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Journal of

Volume Five Number Two


ISSN 1477-9633

Journal of Organisational Transformation & Social Change | Volume Five Number Two
Organisational Transformation
& Social Change 5.2
Volume 5 Number 2 – 2008

105–107 Editorial
Paul Iles

Articles
Journal of

Organisational
109–127 Gender wage inequality in the transitional Chinese economy: A critical
review of post-reform research
Jie Shen and Xin Deng
129–140 Applying the congruence model of organisational change in explaining

Transformation
the change in the Indian economic policies
Karabi C. Bezboruah
141–157 Job motivation and self-confidence for learning and development
as predictors of support for change

& Social Change


Chaiporn Vithessonthi and Markus Schwaninger
159–173 E-mail at work: A cause for concern? The implications of the new
communication technologies for health, wellbeing and productivity at work
Howard Taylor, George Fieldman and Yochanan Altman
175–189 Communication and information exchange among SMEs and their local
environment
Viveca Asproth and Christina Amcoff Nyström

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OTSC_5-2-00-FM 5/31/08 10:14 AM Page 103

Organisational Transformation
and Social Change
Volume 5 Number 2
Organisational Transformation and Social Change (OTASC) is an interna- Editors
tional English language, peer reviewed scholarly journal. It is dedicated Maurice Yolles
to an academically sound approach to enquiry and exploration into School of Business Information
change in organisations and social systems, and it seeks convergence of Liverpool John Moores University
98 Mount Pleasant
these and related disciplines so as to form a science of social communi-
Liverpool L3 5UZ UK
ties. This journal takes the view that situations involving people are nor-
m.yolles@livjm.ac.uk
mally highly complex, and hence it sees all human/social conditions and
processes in terms of the complexity paradigm. While OTASC particularly Paul Iles
encourages systemic, operational research and cybernetic approaches, it Running Stream Professor HRD
should also be seen as a general vehicle to explore theory and practice Leeds Business School
Leeds Metropolitan University
about change deriving from the more traditional academic disciplines.
Headingley Campus
OTASC encompasses the social sciences, including organizational and
Leeds
management science, management systems/operational research and LS6 3QS, UK
cybernetics, social psychology, sociology, anthropology, political science, P.iles@leedsmet.ac.uk
psychohistory, as well as economics, law, mathematics and matters relat-
ing to the information or knowledge society. Assistant Editor
While preference will be given to papers that are well grounded in Ann Mulhaney
the scientific literature, OTASC will also consider more exploratory pieces a.mulhaney@livjm.ac.uk
of work that seek to provide an opening for alternative thought.
All articles will be submitted to two referees, nominated by the Editorial Administrator
Editorial Committee, for peer review. Nicky Hovell
Faculty of Business and Law
Editorial Board Liverpool John Moores University
Yochanan Altman Human Resource Development, UK 98 Mount Pleasant
Bela Banathy Systems, Social Evolution, USA Liverpool L3 5UZ
Soeren Brier Cybernetics and Semiotics, Denmark UK
Zhicheng Chen Strategic Management, OR, China N.G.Hovell@livjm.ac.uk
Keith Dowding Politics, UK
Daniel Dubois Complexity and Living Systems, Belgium
Sebastian Green Strategic Management, Ireland
Stig Holmberg Systemic Modelling, Sweden © 2008 Intellect Ltd. Authorisation
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Rajesh K. Pillania Knowledge Management, IILM, India
Mark Rouncefield Ethnomethodology, UK
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Randall Schuler Human Resource Strategy, USA abstracted and indexed in Cambridge
Markus Schwaninger Managerial Cybernetics, Switzerland Scientific Abstracts, International
Jie Shen (International) Human Resources Management Bibliography of the Social Sciences
(ISBSS), and Journal of Economic
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Editorial Notes for


Contributors
OTSC publishes papers in English. – The theoretical processes were • For example:
Either British or American spelling will clearly observable, for in the
be accepted, but the use of either must culmination period Smith (1992) – Book reference:
be consistent within one article. When observed ‘it was obvious that the Thom, R. (1975), Structural Stability
preparing manuscripts for submission, conflict had reached a pitch when and Morphogenesis, Place: Publisher.
authors should refer to current copies the leader of the opposition said “it Smith, F.T. (1992a), ‘The Politics of
of the journal and follow its style as is not possible to negotiate further the Unnecessary’, Politics Users
closely as possible. Manuscripts must on this matter”’. Manual, ed. Smith, T., Jones, W.,
be typewritten, double-spaced, with Place: Publisher, pp. 101–11.
– Quotations over 40 words should be
generous margins in 12 point Times
single spaced, without quotation – Journal reference:
Roman. Authors are particularly
marks, and indented.
requested to incorporate the following Smith, F.T. (1992), ‘The Politics of
conventions of the journal into their – Indicate dates as follows: 1 July 1992. the Unessential’, Journal of European
typescripts:- Philosophy, 1: 3, pp. 4–17.
– When specific, both names and
1. The name of the paper and the nouns should be capitalised, but not – A non-reference bibliography may
name and institution of the when generalised. The following be added if this is deemed to be a
author(s) should be stated. provides an example: the European necessary addition to the references.
Community, Yugoslavia, the
Commonwealth of Independent 10. Manuscripts will normally be
2. Abstracts of up to 100 words should States. A European community, a linguistically corrected and edited
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3. Keywords taken from the abstract 8. Footnotes should appear as them promptly to the Editorial
should be specified. Endnotes accumulated at the end of Office.
the paper as notes. Endnotes which
4. Illustrations, photographs and tables are comments should appear as 11. The copyright of all material
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figures/tables. intended for publication in the
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journal should be submitted to
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5. Sections and subsections should be editors when sent by post, or an
always appear as first author
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followed by et al.
numbered consecutively, normally Text Format files. The author is
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section 1. cally at the end of the manuscript copy of the manuscript. The
prior to the end-notes and without editors will be glad to comment on
6. Mathematical expressions or Greek reference within the end-notes, the synopses of the proposed
or other symbols should be written which should be used sparingly, kept contributions.
clearly with ample spacing. Any brief ,and to the point.
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Translations of original titles should
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Any matters concerning the format and presentation of articles not covered by the above notes should be addressed to the Editor.
The guidance on this page is by no means comprehensive: it must be read in conjunction with Intellect Notes for Contributors.
These notes can be referred to by contributors to any of Intellect’s journals, and so are, in turn, not sufficient; contributors will also
need to refer to the guidance such as this given for each specific journal. Intellect Notes for Contributors is obtainable from
www.intellectbooks.com/journals, or on request from the Editor of this journal.
OTSC_5-2-01-Editorial 5/31/08 10:15 AM Page 105

Journal of Organisational Transformation and Social Change Volume 5 Number 2


© 2008 Intellect Ltd
Editorial. English language. doi: 10.1386/jots.5.2.105/2

Editorial
Paul Iles Co-Editor, JOTASC

This edition of JOTASC has five papers, three of which are about change in
emerging, transitional or developing economies whilst two concern infor-
mation and communication technologies in Western countries. Three are
literature reviews whilst two are based on empirical studies, one using
qualitative and one quantitative methodologies.
There has been much written recently on the shift in economic power
from West to East, and the emergence of the BRIC bloc of big, rich, indus-
trialising countries (Brazil, Russia, India, China). This edition of the journal
is timely in that there are two articles on this bloc of countries.
Shen and Deng’s article on gender wage inequality in the transitional
Chinese economy explores through a thorough literature review one impact
of China’s economic reform, which has brought significant changes to its
income distribution system. This article critically and systematically reviews
a growing but scattered literature on gender wage inequality in post-
reform China. It concludes that, due to appropriate rewards of human
capital characteristics, marketisation has given rise to a gender wage dif-
ferential which is similar to or smaller than the differential in most indus-
trialised and developing nations. Moreover, the gender wage gap is smaller
in urban industries than in rural ones. Gender wage discrimination that
accounts for unexplained components is generally smaller than that of the
earnings differential. Increased market competition does not seem to have
reduced gender wage inequality. However, the current literature is incon-
clusive, as it examines the gender wage inequality of only a tiny fraction of
the country’s vast population and geography before China’s accelerated
reform programme in the late 1990s. Large-scale empirical research
which explores the effects of such reform on gender wage inequality is
therefore urgently needed. The article is particularly interesting in that it
brings together research by economists and sociologists, often employing
quite different methodologies. It has implications also for politics and HRM
in terms of its significance for HRM policies in organisations, especially
around diversity and equality, as well as government policy in this area. It
should also inspire research into other growing inequalties and disparities
in China, such as the growing gap between urban and rural, East and
West, and rich and poor, as well as the growing ethnic and regional
inequalities currently receiving much media interest.
India is often spoken as a rival to China for Asian economic leadership
and influence. Karabi Bezboruah’s article on applying the congruence

OTASC 5 (2) 105–107 © Intellect Ltd 2008 105


OTSC_5-2-01-Editorial 5/31/08 10:15 AM Page 106

model of organisational change in explaining changes in economic policies


looks at recent developments in India, faced with a dynamic and globalised
external economic environment and a deteriorating internal economic
environment. The Indian government also began reform of its economic
policies, overhauling India’s economic system by making it more market
oriented. This article applies the well-known Nadler–Tushman’s Congruence
Model of organisational change to the changes in the Indian economic
system and attempts to examine the model’s validity in large-scale organi-
sational settings. The findings show that although the change process is
consistent with the model’s features, the model does not recommend any
action strategies to handle resistances. Resistance being a significant part
of any change process, inclusion of strategies to manage resistance would
enhance the applicability of the congruence model.
However, with the focus on the BRIC group, there is a danger of neglect-
ing the economic transformation that is rapidly occurring in other countries,
such as the countries of South-East Asia. Another article by Vithessonthi
and Schwaninger looks at Thailand, and also at the resistance issues men-
tioned but unexplored in the Indian article. It examines job motivation and
self-confidence for learning and development as predictors of support for
change amongst school-teachers in Thailand. Studies on change manage-
ment have often attempted to determine the factors that influence employee
resistance to change. The focus of this study is to test whether job motivation
and self-confidence for learning and development influence employee
support for downsizing. Data were gathered from a sample of 86 teachers at
one private school in Bangkok, Thailand. The analysis was carried out using
multinomial ordered probit regression. The results suggest that the level of
job motivation is negatively associated with the level of support for change,
and that the level of self-confidence for learning and development is not
associated with the level of support for change. This is an interesting finding
which needs replication in other sectors and countries. The relationship of
other variables such as commitment or engagement to resistance to change
would also be worth exploring.
The final two articles take us back to the West and the central issue of
communication and change. E-mail at work: a cause for concern? The impli-
cations of the new communication technologies for health, wellbeing and
productivity at work by Taylor, Fieldman and Altman takes us back specifi-
cally to the United Kingdom and the rapid and decisive impact electronic
communication has had on our lives in general and the work place in par-
ticular, notably e-mail as the preferred communication medium (though
there is also a rapid growth of web 2.0 technologies and social networking
sites such as Facebook, Myspace, Bebo, Youtube and Second Life and
Linkedin which may challenge the dominance of e-mail, and seem already to
have done so amongst younger age groups). A literature review examines
the available evidence on their potential negative effects, given that the ben-
efits of e-mail communication for individuals and organisations are more
often noted in the literature. It is argued that the particular characteristics of

106 Paul Iles


OTSC_5-2-01-Editorial 5/31/08 10:15 AM Page 107

electronic mail and communication may have an adverse impact upon well-
being, stress and productivity. E-mail may act as a stress conduit, but is also
in itself a potential stressor, and may also impair productivity due to its com-
munication characteristics, affecting key operational aspects such as decision
making and team cohesion. It may escalate disputes, facilitate harassment
and encourage litigation. The article presents a framework identifying
antecedents and potential personal and organisational outcomes, and con-
cludes with an outline agenda for further research as a first step in develop-
ing strategies to overcome e-mail’s potential negative consequences.
In the final article by Asproth and Nystrom the results of a Swedish
pilot study on the ‘Arena for Sustainable Innovative Development of small
and medium-sized enterprises’ are discussed. The project aimed to create
and test a model for collaboration and sustainable development among
small- and medium-sized enterprises (SMEs) in local areas. This is an issue
facing many countries, especially those where SMEs are a dominant force
in the economy. The research question in this article is focussed on issues
concerning use of ICT, information exchange and communication among
the interested parties. The pilot study was accomplished in a qualitative
and explorative way with semi-structured interviews. As a result of the
study some questions are identified as needing further investigation.

Editorial 107
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OTSC_5-2-02-Shen 5/31/08 10:16 AM Page 109

Journal of Organisational Transformation and Social Change Volume 5 Number 2


© 2008 Intellect Ltd
Article. English language. doi: 10.1386/jots.5.2.109/1

Gender wage inequality in the


transitional Chinese economy: A critical
review of post-reform research
Jie Shen Monash University, Australia
Xin Deng University of South Australia

Abstract Keywords
China’s economic reform has brought significant changes to its income distribu- gender wage inequality
tion system. This article critically and systematically reviews a growing but scat- gender wage gap
tered literature on gender wage inequality in post-reform China. It concludes that, gender wage differential
due to appropriate rewards of human capital characteristics, market liberation gender wage
gives rise to a gender wage differential which is similar to or smaller than the dif- discrimination
ferential in most industrialised and developing nations. Moreover, the gender gender wage difference
wage gap is smaller in urban industries than in rural ones. Gender wage discrim- China
ination that accounts for unexplained components is generally smaller than that
of the earnings differential. Increased market competition does not seem to reduce
gender wage inequality. However, the current literature is inconclusive, as it
examines the gender wage inequality of only a tiny fraction of the country’s vast
population and geography before China’s accelerated reform in the late 1990s.
Large-scale empirical research, exploring effects of such reform on gender wage
inequality is therefore urgently needed.

1. Introduction
The post-reform research on gender wage inequality in China is critically
and systematically reviewed in this article. Earnings inequality is mainly a
Chinese post-reform phenomenon. China has a long tradition of Confucianism
that discriminated against women. Such a tradition diminished during the
planned economy (1949–1978) when China was committed to gender
equality, particularly in the labour market. Prior to the reform, female
work participation in urban areas reached more than 90 per cent. Such a
level was matched by only a few developing countries (Croll 1995). The
Chinese central government adopted a system of national wage scales,
which was based on the principle of socialist egalitarianism and cradle-to-
grave ‘welfarism’ (Loscoco and Bose 1998; Warner 1995). The socialist
egalitarian ideology suppressed human capital characteristics and induced
equal pay between males and females (Liu, Meng and Zhang, 2000;
Meng and Miller, 1995). Although wage discrepancies in rural areas still

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existed, between 20 and 40 per cent in some instances, and opportunities


to work away from the farm were limited by policy (Chan, Madsen and
Unger, 1992; Rozelle et al. 2002), overall gender wage differentials, rela-
tive to other countries, were small (Croll, 1995; Rozelle et al. 2002). This
was particularly so in urban areas. However, the downside was that egali-
tarianism in the labour market curtailed economic efficiency (Knight and
Song 2003).
Economic reform has replaced the Maoist ideal of socialist egalitarian-
ism with Deng Xiaoping’s policy of ‘a few getting rich first’. Since the mid-
1980s, firms have been given autonomy to determine within government
guidelines their own remuneration systems. Such guidelines have gradu-
ally loosened and evolved into a request for abiding by only minimum
wages since the early 1990s (Shen 2007). Although the deep-rooted egali-
tarianism amongst the Chinese still plays a role in the wages system, some
enterprises tend to use group pay when they allocate bonuses so that every-
body in the group receives the same amount (Mitsuhashi et al. 2000), egal-
itarianism has become more and more unacceptable to employers and
employees alike. Decentralisation and marketisation of wage system allow
managers to link remuneration to firm’s profitability and individual labour
productivity, and consequently provide room for discrimination (Hughes
and Maurer-Fazio 2002; Knight and Song 2003; Ng 2004). Although
firms have stronger incentive to improve profitability, more intensive com-
petition force them to pay greater attention to cost reduction, paying their
employees a wage that is lower than the market value has been utilised as a
way to cut down cost. It is not surprising that employees with less human
capital are more likely to be underpaid. As a result, alongside rising unem-
ployment and inadequate social welfare, there has been widening income
disparity in both urban and rural areas, between regions, and between pop-
ulation groups (Shen 2007). In the last two decades, China has moved from
one of the most equal countries to one of the most unequal ones in terms of
income distribution. This is evidenced by the change of Gini coefficient – it
has risen from 0.3 in 1981 to 0.45 in 2002 (Kuroda 2006). Some
researcher reported Gini coefficient as high as 0.495 in 2007 (Xinhua
News Agency 2007). China’s income inequality has now surpassed that of
all developed countries, and may soon reach that of high-inequality coun-
tries like Brazil, Mexico and Chile if current trends continue. It is particu-
larly alarming as income disparity in other transition countries has not
widened as quickly as that in China. The United Nation’s 2005 China
Report notes that more than 90 per cent of Chinese people believed that
income inequality was too great and about 80 per cent wanted their
national government to solve the imbalance (The UN 2005). As Shen
(2007: 25) argued, ‘the ever-widening earnings gap between the rich and
poor, in stark contrast to the official ideology of China’s Communist Party,
is a major source of discontent for many ordinary Chinese’.
Wage discrimination against females has emerged as a major phenom-
enon of income inequality (Hughes and Maurer-Fazio 2002; NBSC 2005;

110 Jie Shen and Xin Deng


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MOLSS 2005; Rozelle et al. 2002; World Bank 2002). China has a large
female population, which reached 630 million at the end of 2004, and
female employment accounts for nearly 45% of total employment (NBSC
2005; MOLSS 2005). Gender wage inequality in China is an important
topic for empirical research in order to determine the effect of reform of
the largest transitional economy on the largest female workforce in the
world.
China’s experience may have significant implications for other transi-
tional economies. Similar to China, many transition economies in East
Europe experienced widening wage gap, rising unemployment and declined
female labour force participation rates. Contrary to China where female
employees are paying higher price compared with their male counterparty
for such change, female employees fared relatively well in these countries.
The decline in male labour force participation in the early years of transi-
tion is reported to exceed that of female labour force participation, and
there has been a consistent increase in female relative wages across Eastern
Europe, despite a substantial decline in female relative wages in Russia and
Ukraine (Brainerd 2000).
Not surprisingly, there is a growing literature which examines gender
earnings inequality in China since the middle 1990s. This increase is also
largely due to the fact that the phenomenon of gender earnings inequality
contradicts the principle underlined in Mao’s famous slogan ‘Women hold
up half the sky’ (funu neng ding banbian tian), and in the Chinese constitu-
tion that guarantees women equal rights with men in all aspects of life
and equal pay for equal work.
However, there is a lack of research that summarises and assesses the
findings of existing scattered studies which would clarify whether past
research has scientifically and satisfactorily explained this new phenome-
non. Many questions are worth seeking answers to: How large is the
earning gap between men and women in China? What are the major
sources of gender wage inequality? Is western literature equally powerful
when applied to the Chinese context? Has past research on China’s gender
wage inequality advanced knowledge? What are the major limitations of
the existing literature?
To answer these questions, this article reviews post-reform research on
gender wage inequality in China, aiming to develop a better understand-
ing of its size and sources, the effects of economic reform, and to explore
avenues for further research. The databases searched represent virtually
all areas of academic study, economics and peer-reviewed business and
scholarly publications in English and Chinese. The period chosen was
1990–2007, as this represents the time when the early 1990s economic
restructuring in China began to make itself felt, and research on the topic
flowed as a result. The search terms are the same as the key words of this
article. The search term ‘wage difference China’ returns with more than
5,000 articles alone from Google Scholar alone, there were nearly 2000
articles found in JSTOR with the same term. Other databases that returned

Gender wage inequality in the transitional Chinese economy: A critical review . . . 111
OTSC_5-2-02-Shen 5/31/08 10:16 AM Page 112

with more than 50 articles are Blackwell Synergy (248) and Kluwer (89).
The titles and abstracts, where available, were screened to identify the
potentially relevant publications. Two reviewers independently identified
the publications and extracted the findings of the studies cited. Differences
were resolved through discussions, and 25 articles were selected for this
literature review. These articles were published between 1995 and 2007,
with eleven papers published between 1995 and 1999 and ten papers
published between 2000 and 2004. This indicates continuing interest in
this area since the mid-1990s. Majority of the research uses Oaxaca
decomposition method to test the existence of gender discrimination. As
shown in the sections below, these papers have covered a wide range of
areas and utilised data sources including nation-wide household survey
and surveys covering several cities, a group of firm and households.
To meet our objectives, the remaining article is structured as follows:
Firstly, it reviews western concepts explaining gender earnings inequality,
including earnings differential and gender discrimination, and the under-
lying sources. Secondly, it assesses by themes past studies on these issues
in China, including gender earnings inequality in both urban and rural
industry, across ownership sectors and across regions. Subsequently, it
revisits the research questions set for this article, discusses limitations of
past studies and further research directions, and draws some conclusions.

