Strategies For Competitiveness.

Strategies for Competitiveness
in a Globalized World
JOSÉ SÁNCHEZ GUTIÉRREZ

JUAN ANTONIO VARGAS BARRAZA
GUILLERMO VÁZQUEZ ÁVILA
JUAN GAYTÁN CORTÉS
(Editors)
Primera edición, 2012
D.R. © 2012, Red Internacional de Investigadores en Competitividad

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ISBN: 978-607-9147-21-1
Impreso y hecho en México

Printed and made in Mexico
Contents
Introduction. . . . . . . . . . . . . . . . . . . . . . 9
1. An Exploration of Strategic Issues Impacting Wine Co-operatives

in the European Wine Industry . . . . . . . . . . . . . . 11
Alfredo Manuel Coelho & Víctor Manuel Castillo Girón
2. Complexity of a socioeconomic system: the family enterprise . . . . 27

Adriana Segovia & Zuray Melgarejo
3. Competitiveness and its relationship with Corporate Social

Responsibility: Manufacturing Sector Case of the Guadalajara
Metropolitan Area. . . . . . . . . . . . . . . . . . . 49
José Sánchez Gutiérrez, Adair Gutiérrez Govea,
Fabián García Jiménez & Juan Mejía Trejo
4. Comparative analysis of the issuing firms of the Mexican Stock

Market that quote in the Construction Frequent consumption products
and telecommunications during the period 2007-2010, of the reason
Price/book value and its relationship with intellectual capital. . . . . 67
Anselmo Salvador Chávez Capó , Tito Livio de la Torre Hidalgo
& María Josefina Riverovillar
5. The Relationship between Managerial Capacity and Competitiveness

in the Spanish Logistics Managers Furniture Sector. . . . . . . . 91
Gonzalo Maldonado Guzmán, Ricardo García Ramírez,
Juan Gaytán Cortés & Octavio Hernández Castorena
6. The influence of cultural Differences on the perception of a web site:
a comparison between México and U.S. . . . . . . . . . . 119
Juan Antonio Vargas Barraza, Mónica Libertad Gómez Suárez
& Antonio de Jesús Vizcaino
7. Successful hotel website dimensions and attributes– an exploratory

research in Mexico . . . . . . . . . . . . . . . . . . . . 145
Celestino Robles Estrada, Areli Herrera de la Cruz
& Alberto Suástegui Ochoa
8. The impact of public policies as elements of competitiveness for SMEs

in the State of Aguascalientes. . . . . . . . . . . . . . 167
Luis Aguilera Enriquez, Martha González Adame
& R. Rodrigo Rodríguez Camacho
9. Customer satisfaction in the restaurant industry at Guadalajara’s

Metropolitan Area
Óscar Alejandro Espinoza Mercado, José Sánchez Gutiérrez,
Guillermo Vázquez Ávila & Carlos Enrique San Andrés Rivadeneira. . 185
10. Effects on the Mexican peso-us dollar exchange rate risk

as a result of the present European debt crisis . . . . . . . . . 203
Mario Alberto Lagunes Pérez
11. Corporate governance structure in Latin America and its impact

on human resource management and financial performance. . . . 219
Jorge Pelayo Maciel & Carlos Yoshio Cuevas Shiguematsu
Introduction
The 21st century has witnessed the emergence of new economic powers
and the collapse of economies that seemed solid. Not only the traditional
economic powers, sometimes know as the triad, are nowadays the only
players in the global trade and economic development, fostering increased
competition from companies to succeed in international markets. This
has forced to find new strategies and new models of competitiveness in
order to develop successful companies in increasingly competitive global
environment. In addition to this, the recent financial crises that have
shaken the world make the most of organizations to optimize resources
and improve their strategies. Some examples of what is happening in the
Spanish-speaking markets are reflected in this book.
The text touches on topics ranging from the impacts of the strategies
taken by European wine cooperatives to economic sectors such as the
restaurant industry or the Spanish furniture industry. In the spectrum
of areas covered in this book, we will see the importance of small family
businesses, the importance of social responsibility in the manufacturing
sectors, both from the standpoint of the private sector and the impor-
tance of public policies in the development of SMEs. These policies not
only are analyzed from the standpoint of financial or economic, but also
in the field of human resources.
The client satisfaction with a product is not solely focused on the
scope of traditional services, we must not forget the role of technology in
the acceptance or rejection of customers on a Web site, so examples of
sites of hotels, or online music sales are also analyzed.
The reader will find interesting topics throughout the book, which
will help you to understand and can implement strategies in a world in-
creasingly complex and multicultural.
9
1
An Exploration of Strategic Issues
Impacting Wine Co-operatives in the
European Wine Industry
Alfredo Manuel Coelho1

Víctor Manuel Castillo Girón1
Abstract
This paper analyses the main differences and convergence between the
governance systems and organization structures in wine co-operatives
from Italy, Portugal, France, and Spain.
Our methodology combines the administration of an international
survey with secondary data on the governance systems and organization
structures of the Southern European wine co-operatives. Results dem-
onstrate the dominance of two main governance systems (full vs. partial
vertical integration). Furthermore, we find a significant increase of func-
tional convergence however formal convergence is not significant.
Therefore, further research on the institutions promoting functional
convergence between wine co-operatives in different countries will help
us to understand better the drivers impacting their competitiveness.
Keywords: corporative government, organizational structure, wine-
making cooperatives, competitiveness, European wine-making industry.
1. Universidad de Guadalajara
11
Introduction
Co-operatives are non-profit organizations and therefore are a branch of

the social economy. Wine co-operatives as a focal point is a research field
that has not attracted an important flow of research and, with few excep-
tions, studies concern only a specific country or region (cf. Coelho et al.,
2009, Bianchini et al., 2008). This work makes a contribution to broaden-
ing the knowledge of the field of wine co-operatives through the study of
the logics structuring the strategic behavior of these organizations.
Co-operatives dominate the wine production in Southern European
countries (i.e. France, Portugal, Spain, and Italy) and also have a strong
presence in the New World producing countries. However, the structure
and internal organization (e.g. the relationship between boards of direc-
tors and co-operative members, the relationship between employees and
members) of these organizations remain relatively unknown.
Co-operatives are a multidimensional and complex subject as they
are simultaneously embedded in a range of economic, financial, social,
technological, political, and religious issues (Saïsset et al., 2011, Touzard
et al., 2008). The goal of this study is to describe and explain the diversity
of governance structures and performance of Southern European wine
co-operatives. Therefore, we focus our analysis on two levels of strate-
gies, i.e. the ´business strategies´ (diversification and specialization), the
degree of vertical integration of the wine co-operatives, and the perfor-
mances of these co-operatives.
This research is structured as follows. First, we will discuss the main
business strategies of wine co-operatives (specialization, diversification).
After, we discuss the importance and the extent of vertical integration
structures in these countries. Third, we will discuss the conditions of con-
vergence (form, organizational) of the co-operatives in Southern Euro-
pean countries and the sustainability/persistence of wine co-operatives in
the wine sector.
12
An Exploration of Strategic Issues Impacting Wine Co-operatives in the European Wine...
Alternative models of business strategies2
In the wine regions where the co-operative movement has a strong pres-
ence it is possible to differentiate the strategies of wine co-operatives
according to the strategic choices characterizing their business activities.
The ‘business strategies’ here defined include the choices in terms of a pool
of products, technologies, and markets. As a result of the growing interna-
tionalization of markets, the changing of winemaking production rules and
the marketing of wine, the business strategies of co-operatives are there-
fore frequently changed and co-operatives must necessarily adapt.
Focus is a means used to manage the ‘dependency’ from stakeholders
in the wine industry, i.e., a means to manage the bargaining power and
improving competitiveness.
‘Specialization’ allow firms to establish competitive advantages:
reaching the right size in terms of production levels, technology con-
straints/resources, and economics of scale, variety, and experience. A
typical example is the case of co-operatives producing high volumes of
bulk wines tailor-made for customers3. This last example illustrates a
case of strategies of specialization as a means to reduce dependency from
stakeholders (customers, suppliers). Likewise, the strategy of specializa-
tion ensures a better effectiveness (i.e. quicker response to produce pri-
vate labels, increasing focus on wine merchants’ claims…).
The wine sector offers a wide range of opportunities to specialize.
The specialization can also be a means to avoid direct confrontation
against big wine merchants. The positioning of wine co-operatives in the
market ‘gaps’ (niches) would be one the best means to not attract atten-
tion of the majors in the industry. Some wine co-operatives in the New
World have adopted this approach (South Africa, Chile, and Argentina)
through a specialization on fair trade wines or in specific nods of the wine
chain (grape growing, bottling, packaging, storage, marketing…). In this
2. This work was based on a phone survey with the representatives of wine co-operatives in
France, Italy, Portugal, and Spain (2007-2009). The survey was completed with face to face
interviews with co-operative members in those countries.
3. These co-operates can be named as being “hectomaniacs”, i.e. co-operatives producing bulk
wine, outsourcing, private labels (Courderc and Remaud, 2004).
13
particular case, the competitiveness is based on cost-advantages corre-

sponding to the search of niches strategically tenable.
In this respect, the specialization involves some constraints. At first,
by adopting this type of strategy it seems difficult to reach an ambitious
goal leading to a faster growth. A strategy of specialization facilitates the
emerging of new vulnerability factors (e.g. reduction of the customer base).
A ‘diversification’ strategy leads wine co-operatives to extend their
business landscape and entering into new activities. Extreme diversifi-
cation may lead firms to get involved in new businesses. However, this
type of strategy requires caution because companies in the wine industry
today tend to increase their ‘focuses on the core businesses. Additionally,
diversification raises problems in terms of the core competencies and the
organization required by new businesses.
Both, horizontal diversification (wine tourism, consulting…) and
vertical diversification (forward and backward integration of businesses
such as bottling, the sale of phytosanitary products…), are common strat-
egies in co-operatives in Europe and in New World producing countries.
Generally speaking, the survey shows a dominance of the strategies
of specialization across the world, particularly in Southern European
countries. In Europe, strategies of diversification are dominant in Portu-
gal. To some extent, this is related with the geography of the vineyards:
small properties, family ownership, islands… explain the choices oper-
ated through these co-operatives. In Spain and Italy the diversification of
activities is not so important (olive oil, grains…).
The complexity of the businesses related to wine production and the
small size of the co-operatives may explain the dominance of the strat-
egies of specialization. Excepting Italy, where three major groups of
wine co-operatives (Gruppo Italiano Vino, Caviro, Cavit), in the other
Southern European countries the wine co-operatives are small in size
and highly dependent on their domestic markets (direct exports is the
main strategy to penetrate foreign markets). However, in some Southern
European regions, co-operatives remain the leading wine producers.
Finally, in every country, the business strategies of wine co-operatives
remain relatively stable across the time (i.e. diversification or specializa-
tion). This view is consistent with the long-term significance of wine co-
operatives in these countries.
14
A first typology of vertical integration models in wine co-operatives
The specialization of the production basins where bulk wines dominate

can be explained through social, history, and agronomy. Afterwards we
introduce two dominant models in wine co-operatives, i.e., the model
described as “collection-winemaking-bulk” (partial vertical integration)
and the model of “collection-winemaking-bottling-sales” (complete ver-
tical integration). These two models can be found in most of the interna-
tional grape growing basins.
From a conceptual perspective, the transaction costs approach (Coase,
1937, Williamson, 1986) explains the reasons for the choice between par-
tial and complete vertical integration. Partial vertical integration (collec-
tion-winemaking-bulk) is adopted when wine co-operatives lack of specific
competencies particularly in terms of marketing and sales. The complete
vertical integration is recommended when wine co-operative evidence
some ineffectiveness when compared to the market. The choice of the de-
gree of integration is determined by the characteristics of the transactions
(i.e. the frequency, uncertainty, and the specificity of the assets).
The internalization of transactions reduces particularly the costs re-
lated to the access to information and the bargaining costs. When the
economies of transaction costs are reduced or when the transactions
are expensive to make internally (e.g. bottling, packaging, storage, sales,
marketing), wine co-operatives choose to not fully integrated the differ-
ent activities in the wine chain. Vertical integration engenders distortions
and specific and irreversible costs (i.e. sunk costs) (Coase, 1937).
The organizational model of “collection-winemaking-bulk”
In this model, vertical integration downstream is partial because co-oper-

atives do not fully integrate downstream activities (bottling, packaging,
sales, marketing) (Couderc and Remaud, 2004).
The wine price becomes the main adjustment variable in the deci-
sion-making process because there are very few factors to differentiate
the wines. In a context of growing internationalization of the bulk wine
markets where co-operatives are essentially price-takers this co-opera-
15
tive model faces a large number of risks. Saïsset et al. (2011) document
that growers’ remuneration in the South of France is related to the price
levels obtained for the sales of the bulk wines. Also, market competition
is influenced not only by wine merchants that purchase bulk wines but
also middlemen (wine brokers…) that source their wines in a small or
international scale, increasing competition across the wine chain.
Partial vertical integration (i.e. collection-winemaking-bulk) charac-
terizes the regions where co-operatives dominate wine production. This
is the typical model characterizing the Languedoc-Roussillon, South
Italy (Puglia, Sicily) and Castilla-La-Mancha (see for example. Coud-
erc, 2004, Torcivia, 2009). Even if in these regions the supply of wine in
bulk through wine co-operatives accounts for approximately 75% of the
volumes in each one of these regions the business models operating in
these regions are quite different. Languedoc-Region is characterized by
‘qualitative’ reconversion and the building of a mass-market of interna-
tional varietals such as Cabernet Sauvignon, Merlot, Syrah, Chardonnay
and Sauvignon Blanc. In Sicily, the supply is highly-dominated by autoch-
thonous varietals such as Catarrato and Nero d’Avola. According to the
industry members, in Castilla-La-Mancha co-operative members do not
define themselves as wine producers, their business consists of ‘growing
grapes and not making wine’. To some extent, this model is explained by
the European wine policy, the Common Market Organization (CMO)
for wine established in 1999, where co-operative members adopted a
business model focused on the production of grape for distilling potable
alcohol partly subsidized by the EU. The new CMO for wine adopted in
2008 transformed the strategies of the co-operatives in Castilla-La Man-
cha (i.e. suppression of the financial subsidies for distilling wine within
the EU-27), fostering mergers, acquisitions, and partnerships between
co-operatives across the supply chain.
The increasing concentration of buyers (wine merchants, wholesal-
ers, retailers…) puts pressure on the head of the wine oligopoly, There-
fore, the dependency from downstream stakeholders in the wine chain
(wine merchants and brokers) is a key variable in the adjustment of the
supply of bulk wines.
Since the 1960s, the ‘qualitative’ reconversion of vineyards in
Languedoc-Roussillon, improved the quality of wine (i.e. international
16
grape varieties) in this region and led to a change from a ‘mass’ (volume)
market to a more quality-driven viticulture. The main goals during this
period consisted on the adaptation of the demand to the international
markets and to provide a reaction to New World competition. The estab-
lishment of “partnerships” or “contracts” with wine merchants: stability
of the downstream relationships and taken into the account the medium
and long-term (strategic investments became an opportunity). In France,
wine co-operatives are essentially concentrated in the South of France
(Rhone valley, Languedoc-Roussillon, South-West, Provence…). All
things considered, net profits in co-operatives are on average approxi-
mately 1% and this is a major constraint to self-financing the co-opera-
tives’ projects (Couderc, 2008).
The Portuguese model is dual. In Southern Portugal (Alentejo) wine
co-operatives are the leading organizations, adopting a vertically inte-
grated model (there is no bulk wine market). In other Portuguese regions
the partial vertical integration dominates (i.e. there is an important mar-
ket for bulk wines). Contrary to wine co-operatives in Alentejo, many
wine co-operatives merged their structures in other wine regions.
The organizational model of “collection-winemaking-bottling-sales ”
Complete vertical integration (collection-winemaking-bottling-sales) of

wine co-operatives was typically adopted by New World wine producing
countries but the model is also established in the main European countries.
This model is typical of the Southern European regions where the av-
erage prices paid for wine are higher (Bordeaux, Burgundy, Champagne,
Rioja, Ribera del Duero, Tuscany, Piémont, Alentejo, Vinhos Verdes,
Douro Valley). However, these production basins are also impacted by
and increasing trend to merge wine co-operatives (see for example, Che-
vet, 2006 and Bélis-Bergouignan, 2008). Small wine co-operatives adopt-
ing a model of vertically integration specialize on niche markets. The
major wine co-operatives in this model specialize in supplying specialties
(e.g. PDO or G.I. wines, DOCG, sparkling wines…) or in alternative de-
velop very well known brands (Couderc and Remaud, 2004). Contrary
17
to the bulk specialists, co-operatives are required to invest in terms of

marketing and sales forces.
Across Southern Europe in many production basins, the activities of
bottling and sales are undertaken through groups of co-operatives (i.e.
2nd or 3rd level co-operatives). This is one of the main economic justifica-
tions advanced to establish structures of bigger groups of co-operatives.
In short, both models of vertical integral (partial or complete) can
be found in Southern European countries showing both advantages and
disadvantages.
Both models of vertical integration make use of ‘inter-cooperation’,
one of the main co-operative principles, particularly for sharing services
in Southern Europe. In France, the Institut Coopératif du Vin (ICV) is
a co-operative structure providing services for co-operatives involved in
grape growing and winemaking. The services include all the activities re-
lated to grape growing, enology, training, and sustainable development.
Also, another type of co-operatives providing services to the industry
are the co-operatives specialized on providing technical services or ma-
chines for grape growing and harvesting (CUMA). These organizations
make a major contribution to the mechanization of vineyards (harvesting
machines). Some other co-operatives specialized on distilling wines as a
means to regulate the wine lakes in Southern Europe (Spain, France, and
Italy) and have an important role in the regions where co-operatives are
the leading organizations. Nowadays, distilling co-operatives are increas-
ingly involved in environmental and energy production issues.
Convergence of form or function? What exactly is converging

in wine cooperatives?
Ronald Gilson (1996) distinguished ‘formal convergence’ and ‘functional

convergence’. At the European level wine co-operatives are embedded in
different legal systems and factor markets however co-operatives share
the same common rules within the European Common Market Orga-
nization (CMO) for wine. Functional convergence may differ because
wine co-operatives may internalize governance systems differently. Also,
incentive patterns are different among co-operatives (e.g. the remunera-
18
tion to produce some varietals or the grading system using to pay for
grape quality).
Our survey facilitated the identification of two main ‘political’ mod-
els involving wine co-operatives, established according to the geography
of regions (see Touzard et al., 2008). In part I and II we demonstrated
the heterogeneity of these models through the analysis of the dominant
models at work in Southern Europe, either through the main business
strategies or the models of vertical integration. In this section, we will
discuss the conditions of convergence of the wine co-operative models.
The convergence debate
Two streams of literature have preceded the current debate on the con-
vergence of wine co-operatives. One stream of research focus is on the
description of the national or regional patterns of wine co-operatives (see
for example, Touzard et al., 2008). In particular, the Southern European
model, the Eastern European model (former Communist countries),
and the ‘New World’ (Argentina, South Africa…) models were depicted.
Another stream of the literature is focused in studying the efficiency of
wine co-operatives in different countries (see for example Bianchini et
al., 2008). The analysis of the pros and cons of each system was at the
core of the debate on convergence (Gordon and Roe, 2004).
The debate on convergence of the different strategic models involv-
ing wine co-operatives include two types of research streams (see Touzard
for South Africa and Languedoc Roussillon , Couderc et al., 2008 for a
discussion on wine co-operatives in France and Italy , Coelho and Ras-
toin (2008) for a comparison of Southern European countries (Coelho et
al., 2009, Touzard et al., 2009, Bianchini et al., 2008) for the importance
of wine co-operatives in different countries and the major “ political ”
models involving wine co-operatives, 2008).
These international studies recognize the importance of the national
systems of wine co-operatives through the a large group of variables or
dimensions, such as the economic importance of co-operatives in a na-
tional setting, the application of the co-operative principles established
by the International Co-operative Alliance (ICA) or the working agenda
19
of wine co-operatives (see Touzard et al., 2008). However, it also rec-

ognizes the existence of some particular issues (e.g. renewing and mo-
tivating members, the application of the voting rules of ’one person,
one voice’). Accordingly, this research ranked the national systems of
wine co-operatives in six different groups: vineyards in Northern Europe
(Germany, Switzerland, Austria…), and the vineyards in Southern Eu-
rope, the vineyards in South Africa, the vineyards of New Member States
of the EU-27 and other Eastern European countries (Bulgaria, Slove-
nia, Hungary, Croatia…), the vineyards from the New World producing
countries and the other vineyards (see Touzard et al., 2008, p. 338-340).
In Southern Europe, wine co-operatives account for more than 50%
of overall production of every country (France, Italy, Spain, and Portu-
gal). However, in some New World countries, such as Australia, Chile or
the United States, the wine co-operatives do not account for a significant
share of the overall production (less than 1 percent of the country’s wine
production). International differences between wine co-operatives de-
fine a diversity of ‘political’ systems but co-operatives also share several
elements within every country.
The progressive liberalization of international trade for wine (imports
and exports) and the growing internationalization of wine co-operatives
created new competitive conditions that fostered the convergence of for-
mal (i.e. changes in internal regulations and national or regional laws on
co-operatives) and functional institutions. However, the national systems
of wine co-operatives adapted their functions but the forms remained.
Another stream of the literature focuses on the socio-institutional
environment and on the stakeholders and issues operating in Southern
European countries. The convergence of the practices in the field of
grape growing (trellising, irrigation…), oenology (use of oak chips, wine
blends …) and on territory (emerging of designations of origin in the
New World…), or the politics for the regulation of vineyards (liberaliza-
tion of vine plantings, subsidies granted by States and regions…) provide
indications about the convergence in the long-run of the economics of
wine in both Southern European countries and the New World regions.
20
On the convergence of wine co-operatives: The necessary

and sufficient conditions
If there is a necessary condition for the convergence it is the fact that the
expected benefits from a system should overtake the costs related with
the transition process towards the new system.
We do not notice a case for formal convergence. Every system be-
cause every governance system is run by institutions and it has the neces-
sary flexibility to find solutions within the borders defined by path depen-
dencies (Gilson, 2004).
There is convergence of functions whenever the governance of insti-
tutions is enough flexible to meet the demands induced by the circum-
stances without any changes of the “formal characteristics of the institu-
tions” (Coffee, 2000). The ‘reality’ of the wine co-operatives is therefore
a ‘hybrid’ situation combining though elements of both formal and func-
tional convergence.
Wine co-operatives are characterized by a system of functional con-
vergence but not formal convergence
Some intermediaries maintain their influence over the conditions ex-
plaining the working life of the co-operatives, and particularly influence
significantly the performance of these organizations (wine merchants,
wine shops…). The influence of the intermediaries (both upstream and
downstream of the wine chain) operates through cost structures and or-
ganization of wine co-operatives.
Wine co-operatives in Southern Europe do not register formal con-
vergence because the institutions of every governance system have the
necessary flexibility to find alternate solutions within the limits of the
path dependency. Functional convergence operates at a broader level.
The convergence operates within the EU-27 through the adoption
of a common framework (CMO) for wine involving a new recognition of
enology practices, the liberalization of planting rights, the grubbing up of
vines, a new segmentation structure for the European wines, and incen-
tives to promote wines in non-EU countries (cf. Montaigne and Coelho,
2006, European Commission, 2008).
Additionally, the following issues illustrate the interaction between
governance and formal and functional convergence. One of the issues
21
concerns the increasing changes in the taxation of vine and wine co-oper-
atives. Vine and wine co-operatives may now establish subsidiaries ruled
through the common law. Vine and wine co-operatives are allowed to
publicly list in the stock exchange through initial public offerings how-
ever there are no significant cases of IPOs among wine co-operatives.
Changes in internal contracts (internal rules, the harvesting regulations)
and agreements (establishment of partnerships with wine merchants…)
Reaching this point we may now ask what are the normative and pre-
scriptive outcomes. To a large extent, the creation and the expansion of
wine co-operatives in Southern European basins are determined by the
institutional setting. A multi-level analysis (macro. meso, micro) would
help to identify the adoption of ‘old’ and ‘new’ managerial practices. Also,
it would be helpful to analyze more deeply the main ‘political’ models at
the country-level and to appraise its heterogeneity.
Conclusion
Is there an optimal model of wine co-operatives? Are national systems