2. Concepts of gender wage inequality


The earnings inequality based on gender has been a common social
problem in many developing and industrialised countries (Blau and Kahn
1994; Brainerd 2000; Katz and Autor 1999). This is particularly so in
transitional economies, such as Russia and Ukraine (Brainerd 2000).
Western economists separate the gender wage differential from wage dis-
crimination in order to explore sources of gender earnings imparity
(Arrow 1972; Becker 1957; Oaxaca and Ransom 1994; Neumark 1988).
Economists, such as Oaxaca and Ransom (1994) and Neumark (1988),
argued that gender wage differentials are resulted from attempts to reward
human capital endowments. Since employees may be different in this
regard, they should be rewarded accordingly. If there is a perceived produc-
tivity differential between men and women and if their capital characteris-
tics are appropriately rewarded, their wages may differ. As Blau and Kahn
(1992, 1997) argued, gender wage difference is influenced by how
observed and unobserved skills of men and women are rewarded in the
market. Competitiveness in the market is largely based on efficiency that
requires an appropriate reward. Under conditions of perfect competition,
with perfect information, and no transaction costs, gender wage disparity
should exist only where there are differences in productivity between
genders (Hare 1999). Skill-biased technical change is often regarded as the
main culprit of wage differential (Bound and Johnson 1992; Katz and
Autor 1999; Juhn, Murphy and Pierce 1993). Skill-biased technical change
is not gender-specific – but it can be largely associated with gender.

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Liberalisation of economies enables an appropriate reward of human


capital characteristics, and hence gives rise to potential gender wage dif-
ferentials. The experience from developed countries indicates that gender
wage differentials tend to be smaller in countries with centralised collec-
tive bargaining that emphasise egalitarian wage policies in general, e.g.
Sweden, Norway and Australia, but larger in countries that have decen-
tralised, market-oriented wage determination with enterprise-level bar-
gaining, e.g. United States and Canada (Gunderson 1994; Blau and Kahn
1995). Former centrally planned economies tend to have the smallest
gender wage gaps (Meng 1996).
Gender wage discrimination is not driven by productivity differences
but is sex-based (Arrow 1972; Becker 1957). Economists define discrimi-
nation as willingness to pay, either directly or in the form of a reduced
income, to be associated with some people instead of others (Becker 1957:
14). Gender wage discrimination arises from personal tastes of individuals,
including employers, employees and consumers, and often the industry’s
own preference for particular types of workers (Arrow 1972; Becker
1957; Blau and Kahn 1992, 1997; Hare 1999). In the literature, it is
commonplace that gender wage discrimination is unexplained by observ-
able differences in human capital (Millimet and Wang 2006). Statistical
discrimination occurs when the employer is unable to measure accurately
the productivity of each individual worker and pays each worker accord-
ing to the perceived average productivity of all workers of that type (Hare
1999). Such wage structures are likely to undervalue, or not reward at all,
some skills of women and thus result in discrimination. The social conse-
quence of such discriminated wage structures is that women are discour-
aged from participating in employment and investing in education and
skill enhancement, and that the valuable human capital of women are
underdeveloped and underutilised in the society.
Gender wage differentials and wage discrimination are often reflected
in industry or occupational segregation. Rozelle et al. (2002) argued that
the explained wage gap is also attributable to men and women’s accessibil-
ity to a certain industry, a certain type of firm, or job. For example, there
are differing shifts in the occupational and industrial distribution of
employment between men and women. While men comprise a larger
share of employment in heavy industry, the expected shift in the industrial
structure away from heavy industry should favour women relative to men.
Men and women may exhibit different productivity over different occupa-
tions. This is particularly relevant to China, where rural migrants are not
allowed to fill many occupations in the urban areas due to the hukeo
(household registration) system. As Meng (1998a) pointed out, such occu-
pational segregation is the most important source of gender wage disparity
among Chinese migrants. Meng (1998a) also argues that occupational
segregation can be attributable to both wage differentials and wage dis-
crimination. Although occupational segregation resulting from differences
in human capital characteristics is an example of wage differentials caused

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by the low possibility of one gender group finding jobs in a specific sector,
employers’ prejudice against one gender group over the other is an
example of gender wage discrimination.
However, many scholars are optimistic about the role of market forces
on reducing gender discrimination, suggesting that, in the long run,
gender wage discrimination is not sustainable under perfect market com-
petition, as firms that do not discriminate against females are able to
achieve higher productivity and efficiency than those that do (Arrow
1973; Becker 1957; Liu et al. 2000). Becker (1957) argued that market
forces may result in less gender wage discrimination if it becomes too
costly for employers to compete with those who do not discriminate
against females. Some authors find that wage discrimination is less likely
in more market-oriented enterprises and suggest that market liberalisation
will improve women’s economic position (Meng 1998b; Liu et al. 2000).
According to these authors, it can be argued, therefore, that in the long-
run, equality of wages can contribute to economic efficiency.
The methods of Oaxaca (Oaxaca 1973; Oaxaca and Ransom 1994),
Blinder (1973) and Neumark’s (1998) are well-known as Oaxaca-Blinder
decomposition for analysing the composition of the gender wage differ-
ence. According to these researchers, the total gender wage gap consists of
the gender wage differential – attributable to gender differences in observ-
able productive characteristics (explained component) – and the residual
gap – attributable to differences in the male and female returns to these
productive characteristics. This residual is an unexplained component
attributable to discrimination, but could also be due to differences in
unobserved productive characteristics. Nevertheless, critics of Oaxaca-
Blinder decomposition are concerned with the neglect of the remainder of
the distribution (Jenkins 1994; Millimet and Wang 2006).
If western concepts are equally applicable to the Chinese context,
China’s transition from a centrally controlled economy to a marketised
economy is most likely to exert two competing gender effects on wages. On
one hand, liberalisation of the market fosters efficiency and productivity,
which requires appropriate reward of human capital, and, consequently,
widens the gender wage gap, but on the other hand, increasing market
competition might function as a catalytic agent of gender equality, thus
reducing the incidence of gender wage inequality. Nevertheless, it is impor-
tant to clarify how the largest economic transition has actually affected
gender wage inequality.

3. Gender wage inequality in China: the review findings


China had separated rural and urban labour markets for over half a
century. Although since the late 1980s the restrictions on rural–urban
migration have been gradually eased, rural migrants have not been enti-
tled to the same employment and social welfare as have urbanites. For this
reason, in this article we look at gender wage inequality in the urban
industry and the rural industry separately. The last decade has also seen

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an increase in income disparity between different enterprise ownership


types. In 1994, the average wage of workers in foreign-invested enterprises
(FIEs) was 31% higher than that of workers employed in state-owned
enterprises (SOEs) (China Statistical Yearbook 1995). Since 1990, the
income of employees in SOEs have increased faster than those in other
sectors. The average wage in SOEs exceeded that of all other sectors for the
first time in 2003 (Shen 2007). Hence, we also look at gender wage
inequality across enterprise ownership types. Moreover, there are large
income disparities between regions as well. Economic development has
generally been more rapid in coastal provinces than inland. According to
the state statistics, in 2003 the average incomes of urban dwellers were
14,867 and 6,530 CHY in Shanghai and Ningxia respectively, making a
difference of 8,337 CHY, which increased by 1,031 CHY over 2002. In
rural areas, farmers in Shanghai had the highest average income (6,654
CHY), which was 4.25 times higher (an increase of 0.07 times compared
to 2002) than the income of farmers who lived in Guizhou. Generally, the
regional income gaps among rural dwellers are larger than those of urban
dwellers. Hence, it would be interesting to find out if regional income dis-
parity has an impact on gender wage inequality.

4. Gender wage inequality in the urban industry


4.1. Size of gender wage inequality
Scholars did not become concerned with China’s gender earnings
inequality until the middle 1990s. Azizur Rahman Khan was one of the
international scholars who first noticed this issue. Referring to the
Chinese official statistics, he reported that overall during the late 1980s,
Chinese women’s earnings were about 80 per cent of men’s and about
50 per cent of men’s in privately owned enterprises (POEs) in the urban
area (Khan 1996). Analysing the official data presented in labour year-
books, Maurer-Fazio, Rawski and Zhang (1999) revealed that the gender
earnings gap widened nationally in urban industry between 1988 and
1994; the unadjusted gender earnings gap reached between 34–54 per
cent. Xu, Tang and Wang (2006) reported that the overall gender earn-
ings gap in two urbanised towns in Zhejiang Province reached 32%
between 1999 and 2000.
In contrast to the findings of the above-mentioned studies, other
studies have reported a small gender wage gap. Hughes and Maurer-Fazio
(2002) and Gustaffson and Li (2000) argued that the urban female–male
earnings ratio was about 80 per cent between 1988 and 1995. The
gender wage gap in urban China rose from 15.5 per cent in 1988 to 17.55
in 1995, but its average level was smaller compared to many other coun-
tries. According to Gustaffson and Li (2000), gender wage gap is smaller
among the youngest employees and those with better educational qualifi-
cations. Similarly, according to Maurer-Fazio and Hughes (2002), the
overall gender wage gap was 14 per cent in 1991. Using the data of the
Chinese Household Income Project (CHIP), Bishop, Luo and Wang (2005)

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revealed that the gender earnings gap increased slightly from 19 per cent
in 1988 to 20 per cent in 1994. The gender wage gap was reported as
about 10 per cent in the study of Shu and Bian (2003), which is smaller
than reported in other studies. Shu and Bian (2003) also disagreed on the
increase in the gender wage gap; instead, they argued that the gap was
stable from 1988 to 1995. Liu et al. (2000) concluded in their study that
there was increasing competition but no perfect competition, between
1988 and 1994, in the markets of the Chinese transitional economy. The
effect of marketisation on increasing wage differentials overwhelms any
discrimination reduction effect of competition.

4.2. Sources of gender wage inequality


Scholars examined the components of the gender earnings gap in order
to explore the various contributing factors and the change in pattern. In
their study, Bishop et al. (2005) found that the ratio of the gap between
unexplained and total earnings was high. However, while the gender
wage gap increased slightly, the relative share of gender wage discrimina-
tion declined from 71 per cent to 61 per cent during the study period.
Similarly, Liu et al. (2000) argued that, as wage differentials were mainly
the result of appropriate awards of human capital characteristics and sec-
toral differences in wage policies, the relative share of discrimination
declined considerably between 1988 and 1994. Shu and Bian (2003)
found that gender earnings inequality resulted mainly from women’s
unchanged disadvantaged status in education, employment, political life
and promotion over the study period. Shu and Bian argued that the
increasing marketisation reduces the share of gender wage discrimina-
tion only in the most marketised cities. Gustafsson and Li (2000) argued
that the share of wage discrimination in the total wage gap increased
from 1988 to 1995.
Millimet and Wang (2006) conducted a distributional analysis based
on the notion of stochastic dominance and found that, between 1988 and
1994, large gender earnings gaps existed at the distributional level in
terms of annual earnings and hourly wages. Gender discrimination
explained one-third of the disparity in the lower end, but it was not evident
at all in the upper end of the distribution. Gender discrimination and
female underpayment worsened in the lower region of the distribution, but
improved in the upper end. Rising in gender earnings inequality was most
severe for the youngest females. However, the authors’ conclusion, that
female underpayment was a source of discrimination, does not seem to be
able to explain the real source of gender wage discrimination. Millimet
and Wang (2006) were supported by Hughes and Maurer-Fazio (2002)
and Xu et al. (2006) who argued that gender wage gaps decrease among
those with a relatively high educational attainment. Hughes and Maurer-
Fazio (2002) argued that married women experience larger total gender
wage gaps than single ones and a larger proportion in the area of wage
discrimination.

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5. Gender wage inequality in the rural industry


5.1. Size of gender wage inequality
Gender wage inequality in China’s rural industry was first reported in
Meng and Miller (1995); its finding was further discussed in Meng
(1998a), in which, on an average, women earned 20 per cent less than
men in the 49 sample township and village enterprises (TVEs) in 1985. In
a 1989 study of 249 farm households in Guangdong Province, Hare
(1999) found a substantial gender wage gap in the rural industry reflected
in the fact that women earned 37.8 per cent less than men. Analysing
data collected from 230 villages across eight provinces, Rozelle et al.
(2003) reported that, while the average wage of males rose by 2 per cent,
those of females fell by 9 per cent, and the gender wage gap increased from
29 per cent to 45.7 per cent during the study period 1988 to 1995. Dong
et al. (2004) looked at gender wage inequality in the private rural industry
in three counties in Shandong and Jiangsu provinces in 1999 and 2000,
and argued that men’s annual and hourly wages were 32.9 per cent and
34.7 per cent higher in the respective provinces than women’s, indicating
that privatisation had increased gender inequality.

5.2. Sources of gender wage inequality


In their study, Dong et al. (2004) revealed a large amount of gender wage
discrimination, accounting for between 82.22 per cent and 93.65 per cent
of total gender wage gaps in the post-privation period. This percentage was
higher than in the pre-privatisation era. The wage gap attributable to pro-
ductive characteristics rose by a very small margin. Meng (1998b) sug-
gested about 16 per cent as the gender wage discrimination coefficient at
the aggregate level in the rural industry. Based on this figure, the author
argued that gender wage discrimination in China’s rural industry was
much more serious than in the urban sector for industrial and developing
economies (like the United States, Canada, the United Kingdom, Australia,
Malaysia and Taiwan). This was because a traditional female discrimina-
tion culture was deep-seated in rural China. Supporting Meng (1998b),
Xu et al. (2006) argued that gender wage inequality in rural areas was
largely a result of discriminatory practices, for example institutional con-
straints on migration and differentiated gender roles in society and family.
Meng (1998a) found significant differences between the market and non-
market groups in the structure of wages, and concluded that increasing
market liberalisation reduced the contribution of wage discrimination in
total wage gaps. However, Rozelle et al. (2003) disagreed with Meng
(1998a) by arguing that rising competition did not affect gender wage
gaps during their study period. In Hare’s (1999) study, the structure of
wages did not vary with the sex of the individual. However, households, for
example land holding and household size and composition, contributed to
the observed gender wage differentials through their influence in the for-
mation of the individual’s reservation wages. The supply side of the labour
market played a critical role in contributing to the wage gap in the rural

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industry. Women were more likely to become wage employed when the
household’s demand for agricultural labour input was low. Nevertheless,
there seems to be consensus that the relative share of wage discrimination
decreases in the rural industry over time (Dong et al. 2004; Meng 1998a;
Rozelle et al. 2003).
There is not much literature, except for Meng (1998a) and Xu et al.
(2006), devoted to the gender wage differential and discrimination of rural
migrants. Meng (1998a) argued that there was a significant gender wage
gap (34%) among migrants during the study period and it was mainly due
to occupational segregation, for example the unequal treatment of male
and female attributes in occupational assignment. The share of gender
wage differentials and discrimination accounted for 27 per cent and
73 per cent respectively of the total wage gap. However, while discrimina-
tion in occupational attainment was a very serious problem for migrants,
intra-occupational gender wage discrimination was lower for them than
for workers in the rural industry. Xu et al. (2006) reported that the gender
earnings gap was much less among migrants than among local residents,
and was biggest, before 2000, among those working as agricultural
labourers in rural areas.

6. Gender wage inequality across enterprise ownership types


A number of studies on China’s gender wage gap have confirmed the
effects of enterprise ownership. Maurer-Fazio et al. (1999) attributed a
large part of the gender wage gap to the crowding of women into low-
rewarding industries. Relatively, the gender wage gap in collectively owned
enterprises (COEs) was smaller, between 1988 and 1994, than in other
ownership types of enterprise. The study of Hughes and Maurer-Fazio
(2002) shows there were significant wage differences and the gender wage
gap was smaller in SOEs than in joint-ventures (JVs). Hughes and Maurer-
Fazio (2002) argued that the industrial effect was much stronger on the
gender wage gap than that of occupation. Specifically, the wage gaps
between married women and their single counterparts were much higher
in JVs than in SOEs and COEs. Liu et al. (2000) revealed that there
was substantial widening of gender wage differentials across ownership
sectors in Shanghai and Jinan cities, and that gender wage differentials
and discrimination increased in the middle 1990s from the state to the
collective/private sector. In a similar vein, in their study, Xu et al. (2006)
found that the gender earning differentiation is least among the self-
employed and largest in POEs.
Two studies are exceptions, since they propose findings different from
those mentioned above. Rozelle et al. (2003) argued that there was no sys-
tematic association between the level of wage discrimination and the
degree of market orientation by industry, ownership or job type. Gustafsson
and Li (2000) noticed that the size of earnings was highly dependent on
geographic location and the ownership type of the enterprise. However,
they did not specify whether gender earning gaps were also associated

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with these two factors, or produce conclusive findings on the relative


impact of gender earnings differentials and discrimination.

7. Gender wage inequity across regions


Only a few studies examine the effect of location on gender wage inequality
and their findings are very diverse. Using data from 1988 to 1992 for a
national urban household survey of 24,372–30,894 working individuals,
Ng (2004) divided China into three regions: eastern, central and western.
The authors found that, up until the 1990s, the western region (the least
developed) had the largest gender earnings gap and the eastern region (the
most developed) had the highest female–male earnings ratio (0.83–0.86)
during the whole study period. The female–male earning ratio increased for
all regions, indicating gender wage differences reduced over the period.
Prior to 1991, gender wage discrimination in the eastern and central
regions was not obvious. Relatively, the urban gender earnings differen-
tial was lower than in rural areas. Analysing data from a 1988 national
income survey of 9,009 urban households, Xie and Hannum (1996) found
that the effects of gender on returns to education and work experience were
regionally static. Supporting Xie and Hannum (1996), the research of
Bishop, Luo and Wang (2005) did not reveal any regional variations in
gender wage gaps that actually increased between 1988 and 1994.