of wine co-operatives effectively converging towards a particular model?
This paper contributes to this literature by investigating whether wine co-
operatives located in Southern European countries converge to a unique
model.
The comparison of the different Southern European governance sys-
tems and business strategies of wine co-operatives raises a challenging
number of difficulties. In particular, a ‘national’ system may seem stable
as a result of approaching stability on the formal differences across time.
However, even if one of the countries reaches formal stability, several
functional changes operate. For example, co-operatives specializing on
bulk wines undertook a lot of new mergers in the period 2007-2010.
We notice a continuous trend to improve the convergence of the so-
cio-institutional environment. Likewise, we notice an increasing change
on the rules of governance (establishment of new subsidiaries under the
law for general (´limited´) companies, new initial public offerings under-
taken by major groups of wine co-operative, introduction of professional
22
managers to administrate the wine co-operatives and, to a less extent, the

consideration of variable voting rights).
We have identified a great number of barriers to the convergence
of wine co-operatives. Co-operatives are grape growers-owned organi-
zations. Voice is based on the principle of ‘one person, one vote’. Very
often, grape growers block strategic decisions decided by the grape grow-
ers. The same principles apply to the grape growers owning the biggest
vineyard areas. Wine co-operatives are embedded on a diversity of insti-
tutional, legal, and even cultural settings acting as barriers to mergers.
The regulatory wine framework is based on EU directives but final deci-
sions are rooted on every country legal doctrines (subsidiaries).
In summary, in this work we acknowledge that there are different
patterns of wine co-operatives operating in Southern Europe. Howev-
er, beyond the business strategies (specialization or diversification) and
the vertical integration models, new research about wine co-operatives
is required to provide a better understanding of the functional changes
operating within the different regions in Southern Europe and therefore
explaining the determinants of competitiveness of wine co-operatives.
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25
2
Complexity of a socioeconomic system:
the family enterprise
Adriana Segovia1
Zuray Melgarejo1
Abstract
Lack of opportunities and poverty level in Colombia (more than half of

the total population of Colombia is considered to be in poverty condi-
tion, and a third of it is considered to be in indigence condition), as well
as the low capacity of the labor market of generating employment for the
families, is an big issue not only for those affected (unemployed people),
but for the government and the professionals in several areas, in which
“family enterprises” are real and viable solutions. This article is part of a
research work of the Magister of social work of the National University
of Colombia, where, considering the complexity and a systemic approach
of the relations and dynamic, the importance of this model as one of the
principal sources of social and economic development is recognized.
Key words: Development, Entrepreneurship, Family enterprise, Man-
agement.
Clasificación JEL: I31, D13, M21, J12.
1. Universidad Nacional de Colombia.
27
Introduction
Finding strategies of development according to the situation of our coun-

try, for the most vulnerable population, as the poorest families, marginal-
ized communities of the formal labor market and particularly in those in
which the social and economic impairment is associated with high levels
of conflict and imbalance within the household, with social and familiar
implications and particularly with women´s condition.
One of the development strategies viable to be applied in Colombia
is the model of familiar Entrepreneurship, as a solution for the situation
of hundreds of families, which are in a state of helplessness and social
and economic depression.
The concept of Family enterprise is generally associated with small
enterprises, even though this is not true in all the cases, most of them
have the same problems and face the same situation as the SMEs.
Family Enterprises are basic structures of production in which the
principal objective is survival of the owners and their families, creating
self-employment and occupation for the members of the family due to
the fact that in most of the cases there is no economic remuneration
and the earnings is not always valuated in economic terms, but in the
satisfaction of mutual support for the survival of the group. Generally,
family enterprises are guided by the leader of the family and the facilities
and the principal capital is the work capacity of its members. The capital
sometimes is really low and sometimes they have none (work with recy-
clable material and self-made tools). Although this doesn´t mean that
due to the conditions previously described better conditions cannot be
generated, resources and processes optimization ; tools that minimize
the risk of getting out of the market in the process of getting bigger, more
sustainable and increasing the level of empowerment, opportunities and
getting a higher quality life and for the family.
And this is how the family Enterprise model propose a family life
transformation by the goal of achieving a vision and a different insertion
of its members with the productive and social activities in the commu-
nity, where processes as strategic planning can be applied to the family
and to the enterprise maximizing benefits and strengthening the process-
es in both organizations. Creating family enterprises appears to be the
28
Complexity of a socioeconomic system: the family enterprise
principal way of this transformation which will impact in relocation and

upgrading of the family members, by establishing a new balance in the
household and in the relation between the family union and the com-
munity, as an option of growth, strengthening, sustainability and integral
development of solidarity kind.
The basic hypotheses of the proposed investigation are based in the
previous arguments, through an exhaustive fieldwork applied to the Zon-
al Planning Unity – ZPU 96 of the locality of Santa Fe, in Bogota city.
In section number 2 of this article, background and justification of
the research are examined; general conditions and factors that have in-
creased poverty level and inequality in Colombia are analyzed, emphasiz-
ing the analysis in women, who generally have lower wages and a higher
level of informality. In section number 3, the importance of familiar en-
trepreneurship and the importance of entrepreneurial women are ana-
lyzed. In section number 4 it is pretended to understand the family en-
terprises a complex system, dynamic and in constant interaction among
external factors as the market and internal factors as the family and the
enterprise, creating a mutation that can generate both driving and toxic
forces, the first one allows to achieve, not only personal success, but busi-
ness and familiar as well, for all those who are part of the enterprises,
while the second ones destroy both the family and the enterprise. In sec-
tion number 5 the importance of strategic planning with the perspective
of balances scored-card not only as a business growth and strengthening
tool but as a familiar as well in analyzed. In section number 6 some re-
flections that allow the creation of a more humanized model, highlight-
ing some forms of solidarity economy. And the principal conclusions of
the study are considered in the last section.
Background
Since the implementation of the neoliberal model in Colombia (1991),

which its principal objective was to reduce the high levels of inflation,
used strategies that increased the taxes rates and reducing the demand in
the market and rising the level of unemployment. From that moment the
29
rate of unemployment has been high and constant, regardless economi-

cal growth “The combination of sustainable growth in the labor offer, a low
dynamical labor demand and inflexible salary rates have resulted a high
unemployment rate, even for Latin-America standards” (Cárdenas, 2009).
Additionally, there were big changes in the social and economic am-
bit in Colombia between the 80s and the 90s. As an alternative to the
rising level of poverty in most of the social sectors, drugs traffic, politi-
cal subversion and informal economy (especially family enterprises and
micro-enterprises) emerged2 and as a result of an economic model in
crisis. Since 2000, the insecurity made that another harmful phenome-
na emerged, as different armed groups (paramilitaries y self-defenses),
which became strong groups trough massacres, rape, targeted killings,
enforced disappearances –kidnapping- torture and degrading and intimi-
dating actions, controlling the society and taking lands, starting processes
as forced displacement (774.494 families for a total of 3.389.986 people)3,
committing serious crimes and violating human and economic rights,
starting the migration to the big cities, especially Bogotá. The neighbor-
hoods or localities where most of displaced people live are Ciudad Boli-
var and Santa Fe. “About 330 displaced families arrive to Santa Fe, 330
out of the 10.380 that go to Bogotá, which is 3.2 % out of the total dis-
placed people in the city.4
These economical and social processes have considerably impacted
Locality 3th of Santa Fe, one of the 20 that compose Bogotá.
The deterioration of the labor market, low level of incoming and
competence have generated high levels of poverty in Colombia. These
levels of poverty are affecting about 50% of the population and 18% out
of the 50% are considered to be in indigence condition. (Cárdenas, 2009).
In this point is necessary to mention that poverty doesn’t refer to the
lack of economic resources. It also refers to the lack of welfare in the
2. Arango Jaramillo “La Economía informal una transformación democrática. Las famiempresas
y microempresas una alternativa solidaria” Unversidad Cooperativa de Colombia. Marzo 2003.
Pág 61
3. Acción Social. Informe Desplazamiento forzado en Colombia. 31 marzo de 2010. http://
www.accionsocial.gov.co/documentos/Retornos/CIDH%20Desplazamiento%20Forzado%20
en%20Colombia%20Marzo%202010%20para%20Canciller%C3%ADa1.pdf
4. Cámara de Comercio. “Perfil económico y empresarial localidad Santa Fe”. Julio 2007. Pág. 22
30
different areas of the human being, which generates inequality in the po-
tentiality and multidimensionality of the human being and the societies.
Sadly in Colombia, Gini Coefficient of 0,593 in 2009 is one of the most
unequal and less favorable in Latin-America. (DANE, 2009).
Inequality is not only noticed in the incoming as shown by Gini coef-
ficient, it is also observed in other perspectives as gender, race and some
more. In the labor place, and from a gender perspective, The Mundial
Bank and the PNUD and some other institutions, remark the importance
of women’s labor and the development of human talent to reduce the
levels of poverty.
There is a recent acknowledgement of the differences of gender in the intensity and

nature of poverty depending on class, age and race. It is considered that those wo-
men, who are heads of household, are poorer than those who have a husband in the
house. The poverty of the women is compounded during their lives, due to domestic
work not remunerated and wage discrimination. (Palmer, 1999).
About 60 % of all the women employed in Colombia work in the informal

economy in precarious, have unstable jobs, low incoming, long shifts, low
Access to social security and depend on assistance networks and social
support as the subsidized health regime. (ENS: 2008).
So, it is necessary to highlight the increment of the participation of
women in the labor market, modifying the realities in the family: without
leaving their roles, taking double or triple shifts and being more competi-
tive in the enterprises (female literacy rate increased from 70% to 91%
overcoming the male one) (Cárdenas, 2009). In spite of the previous in-
formation, salary wages for women have been historically lower tan for
men, in average women receive 83,6% of the incoming that man receive
in the formal sector in Colombia, and 65% in the informal sector. (Es-
cuela Nacional Sindical, 2008).
According to this, new labor conditions, lack of opportunities, gender
discrimination, encourage informality processes and underemployment
“among 2001 and 2007 underemployment rate has raised to 30%, the
explanation has its origins in the decrement of quality jobs conditions,
lack of hours and level of competence” (Cárdenas, 2009) being an alter-
native to the low incoming for the sustainability in the families. Without
31
a doubt, labor market in vital for any society, determining the value of
the work trough the salary, the principal source of incoming in the fami-
lies, where one or more members of it participate, including the work
of women and in some cases the kids who are under the allowed age to
work, as a part of the productive role in the market.
Informality and underemployment allows family work to exist, as in-
dependents of SMBs. (Gracia y Urdinola, 2000). This kind of enterprises
are characterized by a high relation between labor and capital, little or
none technological level, little or none work division and specialization,
labor relations are based on familiar or personal relations derived from
affective agreements and no those ones determined by contracts. (OCM;
Colombian Observatory of Micro-enterprises- Observatorio Colombia-
no Microempresas: 2005) Most of the employments are casuals, work-
ers with low levels of educations (according to data from DANE, 53%
have studied secondary school and 30% only primary school), there are
low salaries or none for those who work, labor instability, low capacity
in administrative management, low level of organization, there are no
controls or registers, low capacity of production, high production costs,
there are no economy of scale “low productivity and few possibilities of
access to financial resources, which limits their possibilities of growth and
sustainability in the market (Cámara de Comercio, 2008).
The government and other institutions that can vision entrepreneur-
ship as an economic and social strategy have driven it. Now consider-
ing that Colombia has the third place in the world regarding entrepre-
neurship, after Thailand and Peru (Global Entrepreneurship Monitor
–GEM:2009), the research shows that only 86% of the new enterprises
are created as informal and the mortality of the enterprises is rising, The
rate of creation of enterprises is 22,48% and the rate of closing is 10,52%,
showing that the intervention is being insufficient, due to in spite of it
informality, underemployment and “rebusque”5 are rising continuously.
5. A term used to refer to the phenomena of doing anything (cleaning houses, sales in the buses)
to get money.
32
Familiar business entrepreneurship, an alternative of solution
Linking complexity and the contributions of the different disciplines as

economy, management and administrative management, anthropology,
ethnology, sociology, politics, social work among others, is a common
goal to find concrete and pragmatic solutions to the harmful problems
that lots of human being face in the most marginalized sectors in the
contemporary society.
Entrepreneurship means to start something, this word comes from
the word in French “entrepreneur”, which translates to initiate or being
the first, some indicate that the word entrepreneur was used to describe
those people who started an adventure without knowing what was going
to happen in the future or to designate those men who went to military
expeditions. (Rodrigo Varela: 2008). The term was used for the first time
in XVIII century for the economist Richard Cantillon, being the first in
noticing the figure of the entrepreneur in the economy. (Arnulfo Urru-
tia: 2007)
Lately various authors have contributed from different perspectives,
generating two general sources that address the study and the under-
standing of entrepreneurship: From the economic processes of produc-
tion, innovation, risk, uncertainty, technological change, “accumulative
result of many short-term decisions of the political and economic entre-
preneurs” (Díaz and others, 2005), and the humanistic approach, associ-
ating behaviors and attitudes of the entrepreneur “reflect the subjective
mental models, showing ideas, believes and cultural patterns” (Díaz and
others, 2005).
Thus, family enterprises are big motors in the different economies,
like in the United Kingdom where its participation is 76% of the enter-
prises, in United states 90% and the contribute to the 60% of the PIB,
generating 50 millions of jobs and 175 of them make part of the 500 most
famous in Forbes Magazine. In Brazil, more than 90% of the 300 bigger
private enterprises are familiar enterprises and generate more than 1.6
millions of jobs. (Cuesta y Asociados. Cuesta Carlos y Juan Carlos. Cá-
mara de Comercio: 2007)
In Latin-America, due to the cultural characteristics and the size of
the enterprises, is easy to conclude that the figure of the family has to
33
be really high, more than 90% are familiar enterprises. (Rodrigo Varela:
2008). Familiar enterprises in Colombia were created before the colony
because Indian families had production processes organized in familiar
groups. After colonization and in recent times, as indicates César Ucrox,
former superintendent of companies, most of the enterprises were cre-
ated without legal requirements, no legal representative or accounting
registers, after that legislation gives some leads to formalize the enter-
prises, that is after 1978.
“Colombia is a country of familiar enterprises, because the majority
of the economical groups were created like that, and even now retain that
characteristic” (Revista Dinero, 1999). Trough the different generations
some familiar groups have been consolidated: Santo Domingo family,
Ardila Lulle, Sarmiento Angulo, Carvajal, Restrepo, Echevarría, Ca-
rulla, Roland, Chávez (María: Jolie de Vogue), Guerrero (Jesús: Grupo
Servientrega), Gómez (Gumercindo: Colchones el Dorado) among oth-
ers. (Revista Dinero No. 80: 2008)
In 2000, trough studies of registered and enrolled enterprises in the
chamber of commerce in the country show that 67% out of the total are
familiar enterprises, however compared to other countries this indicator
is low. It is worth to highlight that the data correspond to formal enter-
prises, but there is no precision about the registers of informal data.
Entrepreneurship has expand in a fast way, especially in developing
economies, people uses their knowledge and acquired abilities through
their ascendants and some schools among others, doing informal activi-
ties as a way of livelihood, which has taken this people and their fami-
lies to “star small workshops, domestic production of eatable products
(arepa, chorizo, among others) appears, and the small suppliers and the
workshops in the neighborhoods multiply their quantity. (Arango, 2003).
The GEM report of 2009 indicates that men create enterprises in a
higher proportion than the women: 25.7% versus 19.5%. Creation char-
acterized more as a necessity for women than for men. (Women: 49%
versus 36% male), however the gap tends to close.
An important factor that has increased this phenomena in the women who are heads
of the business as entrepreneurs is her desire of being independent and free, de-
34
monstrating that they are entrepreneurs and that they can lead their own economic
projects to succeed in equal conditions. (Serna y Suárez, 2005).
… It is growing almost in geometrical proportion during the last two decades,
some research indicates that in the United Kingdom between 1982 and 1987 women
self-employment growth, for men this rise was 30% and 70% for women. In the uni-
ted states the figure of women who own enterprises raised to 57% between 1982 and
1987 (…) Even though there are no reliable statistics, it can be assured that this par-
ticipation and rising in the quantity of entrepreneurs women has also being rising in
Latin-American countries, as a positive result of its higher academic qualification to
enter in business activities, without withdrawing their activities as wives and mothers.
(Cámara de Comercio, 2006).
The importance of the women and specifically of the entrepreneur

women allows to appreciate with more clarity the reality of these to
define new schemes in the relations of power, hierarchy, masculine domi-
nation, wage inequality, physical or psychological abuse, family structure,
ideas inherited from others, and all those factors required to understand
and interpret the intern and extern dynamics between families and their
environment “the studies of gender use a perspective of analysis of the
general differences, which denounce the binary logic which they are per-
ceive with. (Burín y Melo, 1998).
Family Enterprise as a complex, living and open system.
The study of the enterprise is relatively recent, initiating with descrip-

tions of cases of familiar enterprises from the last two decades, where
researchers, managers, organizational psychologists and lately family
therapists apply concepts of connection and disconnection of familiar
groups who have businesses. (Kelin and others, 1997).
Familiar enterprises have been defined in different ways “In a study
about familiar enterprises, Chua, Chrisman y Sharma quoted 21 different
definitions founded in 250 articles of investigation” (Poza, 2005), how-
ever to precise I will use the one made by Ernesto Poza who defines it
from a systemic approach:
A familiar Enterprise is the one in which an entrepreneur or director in the actual

generation and one or more of the members of the family influence in the strategic
35
direction of the company. Regardless their participation in the enterprise (the re-
lation between the members with the enterprise), control of the property, strategic
preferences and to the culture (behaviors that belong to an enterprise, the relation
between family and business defines culture) and the values that define the enter-
prise. (...) The result is a unique combination of subsystems (familiar, administrati-
ve and of property) that form a whole system in the familiar enterprise, forming a
meaningful adaptation capacity and a competitive advantage or source of vulnerabi-
lity to the generational change.
Several authors agree that familiar Enterprise is composed of three sys-

tems: family, enterprise and property, and the triple intersection are typi-
fied. Family is based in emotional factors, in the support relations in them,
safety, equity, where confrontation is avoided, is a closed system avoiding
change and has a social vision, while the enterprise is based on facts, result-
oriented, competence, risks, equity, an open system looking for the change
and has a purely economic vision. (Rodrigo Varela: 2008: 505).
Familiar enterprises create relations that can be harmonious or con-
flictive and that can potentiate or destroy this kind of enterprises (Serna
y Suárez: 2005: 101). The behavior, interests and vision or life project of
the members of the family, affects the systems: enterprise-family. “Oper-
ating patterns of family enterprises are strongly influenced by the reality
of the familiar system” (Bork and others, 1997).
The strength or strong links among others are commitment, solidar-
ity, dedication of more time and effort, planning of medium and long
term, stable cultures (shared history), their communications, plane struc-
tures, authority acceptance, trust and security among others, but it can
also generate conflict due to disagreement or impositions causing, wrong
selection of the personal, misallocation of functions, low salaries, none or
overrated, getting all the money out of the enterprise for familiar objec-
tives of personal desires, not being a lead but a father, mother, big broth-
er confusing familiar rules and facts with the ones in the enterprise, not
align the personal vision with the businesses vision, confusing businesses
assets with the familiar ones, affective bounds with the ones in a contract,
not desiring that other members of the family become professionals, af-
fecting the systems. (Varela, Gómez, Serna and others, Nogales, Poza).
However it is necessary to remember that familiar enterprise is an
economic unit that has to answer to the necessities and expectations from
36
the market and interested parts, but that also has to attend the intra-
family demands and necessities. And this is how in this mutual interde-
pendence of links, interrelations, alliances, inside networks and outside
networks of the system, very dynamic and complex relations have been
generated, which need to be watch from a complex approach.
This allows us to think over the concept of the production unites gen-
erated by the families, in which is not clear the limit between one and
the other (Family/Enterprise), this vast world of interactions, psycho, so-
cio and economic relations that converge among them are materialized
in the complexity of different worlds: Family and Enterprise, which are
transformed into one: Family enterprises.
A systemic approach of the family and the enterprise is that they are
living and open systems, the trans-disciplinarily proposed a complex vi-
sion, not fragmentized, an interdependent and interconnected set of sys-
tems, forming one big system. Family enterprises are a system composed
of various systems in a continuous interrelationship, whit another inter-
nal and external systems. It is necessary to remember that a family is not
the “union” of its members or their individual performance, a family is
an ecosystem where its operation is determined by the characteristics or
patterns of connection, this, composed by human beings that generate
a net of relations in which intensity, loyalty, communication, emotional
attachment that varies through time, acting as control, direction, regula-
tion or manipulation elements (Hernández, 1997).
Family understood as a system of objectives or functions, creates pat-
terns that become rules describing the sequences of the system and while
it goes through the vital cycle, these rules will be transformed un stan-
dards that will be used to evaluate behaviors that will have to be consis-
tent with the values of the cultures and religions being assimilated in a
very particular way for each family. (Hernández, 1997).
The behaviors and values assimilated in each family made them dif-
ferent from all the others, these behaviors define patterns like organiza-
tion, roles, implicit and explicit rules from the interaction of the mem-
bers, in which the limitation of behaviors and the accomplishment of the
rules keep the integrity of the system. The power structure also deter-
mines patterns in the family and it includes hierarchies associated with
age, gender, education level among others, where the values of the rela-
37
tions between the members of the family define the interaction among
them. While the same family belongs to the same enterprise while this
goes through its life cycle, the family can adapt reorienting systems and
standards. (Hernández, 1997).
On the other hand, some authors set a comparison between the En-
terprise and living organisms, from the approach that they are open sys-
tems, highlighting that the enterprise is a big system composed by differ-
ent parts interrelated and interdependent, set to achieve different objec-
tives. (Chiavenato, 2000).
Enterprises as open systems which are within another systems, have
characteristics like interdependence, with the eternal and internal envi-
ronment, creating changes and culture adaptation, values and adapted
by its members keeping relations, loyalties, power relationships, among
others, homeostasis, keeping the balance in the management, goals and
objectives, boundaries marking what is inside the system and what is out-
side it. These boundaries are not always physical. “Social systems have
overlapping boundaries, which vary in the grade of permeability, allow-
ing a higher or lower level of interaction with the environment” (Chiav-
enato, 2000), morphogenesis describes that an enterprise can change its
constitutions, structure, form, control functions, communication, among
others and negentropy refers to the exchange of energy between subsys-
tems. (Chiavenato, 2000).
Thus, Enterprises grow they have inputs, process them and they pro-
duce outputs (products or services) with a dynamical interaction with the
environment (customers, suppliers, competitors, public institutions or
private or through its members) adapting and adjusting itself to survive,
changing markets, products and structures. (Chiavenato, 2000).
Organization are living systems have inputs and outputs, the get en-
ergy from internal and external systems, this is why subsystems like “pro-
cesses” must understand clearly the objectives and being aligned with the
general objective of the organizations, this subsystem have similar or the
same values, goals and strategies, the same process occurs with the ex-
ternal systems which give constant feedback and create chaos (entropy),
converting feedback in a mechanism which allows detecting and control-
ling the elements that are inside the organization. (Del Castillo, 1997).
38
Trying to understand the formal and informal systems that compose

the networks and its systems formed by the interactions, interdependenc-
es and coexistence of the members of different levels generate a new
vision and can be complementary for those people who are constantly
observing family enterprises.
Graphic 1
Family Enterprise Model as a complex living an open system.
㻌
FAMILY SYSTEM: BUSINESS SYSTEM:
㻌 INTERACTION OBJETIVES INTERACTION OBJETIVES
㻌 ORGANIZATIONAL SYSTEM ORGANIZATIONAL SYSTEM
㻌 Level: Rank, Competences Level: Functions, Profiles,