8. Discussions
In this section, we revisit research questions set for this review study, and
discuss the limitations of past studies. Research Question 1 asked whether
Chinese women are financially disadvantaged in the wages they earn. Past
studies all agreed that economic reform, which has liberalised markets and
enterprise management, had resulted in widespread gender wage inequal-
ity replacing socialist egalitarianism in both urban and rural industries.
Yet, past studies did not reach consensus on the size of gender wage
inequality, which reportedly ranged from 10 per cent to 54 per cent in
urban industries and from 20 per cent to 45.7 per cent in the rural sector,
and on whether gender wage inequality increased over time. Among
migrants, the size of the gender earnings gap was about 34 per cent in the
early 1990s, which falls within the reported wide range (Meng 1998a).
Following the majority, including Bishop et al. (2005), Dong et al.
(2004); Hare (1999), Gustaffson and Li (2000), Hughes and Maurer-Fazio
(2002), Meng (1998a,b), Rozelle et al. (2003), Knight and Song (2003)
and Shu and Bian (2003), and referring to international literature, for
example Blau and Kahn (1992, 1994), Brainerd (2000) and Ogloblin
(1999), we are inclined to draw three conclusions with regard to the size
of gender wage inequality. First, the overall gender wage gap in China is
smaller than or similar to that of other industrialised and developing
nations. This indicates, to a certain extent, that Maoist gender equality
ideology has been maintained in the transition from a command economy
to a market economy. Second, the overall gender wage gap was stable in

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the first two decades of economic reform. Third, the gender wage gap in
the urban industry is smaller than in its rural counterpart.
Research Question 2 dealt with the major sources of gender wage
inequality. Past studies are much divided in estimating relative sizes of the
gender wage differential and discrimination. While the reported sizes of
gender wage discrimination in the total earnings gap range from zero (in
the upper end of the distribution) to 71 per cent in the urban industry,
those in the rural industry vary from 16 per cent to 94 per cent (including
among migrants). Past studies found that education, work experience and
marital status are the universally accepted factors mostly associated with
the gender wage differential. The gender wage gap decreases with an
increase in a worker’s level of education and duration of employment.
Women generally lag behind men in their average number of years of
schooling (China Educational Commission, 1996) and often have a dis-
ruption in their careers due to child-bearing. In contrast to their unmar-
ried counterparts, married women’s intermittent labour force participation
is an important cause of gender wage gaps. There are variations in gender
wage gaps across ownership types, where they decrease from the self-
employed, to the state, to the collective, to FIE/JVs and to private enter-
prise. Also, all studies, except that of Gustaffson and Li (2000), argued
that the relative share of gender earnings discrimination had decreased
since China’s economic reform. Moreover, it is widely agreed that gender
wage discrimination is more serious in rural rather than urban indus-
tries, due to a deep-seated discriminatory culture that exists in rural
areas.
Research Question 3 dealt with whether western literature is equally
powerful when applied to the Chinese context, and research on China’s
gender wage inequality has indeed advanced knowledge in this area. As
discussed in Blau and Kahn (1992, 1995, 1997), western literature differ-
entiates wage differential from discrimination by examining the compo-
nents attributable to differences in productive characteristics (explained
factors) and in rewarding productive characteristics (unexplained factors).
Without exception, when analysing China’s gender wage differential and
discrimination, all past studies used western concepts proven to be equally
powerful when applied to the Chinese context. First, this review study
shows that there is a consensus in the literature that China’s economic
reform, which allows market-oriented wage determination system and free
selection of occupations and employees, has increased gender wage differ-
entials. This is because marketisation enables human capital, mainly edu-
cation and experience, to be appropriately rewarded. Second, market
liberalisation and the relaxation of socialist egalitarian control result in
gender wage discrimination in the workplace. However, due to the fact
that past studies have been mainly application of the Western concepts to
the Chinese context, they have developed a better understanding of gender
wage difference in China, but have contributed little in advancing the
theory. The only exception is the study of Hare (1999), which examined

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land holding and household size as explanatory variables for observed


gender wage differentials.
Research Question 4 asked what the major limitations of the existing
literature are. This review study has identified several limitations that
prevent past studies from producing consistent and up to date findings.
First, the most common study period of past research is between 1988 and
1995, including that of Gustafsson and Li (2000), Hare (1999), Hughes
and Maurer-Fazio (2002), Liu, Meng and Zhang (2000), Maurer-Fazio et
al. (1999), Meng (1998a,b); Meng (2003), Ng (2004), Shu and Bian
(2003) and Xie and Hannum (1996), This period is ten years into reform.
Rozelle et al. (2003) argued that gender wage discrimination might have
emerged in the early stage of reform, e.g. 5–10 years, so if the size of wage
discrimination remained stable, the trend in changes could not be detected
in their study periods. In the first few decades, there were a large number
of non-market enterprises (Meng 1998b). As discussed earlier, China’s
economic reform has deepened since 1997 and only since then has it been
developing a full market economy, greatly increasing the level of competi-
tion. Wage scales and structures before 2000 were very different after that
year. For example, before 1994 state-sector wages were substantially above
collective pay scales (Maurer-Fazio et al. 1999). Workers also preferred
SOEs to COEs and POEs. This situation has largely changed as many SOEs
and COEs have encountered financial difficulties or, since the late 1990s,
been privatised. Before the 1990s, there were many restrictions on rural
residents who worked in urban areas and many of these restrictions have
since been lifted. The change in migration policy has had significant
effects on job attainment, as well as on the gender earnings gap. Using
1995 data, Meng (1998a) analysed only the gender wage gap among
early migrants who had different work and life experiences from that of
new migrants now. More job opportunities have become available for
migrants since 1990. During recent years, China has devoted much effort
to developing a harmonious society by dealing with widespread labour dis-
putes and other social problems, including income inequality and gender
discrimination. These recent economic reforms and social development
certainly have significant impact on gender wage differentials and discrim-
ination, which the existing literature has failed to reflect and address.
Also, although data was heavily focused on the period between 1988 and
1995, different study periods are used in past studies, which may be a
cause of their often inconsistent findings.
Second, the data of past studies represents a tiny fraction of China’s
huge labour force (Maurer-Fazio et al., 1999) even some of them have
wide geographical coverage. China has a vast and diverse economy. Across
regions, there are significant differences in economic development and
wages. The sample bias, for example studies focusing on a selection of few
regions, invariably results in inconsistent and even contradictory results.
Xu et al.’s (2006) study area, for example, is a newly urbanised town
where there is a highly developed rural economy, resulting in relatively

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higher incomes for rural residents compared to urban residents. The find-
ings of this study, however, are hardly universal and under-representative
in China. Meng (1998a) argued that gender wage discrimination is more
serious in the non-market group than in the market group. This finding
contradicts the well-agreed argument that gender earnings inequality is
less serious in a planned economy than in a market economy (Blau and
Kahn 1995; Gunderson 1994; Meng 1996), and, due to its sample bias, is
hardly universal. Therefore, one should be always cautious when using
the results of the past studies.
Third, there should be a concern for the quality of data used in past
studies. As Maurer-Fazio et al. (1999) pointed out, some studies extracted
data from yearbooks that do not provide information about individual
characteristics, for example education, experience and age breakdown.
Migrants, however, who have become an important labour force in the
urban industry, are often excluded from urban surveys. Unavailability of
some essential personal data makes it impossible to clarify the relative
importance of wage differentials and wage discrimination in a representa-
tive population. FIEs and JVs, an important part of the Chinese economy
that employs a large number of employees and has affected considerably
Chinese wage system, were often excluded in the analyses. So too was the
earnings gap of farmers. Moreover, ‘the reliability of Chinese official statis-
tics is often considered problematic’ (Warner 2002: 396).

9. Conclusions
The ever-widening wage inequality, including gender earnings inequality,
is a major source of discontent for many ordinary Chinese people. This
article reviewed the post-reform research on gender wage inequality in
order to examine its size and sources, and applicability of western litera-
ture to the Chinese context. It is inferred that economic reform has
resulted in gender wage inequality attributable to both wage differential
(explained by appropriate rewards of human capital characteristics, such
as education, experience, marital status) and gender discrimination. The
size of the gender wage differential is relatively larger than that of gender
discrimination, but smaller than in most industrialised and developing
nations. Gender wage discrimination is much more serious in the urban
industry than in the rural industry, due to deep-seated discriminatory
culture existing in rural areas. However, it needs to be noted that the find-
ings of past studies are inconclusive and inconsistent. This is mainly due to
the current literature drawing a picture of gender wage inequality only of
the first two decades of reform, and then of a minor fraction of China’s
vast and diverse population. Past Chinese studies have mainly applied
western concepts which are proven very applicable to the Chinese context,
but made little theoretical contribution.
One of this study’s objectives is to identify avenues for further research
into gender wage differentials and discrimination. According to the perfect
market competition approach, with intensification of market competition

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and development of a harmonious society, gender wage differentials and


discrimination will gradually decrease. However, Rozelle et al. (2003)
argued that rising competition in China did not affect the gender wage gap
between 1988 and 1995, which is ten years after the beginning of reform.
How the recent acceleration of economic reform and the development of a
harmonious society have affected gender wage inequality in China is yet
unknown, hence, further empirical research is indicated. To develop a
better understanding of these effects, it would be necessary for new
research to collect more representative data in order to examine changes
in both gender wage gaps and the relative shares of wage differentials and
discrimination nationwide. Further research can be done in at least two
areas: one is to collect and analyse more recent data to cover a wider
range of population so as to provide a more comprehensive and up-to-date
picture of gender wage difference; the other is to conduct in-depth
research via case study or specific survey on gender wage difference. The
second area can be down in many different ways. A representative sample
of population (e.g. university graduates) may be surveyed to identify
factors that may lead to gender discrimination, and population cohorts
suffering greater discrimination. Ideally, the surveyed population can be
traced over an extended period so as to identify more complicated issues
that may evolve over the time, such as job change, promotion and pay rise.
Since the late 1970s, China has been at the elementary stage of devel-
oping the full market economy and it will take many years for it to become
a perfectly competitive market. Further liberalisation will continue to give
rise to a gender earnings differential. It is, however, predicted that China’s
current efforts to build a harmonious society will reduce gender wage dis-
crimination. We suggest that its efforts should focus on changing policies
of sex-differentiated lay-offs which force female workers to retire earlier,
eliminating stronger prejudices against women in the rural industry and
improving their education. Also, relaxation of the hukeo system would
improve the current inferior residential status of migrants, especially
female, and thereby reduce industrial and occupational segregation.
Empirical studies that evaluate the impact of those policies on both gender
wage gap and gender wage discrimination would provide useful informa-
tion for policy makers.
The enforcement of Labour Laws against discrimination is also very
important. China has prided itself for providing equal opportunity for
women, and anti-discrimination was not an issue under socialist society
prior to reform. Wide-spread discrimination in labour market after reform
leads to the incorporation of the first anti-discrimination provisions in the
1994 Labour Law. More specialised provisions, including those found in
the 1995 Law on the Protection of Women’s Rights and Interests, followed
soon thereafter.
However, the law does not seem to have improved women’s employ-
ment condition. While China does not publish official statistics on the
gender breakdown of wages, we can observe a steady decrease in the share

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of female employees among urban units in recent years. The proportion of


female employees in urban units dropped from 38 per cent in 1994 to
36.4 per cent in 2001 (Calculated from China Labour Statistical Yearbook
2005). Unfavourable employment conditions against female are likely to
be the driving force of this change. And there are plenty anecdotal evi-
dences showing that females are still discriminated in labour market. For
example, some employers openly stated in their job advertisements that
only male candidates will be considered, or be given priority. In recent
years, employees have won several high-profile cases of discrimination on
the basis of height, place of origin, hepatitis B status. This has discouraged
similar discriminative practices. However, gender discrimination has yet
attracted enough attention. The lack of enforceable legal definition of
gender discrimination as well as the long history of Confucian culture that
looks down upon females can be important factors. The gap in gender
wage difference is unlikely to close without an enforceable legal framework
to address gender discrimination. Raising society’s awareness on this issue
is also important. However, none of them will be an easy task in an over-
supplied labour market like China.

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Suggested citation
Shen, J., & Deng, X. (2008), ‘Gender wage inequality in the transitional Chinese
economy: A critical review of post-reform research’, Journal of Organisational
Transformation and Social Change 5: 2, pp. 109–127, doi: 10.1386/jots.5.2.109/1

Contributor details
Jie Shen (Dr) is Associate Professor in International Human Resource Management,
Department of Management, Faculty of Business and Economics, Monash
University, Melbourne, Australia. He is Adjunct Associate Professor at University of
South Australia, Guest Professor at Southwest Jiao Tong University, Shanghai
University and Fujian Normal University. His main research interests are
International Human Resource Management (IHRM) and HR and industrial rela-
tions (IR) in China. Contact: Jie Shen (Dr), Associate Professor in International
Business, Department of Management, Faculty of Economics and Management,
Monash University, Melbourne, 3000, Australia. Tel: 0061-3-99055465, Fax:
0061-3-9905 5412.
E-mail: jie.shen@buseco.monash.edu.au
Dr. Xin Deng is Lecturer in Economics at University of South Australia. Her
research is in applied Microeconomics areas, and her previous publications cover a
wide range of topics including state owned enterprises reform in China, taxation
modelling and cost evaluation of non-market goods. Contact: Xin Deng (Dr),
Lecturer, School of Commerce, Division of Business, University of South Australia.
Tel: 61-8-83020743, Fax: 61-8-83020992.
E-mail: xin.deng@unisa.edu.au

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Journal of Organisational Transformation and Social Change Volume 5 Number 2


© 2008 Intellect Ltd
Article. English language. doi: 10.1386/jots.5.2.129/1

Applying the congruence model of


organisational change in explaining the
change in the Indian economic policies
Karabi C. Bezboruah University of Texas at Dallas

Abstract Keywords
Faced with a dynamic and globalised external economic environment and a deterio- congruence model
rating internal economic environment, the Indian government decided to reform its Nadler–Tushman’s
economic policies. The changes meant overhauling India’s economic system by model
making it more market oriented. This article applies Nadler–Tushman’s Congruence Indian economic
Model of organisational change to the changes in the Indian economic system and reforms
attempts to examine the model’s validity in large-scale organisational settings. The change management
findings show that although the change process is consistent with the model’s fea- organisational change
tures, the model does not recommend any action strategies to handle resistances.
Resistances being a significant part of any change process, inclusion of strategies to
manage resistances would enhance the applicability of the congruence model.

1. Introduction
The economic system of a country is the backbone on which the country
designs its development. A large-scale transition involving the economy of
a nation of a billion people is not only merely a process but it also means
changing the identity as well as future of the country. Models for explain-
ing organisational changes have been espoused by several scholars over
the years (Weisbrod 1976; Nadler and Tushman 1988; Burke 2002;
Bolman and Deal 2003). The purpose of this article is to evaluate the policy
change process implemented by the Government of India in the early 1990s
by applying the congruence model developed by Nadler and Tushman in
1997. This article, by examining the policy reforms in the framework of
the congruence model, seeks to assess the validity of this model in large-
scale economic transitions. The economic reforms of India initiated as a
result of severe economic crisis have, over the years, led to increased
foreign investment, growth in entrepreneurial ability, higher collaboration
with multi-national corporations, and an increased importance of India in
international economics. Because of these achievements post-reform, the
change process merits scholarly study. Such massive policy changes of a
nation have not been previously studied in the framework of any organisa-
tional change model.

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In analyzing the applicability of the congruence model, this article con-


siders the Indian sub-continent as an organisation. Although there are
vast differences between a country and an organisation in terms of factors
such as population, culture, history and purpose, the differences do not
affect the analysis because the Nadler–Tushman model takes these factors
into account while analyzing the change process. As per the model, an
organisation’s environment, history and resources are the primary inputs
in the change process. Similarly, in India’s economic transition, its history,
its economic, political, social and cultural environment and its resources
are the prime inputs in the transition. Because of this characteristic of the
Nadler–Tushman model, it is possible to consider the country of India as
an organisation and explain the broad economic changes in the frame-
work of the model.
According to Nadler and Tushman (1997: 34), congruence is ‘the
degree to which the needs, demands, goals, objectives, and/or structures of
one component are consistent with those of the other’. The greater the
congruence, the higher is the performance of the organisation. This is a
comprehensive model that specifies inputs through outputs. According to
this model, the key components of the change leaders include envisioning,
energising and enabling. Envisioning means creating and communicating
a vision of a future state with which the people identify and has greater
intrinsic value. Energising and enabling involve empowering the people
involved in the change with the necessary tools and resources.
The changes brought about by the Indian economic reforms were of an
institutional nature, that is, they were implemented at the national level
and involved a series of deregulation, delicensing and privatisation activities.
For the purposes of this article, these changes at the institutional level have
been interpreted at the operational or the organisational level. Thus, the
economic reforms implemented in the Indian economy have been taken as
reforms or changes in an organisational setting. Such an interpretation
would assist in the applicability of a change model to explain the transition
of India from a closed and protected economy to a more open and entre-
preneurial one.
This article is divided into four sections. First, the literatures on organi-
sational change management and the Indian economic reforms are briefly
explored. This review of the literature presents an overview of the theories
and models espoused by change management scholars and focuses on the
change efforts of the Indian leaders and its effects on the Indian economy.
After the review, the congruence model of change is analysed and applied
to the Indian context. This is followed by an analysis of the findings, and
subsequent conclusions.

2. Literature review
2.1. Overview of the organisational change management
Change is a permanent feature and an ongoing process in organisations
and institutions. Change can be proactive or reactive, incremental or

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discontinuous and through choice or due to an impending organisational


crisis. Large-scale changes, which involve changing the way a nation had
been functioning, require careful planning and implementation. The
implementation of such large-scale changes requires extensive attention
because it affects not only the daily operations and subsequent changes
(Meyer and Stensaker 2006) but also changing the mindset of a diverse set
of people. After a review of the change literature, Meyer and Stensaker
(2006) have developed five categories of recommendations for developing
change capacity. The categories are framing (the reasons and rationale for
change as well as the technique for communicating the change), partici-
pation (involving those affected by change), pacing and sequencing (pace
and timing of change), routinising (use existing or establish new routines
to handle change) and recruiting expert personnel. In the absence of these
categories, it would be difficult to develop change capacity.
Gardner (2006), who believes that all change processes are gradual,
identifies seven factors that might cause a change in perspective or a
change in the way of doing things of an individual or institution. These
factors are reason (rational approach), research (collection of relevant
data pertaining to costs and benefits), resonance (fit of the idea with the
current situation), redescriptions (reinforcing views), rewards, real world
events and resistances to change. Changes, according to Gardner (2006:
18), can occur ‘when the first six factors operate in consort and resis-
tances are relatively weak’.
Argyris and Schon (1974) maintained that people have mental orien-
tations with respect to acting in situations. These orientations guide
people, in the case of organisations, managers, in planning, implementing
and reviewing their actions. The scholars state that there is a split
between the theories people espouse and their actions. Based on these,
Argyris and Schon developed two models – Model I and Model II. Model I
believes in unilaterally setting goals and working to achieve them. Here the
change managers unilaterally control and manage the task environment.
The consequences are defensive relationships, low freedom of choice,
reduced production of valid information and little public testing of ideas.
The Model II environment, on the other hand, focuses on internal com-
mitment, valid information, and free and informed choice. It includes
shared and participatory decision making which leads to minimal defen-
sive relationships and high freedom of choice. Argyris (2000) urges
change managers to move from Model I to Model II environment because
Model I behaviour focuses on winning and suppressing negative feelings.
Based on Argyris’ (2000) arguments, it can be said that the use of Model I
theories by change managers can act against the long-term interests of the
organisation. The Model II environment encourages open communication
and that helps change managers to address some of the mundane aspects.
Thus, the literature on change management views change as a gradual
and rational process that includes in-depth research as well as participa-
tion by those affected by change. It also means having talented individuals

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to implement the changes, manage resistances and to communicate the


changes process to others on a regular basis.

3. Necessity of change in Indian economic policies


3.1. The Indian economy at the time of reforms
Until the 1990s, India was a stringently controlled and a highly regulated
economy. With the economic reforms of the 1990s, the central political
leadership completely overhauled the Indian economy by initiating a massive
paradigm shift from a state-oriented to a market-oriented economy, thereby
embracing globalisation and catapulting India into the world economy.
The changes initiated in the wake of severe economic crises were aimed at
macroeconomic stability and international confidence in the Indian economy
(Singh 1997). Overall, the major areas covered by the reforms were fiscal
deficit reduction, industrial and trade policy, agricultural policy, infra-
structure development, financial development, privatisation and social
sector development. Some of the internal reforms were the abolishment of
industrial licensing, reduction in the number of industries reserved for the
public sector, relaxation of the anti-trust legislation to facilitate expansion
and diversification, banking reforms and changes in the tax system.
External reforms include the devaluation of the Indian currency, increase
in the direct foreign investment to 51 per cent, lowering of licensing
requirements for imports, and reductions in tariffs (Nayar 1998).
Changes can be due to either internal or external forces. Internal could
be in the form of growth pressures whereas external could be the environ-
mental pressures that compel an organisation to change. In the case of
India, the impending economic crises because of balance of payments
problems, and a decrease in foreign exchange reserves pushed the need for
reforms in the foreign economic policies. Reforms were brought about in
the national economic policies to deregulate the economy as well as priva-
tise some of the loss making public sector industries (Bhalla 1995). These
policy reforms brought about changes in various areas of the economy.

3.2. The results of the change in economic policies


The implementation of the economic reforms was gradual, and over the
years, changes in several areas were noticed. Most notable was the increase
in foreign direct investment, privatisation of some of the loss making
industries in the public sector, an increase in the presence of multinational
corporations in India, a significant decline in the poverty rate, and a
stronger presence of India in the world economy. The gradual implemen-
tation of the reforms led to positive economic growth only during the first
five years post-reforms. The following five years experienced slow eco-
nomic growth and was much below the target set by the government. An
analysis of the performance of the major areas after the changes were
implemented resulted in the following observations – failure by the gov-
ernment to invest in public services; industrial policies favouring a few
investor-friendly states resulting in less than uniform development among

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the states; high tariff levels among the developing countries; low export rate
due to India being a high-cost producer; and rigid laws relating to employ-
ment and retrenchment of labour resulted in high production costs and low
productivity (Ahluwalia 2002). The effects of the gradual changes were
mixed. For example, the primary sector lagged behind the secondary and
tertiary sectors, and the non-uniform implementation of the reforms led to
uneven growth across states. The services sector, especially the information
technology enabled services enjoyed the greatest surge due to the deregula-
tion. Employment in this sector also increased due to the presence of large
numbers of well-educated and English speaking people. According to Datt
and Ravallion (2002), in spite of a strong national rate of growth, this sec-
toral and geographic imbalance of growth hampered an equivalent reduc-
tion of the poverty rate. However, the cumulative effect of the changes was
very significant to the Indian economy. This is reflected in India’s increas-
ing gross domestic product (GDP). The Indian economy has posted an
average growth rate of more than 7 per cent in the decade since 1996 and
achieved an 8.5 per cent GDP growth in 2006. Exports of merchandise, ser-
vices and industry increased 23 per cent, 10.3 per cent and 7.6 per cent,
respectively (World Bank 2007).