Competences, Organization
RELATIONAL SYSTEM Chart.
RELATIONAL SYSTEM
㻌
Level: Inside: Powerful Relations
Level: Inside: Powerful Relations
Nuclear Gender Relations
Nuclear Gender Relations
㻌 Intergenerational relations
Intergenerational relations
NETWORK FAMILY
NETWORK
Level: Outside: Extensive Family
㻌 Friends COMPANY
Level: Outside: Stakeholders
Neighbors
Suppliers
Government institutions NEW SYSTEM
㻌 Religion institutions
Customers
Government Institutions
㻌
VALUES SYSTEM
VALUES SYSTEM
㻌 Level: Mission, Life Project,
Level: Mission, Vision
Vision (Objectives, Dreams)
(Objectives, Dreams) Values.
㻌 Values.
COEXISTENCE OF
㻌 FINANCIAL SYSTEM
BOTH SYSTEMS
AND THEIR FINANCIAL SYSTEM
Level: Sources: Obtaining: SUBSYSTEMS
㻌 Own Capital, Credit (MUTATION) Level: Sources: Obtaining:
Own Capital, Credit
Uses: Management (investment,
㻌 grow, expenses Uses: Management
INSTITUTIONAL SYSTEM (Investment, Grow, Expenses)
㻌 Level: Formal: Politic of Family
Women’s Rights
Children’s Rights INSTITUTIONAL SYSTEM
㻌 Teen’s Rights
Level: Formal: Taxes
Level: Informal: Rules Level: Informal: Rules
Source: Author.
39
According to the current research, the complexity paradigm, with a sys-

temic approach, family enterprises are composed of two systems that
form one: this two systems are the family and the enterprise, an living,
open and dynamic system that interacts and interrelate creating another
internal and external systems, interdependent and interconnected creat-
ing a whole, with dynamics in its subsystems and in the big system as well,
“in a new trans-disciplinarily that communicates in a circuit, creating
levels of emergency of the reality without reducing them to plane unites
and general laws “recognize levels of emergency” makes communica-
tion among sciences possible. The objective of searching for a method is
not finding a unique principle of the knowledge (reductionist), but make
communication possible based on a complex analysis in the complexity.”
(Morín, 2003)
The model described in graphic 1, developed during this research,
highlight the interrelation between the systems of the family and the En-
terprise, each one with its own systems interrelating with external systems
which are the politic context, institutions, economic context, cultural con-
text, that together create a new system: Family enterprise composed of
the conjunction of the other systems, which mutate and coexist creating
new dynamics where the permeability defines its own characteristics.
Mutations can be positive or negative affecting any of the origin sys-
tems, making them stronger or destroying them. Institutional context –
formal and informal- is really important because it is a creator of change
(North, 1994) “Believes are transformed in social and economic struc-
tures trough institutions, including formal and informal rules. The rela-
tionship between mental models and institutions in very close” (Díaz and
others, 2005).
Strategic planning and the approach of balance scored card, as tools

of growth and strengthening of the business and the family
The fact that the quantity of family enterprises have growth through time,
many of them are characterized for low levels of competitiveness and lots
of obstacles, like lack of knowledge to designing the products, marketing,
achieving quality standards, and having low capacity of administrative
40
management, low capacity to present projects, insufficiency of market-

ing channels that enclose small enterprises and suppliers with big chains
that increase their business opportunities, lack of conscience of social
responsibility in the enterprises, and high costs of transferring knowledge
among members of the organizations (Gutiérrez and others, 2007), this
implies not only lack of capital to achieve efficiency, but lack of a mana-
gerial model that allows to structure family enterprises in conditions to
grow, strengthen and sustainability.
This research purposes strategic planning due to the fact that it is
a systemic model, applied to any kind of organizations that allows the
search of improving the performance of them, the increment of efficacy
and productivity, including a strong contribution of the systemic model
to the vision of organizations, focused on strategic direction. (Zapata and
others, 2008).
Strategic planning guides and sets what the Enterprise should do in
short, medium and long-term, it allows seeing what the current situation
of the organizations is, identifying key success factors, considering spe-
cific situations according to the resources and the management, in a com-
mon and systemic vision to define plans and programs. (Pérez Castaño
Martha: 1990).
This research considers that strategic planning should be applied to
family organization and not only to the business management, so that in
the fusion strategies elements from the family and from the enterprise
get articulated, which would be the success of the enterprise. Planning
“anticipates the decision making process” (Goodstein, 1998). “Planning
is the process that makes that the leaders of an organization foresee their
future and develop the procedures and operations required to achieve it”
(Goodstein, 1998).
Planning determines or redefine the mission and organization values
(Pérez, 1990), defining objectives, goals and management indicators sys-
tematically, allowing that the organization (family-enterprise) organics,
grows, develop and use strategic tools to understand its environment, as
well as the strengths and limitations of the sector of operation.. (Good-
stein, 1998).
The graphic 2 allows understanding the scope of the model, by de-
scribing each of the components of the strategic planning, including in
41
Graphic 2
Applied Strategic Planning Model
Planning to plan
Environmental monitoring
Searching for values Considerations for
History
Macro environment application
Economic forces (political, social, juridical,
ecological, demographic, geographical, Formulating the mission and vision.
economic, and technological)
And industrial (enterprises that produce or
do the same. Potential competition and Designing the business strategy
real, technology, substitutes products and (identify business lines, Success critical
complementary products, customers, indicators, target, and define Gap analysis
suppliers, location, and distribution) organization culture)
Internal analysis (Process, products,
resources, capacity, information system
and organizational culture) Integration of action plans, tactical
strategies.
Performance
SWOT Audit Defining objectives, goals, operative Planning and controlling
strategies. contingencies.
Defining and adapting of the structure

for implementation and plan’s
development, strategic programs.
Feedback Implementation
Source: Elaborated by the author based on Leonard Goodstein /Martha Pérez.
the implementation phenomena like synergy, for the analysis, decision

making and control using different management indicators.
Seeking productivity and competitively and efficient tools for the
management has become a pressing need, creating nontraditional indi-
cators under the approach of processes, customers, human talent, social
and environmental made that balance scored-card were created by Nor-
ton y Kaplan during 1990.
According to Valdez this tool is one of the most used “more than 60%
of the biggest corporations in the United States, and going to European,
Asian and Latin corporations. Besides this tool is also one of the most
used according to the Mundial survey made by Balanced Score-card Col-
laborative in 2003.
42
Balance score card is “the most effective tool for modern strategic
management” (Anza Calderón, 2004), being an instrument that allows to
have a vision of the whole system for business management, that allows
focusing in the key factor of a business, identifying and interrelating stra-
tegic guidelines, abstracted in objectives, perspectives and indicators “it
captures critical activities that create value” (Kaplan, 2000).
The balance score card “must interrelate objectives with the cause-
effect relationships among critical variables” (Kaplan, 2000), aligned
with the strategic map, visualizing and measuring organizational strat-
egies, “If enterprises are going to survive and thrive, they have to use
measurement systems and management derived from their strategies and
capacities. (Kaplan, 2000).
Solidarity Economy: Coactive Paradigm
Social, economic, and cultural conditions, as well as the extended indi-

vidualism in a capitalist economy, requires of new mentalities and break-
ing paradigms that create alternatives that allow the inclusion of more
humanized model, where values and objectives of human and economic
development are potentiated. According to this Sen. (2000), remarks that
“when human capacities are improved it usually implies more productiv-
ity and ability to get incoming”.
Aligned to this productivity logic, when lacks, priorities and desires
(individual or common) are determined, it implies to include the social
factor and forget the one-dimension behavior of focusing in the economi-
cal and financial aspect and apply one that includes the interaction of the
complexity of human beings, giving place to new alternative models to
emerge like Solidarity Economy. (Arango, 2003).
Solidarity Economy acts in different ways to select from, for instance:
business economic activity self-managed by the family, with clear objec-
tives to generate incomings. Survival where complex systems (social, eco-
nomic, cultural) are interrelated by life and family projects in a popular
economy. (Arango, 2003).
This is how since the last decade, business initiatives that answer to
social demands have been driven, as Muhammad Junus posed in his work
43
with social enterprises ( subset of social entrepreneurship) which objec-

tive is to generate social benefits (it doesn’t make dividends, has its own
autonomy, is sustainable and the capital is recovered and it is possible
or no, to invest in it or in another social enterprise) or the enterprises of
the people who live in poverty or misery creating economical benefit for
them. And social entrepreneurs, who encourage social businesses in the
entire world, want to do something to reduce the levels of poverty and
help other people. (Junus, 2008).
Thus, from the socio-economic approach or the politic of Solidar-
ity economy and social entrepreneurship6 make that social initiatives have
impact in their environments, including redistribution and reciprocity
principles. Supporting this Favreau (2003 quoted by Juan Carlos Pérez
de Mendiguren and others: 2009) remarks the importance of social and
economic networks which combines market and nonmarket in produc-
tive and nonproductive activities with an ethical vision of the democrati-
zations of the economy based on networks, grouping services and people
not satisfied for the government, that allow the inclusion of people ex-
cluded from activities where the market is the most important aspect.
(Juan Carlos Pérez de Mendiguren and others: 2009:17).
Human beings are part of social groups (family, labor, church among
others), determining the relationship with others and its complexity, this
depends on the total of connections and elements. its relational dimen-
sion (internal or external) determines the social network, defined as “a
group of people, members of the family, neighbors, friends and other
people, able to contribute, help and give real and lasting support to an
individual, creating exchange and interconnection, creating a net of links
that makes possible more human relationships, as an answer to the con-
tingencies that all the groups face in any vital part of their lives. (Edgar
Morín: 2003:27).
This is how nets are part of organizational models, which are neces-
sary to understand in order to determine competitive advantages that
improve and potentiate the sustainability of the organizations (families
or enterprises), due to that as living and open systems with multiple cen-
6. Italics for the author
44
ters create “a dynamical exchange that makes possible to potentiate the

resources that communities own, and t create alternatives to satisfy the
needs” (Elina Dabas: 1998), They have to interact with their environ-
ment, not doing this implies its deterioration, leading it to rickets or even
to death.
That is why breaking paradigms and looking for new strategies, im-
proving quality life of the families and enhancing the development of the
people trough social entrepreneurship, creates a dynamic that multiplies
both the social and economic benefit.
Conclusions and Recommendations
Even the model has problems in Colombia family enterprises is one of

the principal sources of creation of enterprises. It is also true that its
survival implies hard work, there are some cases that have gone through
the boundaries and have succeeded, Due to some advantages that in
comparison with another kind of enterprises, only the family enterprise
have: “simplification and speed of their processes, trust and the agree-
ment among partners”.
The role of the family and the women in the entrepreneurship is
practically invisible, that is why is necessary to analyze contexts in time
and space, where continuous transformations and interrelations among
social, economic and politic allow to permeate and create new realities,
actions of human being exposed to a changing situation, accepting that
there is social diversity “social worlds”, ones next to the others, mixed
and overlapped. (Ragin, 1999).
The vision of the family Enterprise through complexity and a systemic
approach that compose the family and the enterprise as well as manage-
ment processes like strategic planning, are instruments of analysis and
debate for the construction of successful schemes for family enterprises
in poverty conditions, as well as the meaningful contribution that can be
achieved in economic growth and quality life for these families.
Creating families and culture is learnt in the household, and that is
why the proposal is to create strategies in the families, through educa-
45
tion and institutionalization, creating an entrepreneurship culture to get

results in the medium and long term.
Social Entrepreneurship as an strategy, breaking paradigms of the
common and the social, will create a dynamic that will multiply the social
benefit, developing new economic and business endpoints, where society
can participate, working and developing its potentiate, acting according
to their rights, generating income and self-employment, eliminating in-
equality, not only economic but including gender, race or religion, im-
proving quality life conditions and creating cultural, social and economic
changes, including coexistence and peace processes.
All the staff mentioned before, leads us to affirm that family enter-
prises can be consolidate one again as one of the best answers to get over
financial crisis in the families.
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Arango, M.(2003). La Economía informal una transformación democrática-Las
Famiempresas y microempresas una alternativa solidaria .Colombia.
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liar.: Granica.
Burin, M. y Melo, I. (1998). “Género y familia” : Paidós
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Cámara de comercio de bogota. (2010). Informalidad empresarial y laboral en
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Cuesta, C. y Cuesta, J.. (2007). Informe Cámara de Comercio.
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Del castillo,. (1997). El administrador y su entorno dentro de la administración.:
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Escuela Nacional Sindical.(2008). Informe anual. Panorama de la situación labo-