4. The necessity of a change model


A change model assists in explaining any changes implemented in an organ-
isation in a simplified manner. The models try to illustrate the various
factors or variables that have a strong influence on the changes. Because of
the complex nature of organisations, a change model needs to be holistic in
order to take into account factors such as organisational structures, culture,
leadership processes, individuals, knowledge, as well as capabilities. The
selection of a change model to explain organisational changes is crucial
because the model would need to adequately represent the changes. In this
article, the congruence model is applied to the Indian context in order to
explain the economic changes of the 1990s. The application of the model
would, in turn, assist in evaluating its validity in large scale changes.

5. The congruence model and its applicability to the


Indian economy
Nadler and Tushman’s change model is an open systems model based on
the proposition that the effectiveness of an organisation is determined by
the congruence between the various elements of the organisation. According
to the open systems theory, the organisation is dependent on its environ-
ment. The outputs from the transformation of the system-received inputs
are again exchanged for new inputs (Hendrickson 1992). There are four
basic components in the transformation process of an organisation – task
or the specific work activities; individuals or the knowledge, skills, needs
and expectations; formal organisational arrangements which includes
the structures, processes and methods; and informal organisation that
involves implicit, unstated values, beliefs and behaviours (Palmer, Dunford

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OTSC_5-2-03-Bezboruah 5/31/08 10:18 AM Page 134

and Akin 2006). The inputs towards the transformation process include the
external environment, internal resources and the organisation’s history.
Based on these inputs, the organisation’s leaders formulate the strategy for
initiating changes. The outputs are the performance of the various sectors
of the organisation after the changes are implemented.
The economic policy reforms initiated by the Indian government were a
gradual process involving a period of about 6 years from 1991 to 1997.
These changes can be categorised as a first-order, incremental change that
involves maintaining and developing the continuity of the organisation as
opposed to second-order, discontinuous change involving radical transfor-
mation in the nature of the organisation. Nadler and Tushman (1995)
added another dimension to this distinction between the incremental and
discontinuous change by incorporating the concepts of anticipatory or reac-
tive of changes to the external environment (Palmer, Dunford and Akin
2006). In the case of changes in the Indian policies, the changes were pri-
marily reactive in nature. The impending economic crisis faced by India was
due to the Gulf War between Iraq and the United States in the early 1990s
that led to a short-term rise in the prices of oil. The collapse of the Soviet
Union, India’s largest trading partner in 1991 was another cause of India’s
economic crisis (Nagaraj 1997). Similarly, there were demands from inter-
national lenders such as the international monetary fund (IMF) to deregu-
late and liberalise India’s economy in order to avoid a debt crisis and
maintain economic stability (Basu 1993). In addition, weak economic poli-
cies by earlier governments whereby expenditures exceeded revenue leading
to high fiscal deficits and heavy borrowing by the government were also
responsible for the economic crisis (Nayar 1998). The economic reforms
brought about by the government were, thus, a reaction of these pressures to
bring about change in the national policies. Moreover, these incremental
changes in the policies were adaptive to the pressures of India’s deteriorating
economic situation as well as the dictates of international lenders.
The congruence model outlines eight steps while analyzing organisa-
tional problems. Table 1 lists the eight steps and then analyses them in the
context of the changes.

Step 1 Identification of symptoms of problem existence


Step 2 Specification of the key elements of the organisation – environment,
resources and strategy
Step 3 Identification of outputs – the desired and the actual
Step 4 Classification of the problems, that is, the gap between the desired and
the actual outputs
Step 5 Describe the organisational components by collecting data on the
four components
Step 6 Evaluation of the congruence between the various components
Step 7 Identify the key factors requiring attention by linking the congruence
analysis to the problem identified
Step 8 Identification of action steps that might remove or reduce the problem

Table 1. Eight steps of Nadler–Tushman’s congruence model.

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5.1. Application of the congruence model to the


Indian economic change process
In the context of the changes brought about by the economic reforms in
India, the eight steps would be as follows. The symptoms that suggested
that there existed a problem in the Indian economy are a balance of pay-
ments problem, high fiscal deficits and high inflation. The inputs for the
transition are the policies that were formulated to bail the country out of
severe economic crisis. These policies were in response to external pressures
as well as internal efforts at stabilising the economy. The intended outputs
of the change efforts were to improve India’s economic stand in the inter-
national arena as well as to make India a more deregulated and globalised
economy. The problems or the gaps between the intended and actual
outputs are deficiencies in the policies implemented by the previous govern-
ments. Being a democracy, the new policies related to changes in the eco-
nomic system need to be dictated by consensus. In addition, the government
initiating the changes was a minority government which was subject to
coalition politics as well as the demands of the opposition parties.
The next sections would discuss in detail steps 5 through 8, that is, the
organisational components, the congruence between them, and identify
actionable steps.

5.2. The organisational components in the change process


Following is a brief description of the four important organisational com-
ponents involved in the change process.
Task – the task or the specific work activities in the change process
involved formulating economic policies that would initiate and sustain the
changes.
Informal organisation – this includes the implicit, unstated values, beliefs
and behaviours of the organisation. India being a socialist democratic
republic, its policies, ideals and values were dictated by social concerns,
namely, those which benefited the whole society. However, with globalisa-
tion and reforms in countries such as China as well as radical changes in
erstwhile communist nations and the break-up of the Soviet Union, India
had to change its socialist values for a market-oriented, capitalist approach.
Formal organisational arrangements – the policies that were imple-
mented were recommended by a high-powered committee comprising of
the Tax Reform Committee, the Committee on the Financial System and
the Insurance Reform Committee. Other key groups such as political
parties, organised labour groups, and the public – the middle class in
particular – were also included in order to build consensus on the changes
(Nayar 1998).
Individual – this level consists of the knowledge, skills, needs and expec-
tations of the organisations undergoing the change. The change efforts
initiated by the Indian government became more definite with the
appointment of Dr. Manmohan Singh, a renowned scholar in economics
and a proponent of open markets as India’s Finance Minister. Dr. Singh

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had the necessary knowledge, skills and experience in liberal economic


policies, and was instrumental in framing the changes that led to replac-
ing of the previous economic policies with policies characterised by
medium levels of protection and regulation.
In the next section, the fit between these four organisational compo-
nents is studied.

5.3. Assessing congruence or consistency between the


organisational components
There needs to be consistency between the four components involved in the
change process, namely, task, informal organisation, formal organisational
arrangements, and the individual in order for the change to be effective. As
discussed earlier, the specific task to bring about change involved framing
new market oriented and investor friendly policies that were very different
from the policies implemented by previous governments. In fact, the social-
ist values that guided the country’s policies since independence from British
rule were somewhat given up in order to avoid a huge public debt and an
impending economic crisis. Moreover, the new policies were framed after
much discussions and deliberations with key stakeholder groups such as
political organisations, organised labour groups, committees set up for dif-
ferent areas, interest groups, industrialists, as well as the general public.
The change would not have been effective if it had not been for the appoint-
ment of a skilled Finance Minister whose knowledge in the field of deregu-
lation, delimitation and open market systems assisted in the framing of
policies that propelled India into the forefront among the developing
nations. Thus, the four components are consistent with each other and this
explains why the changes initiated by the Indian government were effective
in boosting the country’s economic health.
In the event of inconsistencies between the components, Nadler and
Tushman (1988) suggested an identification of the key factors needing
attention and identifying actionable steps that would reduce or remove the
problem as mentioned in steps seven and eight of the congruence model. In
this analysis, the four components were consistent with the change and the
need for identifying key factors and solutions do not arise. The changes in
the Indian economic system is also consistent with the stage-based theory
developed by Rogers (1983) to explain how new ideas or initiatives are dis-
seminated and adopted by the society. The five stages identified by Rogers in
the diffusion process of a new initiative are knowledge, persuasion, decision,
implementation and confirmation. Roger’s argument was that dissemination
of ideas is high when the perceived superiority of the initiative is high com-
pared with the existing practice as well as when the initiative’s perceived
compatibility with the existing social system is high. In the Indian context,
the new economic policies were successfully implemented because the per-
ceived success rate of the new policies in stabilising the economy was very
high. Also, economic changes in the communist countries and China also
changed the mindset of the Indian people regarding market oriented policies.

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6. Findings and conclusions


The application of the Congruence model to the Indian economic policy
changes implemented in the early 1990s shows that the changes were
well planned in terms of a gradual and piecemeal implementation that
replaced high levels of economic protection and regulation by medium
protection and regulation. This strategy of gradual implementation was
followed because the change leaders had to build consensus among the
key stakeholders and groups as the policies were implemented. These poli-
cies were also designed to gradually transform India from a highly insu-
lated economy to one that is more integrated with the world economy. The
cautious and gradual approach was undertaken by the change leaders in
order to avoid repeating the failed economic reform efforts of previous
Indian governments. Earlier attempts at reforming the economic policies
were unilateral approaches that did not include consensus building or
research. As a result, those reforms failed.
The model explains that the change efforts were consistent with the
final output or goal of the government. The eight-step analysis found that
the context of the organisation that defined the strategy to be used fits well
with the four important components involved in the change process.
Because of this consistency, the output or the goal – to achieve economic
stability and improve India’s economic standing in the world economy – of
the change leaders was achieved. Moreover, because the change process
was gradual, there was adequate room for feedback among the various
stages of change. This ensured adaptation and modification of the policies
based on the prevailing political and economic conditions. The findings
also suggested that the information on the change process was available to
all stakeholders and these stakeholders were involved in the decision-
making process. Thus, this model applies well to the changes in the Indian
economy as the change managers planned well in implementing the
changes. The congruence between the different organisational compo-
nents reduced the need for examining the changes based on steps 7 and 8
of the model. This is because in step 7, those organisational components
are identified that have some problems and do not fit with the other com-
ponents. The problems can pose a hindrance in the achievement of the
change outcome. In step 8, actions are taken to remove or reduce this
problem and bring about coherency between the components. Because of
the congruency between the various components such as task, formal
organisation, informal organisation and the individual in the Indian eco-
nomic policy changes, the need for steps 7 and 8 do not arise.
The congruence model, however, does not mention any resistances to
change. Resistances are deeply embedded in change efforts and could be in
the form of both active and passive resistances. The resistances that cropped
up in the Indian economic reforms in the form of opposition from other
political parties to implement new policies were also managed by the able
leadership of the change leader and the bureaucrats assisting in the tran-
sition. In addition, the economic situation during that period necessitated

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such a change in policies and as such, the reforms were contextual to a


certain extent as well. Although Gardner (2006), as mentioned earlier,
stated that change is possible when resistances are relatively weak to other
factors, changes were implemented and effective to a large extent despite
strong resistances from various quarters. Public sector managers resisted
because they did not want to give up the old management techniques,
control and power. Similarly, organised labour groups resisted changes in
fear of losing employment but they were taken into confidence during the
change process thereby minimising opposing pressures. Since 2006,
however, the Indian government has stalled the privatisation of public
sector industries because of the resistances from within the ruling political
party and their communist allies.
By applying the Congruence model of change to the Indian economic
reforms, this article examined the economic change process in the frame-
work of the model as well as evaluated the model’s applicability. The find-
ings showed that as per the model, the various elements involved in the
change process in the Indian change scenario were consistent with each
other. The main drawback of the model is that it did not recommend any
action strategies to manage resistances to change. This becomes starker
with the stalling of the privatisation efforts in recent years due to political
pressures, which have created a barrier for the country’s effort to imple-
ment market-oriented practices. These are resistances that can be miti-
gated through proper discussions and negotiation. Moreover, welfare
policies for employees displaced or losing employment would also help in
reducing the resistances.
On the other hand, the congruence model when applied to the complex
change process of a nation’s policies is useful in that it shows the need for
fit between the elements as well as flexibility to deal with changing condi-
tions in a globalised environment. This model can serve as a template for
future economic transitions of nations and can provide change agents
with a framework for formulating and implementing the change plan. It can
also be used to evaluate any large-scale changes post-implementation as the
organisational components and the continuous feedback can be used to
measure the effectiveness of the change process. Thus, this model can be
used in the beginning as well as after the changes have been implemented
and can guide change managers to better manage the transition phase and
thereafter. Needless to say that in order to maintain sustainable success in
a fast-changing world, change managers should possess capabilities to
face any competition or threat proactively or reactively by framing policies,
that fits any situation.

7. Research implications
The analysis of the Indian economic reforms suggests that the components
involved in the transformation process were consistent with each other as
per the congruence model. However, this model might not be able to
explain all aspects of such a large-scale change that involves the economy

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and future of a whole nation. This is because the model leaves out an
important aspect of any transformation, that is, resistance from those
affected by the change. On the other hand, the model provides a holistic
view as it encompasses the various elements of the organisation.
Diagnostic models of change management assist in explaining how the
change process works out. Congruence model is one such explicit model
that tries to link the causal relationship of any change. Yet, the question
arises regarding the necessity or usefulness of models to explain organisa-
tional change. According to Burke (2002), as cited in Palmer, Dunford and
Akin (2006: 108–109), organisational change models help in reducing
complex situations into more manageable categories and also identify the
activities that needs the most attention. The models also bring out the inter-
connectedness of the elements and processes which highlights the sequence
of events that were involved in the change process. Although application
of these models to nations and economic transformations is not common,
these models can be useful to analyse changes in the national context. Such
application can provide insight to the change processes from the planning
stage so that the complex processes are categorised into more manageable
units. Further, this can also help in extending and modifying the model by
evaluating its applicability in all aspects of large-scale transitions.
This article provides a gateway for future research on economic transi-
tions of nations by applying change management tools and models. Future
studies would assist in proving a change model’s applicability and validity
as well as evaluate its usefulness and shortcomings in different organisa-
tional environments. This could assist in modifying and refining the
change models in order to enhance their characteristics.

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Suggested citation
Bezboruah, K. (2008), ‘Applying the congruence model of organisational change in
explaining the change in the Indian economic policies’, Journal of Organisational
Transformation and Social Change 5: 2, pp. 129–140, doi: 10.1386/jots.5.2.129/1

Contributor details
Karabi C. Bezboruah is a doctoral candidate in the Public Affairs programme at the
School of Economic, Political and Policy Sciences, University of Texas at Dallas. She
also teaches courses in Public Administration such as bureaucracy and nonprofit
organisations at the University of Texas at Dallas. Her interests include organisa-
tional change and behaviour, corporate philanthropy, nonprofit management and
emotional intelligence. Contact: Karabi C. Bezboruah, EPPS – Public Affairs, Mail
Station WT 17, University of Texas at Dallas, 2601 N. Floyd Rd., Richardson, TX
75080, USA.
E-mail: kcb051000@utdallas.edu

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Journal of Organisational Transformation and Social Change Volume 5 Number 2


© 2008 Intellect Ltd
Article. English language. doi: 10.1386/jots.5.2.141/1

Job motivation and self-confidence for


learning and development as predictors
of support for change
Chaiporn Vithessonthi Mahasarakham University
Markus Schwaninger University of St. Gallen

Abstract Keywords
For the most part, studies on change management have attempted to determine change management
the factors that influence employee resistance to change. The focus of the present downsizing
study is to test whether job motivation and self-confidence for learning and devel- job motivation
opment influence employee support for downsizing. Data were gathered from a learning
sample of 86 teachers at one private school in Bangkok, Thailand. The analysis support for change
was carried out using multinomial ordered probit regression. The results suggest
that the level of job motivation is negatively associated with the level of support
for change, and that the level of self-confidence for learning and development is not
associated with the level of support for change. These results are counterintuitive,
and they refute our initial hypotheses.

1. Introduction
Greater competition, rapid technological and social changes in an emerg-
ing market economy have made efficiency improvement a crucial manage-
rial challenge for firms to remain competitive in the marketplace. However,
authors on organisational change have pointed out that managerial
choices may be influenced by pressures from employees and institutional
inertia (e.g., Barnett and Carroll 1995). Firms with poor performance tend
to be shrinking; downsizing is then either a consequence of poor perfor-
mance or one of to the options for improving performance. According to
resource-based and dynamic capabilities views, it is essential for a firm to
actively manage internal resources in order to sustain competitive advan-
tages over time (Teece, Pisano and Shuen 1997). A key issue with respect
to the management of firm performance is the use of downsizing. In a narrow
view, downsizing has been defined as the planned reduction in a firm’s
personnel intended to improve the efficiency and effectiveness of a firm
(Alien et al. 1995; Cascio 1993; Freeman and Cameron 1993; Wayhan and
Werner 2000); in a broader perspective, downsizing has been defined as a
reduction in the use of a firm’s resources to improve its performance

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(DeWitt 1998). DeWitt (1998) argues ideas that downsizing is a restruc-


turing process, entailing three resource reduction choices: retrenchment,
downscaling and down scoping. In this article, we refer to all the three
kinds of downsizing.
It has been argued that the main benefits of downsizing are efficiency
improvement and increased profitability. A firm that better manages its
human resources so that firm-specific capabilities are created is more
likely to stay competitive in the marketplace (Wright, Dunford and Snell
2001). Nevertheless, downsizing can be viewed as a breach of the psycho-
logical contract between a firm and its employees, leading to a reduction
in trust in management (Mishra and Spreitzer 1998). Empirical research
has found mixed results concerning the effect of downsizings on efficiency
and profitability (Cascio 1993; McKinley, Sanchez and Schick 1995). One
plausible explanation for this may be the influences of employees in
the aftermath of downsizings. That is, a firm’s downsizing success is
contingent upon the attitude of employees towards change initiatives.
In change management literature, employee resistance to change has been
cited as the main factor derailing change initiatives (Regar et al. 1994;
Kotter 1995).
Although downsizing destroys the existing social networks in a firm, it
also creates a new social network that may provide new opportunities
for employees who have survived (Shah 2000). Accurate knowledge of
employee reaction to change is clearly essential to the selection and imple-
mentation of strategies by the firms, and employees are key firm assets,
making downsizing strategies crucial. This raises important questions.
What factors influence the extent to which employees support organisa-
tional change? The purpose of this study is to enhance our understanding
of employee reaction to downsizing initiatives in the context of an emerg-
ing market economy where economic growth has rapidly changed the
competition landscape for local firms.
This study addresses a question that is crucial for firms pursing strate-
gic change. It focuses on the key factors that can explain observed differ-
ences in the level of support for change among the employees that face
downsizing. Given that firms usually attempt to initiate a wide range of
strategic actions, including downsizing, after firm performance has begun
to deteriorate, it is particularly surprising that few studies (e.g., Judson
1991; Kotter 1995) have attempted to explain the differences in the level
of support for change that has been observed among employees. Past
research has placed considerable emphasis on various factors that can
minimise employee resistance to change. Consequently, this article tries
to link observed differences in the levels of support for change among
employees to several factors in addition to change management models.
Several researchers (Dent and Goldberg 1999; Mabin, Forgeson and Green
2001) have begun to place substantial emphasis on various factors
that can influence employee reactions to change that occur in different
contexts. In broad terms, employee reaction to change has been tied to a

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wide range of factors, from prevailing change process conditions to specific


employee perceptions.
Given that importance of these factors, it is not surprising that Kotter
(1995) suggests that managers should attempt to investigate and under-
stand the factors that lie behind observed differences in the levels of resis-
tance to change and support for change in order to have successful change
initiatives. In this article, we therefore attempt to address this important
topic in the context of downsizing in an emerging market economy that
has been largely neglected by past studies. We focus exclusively on a
sample of employees that can be clearly regarded as being in a downsizing
situation in Thailand. We then attempt to examine and explain the differ-
ences among these employees in their support for change in spite of the
firm’s downsizing that might affect their job.
Research suggests that employees develop beliefs about the extent to
which they are motivated to achieve their tasks and assignments (Herzberg
1968). Empirical evidence suggests that job motivation is related to a
variety of work-related attitudes and outcomes (Deery et al. 1995). Two
important issues requiring further attention are the relationship between
job motivation and support for change on the one hand and the factors
influencing the development of job motivation on the other. Likewise,
research suggests that self-efficacy for development and learning influ-
ences one’s performance (Maurer 2001). As such, it is of great interest to
understand the effects of self-confidence for learning and development on
behaviours of employees.
In this study, we propose that job motivation and self-confidence
for learning and development play an important role on an employee’s
support for change. Under circumstances in which a firm’s strategic
choice such as downsizing might significantly affect employees in the firm,
employees’ perceptions are more likely to influence their level of support
for the firm’s decision. Thus, an important research issue deals with the
nature of employees’ perceptions during the downsizing process and how
to enhance the positive effects of such perceptions while reducing the neg-
ative effects of such perceptions. This study attempts to fill a gap in current
research on downsizing and change management by empirically examin-
ing the role of employees’ job motivation and self-confidence for learning
and development in predicting employees’ support for change in the
context of a downsizing endeavour pursued by a large private school in
Thailand. In general, the work pattern in Thailand differs from that found
in North America in that it is shaped by different values. For instance, in
contrast to the United States with their universalism- and individualism-
oriented culture, Thailand’s culture is stamped with enthusiasm for par-
ticularism and communitarianism (Cf. Hofstede, 1992: 54). Thus, these
have implications on how Thai employees view the world and the people
around them. In particular, they will more likely react differently to changes
in the organisation than the Americans. For example, as in many Asian
countries, avoiding confrontation is the norm in Thailand (Cf. Hofstede

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1992: 123f.): Traditionally, Thais seem to find it difficult to accept a direct


negative response or answer. Hence, Thais tend to make excuses rather
than offer a direct negative answer. Consequently, in our survey we have
not used any scales including ‘no’ answers.