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Colombia”. Colombia.
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Muhammad, J. (2008). Un mundo sin pobreza. Las empresas sociales y el futuro
del capitalism.:Paidós
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en Colombia. 1990_ 2005.
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cas. Macroeconomía, Género y Estado.: TM Editores.
Pérez, M.(1990). Guía práctica de Planeación estratégica.
Poza, E.(2005). Empresas familiares.: Thomson editores
Ragin, C.(1994).La construcción de la investigación social.: Sage.
(1999) Familia vs negocios. Revista Dinero, 80.
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Colombia.: Nuevo Mundo.
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y sostenibilidad de las empresas familiares: Temis.
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organización y del management .:Ediciones ECOE
47
3
Competitiveness and its relationship
with Corporate Social Responsibility:
Manufacturing Sector Case
of the Guadalajara Metropolitan Area
José Sánchez Gutiérrez1

Adair Gutiérrez Govea1
Fabián García Jiménez1
Juan Mejía Trejo1
Abstract
The purpose of this research is to determine the relationship between

competitiveness and corporate social responsibility in SME manufactur-
ing heading at Guadalajara. We have proposed a quantitative approach,
based on the application of questionnaires applied to managers of the
manufacturing industry such as metalworking, food, and pharmaceutical
processing.
In Mexico, the Mexican manufacturing sector has been showing
growth rates of variables, therefore it is important to develop strategies
that allow companies to maintain stability in order to provide the right
1. Universidad de Guadalajara
49
Sánchez Gutiérrez, Gutiérrez Govea, García Jiménez & Mejía Trejo
conditions to survive and develop. The activities associated with corpo-

rate social responsibility can be taken into account as a way to develop
strategies. The results obtained demonstrated that for small and medium
enterprises that composed the manufacturing industry in the Metropoli-
tan Zone of Guadalajara, it is convenient to develop and implement so-
cial accountability plans which it can created a competitive advantages.
Keywords: Competitiveness, Corporate Social Responsibility,
SMENs, Manufacturing industries.
Introduction
The increasing competence currently demands companies to develop

their capacities in order to participate by offering superior products and
services and as well, wealth and progress to its industry. The competitive-
ness of a sector is the result of the sum of the efforts and skills formed
by all the companies that conforms an industry, and consequently the
degree of innovation in industries generate national competitiveness,
which results in a process staggered. Therefore, the competitiveness of
enterprises should be considered as a central topic of discussion and sup-
port from the industry and governments to benefit society.
The purpose of this research is study the manufacturing industry,
which consists of all those economic activities that transforms different
raw materials in various consumer products. This industry is conformed
from small to large companies, and they are classified according to the
activity (nine divisions) according to the INEGI (2005):
1. Food and beverages
2. Textiles, clothing and leather industries
3. Manufacture of wood and wood products
4. Paper, paper products, printing and publishing
5. Chemicals, petroleum, rubber and plastic products
6. Metal products, machinery and equipment.
7. Non-metallic mineral products except petroleum and coal.
8. Basic metal industries.
9. Other manufacturing industries
50
Competitiveness and its relationship with Corporate Social Responsibility
Recently, the manufacturing sector in Jalisco has been developed with

similar importance to other states such as the Federal District and Nuevo
Leon. On a national scale, this industry experiments a crisis since the
manpower that the industry employs has decreased considerably. Cur-
rently it is the sector with the highest contribution to GDP of the state
with the 22.6% of participation (PROMEXICO, 2010).
Corporate social responsibility
Social responsibility is a concept that has been gaining importance in

business as a way to develop competitive advantages (Crespo, 2010).
According to (Friedman, 1970), social responsibility refers to practices
that allow conducting business effectively to meet economic objectives
while adhering to compliance with the basic principles of social welfare,
whether they are set within a regulatory framework and or in a socio-
cultural context governed by the customs. Therefore companies has
identified the convenience of creating a link with the community that
encourages the implementation of actions that impact positively on the
society in response to the commitment of wanting to do things correctly
(Anez and Bonomi, 2010).
As well, the concept has been widely argued; researchers in the field
have analyzed and assigned a definition depending on the approach that
can go from the standpoint of business, academic, to the civil organiza-
tions (Buhr and Grafstro ¨ m, 2004).
To GugleryShi (2009), the concept of social responsibility was origi-
nated back to the early fifties and has evolved through the development
and inclusion of new theories concerning the responsibility of business,
the finance responsibility and more recently the development of com-
petitiveness.
Therefore definition of social responsibility varies depending on the
cultural, social and economic environment. As an example, to Kima and
Reber (2008) and Siegel and Ward (2007) the social responsibility ex-
plores the impact in society and how they can capitalize the benefits from
the business practices.
51
As a definition, CSR is the financial responsibility, legal and ethic

entity that is often assumed by the company through the implementation
and execution of strategies for the betterment of society (Kelly, 2001;
Werhane, 2007; Kim and Reber, 2008). On the other hand, for Ford
(2007) the CSR is the combination of a sustained development of com-
pany practices that foster respect for human and society that surrounds
it. In this regard, Molteni (2006) states that the objective of social respon-
sibility is the enforcement of the regulations established by the authority
on how to act and meet the needs of its shareholders, members and soci-
ety, and even when they do not belong to the company.
Another definition is proposed by Bronner and Vrioni (2001) who
explain that the CSR is the manifestation of a certain level of ethics in
the company, reflecting the values that govern behavior and socially re-
sponsible practices that are derived from the rules of the system, the cor-
porate culture and education, which aim to guarantee the social needs.
Similarly, Van der Putten and Dubbink (2009) believe that CSR is the
primary responsibility according to the rules and guidelines established
by the society. This means that CSR goes beyond simple compliance with
government regulations and it is the responsibilities of the company con-
sider them as constants for continuous improvement Larios (2010).
Using the above definitions, it is concluded that most of the authors
converge that the main goal of social responsibility is to increase the
quality of life among the companies while looking for the economic ben-
efits of the business corporation (Hopkins, 2003). As a result, a socially
responsible company is one that leads a profitable company and has a
strong sense of how their activities impact positively and negatively on
the environment, society and economy (Dahlsrud, 2008).
Benefits of implementing social responsibility
In recent years the competitiveness of markets has determined that altru-

istic intentions are not enough justified by generous contributions and
philanthropic behavior. Also it has been identified that over the time
there is a greater number of consumers who go further by seeking infor-
mation regarding the products they buy, as a result, there is an increasing
52
tendency to base purchasing decisions on the social responsibility per-

formance of companies (Bronner and Vrioni, 2001), especially when it
impacts performance in environmental, health and even legal aspects.
According to Mohr et al, (2001), social responsibility also benefits the
consumers that appreciate and reward companies that carry out any kind
of responsible action. This type of consumers expects companies to raise
awareness, care for the environment and act ethically conditioning their
purchasing decision. Furthermore, the same Molteni (2006) suggests that
CSR benefits companies in other areas such as:
1. The improvement of the image and reputation of the company over
its employees, partners and the general public.
2 . The creation of intangible assets related to brand management, ima-
ge, reputation, as well as improvement in motivation and identifi-
cation of human resources who at the same time develop a sense of
belonging, pride and even influence their esteem (Rego, Leal, Cunha
and Faria, 2010).
3. The increased revenue and reduced expenses and costs.
4. It promotes the active involvement of shareholders, employees and
other members of the organization.
Continuing with the statement of Molteni (2006), there are rewards for
companies that implement CSR programs translated into a competitive
advantage. A good reputation can be considered as the most obvious link
of CSR with the performance, especially when it allows the firm to dif-
ferentiate itself from its competitors through its range of products and
services. Another important aspect is that CSR can positively influence
the company’s finances as appropriate behavior on the part of this may
allow it to avoid penalties imposed by the government (Godfrey, 2004).
However, there are disadvantages inherent in CSR such as high costs
involved in developing, implementing and evaluating the program per-
formance, besides of reducing the operational capability resulting from
the allocation of human resource allocation which might distract ordi-
nary productive activities (Flare, Giner, De-la-Miquela Sources and Gri-
ful, (2007) and becomes a non profitable activity in a short term.
53
Application of social responsibility within companies
It is proved that it is possible to increase the quality of the society life at

the same time of doing business by offering superior products and ser-
vices in environmental, social and economically aspects (Zadek, 2006).
In this sense, CSR functions as an extension of the company, especially
those that have a presence in international markets which interact with
different cultures (Kovalev, & Streimikiene, 2008).
However, social responsibility may be applicable to any organization,
regardless of its size and industry, whether there is a strong belief and
commitment to undertake efforts that aim to improve the social environ-
ment (Camacho, 2010). The premise of this type of activities are well
implemented in the company is based on the active participation of the
individuals that comprise it, that is, CSR must share the vision of the
company members (Duran, J. 2009).
The CSR application can range from support in the form of sponsor-
ship of social causes, the formation of partnerships with nongovernmen-
tal organizations (donations, educational programs, or even with the de-
velopment of internal rules of behavior that promote labor rights policies
of transparency and environment care) Siegeley Ward, (2007), Griesser
(2007).
Competitiveness
Competitiveness is a term that is defined by its approach, and it can be

differed at a national, industry and even company level (Ambastha and
Momaya, 2004).
According to Mohamed, D. (2008), country-level competitiveness
represents the ability of a nation to preserve and increase the level of
trade between their international counterparts in order to improve the
standard of living of its people through the income received. For Flana-
gan et al., (2005) national competitiveness has as objective the human
development, growth and quality of life. For Porter (1998), the interna-
tional competitiveness of nations is described by macroeconomic scenar-
ios, such as exchange rates, interest rates, labor availability and economic
54
availability of natural resources, a positive trade balance, and especially