2. Literature review and hypotheses


2.1. Job motivation
Job motivation has emerged as one of the most important factors influenc-
ing a variety of work-related variables (Jalajas and Bommer, 1999; Stumpf
and Hartman, 1984). Many studies in the field of change management
suggest that job motivation is positively related to organisational commit-
ment (e.g., Deery et al. 1995; Morrow 1983), work performance (Jalajas
and Bommer 1999), commitment (Jalajas and Bommer 1999; Morrow
1983). In addition, Brockner, Grover, Reed and DeWitt (1992) find that
perceived job enrichment has a positive and significant effect on work
effort. Research on the effect of job motivation on employee absenteeism
suggests that the two variables are negatively correlated (Blau 1986;
Deery et al. 1995).
Recent research in the field of change management has raised interest
in the extent to which employees can be motivated to perform their jobs
and in the way of how firms can motivate employees (e.g., Herzberg 1968;
Kanfer 1990; Vroom, 1964). When employees have high job motivation,
they are likely to show better adaptive responses to any change in the
organisation. Broadly speaking, managers, acting on behalf of the firm,
might make decisions that affect the job motivation of employees (Korsgaard,
Sapienza and Schweiger 2002), which in turn affects their attitudes and
behaviours toward the decisions. If we apply the same basic rationale to
how job motivation would affect absenteeism, organisational commitment
and work effort, it is plausible that job motivation will be able to influence
employees’ support for organisational change pursued by a firm. Now, con-
sider an organisation change from which only benefits to a firm and its
employees will result. All employees must support the change in order for
any of them to derive the benefits. Thus, there is an incentive for employees
to try to support the firm’s implementation of the change in an effort to
reap private benefits. In such a situation, employees are likely to be moti-
vated to support the change. However, employees with higher levels of job
motivation are likely to provide higher levels of support for change.
Studies of job motivation support the notion that motivation is defined
in relation to need strength (e.g., McClelland and Boyatzis 1984; Herzberg
1968). McClelland and Boyatzis (1984) argue that humans are motivated
by need for power, achievement and affiliation. Scholars distinguish two
types of motivation: intrinsic motivation refers to the relationship between
employees and their job itself (Hui and Lee 2000), and is derived from
within the individuals or from the activity related to the job itself (Sansone
and Harackiewicz 2000); and extrinsic motivation applies to the relation-
ship between individuals and externally administered rewards such as pay

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(Komaki, 1982). Hackman and Oldham, (1976) suggest that key character-
istics that induce intrinsic motivation include task variety, task significance,
task identity, and task feedback. Guerrero and Barraud-Didier (2004)
suggest that job motivation can result in the high involvement in the
company that will increase effectiveness and productivity. However, age
can account for the degree of job motivation. In this respect, Kanfer and
Ackerman (2004) argue that the attractiveness of higher levels of effort is
a negative function of age, because the perceived utility of effort is expected
to decline with age.
Empirically, Stumpf and Hartman (1984) find that work motivation
has improved perceived work performance, and has lowered the intention
to quit. Recently, Halbesleben and Bowler (2007) find that work motiva-
tion (e.g., achieving striving motivation, status striving motivation and
communion striving motivation) mediates the relationship between emo-
tional exhaustion and job performance in the sample of professional fire-
fighters. It is logical to argue that the more job motivation a person has,
the greater his/her effort to adapt to organisational change, and the
greater her support for change. Employees are likely to ascertain that their
job motivation and work effort are aligned; the alignment process might
have some implications for their decision. For example, if employees have
low job motivation, it should be relatively more difficult to increase their
support for change and build trust between managers and employees in
the context of downsizing. On the other hand, employees with high job
motivation are more likely to be adaptive to and support downsizing, other
things being equal. In sum, we hypothesise that:

H1: Higher levels of job motivation are positively associated with support for
change.

2.2. Self-confidence for learning and development


Human resource management research has long included ideas that relate
employees’ self-confidence in their ability to learning and development on the
one hand to work performance on the other. Research into self-confidence
for learning and development suggests that humans have different beliefs
about the factors responsible for what happens to them. Individuals with
an internal locus of control consider what happens to them as determined
by factors under their control; on the other hand, individuals with an
external locus of control consider what happens to them as determined by
factor outside their control (Elangovan and Xie, 1999). Self-confidence for
learning and development continues to receive increasing research inter-
est, possibly due to its importance for employees’ work performance. It is
however an under-researched topic, particularly when it comes to the role
that self-confidence for learning and development plays in employees’
reaction to organisational change.
In the literature, self-confidence is also known as self-efficacy (Maurer
2001). There has been a growing awareness in the organisational psychology

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literature that self-efficacy is a key determinant of individuals’ intention


and choice to pursue an activity (e.g., Bandura 1977). For instance,
empirical research examining the roles of entrepreneurial self-efficacy
suggests that there is a positive relationship between entrepreneurial self-
efficacy and entrepreneurial intentions (Zhao, Seibert, and Hills 2005).
Self-efficacy has been defined as beliefs or perceptions that one possesses
the ability to complete a certain task (Foley, Kidder, and Powell 2002). In
addition, Bandura (1997) suggests the notion that self-efficacy has three
levels: (1) task specific self-efficacy; (2) domain self-efficacy; and (3) general
self-efficacy. This categorisation however is not helpful in the context of
our article which aims to explain differences in the level of support for
organisational change.
In the literature we have found a distinction, which relates closer to the
intention of our study: self-efficacy for development and learning and self-
efficacy for performance (e.g., Maurer 2001). According to Maurer (2001),
self-efficacy for development and learning refers to one’s (self-)confidence
in developing skills and learning new things, whereas self-efficacy for per-
formance refers to one’s confidence in performing a task for which one
already possesses the skills required to perform it. We shall concentrate on
the learning of new skills or advanced levels of currently possessed skills,
which is crucial for competence development. One can argue that self-
confidence is conceptualised as a more global variable, whereas self-efficacy
is usually conceptualised as a more local variable, implying that it is a dif-
ferent construct. In this respect, we do not argue for the equivalence of the
two constructs, per se, rather we suggest that when we have focused on
one facet of self-confidence, that is, self-confidence for learning and devel-
opment, the differences between self-confidence for learning and develop-
ment and self-efficacy for development and learning to become smaller.
That is, self-confidence has now been conceptualised at a more local level.
Whether employees exploit potential career development is likely to
depend initially on the degree to which employees believe that they possess
the ability to develop skills and knowledge required to perform new tasks.
Therefore, employees’ self-confidence for learning and development may
be an important determinant of work performance in a new work setting
where a new set of skills and knowledge might be needed. In the context of
organisational change where employees are likely to have perceptions of
job uncertainty, employees’ self-confidence for learning and development
may influence employees’ reaction to change.
We hypothesise that employees with high levels of self-confidence for
learning and development tend to feel more comfortable with organisa-
tional change than those with low levels of self-confidence for learning
and development. Because employees’ self-confidence for learning and
development is likely to influence the degree to which employees actually
learn and develop, low levels of self-confidence for learning and develop-
ment may cause employees to be afraid of potential failures to perform in a
new work environment, because of their limited capability to learn new

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knowledge and/or develop new skills. Therefore, it is unlikely that they will
support the change. On the other hand, employees with high levels of self-
confidence for learning and development tend to consider learning new
skills resulting from organisational change as achievable. In this view,
they may see the change as an opportunity to improve their career
prospects rather than a threat, leading them to support the change. Based
on this argumentation we present the following hypothesis.

H2: An employee’s self-confidence for learning and development will be positively


(negatively) related to support for change.

3. Methodology
3.1 Data collection and sample
The setting for this study was a private school in Thailand employing 108
full-time teachers at the time of the survey in 2004. Declining numbers of
enrolled (both new and current) students over past few years (e.g., from
approximately 200 new students per year in 1990 to around 100 new
students per year in 2004) had caused the management team to make
multiple efforts to improve the school’s efficiency and profitability. However,
the numbers of enrolled students still continued to decline each year, pres-
surising the management team to engage in workforce reductions. The
downsizing programme was initially aimed to lay off approximately ten
teachers by the start of the next academic year (i.e., 2005–2006) so as to
improve the student/teacher ratio and cash flows. Teachers were informed
about the downsizing decision in August 2004. At the time of the survey
(during the first two weeks of September 2004), teachers did not know the
full details of the downsizing programme (e.g., the involuntary nature of
the workforce reductions programme).
A multiple-item survey in Thai was administered during working
hours to a random sample of 100 employees at the school. The original
questionnaire written in English was translated into the Thai language
by one of the authors. In order to determine the clarity and the readability
of the original questionnaire written in the Thai language, three other
Thais had reviewed and revised the questionnaire. Then, a professional
Thai–English translator back-translated the questionnaire into the English
and the authors examined each item for translation error. The inspection
did not find any instances where an item’s meaning had significantly
changed because of the translation. Survey instructions stressed that it
was a survey about the planned downsizing of the school and the partici-
pation in this survey was voluntary and confidential. Ninety-one question-
naires were returned, presenting a response rate of 91 per cent. Of these,
three questionnaires were excluded from the analysis because of those
respondents who did not complete the main part of the questionnaires.
The final sample comprised 88 cases.
According to the Office of the Primary Education Committee, Ministry
of Education (Thai Ministry of Education, 2006), the number of primary

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1 Factor analysis has and secondary public school teachers in Bangkok for the academic year
not been chosen 2006–2007 was 12,682 teachers, 77 per cent of which held a bachelor’s
because interval data
were not assumed. degree or an equivalent. Nonetheless, there was no information on the dis-
The use of ordinal tribution of the teachers by gender and tenure. The structure of the
data in factor analysis
may substantially sample was representative of both the population of the 108 teachers at
alter the underlying this school and the population of school teachers in Bangkok and
metric scaling
(Kim and Mueller, Thailand, at least with regard to the distribution of the school teachers by
1978). In addition, educational background. Eighty per cent of the sample had a bachelor’s
a three-point scale is
likely to result in the
degree or an equivalent, mean age ⫽ 44.1 years, mean position tenure ⫽
departure from the 14.8 years, mean organisational tenure ⫽ 17.8 years. In comparison with
normal distribution other schools in Bangkok on the basis of the number of teachers, the
assumption.
sample school can be considered as a large school.
Listwise deletion of missing values of the remaining sample reduced the
sample size to 86 respondents (for further data analysis with two control
variables: education and gender). It should be noted that the data used in
this article were part of a larger survey that included 22 variables mea-
sured by 66 questionnaire items. It was a trade-off between the number of
variables studied and the comprehensiveness of variable measurement in
the above-mentioned survey; thus, only three items were used to measure
each variable to increase the response rate. The focus of this article is on
job motivation and self-confidence for learning and development because
both variables seem to be closely related in terms of conceptual construct,
and thus should be discussed together in this article. Other variables under
study (e.g., perceived change in status, commitment, perceived organisa-
tional support, power, pride as a consequence of change, etc.) will be dis-
cussed in more details in our other papers. An overview of the survey
items is given in the Appendix.

3.2 Measures
Unlike other studies that treated the ordinal data as the matrix data and
employed a factor analysis, this study examined whether the indicators for
each variable were internally consistent, that is whether it was possible to
reduce the number of indicators, with the following procedures, for the
use of the multinomial ordered probit model.1 We averaged across the
original indicators to form an average indicator, plotted the average indi-
cator along with the original indicators in a graph, and examined the
pattern of directions of the indicators. Using this procedure, it could be
observed whether the indicators for each variable followed the same
pattern of directions or not. In addition to applying the graphical analyses,
we also examined the Spearman correlation coefficient.
Support for change was measured using a three-item scale. Because
there is no consensus on a definition of support for change, three newly
developed items were used to measure the degree of behaviours that were
conceived of representing employees’ support for change. The three items
were similar in spirit to those used by Bovey and Hede (2001). These items
were measured using a five-point scale ranging from 1 (strongly disagree)

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to 5 (strongly agree). Following the procedure, the measure of support for


change included two items (Cronbach’s alpha ⫽ 0.70).
Job motivation was measured using a three-item measure adopted
from those used by Hui and Lee (2000). Respondents were asked to indi-
cate the degree to which they agreed with these items using a five-point
scale ranging from 1 (strongly disagree) to 5 (strongly agree). All three items
were transformed to be used for the measure of job motivation (Cronbach’s
alpha ⫽ 0.81).
Self-confidence for learning and development was measured using a
three-item measure. One item was adopted from a study by Maurer et al.
(2003) reflecting employees’ perceptions of their capability to learn new
knowledge and develop new skills. Respondents indicated the degree to
which they agreed with these items using a five-point scale ranging from
1 (strongly disagree) to 5 (strongly agree). Following the procedure, the
measure of self-confidence for learning and development included all three
items (Cronbach’s alpha ⫽ 0.83).
To control differences in education across teachers in the sample, the
education variable, a categorical variable, was used to represent education
and coded as follows: ‘0 (a degree below a bachelor level)’; ‘1 (a degree
equivalent to a bachelor level)’; and ‘2 (a degree equivalent to a master
level)’. To control differences in gender, the gender variable was included
and coded as follows: ‘0 (male)’ and ‘1 (female)’.

3.3 Multinomial ordered probit model


Because of the ordinal nature of the dependent variables, we therefore
employed the multinomial ordered probit regression models to test the
hypothesised relationships. In comparison with the ordinary regression
model, the multinomial ordered probit model would be more appropriate as
an analytical tool for estimation in this study because (1) the existence of a
ranking of levels of a variable is taken into account, (2) it assumes that the dif-
ferences between any two adjacent levels of a variable need not be the same
and are unknown, and (3) it does not assume the independence of irrelevant
alternative property (Alvarez and Nagler, 1998). The maximum likelihood
function using the command PLUM (Polytomous Universal Model procedure)
with a probit link function, in the SPSS package version 13 (see Borooah,
2002), was used to estimate parameters. It is noteworthy that the small
sample size and number of parameters estimated can impose a potential esti-
mation problem for the full model. This will be discussed in the next section.

4. Results
Because the sample size was relatively small and might cause the estima-
tion problem for the multinomial ordered probit regressions, measurement
scales for dependent variables and independent variables were recorded
(i.e., the original scales ‘1’ and ‘2’ were recoded as ‘1’; the original scales
‘3’ was recoded as ‘2’; and the original scales ‘4’ and ‘5’ were recoded as
‘3’) to alleviate the estimation problem before the multinomial ordered

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Mean S.D. 1 2 3 4 5
1. Support for change 2.16 0.81 .70
2. Job motivation 2.66 0.63 .26* .81
3. Self-confidence for learning 2.50 0.66 .21* .38** .83
and development
4. Education 0.94 0.44 .12 .05 .15 -
5. Gender 0.74 0.44 .11 .06 ⫺.09 ⫺.19 -
Notes: N ⫽ 86. Correlations typed in bold are significant at the 0.01 level or the 0.05 level
(2-tailed).
*p ⬍ .05, **p ⬍ .01. Scale reliabilities (Cronbach’s alpha) are shown along the diagonal.

Table 1: Descriptive statistics and Spearman correlation coefficients for the


study variables.

probit regression was computed. Table 1 presents the results of the descrip-
tive statistics, Spearman correlation coefficients and scale reliabilities
(Cronbach’s alpha) of the study variables. Respondents reported a mean
support for change of 2.16 (SD ⫽ 0.81), indicating support for change to
be relative prevalent in the school. Support for change was related to all
variables under study (with the exception of the education and gender vari-
ables) and showed the positive correlation with job motivation (r ⫽ 0.26,
p ⬍ 0.05) and the positive correlation with self-confidence for careering-
relevant learning and competence development (r ⫽ 0.21, p ⬍ 0.05).
The results of the multinomial ordered probit models are presented in
Table 2. Model 1 (Table 2) is a baseline model containing control variables.
It shows that education and gender have statistically significant coeffi-
cients suggesting that teachers with higher education and female teachers
are likely to have lower levels of support for change when the organisa-
tions announce downsizing. Models 2 and 3 individually add the variable
of interest to test the hypotheses. Model 4 is a full model that includes all
the variables of the study to check for robustness of the results.
Model 2 provides results that test Hypothesis 1, which proposes that
job motivation would be positively associated with support for change. In
Model 2, the coefficients for job motivation are however negative and sta-
tistically significant. These results provide no support for Hypothesis 1,
suggesting that teachers with high levels of job motivation are less likely to
support the change. Model 3 provides results that test Hypothesis 2, which
proposes that self-confidence would be positively related to support for
change. In Model 3, self-confidence for learning and development are neg-
atively and partially predictive of support for change, suggesting that
higher levels of self-confidence for learning and development increase the
likelihood of having lower levels of support for change. Thus, Hypothesis 2
receives no support.
The results of Models 2 and 3 are contradictory to those of the results
of Spearman correlations. That is, on the basis of the correlation coefficients,
support for change was positively and significantly correlated with job

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Model 1 Model 2 Model 3 Model 4


Dependent Variable Level 1 Estimate ⫺2.350** ⫺2.717** ⫺2.553**
⫺2.789**
Threshold S.E. 0.682 0.720 0.685
0.725
Level 2 Estimate ⫺1.441* ⫺1.754* ⫺1.606*
⫺1.814**
S.E. 0.665 0.700 0.665
0.703
Education Level 0 Estimate ⫺1.550* ⫺1.603* ⫺1.450*
⫺1.568*
S.E. 0.735 0.756 0.735
0.762
Level 1 Estimate ⫺1.635* ⫺1.806** ⫺1.624*
⫺1.790
S.E. 0.662 0.691 0.663
0.698
Gender Level 0 Estimate ⫺0.534† ⫺0.488 ⫺0.613*
⫺0.537
S.E. 0.297 0.303 0.304
0.309
Job motivation Level 1 Estimate ⫺0.818† ⫺0.541
S.E. 0.480 0.534
Level 2 Estimate ⫺0.668* ⫺0.604
S.E. 0.336 0.345
Self-confidence for Level 1 Estimate ⫺0.829† ⫺0.555
learning and S.E. 0.455 0.512
development Level 2 Estimate ⫺0.307 ⫺0.159
S.E. 0.276 0.286
␹2 8.771* 15.078* 12.700* 16.335*
Notes: N ⫽ 86. Parameters for variables’ highest level are set to zero because they are
redundant. Coefficients typed in bold are significant at the 0.01 level, the 0.05 level,
or the 0.10 level.

p ⬍ .10, *p ⬍ .05, **p ⬍ .01.

Table 2: Regression results of support for change.

motivation and self-confidence for learning and development. However, the


correlation coefficients of 0.26 and 0.21 can be considered to be of statis-
tical significance but of less economical significance. On the other hand,
the results of Models 2 and 3 suggest that job motivation and self-confidence
for change are negatively predictive of support for change. It can be seen
that the results of Models 2 and 3 were only partially and statistically sig-
nificant; that is, the coefficients for job motivation were significant at the
0.05 level and the 0.10 level. Hence, one can argue that the relationship
between job motivation and support for change is not statistically signifi-
cant at the traditional level of 0.05. Similarly, the relationship between
support for change and self-confidence for learning and development was
not significant at the traditional level.
Finally, examination of Model 4 suggests that the results are mixed.
With all variables entered into the model, all but coefficients for control
variables that were statistically significant in the earlier model become sig-
nificant in the full model, suggesting that taken together, job motivation
and self-confidence for learning and development are not predictive of
support for change. A plausible explanation for these results is that the
small sample size led to an estimation problem for the full model with the
large number of parameters being estimated. In this case, the relatively
clear results of Models 1, 2 and 3 overrule the results of Model 4.

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5. Discussion and conclusion


Both hypotheses are therewith provisionally refuted, which is surprising in
the light of the assumptions made at the outset. The aim of this article is to
relate an employee’s job motivation and self-confidence for learning and
development to the employee’s support for organisational change. At the
most basic levels, the findings in respect of job motivation extend current
research on the importance of developing job motivation by linking
employees’ job motivation to the aim of a firm’s downsizing endeavours:
support for change in order to improve the efficiency and profitability of
the firm. In doing so, we support Stumpf and Hartmann’s (1984) sugges-
tion that work motivation is the driver of work performance. Firms invest
in human resource system with the hope that this investment will trans-
late into higher levels of job motivation, more advantageous human capi-
tals, and thus better work performance. In the context of downsizing, firms
would expect to receive support for change from employees with high
levels of job motivation. The negative and significant impact of job motiva-
tion in Model 2 suggest that this does not indeed occur. Rather than being
supportive of change in the context of downsizing, we found that job moti-
vation had a negative effect on teachers’ support for change. The results
are inconsistent with other studies (e.g., Narayan et al. 2007). Narayan
et al. (2007) find that people who were motivated to learn demonstrated
higher levels of readiness to change in a United States sample of 127
driving under influence offenders. The findings suggest that employees
with high levels of job motivation do in practice provide relatively low
levels of support for change, at least when they are confronted with down-
sizing. One plausible explanation for this effect is that one may be afraid of
being seen as providing support for a plan that will result in a potential
layoff of his/her colleagues and that one may be indeed required to provide
moral support to those who will be affected by the downsizing by means of
providing no support to the downsizing. From these data one might con-
clude that the human resource system, which had increased job motiva-
tion of the employees, had failed in that it had not been able to generate
the employees’ support for the downsizing.
The findings pertaining to self-confidence for learning and develop-
ment suggest that this may not help a firm with its downsizing. That is,
employees with self-confidence for learning and development tend to
provide low levels of support for change when a firm introduces downsiz-
ing. The results suggest that a somewhat complex process governs the
relationship between self-confidence for learning and development and a
variety of variables that represent employees’ behaviour. When employees
have self-confidence for learning and development, this facilitates their
actual learning and development in response to the requirement of new
work demand. This benefits the firm. However, when a firm introduces
organisational change (e.g., downsizing) to improve firm performance,
employees with high self-confidence are unlikely to provide support for
change.

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The results suggest that it will be easier to realise a downsizing


programme, if the workforce consists of employees with low levels of self-
confidence for learning and development. One may conjecture that this
level of self-confidence will lead to a more effective change programme,
with improvements of the organisation’s efficiency and profit. Even though
such an assumption would require additional empirical evidence, one can
cogently assume that employee support – ceteris paribus – leads to downsiz-
ing success.
The different characteristics of employees required in different contexts
are problematic for firms. On the one hand, one may argue that employees
with self-confidence for learning and development are strategic assets that
potentially help a firm sustain competitive advantage over time (Wright
et al. 2001), because these employees are more likely to be capable of sig-
nificantly improving work performance and adapting to new job require-
ments. On the other hand, based on the findings of this study, employees
with high self-confidence for learning and development are less likely to
provide support for change; thus, a firm that introduces downsizing is less
likely to receive employee support for change, reducing the probability of
downsizing success. Taken together, the results about education and self-
confidence for learning and development results suggest that when a firm
initiates changes in the organisation, it should expect that employees with
high education and self-confidence for learning and development tend to
provide low levels of support. One plausible explanation for the results is
that teachers with high education and self-confidence for learning and
development hold beliefs that there are other existing job opportunities
available to them outside the organisation; thus, they might see no incen-
tives to support downsizing pursued by the school.
A number of limitations to this study require attention. First, as discussed
earlier, the small sample size led to an estimation problem for the full model,
thereby making coefficients for explanatory variables in the full model
insignificant. Second, self-reported data in this study made it difficult to sep-
arate method variance from true score variance. It is possible that method
variance bolstered or weakened the magnitude of relationships between pre-
dictors and outcomes. To reduce the possibility of mono-method bias, future
studies should aim to incorporate other methods than relying on subjects’
self-reports. For instance, future research should assess the extent to which
direct observation of employees can be used to measure the employees’ job
motivation and support for change. Last but not least, this study is exclu-
sively based on cross-sectional data; hence, the causal inferences regarding
predictor/outcome relationships could not be determined. Longitudinal
designs in future studies would enable true causal inferences.
This said, there is much more work to be done. An obvious extension of
this line of research would be to compare data from this study with data
from other downsizing plans and organisational contexts. For example, we
would hypothesise that job motivation would decrease resistance to a
downsizing. The logic is that an employee may be morally obliged to not

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support the downsizing that will negatively affect his or her colleagues. As
suggested before, future research should look more closely at the dynamic
interplay between job motivation and self-confidence for learning and
development in order to tease out more subtle effects on the development
of human resource potential. More specifically, job motivation and self-
confidence for learning and development not only improve work perfor-
mance but also decrease support for change. Are there differences in the
effects of job motivation on support for change in the context of asset
expansion versus downsizing programmes? At the same time, it should be
examined whether the different types of data analysis methods signifi-
cantly influence the outcomes of the study. This is particularly important
because scholars in management studies tend to adopt the ordinary
regression analysis in their study of dependent variables that are measured
on ordinal scale. McKelvey and Zavoina (1975), for example, suggest that
using regression models that do not appropriately account for the nature
of ordinal data may provide misleading results. Therefore, we might want
to revisit our analysis in order to examine the extent to which employees’
job motivation and self-confidence in learning and development are likely
to have negative effects on employees’ attitudes and behaviours in other
contexts. Finally, longer-term implications of job motivation and self-
confidence for learning and development should be studied. This should be
set alongside further work on the processes that create employees’ job
motivation and self-confidence for learning and development. This should
lead to a more comprehensive account of the processes that govern
employee reaction to a variety of organisational initiatives.

Appendix: Questionnaire survey items


Support for change
1. I agree with the organization’s decision to make this change.
2. This change is acceptable to me.
3. I certainly comply with this change.
Job motivation
1. I take pride in doing my job as well as I can.
2. I try to think of ways of doing my job effectively.
3. I feel a sense of personal satisfaction when I do my job well.
Self-confidence for learning and development
1. I am very confident at learning and developing new skills relevant to my job.
2. I know I am very capable of keeping up with new techniques and knowledge
required for my job.
3. I can develop my career-relevant skills.

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Suggested citation
Vithessonthi, C., & Schwaninger, M. (2008), ‘Job motivation and self-confidence for
learning and development as predictors of support for change’, Journal of
Organisational Transformation and Social Change 5: 2, pp. 141–157, doi: 10.1386/
jots.5.2.141/1

Contributor details
Chaiporn Vithessonthi is a visiting lecturer in the Faculty of Accountancy and
Management at Mahasarakham University. He received his doctorate degree from
the University of St. Gallen, Switzerland. His research interests include interna-
tional management, corporate finance and competitive strategy. Contact: Chaiporn
Vithessonthi, Faculty of Accountancy and Management, Mahasarakham University,
Kantarawichai, Mahasarakham 44150, Thailand.
E-mail: chaiporn.vithessonthi@gmx.ch
Markus Schwaninger is a Professor of Management at the University of St. Gallen,
Switzerland. His research focuses on issues of general management, namely strat-
egy and organisational transformation. Methodologically, his works are oriented
towards innovative approaches to dealing with complexity. Contact: Markus
Schwaninger, Institute of Management, University of St. Gallen, Dufourstrasse
40a, CH-9000 St Gallen, Switzerland.
E-mail: markus.schwaninger@unisg.ch

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Journal of Organisational Transformation and Social Change Volume 5 Number 2


© 2008 Intellect Ltd
Article. English language. doi: 10.1386/jots.5.2.159/1

E-mail at work: A cause for concern? The


implications of the new communication
technologies for health, wellbeing and
productivity at work*
Howard Taylor Buckinghamshire New University
George Fieldman Buckinghamshire New University
Yochanan Altman London Metropolitan University

Abstract Keywords
With the rapid and decisive impact electronic communication has had on our lives e-mail
in general, and the work place in particular, notably e-mail as the preferred com- electronic
munication medium, this literature review paper examines the available evidence communication
of its potential negative effects. Even though the benefits of e-mail communication well being
for individuals and organisations are well noted, it is argued that the particular stress
characteristics of electronic mail and communication may have an adverse impact productivity
upon well-being, stress and productivity. E-mail may act as a stress conduit but is
also in itself a potential stressor. It may impair productivity too due to its com-
munication characteristics, affecting key operational aspects such a decision
making and team cohesion; it may escalate disputes, facilitate harassment and
encourage litigation. We present a framework delineating antecedents and poten-
tial personal and organisational outcomes and conclude with an outline agenda
for further research as a first step in developing strategies to overcome e-mail’s
potential negative consequences.

1. Introduction
In all areas of work and work-related domains, electronic-mail has become * At Thomas Edison’s
the primary source of communication in the workplace (APS 2003) with Ontario home, the
birthplace of the
98% of ‘business-to-business’ communication worldwide employing it telephone, there is a
(Business Communicator 2004). E-mail is also rapidly becoming the pre- small plaque depicting
instructions to the
ferred medium of personal to organisational communication, evidenced by users of the then new
the steep rise in personal computers and home-based Internet communi- medium: how to
speak, at what voice
cation (Levitt and Mahowald 2003; Rosenberg 2003). However, it seems level and intonation,
that the move to this new era of communication is driven more by the at what distance from
the receiver, key
immediate, practical advantages, and the availability of the technology, phrases, etc. At the
rather than a rational assessment of its advantages and disadvantages. time these made a
The use of e-mail and electronic messaging is the biggest change in the necessary manual;

OTASC 5 (2) 159–173 © Intellect Ltd 2008 159


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nowadays, one reads medium of communication since the introduction of the telephone, which
the notes with a wry became an integral part of the development of the modern business era of
smile: surely everyone
knows what one can the last century. It is likely that communication in the new millennium
and can’t do with a will present new concerns and challenges.
telephone? As we are
at the onset of a world The apparent advantages in using e-mail as the preferred medium of
e-mail dominated communicating, as well as other forms of electronic messaging (mobile
epoch, we likewise
could do with some phone texts, Internet chat rooms), have opened up immense opportunities
user instructions, for work-related communication and derived efficiencies. The technology
deployment
conventions, and best
is easy to use and cost-effective, facilitating networking and access (Garton
practice. That may be and Wellman 1995), as is indeed manifested in it being so readily, rapidly
no mean task. and universally embraced in a wide range of occupations and services. For
example, in the legal profession, Horton Flaherty (2001) discloses that
attorneys are now negotiating, advising, exchanging documents and
responding to clients via e-mail. In the medical profession Neville (2004)
reported a major impact of e-mail on doctor-patient relations. E-mail com-
munication now dominates such diverse areas as after sales service and
local government – resident contacts (Riquelme 2004). E-mail is even
being used in psychotherapy (McDaniel 2003) and counselling (Nakada
and Masayuki 2000) – a traditional domain of face-to-face interaction.
Indeed, The transfer from a manufacturing-based economy to a
service-based economy, and more recently to a knowledge-based economy
(OECD, 1996), may have stirred a fundamental and irreversible shift in the
nature of workplace communications (Castells 2001). Improved commu-
nication technology means, for example, that it is now much easier to
work in a location that is physically detached from other workers for long
periods (as well as in multi locations) and still be a formal member of a sin-
gular team (Arnold et al., 2005). This change in working practice as a
consequence of advances in technology has added to the discourse on
work-related stress an important new interface: that of work and home life
(e.g. Sutherland and Cooper 2000). But are these changes all positive?
Now that e-mail use has become so ubiquitous, perhaps it is time to begin
to ask questions about the possible disadvantages and perhaps even nega-
tive consequences for this form of communication. In line with Hart and
Cooper (2001) who argue that viewing any work experience as either
stress-positive or stress-negative is too simplistic, we believe the time has
come to question e-mail, not discounting its considerable advantages, as to
its potentiality as a source of stress in the work context, as well as assess its
possible negative effect on related productivity.
The aim of this article therefore is to highlight areas of concern that
have emerged and examine the divergent positions voiced as evidenced in
the extant literature, concerning the impact of computer-mediated com-
munication (CMC) in the form of e-mail. We will outline the impact that
e-mail is having on people at work, especially in the areas of wellbeing and
health, on the one hand, and for productivity and efficiency, on the other.
The literature was derived from a comprehensive search of manage-
ment psychology databases, for example, Psychinfo (covers 1,900 journals

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in 35 languages), and ABI/Inform/Proquest (articles from business and


management journals, trade and industry publications, and UK newspa-
pers). Searches were made covering the period 1974 to January 2005,
using the following key-word combinations: (1) electronic mail systems
and communication (2) computer-mediated communication and stress (3)
electronic communication and health. The papers, books, book chapters
and articles were finally selected based on their abstracts. The search
revealed a bias in favour of a focus on productivity rather than health in
relation to electronic communication. For example, a search of Psychinfo
produced 104 hits relating to electronic communication and productivity
as against 21 hits for electronic communication and stress. Altogether we
review here 73 papers, books, book chapters and articles, which specifi-
cally addressed the topic.

2. Workplace stress and communication


With workplace stress reaching epidemic proportions (Cooper and Clarke
2003), and the ever-increasing compensation costs of stress-related work-
place injury (Griffin 2004), the study of stress at work has become of
major interest to scholars and practitioners alike.
In a review of studies looking at the characteristics of companies with the
highest number of stress-related compensation claims compared with those
with the lowest number of claims, Moran, Wolff and Green (1995) showed
that the worst organisations had at least ten times as many claims as the
best in each industry. More importantly, they showed that workers’ compen-
sation costs and associated occupational stress could be managed through
employer-driven initiatives. They also claim that, even though some of the
causes were external to the employer, the most important factor was the
organisation itself and its management practices. Communication and social
relationships may be a major factor in stress at work.
A number of attempts to categorise potential sources of job stress have
been made. Sutherland and Cooper (2000) for example suggest six cate-
gories: the job itself, role, relationships at work, career stress, organisational
climate, and home and work interface. Most, if not all, categorisations of the
potential sources of stress recognise social relationships and, incorporated
in them, communication at work as important relevant factors (Cooper
and Marshall 1978; HSE 2004; Le Blanc, Jonge and Schaufeli 2000;
Sutherland and Cooper 2000).
In Johnson and Hall’s (1988) demand-control-support model, social
support is assumed to be a critical factor, acting as a buffer to stress.
Relationships with superiors, colleagues and subordinates can thus act to
reduce job stress: the model emphasises the positive aspects of social rela-
tions. One wonders though whether this is a wholly adequate conceptual-
isation of the role of social relations. Some doubt was cast on the buffer
effects of social support on stress (Cohen and Wills 1985); and the major
changes we currently evidence in the nature of work and careers raise this
question too (Guest and Conway 2002).

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3. E-mail as an inbuilt work stressor


Romm and Pliskin (1999) present the features of e-mail that may have
particular implications for stress in a work setting. They are:

• Speed. Messages transmitted by e-mail can reach their destination in a


very short time, regardless of whether the message is being sent to the
office next door or to someone on the other side of the globe.
• Multiple addressability. The capacity to send an e-mail message simulta-
neously to a large group of people.
• Recordability. The capacity to store e-mail messages indefinitely, auto-
matically. This feature allows a database of messages to develop. Some
of the messages may have no significance at the time but may later be
used as evidence, in a dispute for example.
• Processing. This allows a message to be altered by a recipient before for-
warding it on to other recipients. Information can be added, removed
or emphasised.
• Routing. Defined as the capacity of senders to transmit messages to
groups of addressees whose names may or may not appear as recipi-
ents. This function allows the sender to alter the names of the recipi-
ents in a group, resulting in individuals who think they are being sent
the same message as others, actually receiving slightly (but signifi-
cantly) different messages. This feature also allows messages to be
passed on to individuals who the original sender had not intended the
message to get to.

3.1. Work overload


A common complaint of e-mail users is its impact on their workload.
A large survey by the Australian Psychological Society (APS 2003)
found that 80 per cent of workers spent more than 20 per cent of
their day dealing with e-mails. Most of those surveyed said they dealt
with between twenty and fifty work-related e-mails a day; although
receiving one hundred e-mails a day is not uncommon (Horton Flaherty
2001). Most (69%) found having to deal with their daily intake of e-mail
mildly or moderately stressful; and those who sought psychological
help about workplace stress identified e-mails as part of that stress
(APS 2003).
In that context it may be worthwhile to note that Karasek and
Theorell’s (1990) influential model puts job strain as a consequence of two
factors: job demand and job decision latitude (control). Thus job strain is
conceived not only as a consequence of job demand but also dependents
on the degree of control a worker can exercise. Jobs that are high in
demand but also high in job decision latitude would not necessarily
produce strain. This could help in understanding the stress caused by
having to deal with large numbers of e-mails. The problem may result not
only from the volume of e-mails received but also from the inability to
control e-mail traffic as well.

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4. The potential of e-mail to disturb social relationships at work


E-mail may contribute to workplace stress in a number of different ways.
The new technology has exacerbated some problems that already existed,
such as work overload (see above). However, some of the unique features of
e-mail also influence communication in a manner that may contribute to
stress in new ways. These are listed below.

4.1. Electronic mail communication may make it more


difficult to understand and respond to a message
A survey of 26,000 e-mail users showed that 52 per cent of respondents
struggled to interpret personal e-mails (Yahoo 2003). The findings identi-
fied a new cyber disorder: PPMT (pre and post mail tension) relating to
anticipated and sent mail. Schwartz (2003) also identified potential e-mail
misunderstanding as a source of interpersonal difficulties.
In a work setting, inherently stressful communications may inevitably
occur from time to time (for example, instructions to workers to achieve
certain targets or goals). E-mail may seem an attractive means to carrying
out such communications. This is because the sender of such communica-
tion can eschew or postpone having to deal with any objections, or
adverse reactions of the recipient. However, top-down imposition of goals
has been shown to be stress inducing and Quick et al. (1981, 1997)
showed that stress could be reduced by the use of goal-setting only when a
participatory and interactive relationship existed between supervisor and
individual, more so perhaps in a virtual work environment, where little
face-to-face communication is possible.

4.2. Electronic mail communication may encourage an


inhospitable working environment
Social support is a means of enhancing an individual’s capacity to deal
with stress at work by increasing their perception that they are cared for
and loved, that they are held in some esteem and valued, and belong to a
social framework (Quick et al. 1997). The ‘isolationist’ property of e-mail
communications thus involves a potential health risk, since isolation is a
risk factor for both mortality and morbidity (Borkovec 2005; House,
Landis and Umberson 1988).
The monitoring of work-based e-mail is apparently not uncommon
(Hacker et al. 1998). In a case study, Romm and Pliskin (1999) showed
how e-mail could be employed to manage people through surveillance and
tight control of movements by requiring them to report regularly on their
whereabouts and deeds. However, efficiency gains were achieved at a cost
of increased stress and general discontent. In customer service work envi-
ronments it would be easy to monitor performance through surveillance
of e-mail communication. Thus, for instance, in private banking, service
providers are required to respond to customers’ communications within
two hours of receipt of e-mail, their response speed (and response con-
tents) being open to scrutiny of their superiors (Altman 2005).