high and increasing productivity. However, even though competitiveness
focuses on nations, actually companies and society participate and deter-
mine those involved.
The industry-wide competitiveness, according to Flanagan (2005), is
determined as the extent in which an industry meets the needs of indi-
viduals by providing the optimum combination of manufactured goods
and services, in terms of cost, value and innovation; but at the same time
it meet the needs of investors by offering an attractive return on invest-
ment and projected growth.
To Schuller and Lidbom (2009), at the enterprise level, competitive-
ness is directly related to market performance, which translates high effi-
ciency as a key success factor and then creates added value to companies.
For Villanova, Lozano and Arenas (2009) firm-level competitiveness is
composed of four agents: the capacity for innovation, internal and ex-
ternal relationships, reputation and strategic assets. For these authors,
competitiveness extends to intangible assets, which are also able to offer
a competitive advantage.
To measure competitiveness, productivity has been considered as
a suitable indicator (Porter, 1998). Additionally, measurement systems
based on financial performance have been used; however, there are crit-
ics that these do not considered key aspects of competitiveness such as
generation of knowledge, reputation, corporate image and human talent.
There are a considerable number of definitions and factors that com-
prised competitiveness; however, these key factors can be grouped into
five items:
1. Performance: The competitiveness enhancements tangible financial
measures such as cash flow, growth or profitability.
2. Quality of products and services in general.
3. Productivity in relation to increased production and reduced use of
resources (Porter, 1998).
4. The innovation that includes products, services and processes.
5. Image: Includes corporate brand in relation to building confidence
and the exploration of the relationship between CSR and reputation
of competitiveness in the relationship with stakeholders.
55
CSR and its relation with competitiveness
Recently, the CSR has been considered not only as a cost or an act of
philanthropy, but recent studies have shown that it is able to enhance
or create a competitive advantage for companies (Porter and Kramer,
2006). Through the proper management of CSR, the company has the
potential to develop more successfully (Vilanova et al, 2009) through a
cycle of learning and innovation that generates transformative and new
strategies.
The social responsibility even within corporate strategies (Pirson and
Lawrence (2007) has been called “strategic corporate social responsibil-
ity.” The social problems then are seen as opportunities for growth and
as well it has been recommended to analyze these problems as a busi-
ness opportunity and at the same time as a reward to society. Other au-
thors such as SAII, Carroll and Buchholtz (2003) recognize this term as
“strategic philanthropy,” which is defined as the allocation of corporate
resources to solve or alleviate social problems while maximizing the ben-
efits of the company.
In the best case scenario, the company could change its social re-
sponsibility strategy as these changes do not represent any cost, however,
other authors argue that in fact the implementation of CSR is the equiva-
lent of social commitment and consistent effort which will be paid off in
a positive corporate image (Mackey, Mackey and Barney, 2007; Kovalev
and Streimikiene, 2008).
The clear correspondence between CSR and competitiveness is ad-
dressed generally based on the corporate image and reputation that can
be provided to company (Vilanova, Lozano and Arenas, 2009; Fan, 2005)
and may be the key to increase sales and consumer preferences (Bansal
and Roth, 2000; Haigh and Jones, 2006; Juholin 2004). However, inten-
tions are not enough to create social and environmental value, the avail-
able resources have to be analyzed in order to generate and deliver prod-
ucts and value-added services (Porter and Kramer, 2006).
Additionally, it is stressed that due to the establishment of trade rules
by developed countries to underdeveloped nations, CSR has been placed
as a tool to improve the competitiveness of nations since they demon-
strate social and environmental commitment. Furthermore, in develop-
56
ing countries the media plays an important role in promoting CSR prac-
tices by companies, while in developed countries, companies often acting
through NGOs and trade unions (Gugler and Shi, 2009).
For Zadek (2006), strategic CSR is classified by the competitive ad-
vantage generated at different levels:
1. Civil society: It is the starting point for the creation of competitive
advantage.
2. Business started: Contains innovation in products, services or busi-
ness processes that could be more sustainable.
3. Initiated by the Association: It generates and maintains sector allian-
ces.
4. Legal: It is related to public guidance focusing on CSR practices and
standards.
Companies must learn to recognize the social problems in order to

increase its potential, its competitive advantages, but mainly to provide
added value to society. According to Kramer and Porter (2006), they rec-
ommend to the company to classify social issues according to the value
chain, its social impacts, and social dimensions in a competitive context,
its nature, and then considering the potential impact and company avail-
able resources. Any change to the processes of CSR should follow a care-
ful selection and implementation of plans that are more positive and
inclusive.
When doing business on a daily basis involving CSR, companies can
add a positive and useful value after participating in conjunction with
NGOs, government and society in general.
Methodology
This research was based on a study of the SME manufacturing indus-

try in the Metropolitan Zone of Guadalajara in Jalisco. This involved
the application of a questionnaire in an interview to managers of the
manufacturing industries such as metalworking, food processing and
pharmaceutical. Thus it was possible to obtain the amount of 150 surveys
successfully applied which allowed us to structure a reliable database
57
for interpretation, decreasing the possibility of error in the subsequent

analysis.
This questionnaire was developed as part of a collaborative research
program with the association of various academic institutions such as:
the Autonomous University of Queretaro, the University of Colima, the
Autonomous University of Aguascalientes, the Autonomous University
of Nayarit, The Universidad Veracruzana and the University of Guada-
lajara through the Department of Marketing and International Business
from the University Center for Economic and Administrative Sciences.
This questionnaire was structured in 163 reagents comprising 8 areas of
study including Administration of Customer Relationship (CRM), Intel-
lectual Capital, Competitiveness, Knowledge Management, Innovation,
Marketing, Strategic Positioning, and Social Responsibility.
From the collection of information it was possible to construct a
nominal database, due to each of the reagents applied was evaluated us-
ing a Likert scale, which it allows to measure the degree of agreement or
disagreement that each of them impact on the business. Thus, the scale
was based on the value (1) to indicate a degree of disagree and would
increase to the value (5) to express their full agreement.
This database, once it was captured and codified, had to be refined to
reduce bias and error through the use of univariant techniques that cal-
culate the distribution of frequencies and show the trend of the location
from a range of possible values for
each variable.
Sample
According to the estimates by the Sistema Estatal de Información Jalisco

(SEIJAL, 2011), in the state there are about of 31.826 companies belong-
ing to the manufacturing industry, of which 17.284 are located in Gua-
dalajara metropolitan area and these in turn are only 2.529 regarded as
SMEs. From this information, it was determined the size of the sample
with a confidence level of 95% and a margin of error of 8%.
58
This was determined that the optimal sample size was 145 surveys applied
between manufacturing firms classified as SMEs.
Hypothesis
H1. The greater implementation of long-term programs of social respon-

sibility, the higher level of competitiveness is.
H2. The greater involvement in social responsibility activities, the higher
level of competitiveness is.
Analysis of results
Table 1
Cronbach’s alpha of 20 Items
Cronbach Alpha N of Items

.882 20
Source: Own elaboration.
Through the table 1 it is demonstrated that the Cronbach Alpha indica-

tor has a value of 0.882 which indicates that the variables selected for the
statistical analysis are closely related with 88%, which means that these
variables are highly eligible for further analysis.
59
Independent variables
RSG4: The presence of a social responsibility program in the company

represents a viable option for improving the same.
RSB1: The actions of social responsibility to the company give back ben-
efits.
RSB3: The cost of maintaining a long-term program of social responsi-
bility activities could represent a greater cost than the perceived
benefit.
RSI4: The involvement of employees of the company contributes to
meet the objectives of social responsibility plans more effectively.
RSP7: The reinvestment in the community is the best option in terms of
social responsibility.
Table 2
Summary of the regression table
Model R Square R Adjusted Estimated

R-squared Standard Error
1 .531 .282 .277 .67380
2 .569 .323 .314 .65615
3 .610 .372 .360 .63404
4 .663 .439 .424 .60148
5 .657 .432 .420 .60342
6 .683 .467 .452 .58650
7 .697 .486 .469 .57753
Independent variables: RSG4, RSB1, RSB3, RSI4, RSP7
Dependent variable: Competitiveness
Table 2 shows a summary of linear regression analysis, which explains

that by including an extra variable to the first model as this model will
impact the dependent variable. Only the variables of social responsibility
RSG4, RSB1, RSB3, RSI4, RSP7 are those which together may explain
the relationship with the dependent variable (competitiveness) by 48%,
60
which is based on the coefficient of determination explained through an

R squared value of 0.486.
Table 3
ANOVA
Model Sum of df Media F Value Significance

Squares Square
Regression 45.494 5 9.099 27.279 .000g
Residual 48.031 144 .334
Total 93.524 149
Independent variables: RSG4, RSB1, RSB3, RSI4, RSP7
Dependent variable: Competitiveness
Based on the results in Table 3, it is shown that the coefficients of the

most significant variables are: RSG4, RSB1, RSB3, RSI4, RSP7 which
are statistically most significant values expressed
in T (in absolute value)
are about above 1.96. Similarly, the independent variables have signifi-
cance values less than 0.05 so they are accepted and it can be deduced
that there is a high degree of correlation between the predetermined
variables and therefore are those through which competitiveness can be
explained by implementing practices of corporate social responsibility,
their involvement and development of activities that do not required sub-
stantial resources.
Conclusions
The results obtained from this research indicate that for small and
medium enterprises that comprise the manufacturing industry in the
Metropolitan Zone of Guadalajara, it is convenient to the development
and to implement social responsibility plans as a way to increase their
capabilities in the sense that are differentiating actions like these that
spurred the creation of competitive advantages based on active participa-
tion of matters that concern the public interest.
61
It was also demonstrated that those companies that practice corpo-

rate culture of engagement between its members, have greater opportu-
nities to structure a long-term approach, which does not constitute the
provision of significant financial and human resources and in the future
it will become a philosophy of doing business ethically. In this sense, it
was possible to observe that a major problem for SMEs of implementing
social responsibility activities is the cost and allocation of resources it
represents, so these companies need to understand that there are alter-
natives actions such as compliance and strict adherence to regulations
and social and governmental regulations.
Based on the foregoing, it is appropriate to recommend that organi-
zations pursue their interest in investing in intangible resources and not
just focus on the tangible, since it has been shown that to increase the
social responsibility performance and competitiveness of organizations,
since all members should develop a solid ethical culture that becomes
in the way of doing business of a socially responsible and competitive
company.
Limitations and recommendations
In order to know more thoroughly about the context of social responsi-

bility in the manufacturing industry, it would be appropriate to analyze
the perception of society, since it reflects the impact that decisions and
actions carried out by the company and therefore if this theory grounded
in practice: great benefits for both parties involved.
In addition, studies are needed that focus on identifying those factors
combined with social responsibility that maximize their potential and
suitability of application.
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65
4
Comparative analysis of the issuing
firms of the Mexican Stock Market that
quote in the Construction
Frequent consumption products and
telecommunications during the period 2007-2010,
of the reason Price/book value and its relationship with
intellectual capital
Anselmo Salvador Chávez Capó1