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Sutherland and Cooper (1988) showed that inconsiderate behaviour,


close supervision, and rigid performance monitoring by supervisors con-
tributed significantly to feelings of job pressure. Negative health effects of poor
superior–subordinate relationships reported in the literature include: hyper-
tension (Kahn et al. 1972), coronary heart disease (Haynes and Feinleib
1980), diastolic blood pressure (Mathews et al. 1987; Wager, Fieldman and
Hussey 2003) and a higher risk of psychiatric disorder (Stansfield, Head and
Marmot 2000). Concern about the effects of inconsiderate behaviour led
Taylor, Fieldman, and Lahlou (2005) to examine the effect that a single
e-mail communication might have on a recipient’s physiological response. In
a controlled experiment they showed that blood pressure was higher when an
e-mail recipient was reading a threateningly worded reprimand than when
they were reading a nonthreateningly worded reprimand.
E-mail may become an instrument for harassment and bullying too;
Baruch (2004) brought convincing evidence of widespread e-mail bullying
in one large organisation. E-mail bullying was associated with anxiety and
intent to leave, and negatively associated with job satisfaction and perfor-
mance. Finally, e-mail communication has been shown to escalate disputes.
In a comparative study, Friedman and Currall (2003) demonstrated how
the structural properties of e-mail (textual, electronic and asynchronous)
make it more likely that disputes would escalate when people communicate
electronically than when they communicate face-to-face or via the tele-
phone. By asynchronous, they mean that the communicators are not co-
present, but rather they can read and respond whenever they desire. The
result is not a conversation but a series of one-directional comments.

5. E-mail’s potential negative impact on productivity


Perhaps because of the self-evident productivity advantages of communi-
cating via e-mail: speed, immediacy, accessibility and cost, there is little
research about its potential drawbacks. The evidence that does exist – for
the period preceding the e-mail revolution – suggests that electronic com-
munication has its disadvantages too. A number of studies have shown
that groups that interact via electronic media take longer to complete
tasks than groups interacting face-to-face (Kiesler et al. 1985; Weisband
1992). Straus and McGrath (1994) found some advantages to interaction
via electronic media (as compared to face-to-face interaction) in the gener-
ation of ideas and creativity; but maintain that computer-mediated com-
munication was particularly inappropriate for a judgement task where
participants had to determine disciplinary action.
Other studies showed that computer-mediated interaction reduces par-
alinguistic and social context cues and prevents the full exchange of views
and feedback available in face-to-face interaction (McGuire, Kiesler and
Siegel 1987; Sproull and Kiesler 1986). These studies also found that the
number, length, complexity and novelty of arguments are much reduced
in computer-mediated groups compared with face-to-face groups.
Computer-mediated discussions tend to consist of simple statements of

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position rather than real argumentation. The limitations associated with


computer-mediated interaction (restricted ability to exchange verbal and
paralinguistic information or to provide dynamic feedback and convey
social context cues) tend to discourage the exchange of arguments. Work
on group decision-making has shown that some of the least desirable
aspects of group behaviour, such as ‘groupthink’ and group polarisation
occur when argumentation is absent. There would appear to be a strong
case for arguing that important decisions should not be made via e-mail.
Research has also shown that computer-mediation reduces perceived
hierarchy in team communication (Kiesler and Sproull 1992, Straus
1996), and may lead to the establishment of alternative hierarchies in elec-
tronic environments (Gatzenbrucker 2004). However, electronic communi-
cation also reduces the context and milieu of other team members,
conveyed through non-verbal and paraverbal nuances, present in face-to-
face communication (Argyle et al. 1970; Bordia 1997; Thompson and
Coovert 2002). The effect of this may be demonstrated in the area of nego-
tiations (Poole, Shannon and DeSanctis 1992). E-mail is increasingly
replacing face-to-face and telephone communication (Seaberry 2000);
however, we know little of how e-mail and face-to-face negotiations differ
(Morris et al. 2002) and the evidence is inconclusive. One study (Purdy,
Nye and Balakrishnan 1997) found an advantage for e-mail, another study
showed e-mail to be disadvantageous (Arunachalam and Dilla 1995), and
at least two studies found no significant difference between e-mail and face-
to-face negotiations (Barsness and Tenbrunsel 1998; Croson 1999).
These mixed findings suggest that e-mail negotiations may differ with
context, sector and organisation. Morris et al. (2002) claimed that e-mail
negotiations suffered from low levels of rapport. They proposed that a com-
bination of personal contact (via telephone) and e-mail interaction might
be more effective. As a more socially constrained medium of communica-
tion (Chaiken and Eagly 1983, Guadagno and Cialdini 2002), e-mail may
require more negotiating than the more traditional modes of communica-
tion. Early studies comparing computer-mediated communication with
face-to-face communication, showed that participants were more likely to
violate social norms of politeness, and preferred to be task focused (Siegal
et al. 1996). Participants interacting face-to-face were found to like their
discussion partners more than those interacting via computer (Kiesler et al.
1985; Weisband and Atwater 1999). Guadagno and Cialdini (2002) also
showed gender differences in the effectiveness of messages in different
modalities. Women in the face-to-face condition reported more agreement
with the message than women in the e-mail condition. There was no signif-
icant difference in agreement for men in the face-to-face and e-mail condi-
tions. The authors suggest this is because women focus more on
relationship formation and co-operation than do men.
One of the advantages of e-mail communication is that it allows mes-
sages to be sent without interrupting the recipient. The ability to contact
people without interrupting them is a feature of e-mail that may have an

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empowering effect for people with a related anxiety. The anxiety may be a
consequence of the communicator having lower status than the recipient
or it may be that the communicator is intimidated by the recipient, or
simply that the communicator is more generally anxious about social
contact. On the other hand, from the early days of experimental psychol-
ogy we know that interruptions may be disruptive to people engaged on a
task. Furthermore, modern broadband ‘always-on’ technology allows per-
sonal computers to check for new e-mail every minute, and the applica-
tion can be set to provide an audible alert upon receipt of a new message.
These innovations provide opportunities for frequent interruptions, which
may be detrimental to work productivity.

6. The potential of e-mail to impact on emotions


Without the additional cues of facial expression, gestures, tone of voice, or
head nods, the feedback that one normally receives when communicating
is lost (Weisband and Atwater 1999). It has been suggested that the use of
emoticons (e.g. happy face, sad face) may aid non-verbal communication.
However, Krohn (2004) has shown that an understanding of such
symbols is not universal, especially among older generations.
According to Nakamura, Buck and Kenny (1990) facial expressions
are key to understanding emotional states, and e-mail is often used to
communicate factual information without addressing any germane emo-
tional issues. However, in circumstances where there is an emotional
element, it has been suggested that electronic communication may exacer-
bate the emotion. For example, Walther (1996) suggests that much per-
sonal information can be conveyed by text, and cites examples of e-mail
romances, on-line social support communities, and virtual weddings.
The use of electronic communication in developing social support net-
works is one of the fastest growing and interesting areas of social change.
The recent development of on-line groups providing support in areas
ranging from on-line dating to ‘whistle blowing’ on organisational practices,
demonstrate the potential of the worldwide web for social empowerment.
Research on social support (e.g. Tardy 1992; Searle, Bright and Bochner
2001) makes a distinction between informational support (solutions to tech-
nical problems, practical advice) and emotional support (improving one’s
sense of self worth). There is evidence to show that both of these elements
are present in on-line support networks. Davidson, Pennebacker and
Dickerson (2000) provide examples of the importance of informational
support in on-line illness support groups. However, Preece (1999) points out
that people using such on-line support groups are often looking for more
than just factual information. When people are suffering from a problem it is
vital to be able to communicate with others who understand the problem.
On-line support groups provide people with the opportunity to empathise or
identify with each other (an important component of psychotherapy).
However, in a work setting the lack of cues may lead to an intensifying
of emotions in an entirely different and more negative way. Friedman and
Currall (2003) propose that diminished feedback will result in weakened
166 Howard Taylor, George Fieldman and Yochanan Altman
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Negative personal and


E-mail characteristics Anticipated impact organisational consequences

Speed and convenience Increased number of messages Work overload, errors


and increased expectation of
response speed
Recordability Increased control potential Resentment, reduced autonomy
Multiple addressability, Communication manipulation Potential harassment; possible
processing, routing litigation
Lack of social cues (facial Weakened interpersonal, bonds; More misunderstandings, lower
expression, feedback) lowered commitment decision quality, context;
escalation of disputes
Lack of conversational Focus of attention on internal Greater susceptibility to negative
cues (turn-taking, colour, (negative) states affect (mood) and negative
clarification, tone) evaluations

Table 1. E-mail characteristics and their negative effects on personal and organisational outcomes.

interpersonal bonds that in turn may act as a trigger for conflict escalation.
According to Kiesler and Sproull (1992), when disagreements occur elec-
tronically, social behaviours such as politeness and acknowledgement of
the other’s perspective decrease and participants engage in deeper conflict.
One of the key features that comprise the stress response is the con-
comitant emotional reaction. To understand the impact of e-mail on stress
at work, we need to understand how e-mail affects the communication of
emotion. Acceptance theory (Hayes 1987; Hayes, Strosahl and Wilson
1999) may provide a useful framework for understanding how emotions
are affected by electronic mail. Psychological acceptance refers to a will-
ingness to experience feelings, especially negative feelings such as fear,
without having to avoid them or let them determine one’s actions. Bond
and Bunce (2003) have shown that acceptance predicts levels of mental
health. The lack of conversational communication embedded in e-mail
communication may hinder the effective processing of negative feelings
and consequently increase stress.
Summary model: e-mail, stress and productivity outcomes.
The model shown in Table 1 summarises the relationships proposed in
the literature between particular e-mail characteristics, the changes in the
work setting that these characteristics produce, and subsequent poten-
tially negative personal and organisational outcomes.

7. What we need to know about e-mail’s impact in the workplace


The rapid development of electronic technology and its deployment has led
to an understandable lag in the body of research examining its character-
istics, usage and impact. We propose a number of areas of particular
promise for further research.
Much of the evidence to date concentrates on e-mail as a communica-
tion tool, but we need to know a great deal more. To help organisations in
formulating policies regarding organisational use of e-mail, further evi-
dence is needed to demonstrate how communication practices interact
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with the features of e-mail to produce outcomes such as work overload


and lack of control. We need to know what communication compositions
will yield the best communication results in a collegial work environment.
At the micro (individual) level, of high relevance are the effects of specific
words, phrases and tonal signifiers such as font, message structure and
emphasis (Boje, Oswick and Ford 2004). We need to know, firstly, whether
and how such message characteristics affect the message recipient.
Secondly, we need to know how these relate to important organisational
outcome variables of employee well-being, health and productivity, as well
as mediating variables, such as interpersonal trust.
Morris et al.’s (2002) study of e-mail negotiations is an example of how
research findings could be used to improve the outcomes of e-mail-based
communication. The study examines the process of negotiating deals and
interpersonal disputes via e-mail. Overcoming obstacles such as initial
mistrust and interpersonal friction is achieved through a series of, largely
automatic, verbal and non-verbal behaviours. E-mail inhibits the process
of exchanging personal information through which negotiators establish
rapport. The results showed that the liabilities of e-mail communications
could be minimised by a brief, pre-negotiation, personal telephone call.
At the organisational level, we need to discover how organisations with
different communication styles, and different levels of trust and reciproc-
ity, differ on outcome variables relating to productivity and well-being. It is
possible that records of e-mail messages could be used by organisations to
develop communication policies. Such policies may help organisations to
change and develop into more effective and, dare we say, more humane
workplaces by changing the corporate and personal communication styles
of their managers and workers.
And while there is some evidence on the communicative effects of e-
mail, we know next to nothing on its organising qualities (Weick 1995) in
a work context. What are e-mail’s effects on work processes, structures,
power distribution, relationships, motivation, commitment, organisational
citizenship behaviour, to mention but a few. At the meta organisational
level we may want to find out how organisational clusters (sectors, indus-
tries) differ in their ‘e-mail behaviour’ and how, in turn, this shapes dis-
tinctive organisational cultures.
As Sutherland and Cooper (2000) point out, interpersonal skills train-
ing is usually a key issue in leadership training programs. It may now be
time to include e-mail communication skills as a key part of the interper-
sonal skills training for all managers and assess its impact on developing a
constructive e-mail culture at the workplace.
Finally, its potential to facilitate industrial democracy may be a liberat-
ing quality of electronic communications. Its effect in facilitating political
democracy is well recognised (Smith 2004; Holmes and Grieco 2002).
Realising the full potential of electronic communication in the workplace
may add an important course to organisational citizenship. We would
benefit from longitudinal studies of e-mail communication policies and ‘best
practice’ case studies. However, as studies on e-democracy have shown,
168 Howard Taylor, George Fieldman and Yochanan Altman
OTSC_5-2-05-Altman 5/31/08 10:20 AM Page 169

there are potential dangers in opening up policy making to the will of the
majority – we may not like the direction the majority want to take.

Acknowledgement
We gratefully acknowledge the help of Frank Bournois, Jacques Rojot and two
anonymous reviewers. All the authors contributed equally to this work.

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Suggested citation
Taylor, H., Fieldman, G., & Altman, Y. (2008), ‘E-mail at work: A cause for
concern? The implications of the new communication technologies for health,
wellbeing and productivity at work’, Journal of Organisational Transformation and
Social Change 5: 2, pp. 159–173, doi: 10.1386/jots.5.2.159/1

Contributor details
Yochanan Altman is Research Professor of International HRM and Comparative
Management at London Metropolitan University and Visiting Professor of International
HRM with CIFFOP, University of Paris (Panthéon-Assas). Educated in occupational
psychology and organisational anthropology he is also a trained psychotherapist.
Yochanan is Founding Editor of the Journal of Management, Spirituality and Religion,
European Editor of the journal Human Resource Planning and past Editor of Journal of
Managerial Psychology. Yochanan’s research interests are in international human
resource management, careers, gender, change management, creativity and organisa-
tional spirituality. Contact: 262 Shakespeare Tower, Barbican, London EC2Y 8DR, UK.
E-mail: y_altman@hotmail.com
Dr. George Fieldman is Principal Lecturer in Psychology at Buckinghamshire New
University. He obtained his BSc and PhD degrees from King’s College London. His
research interests are in Health and Evolutionary Psychology. He has various
entries on BBC News online regarding his own research and invited commentary
upon the research of others. He is a qualified Cognitive Behavioural Psychotherapist
in practice in London. Contact: Buckinghamshire New University is High
Wycombe, HP11 2JZ, UK.
E-mail: gf@george-fieldman.co.uk
Howard Taylor’s PhD research is titled ‘The effects of communication style on task
performance and well being’. Howard is a Senior Lecturer in Psychology at
Buckinghamshire New University. He has presented papers relating to the negative
effects of certain communication styles and is involved in ongoing research
into effective communications, especially electronic communication. Contact:
Buckinghamshire New University, High Wycombe, HP11 2JZ, UK.
E-mail: howard.taylor1@virgin.net

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Journal of Organisational Transformation and Social Change Volume 5 Number 2


© 2008 Intellect Ltd
Article. English language. doi: 10.1386/jots.5.2.175/1

Communication and information


exchange among SMEs and their local
environment
Viveca Asproth Mid Sweden University
Christina Amcoff Nyström Mid Sweden University

Abstract Keywords
In this article the results from a Swedish pilot study in the project ‘Arena for Sus- communication
tainable Innovative Development of small and medium-sized enterprises’ is pre- SME
sented. The project in a whole aims to create and test a model for collaboration and collaboration
sustainable development among small- and medium-sized enterprises (SMEs) in information exchange
local areas. The research question in this article is delimited to issues concerning ICT
use of ICT, information exchange and communication among the interested
parties. The pilot study was accomplished in a qualitative and explorative way
with semi-structured interviews. As a result of the study some questions are iden-
tified as urgent to further investigate.

1. Introduction
Collaboration between different kinds of organisations such as companies is
resulting in a range of important outcomes for the collaborating parts.
Collaboration not only transfers existing knowledge among organisations but
also facilitates the creation of new knowledge and produce synergistic solu-
tions. Organisations can also achieve a more central and influential position
in relation to other organisations through the collaboration (Hardy et al.
2003). To achieve the positive effects with collaboration, communication and
information exchange between the organisations must be efficient. Much of
today’s communication and information exchange between organisations are
often sporadic and isolated. Virtual teams can bridge the inter-organisational
boundaries and provide a considerable competitive advantage (Lipnack and
Stamps 1997; Townsend et al. 1998). The term Virtual team can be used for
teams that are separated in time and/or in space and teams bridging organi-
sational boarders (Watson-Manheim, Chudoba and Crowston 2002).
According to Zakaria, Amelinckx and Wilemon (2004), the human
challenges of virtual teams are:

• Creating effective team leadership


• Managing conflict and global virtual teams dynamics

OTASC 5 (2) 175–189 © Intellect Ltd 2008 175


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• Developing trust and relationships


• Understanding cross-cultural differences
• Developing intercultural communication competence

Handy (1995), Maznevski and Choduba (2000) and Crossman and


Lee-Kelley (2004), among others, claim that ‘trust needs touch’ at least in
the initial stage. Crossman and Lee-Kelley (2004) conclude that low com-
mitment from the individual leads to low trust and that team effectiveness
is inhibited, yet organisational efficacy in dispersed teams requires high
mutual commitment and high trust. They also conclude that trust takes
time to develop.
Holmqvist (2003) and Rashman and Hartley (2002), recommend
organisational learning as a tool to, in the first place, not only develop an
intercultural communication competence but also as a complement to
learn more about each other.
The use of organisational learning within an organisation can, when
used in an appropriate way, be successful. The question is how to transfer
the concept to inter-organisations. There might be competitiveness and
conflicting interest that put hindrance in the way (Asproth 2006).
To increase the possibilities for fruitful collaboration between Swedish
small- and medium-sized enterprises (SMEs) in geographically delimited
locations in a peripheral region, a research project has been initiated.
Swedish SMEs represents a mix of very small enterprises and there are few
examples of research projects focusing on this kind of enterprises and the
problems they are facing. Swedish SMEs in this context might well repre-
sent SMEs in general. The overall research project (in Swedish the ‘Arena
project’) is in an initial phase and a pilot study has been carried through.
The connection between the ‘Arena project’, the pilot study and this part
presentation is presented in figure 1 below.
The background and interested parties are presented in the next
section.

1.1. The project


This section presents the project ‘Arena for Sustainable Innovative
Development of Small and Medium-sized Enterprises’ which the results in
this article are a part of. These results are also a base for further research
in the area.
The research project ‘Arena for Sustainable Innovative Development of
Small and Medium-sized Enterprises’ is a co-operation between Mid Sweden
University, the county administrative board, and the local authority of the
city of Östersund. The project aims to create and test a model for collabo-
ration and sustainable development among small and medium sized com-
panies in local areas. In the project, two industrial areas, Odenskog and
Lugnvik, are taking part. A third constellation of companies working with
vehicles, vehicle technical centre (VTC) is also incorporated in the project.
VTC is a co-operation of interested parties with their background in either

176 Viveca Asproth and Christina Amcoff Nyström


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Figure 1: The connection between the aim of the different parts – the overall
research project – ARENA – the Pilot project and the part study.

military vehicle education or civil enterprises with connection to vehicles.


The area of Odenskog is characterised by increasing heterogeneity among
the enterprises and trading. The interested group, representing most of the
enterprises in the area, wishes to remove the label as a ‘traditional indus-
trial estate’ in favour of trading and visiting customers. This is to some
extent in conflict with the existing city planning due to limited permis-
sions to establish new kinds of trades. The first enterprises in the other dis-
trict – Lugnvik – moved from Odenskog in the 1970s, and were earlier
characterised as enterprises demanding large spaces such as hauliers,
scrap yards for old cars, and localities for building materials. The district
today has problems with respect to lack of uniform displaying and prob-
lems for customers to find in the area. The interested group in the area
runs a project with the aim to clean up the area and produce uniform dis-
plays and enterprise signs. Many of the enterprises in the three studied
clusters are in some kind of an organisational transformation phase,
trying to increase their competitiveness.
According to the Statistics, Sweden, a small enterprise is an enterprise
with 10–49 employees. The European commission defines small and
middle sized enterprises as companies with a range of 10–250 employees.
In the studied areas almost every enterprise falls under the definition of
the Statistics Sweden and certainly within the European commission.
There are also quite a few companies that have less than ten employees,
the so-called micro companies.

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1 The concept ICT is The overall aim with the ‘Arena project’ (see figure 1) is to create and
an abbreviation for test a model for collaboration and sustainable development among small
Information and
Communications and medium sized companies in local areas.
Technology. The Questions to be answered in the ‘Arena project’ are:
difference from the
concept IT is that
the focus of • What kind of problems and requirements can be found in small enter-
communication has
been highlighted in prises with respect to information exchange and communication with
the first concept others?
whereas it was
implicit in the latter
• Which information is needed to promote active engagement among the
definition. interested parties?
• How does the knowledge creation and exchange work between the
actors?

An initial pilot study, aiming to investigate the necessary conditions for


collaboration between small enterprises, supporting systems run by the
local authorities and higher education, in order to reach sustainable devel-
opment of the trade and industry was carried through. The aim of this
article is to present the results from this initial pilot study limited to the
questions concerning communication and information exchange among
the interested parties.

2. Method
This section presents the used Method in the pilot study.
The method used in the pilot study was qualitative and explorative. The
study was carried through with help of analysis of background information
such as brochures, annual reports and homepages. Opinions and experi-
ences concerning collaboration were collected by semi-structured inter-
views. Fifteen representatives for the trade and industry representing the
three company clusters, representatives for the local authorities and seven
representatives for the University have been interviewed. The participants
from the three company clusters have been selected mainly based on their
representation of not only either enterprises belonging to service sector, pro-
duction or trading but also the fact that they represent different enterprises
sizes. Representatives from the local authorities and the University have been
selected with respect to their experiences with collaboration with SMEs. An
interview guide was constructed. The guide was divided into questions
about collaboration between companies, co-operation with the university
and support from the local authorities and questions about communication
and information exchange. The part of the guide containing questions con-
cerning co-operation with the university was used for the university inter-
views as well as the part of the guide containing questions about support
from the local authorities was used for the local authority interviews.

3. Ongoing research – ICT and small enterprises


This section presents relevant literature and ongoing research in the area
of ICT1 and small enterprises (SMEs). The focus when identifying the

178 Viveca Asproth and Christina Amcoff Nyström


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articles/papers have been on ICT, SMEs, Networks, organisational change,


collaboration, virtual teams and trust.

3.1. Networks and their importance for SMEs


Several researchers conclude that there are great advantages for enter-
prises to cooperate in clusters (Enright 1995; Maillat et al. 1995; Piore
and Sabel 1984; Porter 2001). Accordingly, Carbonara (2005: 213), dis-
cusses the advantages of cooperating in cluster:

Clusters base their competive advantages on two distinctive aspects: the


inter-networking processes and the speed and easy circulation of informa-
tion and knowledge. Hence, a cluster can be seen as an extended enterprise
where the different actors (the cluster firms) are usually specialised in single
manufacturing phases that require intense coordination, flexible relation-
ships and apporpriate supportintg tools to manage the networking activities.

World Wide Web (WWW) offers great opportunities for SMEs to extend
their customer base into the global marketplace (Tetteh and Burn 2001).
However, there is a need to adopt a different approach to strategic plan-
ning and management which can enable an extensive infrastructure
network based on shared resources with other firms. Accordingly, SMEs
could save costs if they share resources with others and carefully analyse
and plan for e-businesses. Internet technology offers general advantages
for businesses to collaborate (Power and Singh 2007).
Organisations using Intranets to support the internal communication
can reach great advantages with the use of this technology because it
supports communication, collaboration and knowledge sharing (e.g. Bank
and Nyström 2005; Nyström 2006b). Well-functioning external commu-
nication demands well-functioning internal communication. The Intranet
can be extended in order to allow special groups – e.g. customers and
suppliers – to share a delimited part of the Intranet. The Intranet is extended
with an Extranet with the main aim to support external communication
with specific stakeholders (Nyström 2006b; Telleen 1999).

3.2. Use of technology demands organisational change in SMEs


SMEs as well as any type of organisation could be analysed from different
points. One way to get a comprehensive view would be to study organisations
as the fusion or synergism of four spheres – Competence or human skills,
Management, Organisation and Technology (Holmberg 2001) (see Figure 2).
Holmberg (2001) argues that the interdependence of the spheres has
been ignored or even omitted in development and maintenance processes
of organisations. The focus is normally only on one sphere at a time.
The adoption of technology in organisations differs. According to
SMEs, recent data on the diffusion and adoption of ICTs show that the ICT
penetration is still quite low among SMEs (Eurostat 2002; IDC 2000;
OECD 1998; Carbonara 2005).

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Figure 2: Synergy-4, adapted from Holmberg (2001).

It is well known that Internet-based technologies and other ICTs offer


great opportunities and advantages for organisations as a foundation for
collaboration – both within the organisations as well as between organisa-
tions. Hence, Power and Singh (2007) among others, conclude that the
application of Internet-based technologies provides significant potential
opportunities for the integration of business processes between firms
(Power and Singh 2007 referring to Cagliano, Caniato and Spina 2003
and Segev, Patankar and Zhao 2003). Benefits based on this integration
could, for example be reducing costs for searching for and accessing infor-
mation (Berthon et al. 2003; Krumwiede, Swain and Stocks 2003), but
limiting factors could also be the increase of information processing and
coordination costs because of the reducing of transaction costs (Kulkarni
and Heriot 1999).
Organisations implementing Internet technology in order to create
more integrated supply chain will probably be confronted with the need for
structural change (e.g. Power and Singh 2007; Reid and Catterall 2005).
This change could mean a need to develop new processes (e.g. Jayaram,
Vickery and Droge 2000; Mitev 1996) or involve new structures, roles and
competencies for the management of such process (Malhotra 2000; Power
2004). This is in line with the Synergy-4 Model by Holmberg (2001).
If new technologies are implemented to support inter-organisational col-
laboration, an analysis concerning the structure of the organisation, the
processes and the management as well as the competence in the organisa-
tion and necessary measures should be carried out (the other spheres in
the Synergy-4 model).
According to Rabinovich, the Internet and the Web may have had the
most profound impact on business integration and collaboration of all
information technologies (Rabinovich, Bailey and Carter 2003). Sanders
defines e-business technologies as the Internet, Web, and web-based
applications (Sanders 2007). Findings show that the use of e-business-
technologies has a positive impact on intra-organisational collaboration

180 Viveca Asproth and Christina Amcoff Nyström


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(collaboration between organisations) as well as inter-organisational col-


laboration (collaboration between two or more departments in an organi-
sation). Furthermore, the existence of inter-organisational collaboration
has also a positive impact on intra-organisational collaboration (ibid). Use
of e-business technologies, inter- and intra-organisational collaboration
has a positive influence on organisational performance (ibid). However,
Sanders points out the fact that collaboration is not synonymous with e-
business technology use which wrongly has been presumed by a lot of
companies. Collaboration, according to Sanders (2007: 12) is:

a result of human interaction which can only be supported by IT, one of


which are e-business technologies, but not replaced.

Companies should therefore consider investing in e-business technologies


in order to promote internal collaboration.
IT can be aggregated into several categories. Barki, Rivard and Talbot
(1993) have divided IT into six categories as follows: transaction process-
ing systems, decision support systems, inter-organisational systems, com-
munication systems, storage and retrieval systems and collaborative work
systems. Another categorisation is provided by Kendall (1997); production
oriented information technologies and coordination oriented information
technologies. Some of these ITs might have more impact on collaboration
and integration than others which future research should consider
(Sanders 2007).

3.3. SMEs and collaboration with the environment –


conditions and obstacles
Vescovi (2000) has identified ‘six natural troubles’ related to SMEs in
introducing e-communication. It should be noticed that these ‘troubles’
not necessarily appear at the same time. The ‘troubles’ are:

(1) Unclear communication strategy


(2) New communication paradigms
(3) Non-integrated marketing communications
(4) Company involvement in the Internet challenge;
(5) People for Internet communication and
(6) Organisational change.

The first ‘trouble’ – unclear communication strategy – could be related to


a waiting attitude to the use of the own Web site where absence of purpose
and strategy are common. According to Vescovi (2000), referring to
Schlosser and Kanfer (2000) and Vescovi (1998), several researchers
pointed out a prevalent attitude of undervaluing the updating and vitalis-
ing problems of the web site. The absence of strategies could also be related
to development of Intranet as a common problem (Bank and Nyström
2005; Nyström 2006a).

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To solve ‘trouble’ number two – new communication paradigms –


diffusion and access to computers and computer competence is needed.
The attendance ‘on the Net’ demands also quick responses because of the
changed expectations (Vescovi 2000). Bank and Nyström did also notice
the problem with poor access to the Intranet caused by limited number of
computers among assistant nurses which caused uninformed employees
(Bank and Nyström 2005).
The presence on the net – trouble number three – demands coordinated
marketing strategies so the Web site shows a uniform view of the company
according to contact information and so on.
The fourth ‘trouble’ – company involvement in the internet challenge –
addresses issues as patience and carefully planning. The result from mar-
keting activities through the Web site does not come immediately. Request
for a strong cultural change, long time needed for the results, and the
investment in continuous updating processes creates quick enthusiasms
and fast disappointments (Vescovi 2000) – ‘trouble’ number five – people
for internet communication.
The focus when developing Web sites has been too much on technical
solutions. Vescovi (2000) argues that marketing competencies must enter
the stage in order to market the companies better.
The last ‘trouble’ – Organisational change – demands that the entire
organisation has competence to use the technology. This is in line with
the idea of Synergy-4 by Holmberg (2001) who argues that change in
the technology demands an overhaul of competence, management and
organisation.
SMEs could increase their level of competence and power of attraction in
several ways. One way is to use ICT in different ways – when collaborating
and so on. Another way is to adopt the idea of Knowledge Management in
a systematic way. Wong and Aspinwall (2005) have in a study, systemati-
cally determined the Critical Success Factors for Knowledge Management
implementation in the SME sector. Their study offers information to SMEs
which, according to the authors, are still lagging far behind when it comes
to Knowledge Management practices.

3.4. Trust as a prerequisite for collaboration


Zaheer, McEvily and Perrone (1988) say – referring to Arrow (1974),
Granovetter (1985) and Macauley (1963) – that several theoretical traditions
have recognised the importance of trust in economic exchange.
To obtain new business opportunities a range of new forms of inter-
organisational collaborations are formed. The important role of trust in
cooperative relationships have for some while been paid attention to as
expressed by Smith, Carroll and Ashford (1995, page 15):

The study of trust and its impact on cooperative relationships at all levels
may be particularly fruitful area of future research.

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The formation of cross-cultural trust includes a reciprocal element and


falls under two behavioural categories. The first is credibility where one
part believes that the other part has capabilities, competence, expertise
and resources to contribute to a successful outcome. The second category
is benevolence, i.e. beliefs about the emotional aspects of the other part’s
behaviour (Johnson and Cullen, 2002).
As mention earlier it is important that group members trust each other
and that they work in a shared context with shared goals. Additionally,
commitment to these goals and the identification with the collective are
important aspects that foster cooperative instead of competitive behaviour
(Coleman 1999; Zand 1997). Handy (1995), Maznevski and Choduba
(2000), and Crossman and Lee-Kelley (2004), among others, claim that
‘trust needs touch’ at least in the initial stage. Crossman and Lee-Kelley
(2004) conclude that low commitment from the individual leads to low
trust and that team effectiveness is inhibited, yet organisational efficacy in
dispersed teams requires high mutual commitment and high trust. They
also conclude that trust takes time to develop.

4. Results of the pilot study


This section presents the results from the pilot study, limited to issues con-
cerning ICT use, collaboration in terms of learning, information exchange,
communication and knowledge sharing.

4.1. The use of websites and intranet


Most of the enterprises websites were mainly used for publishing.
Collaboration and more advanced use modes were only found among enter-
prises belonging to a group of companies. Several web sites were designed
as one-way communication – pushing of information. Some of the intervie-
wees also mentioned the risk with publishing to trivial information on the
Intranet though more important issues disappeared (information overload).
Several interviewees mention the increased importance of updated and
informative websites with respect to new markets in Asia. In general, the
information retrieval from different websites was increasing and the possi-
bility to subscribe for newsletters were used more than before.

4.2. Communication
Personal meetings, cellular phones and e-mail were mentioned as very
important when the interviewees were communicating with external
parties. Communication through e-mail should be preceded by a personal
meeting if the contact would remain and long-term collaboration will be
established. Personal meeting must be effective with a clearly outspoken
purpose, and end with a plain contract. The contract must also contain
questions left to the next meeting, and meetings must be documented.
Contact with customers was experienced as more and more important
and the number of personal contacts increased. Some of the interviewees

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experienced use of e-mail to be problematic with respect to information


overload (spam). Some interviewees used their secretary function as a filter
whereas others did not experience information overload as any problem.
The amounts of undesired information were experienced to increase.
Someone among the interviewees explained the problem with too much
information as a matter of prioritisation: ‘the customers are most impor-
tant, then come the suppliers and last the authorities’. Some sellers in an
enterprise, who worked in the field, had desired more contact and commu-
nication with their other fellow workers. The enterprises had solved this
desire with phone meetings every month which worked well. The enterprises
in VTC communicated primarily by public information meetings and sec-
ondarily by arena meetings/discussion groups. Thirdly, the website was
used for information exchange.

4.3. Information exchange


Everyone thought information exchange to be difficult. There is a lot of
noise. Some enterprises are sending information to their employees in the
pay envelope whereas others use weekly meetings. In the work with infor-
mation exchange, it is important to think about the purpose, costs and
estimated benefit related to the information. Updating information was
among several interviewees experienced as difficult and a problem. Some
enterprises, who worked with projects, used a common database con-
nected to a project management system. This was believed to be a condi-
tion to ensure that everyone had proper information.

4.4. Technology matured enterprises


Some of the enterprises in the study used more advanced technology than
others and were also using the technology in a more advanced mode. These
firms felt it is natural to use online chat functions with web cameras as a
similar communication channel as videoconferences (but simpler and
cheaper). These firms demanded more functions to support online commu-
nication. The Intranet in one of these enterprises was totally integrated
with the enterprise system in the enterprise. Some other interviewees also
mention web meetings where computer and phone are used together. These
communication modes presuppose that the parties know each other before
and personal meetings have already been carried out. ‘There is no problem
with new technology but the maturing should be high’ as someone said.
One of the interviewed enterprises has an operator solution in the form of
‘round robin’ where everyone in the enterprise is connected and the first
unoccupied telephone line (cellular phone) works as an operator.

4.5. Electronically discussion boards and bulletin


board systems
Most of the interviewees had not heard about systems like bulletin board
systems (BBSs) or computer based conference systems. None among the
interviewees were using such systems. Someone mentioned the problem to

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adapt new technology. ICTs are supposed to be effective, but what is effec-
tivity? Quality is not especially effective and vice versa. It is difficult to
measure effectiveness in ICTs.

5. The results related to ongoing research


This section relates the results from the pilot study in section 4 with the
literature and ongoing research presented in section 3.
Some of the factors identified by Wong and Aspinwall (2005) that are
important for SMEs in their work with adopting Knowledge Management
are also present in the results from the study of SMEs presented in this
article. The factors are application of technological tools such as collabo-
rative tools, knowledge bases, etc, utilisation of the intranet or internet
and ease of use of the technology.
Several of the enterprises in the study pointed out the same ‘troubles’
as Vescovi (2000): unclear communication strategy – or lack of, company
involvement in the internet challenge – poor matured websites and no
strategy for how to use the internet in a strategic manner, organisational
change and the increased importance of updated websites.
Adoption and diffusion of technology should also be considered together
with changes in the organisation, updating of competence and procedures
as well as an overhaul of the management of the enterprises (Holmberg,
2001).
Collaboration can be viewed in stages – from simple information exchange
to true collaboration (Sanders, 2007; Sabath and Fonatanela, 2002). Sanders
suggests that future research should consider the relationship between spe-
cific types of IT and their linkage to specific collaboration needs.
The interviewees could see advantages of cooperating in cluster/net-
works (Carbonara, 2005) but problems with contacts and communication
were also mentioned. These problems or hindrances could be related to the
demand for trust and development of relationships formulated/explained
by Zakaria, Amelinckx and Wilemon (2004).
Several interviewees explained the need to meet in person before estab-
lishing contact through e-mail or other electronic communication media.
This is also explained by Handy (1995), Maznevski and Chouduba (2000)
and Crossman and Lee-Kelley (2004) – ‘trust needs touch’ at least in the
initial stage.
Several of the problems occurring in the participating enterprises can
also be found in larger enterprises. Anyhow, we believe that these prob-
lems are more critical in SMEs with respect to the fact that several func-
tions in SMEs might be handled by one or few persons whereas these
functions in larger enterprises probably are handled by an organisational
unit or division. SMEs are more vulnerable.

6. Concluding remarks
Several questions were identified in the study. Some of these questions con-
cerned issues about knowledge management, adoption of ICTs, maturing

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in use of ICTs related to communication modes, and importance of


communication strategies.
There is a gap between enterprises concerning maturing related to the
use of ICT. Technology matured enterprises use the technology in a natural
way and the technology is in some sense experienced as transparent – the
users are focused on the aim with the communication, not the ingoing
units of the technology such as web cameras, microphones, communication
programs, chat functions, and so on.

• How can this natural use of technology be transferred to low-technology


matured enterprises?

Enterprises in the clusters were anxious about the continuity of the


collaboration through projects – as all kinds of projects financed by exter-
nal money – tend to break down when the projects have to survive on
their own.

• How can the continuity and viability in such projects be guaranteed so


they will survive on their own?

Interviewees pointed out the necessity of trust among collaboration parts.


Communication among the participants demands personal meetings before
more advanced communication modes can be used – ‘Trust needs touch’.

• How can communication be facilitated and simplified?

Further research should focus on the questions above and issues concerning
the transformation of organisations/enterprises from one state to another in
order to guarantee viability. A model supporting collaboration among SMEs
with respect to their special problems should therefore be developed.

Acknowledgements
This article is part of the project ‘Arena for Sustainable Innovative Development of
Small and Medium-sized Enterprises’. The authors thank the project leaders and
the interviewees in the participating constellation of SMEs.

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Suggested citation
Asproth, V., & Nyström, C. (2008), ‘Communication and information exchange
among SMEs and their local environment’, Journal of Organisational Transformation
and Social Change 5: 2, pp. 175–189, doi: 10.1386/jots.5.2.175/1

Contributor details
Viveca Asproth is a Professor in Informatics at Mid Sweden University in Öster-
sund, Sweden. She has published papers on visualisation, spatial systems, decision
support, anticipation and fuzzy systems. In her current research, she is focusing on
inter-organisational issues. Contact: Department of Information Technology and
Media, Mid Sweden University, Akademigatan 1, S-831 25 Östersund, Sweden.
E-mail: viveca.asproth@miun.se
Christina Amcoff Nyström is a PhD/Senior lecturer in Informatics at Mid Sweden
University in Östersund, Sweden. Her current research and interests concerns
Intranets and their impact on organisations. Example of sub-questions: power,
empowerment, influence, philosophy of technology and strategies related to
Intranets and organisations. Contact: Department of Information Technology and
Media, Mid Sweden University, Akademigatan 1, S-831 25 Östersund, Sweden.
E-mail: Christina.amcoff@miun.se

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Volume Five Number Two


ISSN 1477-9633

Journal of Organisational Transformation & Social Change | Volume Five Number Two
Organisational Transformation
& Social Change 5.2
Volume 5 Number 2 – 2008

105–107 Editorial
Paul Iles

Articles
Journal of

Organisational
109–127 Gender wage inequality in the transitional Chinese economy: A critical
review of post-reform research
Jie Shen and Xin Deng
129–140 Applying the congruence model of organisational change in explaining

Transformation
the change in the Indian economic policies
Karabi C. Bezboruah
141–157 Job motivation and self-confidence for learning and development
as predictors of support for change

& Social Change


Chaiporn Vithessonthi and Markus Schwaninger
159–173 E-mail at work: A cause for concern? The implications of the new
communication technologies for health, wellbeing and productivity at work
Howard Taylor, George Fieldman and Yochanan Altman
175–189 Communication and information exchange among SMEs and their local
environment
Viveca Asproth and Christina Amcoff Nyström

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ISSN 1477-9633
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