Tito Livio de la Torre Hidalgo1
María Josefina Riverovillar1
Abstract
The reason Price/Book Value shown is the perception in the market for
a company and its performance, intangible resources are appreciated
and valued for their potential to generate value due to use of knowl-
edge as an axis of development have been called intellectual capital. This
research is not experimental, quantitative, longitudinal, descriptive co
relational-made with the issuing companies listed on the Mexican Stock
1. Universidad Popular Autónoma del Estado de Puebla.
67
Anselmo Salvador Chávez Capó, Tito Livio de la Torre Hidalgo & María Josefina Riverovillar
Market Construction, Consumer Products and Telecommunications sec-

tors during the period 2007 -2010, seeks to determine the effects of the
price / book (P / BV) between these three sectors, because in this assess-
ment there is a high weight load of intangible assets, also if in a time of
crisis, investors prefer companies with intensive use of intangible assets
or those who base their performance in fixed assets.
Keywords: Intangible Assets, Ratio Price / Book Value, Intellectual
Capital.
Introduction
The development achieved by administration is related to the evolution

of several productive actors along the time. Starting from what Taylor
(1911) described as scientific administration -the attempt to apply sci-
entific methods to administrative problems in order to achieve indus-
trial efficiency; the settlement of principles and administrative elements
described by Fayol (1949), The defense made by Rathenau (1916) of
entrepreneurial leadership and the need to plan with complex variables
as well as self-governing for that stage of capitalism, Gantt’s (1919) pro-
posal on the use of visual support for the follow up of factory activities,
such as Gantt’s chart, supporting the systematization of the productive
process, and additionally developing a chart for floor workers, both opera-
tive and supervisors, that provides feedback to planners and programmers
on the reason why the program and the planning hadn’t been executed
according to the prevision. This model was the conceptual basis for the
Balanced Scorecard, proposed by Kaplan & Norton (1997) that is a ref-
erence method for the assessment of intangibles within organizations.
These contributions, among others set the departing point to manage
current organizations
The various stages present in management studies get to an inflec-
tion point when Drucker (1993) presents the knowledge society concept
pointing out that capital is a critical production resource, totally apart
from and counter placed to labor, stating that the key factor nowadays
is knowledge, which cannot be bought with money nor be created with
investment capital, because it resides in the person. Its new protagonist,
68
Comparative analysis of the issuing firms of the Mexican Stock Market...
the knowledge worker and the implications for the firms, modify the up
to date existing paradigms in the field. This idea isn’t new in him, he had
already reflected at its respect in the mid fifties, pointing out that this
social group represents 30% of the active population and will be 40% in
2020 (Drucker, 2001).
With the development of technology, the massive use of the internet,
the transformation of the World Wide Web in an element of easy access
to most of people, through the creation and development of navigators
that allow to see the content of a web page and a business platform, man-
agement has had to interact with another reality, this new environment
has been called differently, Tapscott, (1996) called it digital economy
pointing out that the traditional way of understanding economy, value
creation, business organization and other organizational structures must
be re-thought.
The intensive use of knowledge and turbulence are trademarks of the
new economy, which must not restrain to consider the several forms of
e-business, because all the forms of business, are gradually moving to the
intensive use of knowledge, so, part of the businesses are using knowl-
edge as their main strategy (Ståhle & Hong, 2003). Kelly (1999) describes
the new rules for this economy, where a completely opposite vision of the
economic rules valid during a long time is offered.
The most successful firms, have recently made the decision to use
knowledge as a core element of their strategies, due to the fact that man-
agement theory has gradually accepted hidden assets such as employees’
knowledge, relationships with clients and providers, brand loyalty; ele-
ments that have a key role in the survival and success of a large number
of firms (Roos & Roos, 1997).
Nowadays, organizations face new challenges to their development
in the megatrends, the globalizing process has suffered radical changes
in its conception, earlier it meant to establish an efficient network of
production, sales and subsidiaries of service able to penetrate the world
markets, but demands of the new knowledge economy have changed the
focus, to innovate while learning from the world, the winning companies
of the future will be those capable of looking out of their areas of com-
fort for the application of unexplored areas of technology and business
intelligence that are spread in the world (Y, L, Doz & Williamson, 2001)
69
The field of knowledge in business is, for practical effects, unlimited;

the globalizing process has been a trigger and facilitator of innovations
and improver in the world (Marmolejo, 2010). Its importance is in the
fact that it is subject to increasing yields, contrary to what happens with
traditional resources that have decreasing yields (López, Martin de Cas-
tro & Navas, 2004). In the same way, García-Parra, Simo & Sallan (2006)
describe that the aforementioned has promoted a growth in the invest-
ment made by the firms in the world on intangibles since the end of the
last century, where knowledge and economic nature of intangibles, as
well as their identification and measurement are the main concern of the
main firms’ stakeholders.
Booth (1998) assets that investment in intangibles has something to
do with the capacity of a firm to develop its resources in new markets, as
well as with the ability to innovate in products and services it offers. It
is evident that each organization must classify, identify and measure its
intangible assets, besides it must understand how to link the possibility of
managing it so that it results in the generation of value.
Sullivan & Sullivan (2000) point out that the number of companies
whose value is widely related to intellectual capital, has increased consid-
erably, evidencing a change in the generation of value by the firm based
on tangible assets, until the last decade the proportion of corporative
value generated by them was 80% while 20% was generated by intan-
gibles, while nowadays the proportion has reverted, corporative value of
the firms is related to the use of intangible in an 80% while the remaining
20% depends on tangible assets.
General objective
To compare the reason Price/Value in books of the issuers that quote in

the sectors Construction, Frequent consumption products and Telecom-
munications in the Mexican Stock Market (BMV) over the period 2007-
2010, to determine which sector has a higher relationship, as a result of
the use of intellectual capital.
70
Theoretical framework
Several authors have proposed their definition of intellectual capital,

Edvinsson & Malone (1999) describe it as the possession of knowledge,
applied experience, technology, relationships with clients and profes-
sional dexterity that provide the firm with a competitive advantage.
Brooking (1997) states it is a combination of immaterial assets that allow
a firm’s operation.
For Nevado & López (2002) it is the set of a firm’s assets that even
though are not reflected in the traditional accounting statements, gener-
ate or will generate future benefits as a result of aspects related to human
and structural capitals, and allow the firm to take advantage of better
opportunities than others.
The Organization for Economic Co-operation and Development
(OECD, 1999) on its part, describes it as the economic value of two in-
tangible values of a company, the structural or organizational capital and
the human capital. The first refers to the assets owned by the company
such as software, administrative systems, facilities, distribution channels,
supply chains, among others; the latter includes human resources within
an organization and the relationships they have with external entities
such as the ones with clients and providers.
Petty & Guthrie (2000) point out that the terms intellectual capital
and intangible assets are frequently used as synonyms, a proper distinc-
tion must consider intellectual capital as a part of the intangible assets
instead of referring to it as the basis of a business, in that way they explain
that there are intangible assets that cannot be part of the intellectual
capital per se, such as reputation of the companies or loyalty of the clients
because they are a consequence of the management. Authors such as
Edvinsson & Malone (1997), Sveiby (2000) & Roos et al. (2001) include
the in it. In a model where companies intensively manage knowledge,
the three components: intellectual capital, structural capital and com-
plementary assets represent the sources in function from which the firm
creates value, which is later on reflected on cash flows, that exert a main
influence in the price of a share (Figure 1).
71
Figure 1
Figure 1
Model of Knowledge Company
Model of Knowledge Company
Intelectual Capital
Distributión Capacity
Humano Intellectual
$$$$
Sales Force
Capital Assets
Facilities
Structural Capital
Source: Sullivan & Sullivan (2000)

41
Bueno (2008) asserts that the contribution of intangible assets to
the value of the firms has been registered, and is reflected in intellectual
capital and concentrate in a set of assets of basically intangible nature.
This new set of circumstances has been meant as a central objective for
higher management, because it is used to manage the tangible assets, as
the main source of value of the entity.
Today, the creation of value in the firm is based upon knowledge, but
it is necessary to combine it with the traditional productive resources,
land labor and capital defined as tangible assets, which results a new sys-
tem of creation of affluence for the firm, becoming a challenge for its
management (Figure 2).
Intellectual capital concept is an expression that combines two ba-
sic ideas: the results of intellectual exercise and their value or measure-
ment in similar terms to those used to explain the financial capital (Marr,
2005). Knowledge management is a recent process, from it the intellectu-
al capital concept has developed based on this line of thinking, the theo-
retical roots of intellectual capital can be traced in two different currents
of thought the first one called strategic which studies the creation and
use of knowledge, as well as the relationship existing between knowledge
72
Today, the creation of value in the firm is based upon knowledge, but it is necessary to combine
it with the traditional productive resources, land labor and capital defined as tangible assets,
which results a new system of creation of affluence for the firm, becoming a challenge for its
management (Figure 2).
Figure
Figure 2 2
The value of the firm in current
The value of the firm in the economyeconomy
the current
Tangible
Value Capital
Tangible
Assets
Management of
tangible activities
Intangible
Capital
Value
Intangible
Assets
Management of
intangible activities
Source: Bueno 2008
42
and value creation, the latter is centered in the need to develop a new
system of information measuring data not along the traditional financial
systems, reason why it is asserted that intellectual capital can be linked to
other disciplines as the corporate strategy (Figure 3).
73
Figure 3
Conceptual root of Figure
intellectual
3 capital
Conceptual root of intellectual capital
Organizational
learning
Knowledge Management
development conversion
Strategy
Innovation
Knowledge
Intellectual management
capital Knowledge
Core
influence
competencies
Human Invisible assets

resources
accounting Comprehensive
Measurement Command
charts Financial
Source: Roos et al. (2001)
Source: Roos et al. (2001)

It must be stated that the decision making process referred to the choice
of actions in the stock market is related with the problems faced by fund
administrators such as, ignorance of corporate
43 performance, as well as
uncertainty in the choice of financial assets, which are due in part to the
limitations of corporate reports and other public sources of information
available in the stock market, this turns out to be even more complicated
due to the effect on the organizational performance related to intellec-
tual capital and intangible assets reflected over the price of the shares
(Holland, 1999). Luthy (1998) says that the reason Price to book value
(P/BV) assumes that the approximated value of the company –tangible
assets plus intangible assets- is indicated by the value in the market –the
74
market price of the share multiplied by the number of shares circulating–

the difference between the value in books stated in the balance sheet and
the market value, gives an approximate measurement of the intellectual
capital that does not appear in the financial reports. In the same order of
ideas, Petty & Guthrie (2000) consider that the most relevant discover-
ies in this field can be presented through a combination of the research
methods, analyzing specific problems, as well as at market level through
statistics and experimental work, the present state of knowledge in this
field, offers to potential investigators the opportunity to make huge con-
tributions.
Model of study
To make the measurements of intellectual capital (Figure 4) of the firms

of the sector of services that quote in the Mexican Stock Market (BMV)
of the P/BV of each of the sectors, making a comparative analysis by
sector proving which of them had a higher relationship.
Reason Price Book value (P/BV)
This reason allows the determination of the number of times an investor

is willing to pay for a share in the stock market over its price in books, yet
earning future yield.
Chen, Cheng & Hwang (2005) highlight that several researchers have
registered that over the period 1997-2001 the relationship P/BV of com-
panies listed in Standard & Poors 500 have increased their market value
in relationship with their value in books fom1 to 5 times, what implies
that approximately 80% of the value in the market of the company, is
not reflected on its financial reports. For this research the relationship
P/BV, will be a complement in the measurement of intellectual capital,
comparing it to market added value (MAV). But it must be considered
that the market price can be affected by events out of the managerial
control, such as the generalized world crisis of 2008, additionally it helps
to know how much a buyer is willing to pay in relation to the nominal
value of the share.
75
4. Model of study
To make the measurements of intellectual capital (Figure 4) of the firms of the sector of services
that quote in the Mexican Stock Market (BMV) of the P/BV of each of the sectors, making a
comparative analysis
Anselmoby sectorChávez
Salvador proving which
Capó, of them
Tito Livio hadHidalgo
de la Torre a higher relationship.
& María Josefina Riverovillar
Figure 4
Model of the relationship
Figurebetween
4 Price/ Book value
and thePrice/
Model of the relationship between productive sectorand the productive sector
Book value
Calculation of the reason

Price/Book
value
Price in the stock between Book value

market
Reason
P/BV
Construction sector Frequent consumption Telecommunications

products sector sector
The more use of intangibles, the

higher Price book value
Source: own elaboration

Sveiby (1998) asserts that firms who own a great amount of intangible
assets tend to have higher prices44 for its shares when compared to tan-
gible assets. The value of intangible assets cannot be deduced as in the
tangible case it only emerges indirectly when the company is sold. When
it is considered that the value in books of the tangible assets represents a
100% of the market value, and so it is in strict theory, the minimum value
a share can have in that sector, is an absolute value when considering the
equity capital provided by the shareholders independently of its nominal
value.
76
The reason P/BV allows the determination of the attractiveness of a

share for the investors, because it means the number of times over the
value in books that someone is willing to pay for it, in this information
there is a large amount of the weight of the intangible assets assessment.
When it is less than 1 it means that investors are not willing to pay even
the price of the share in books, so they are not attractive, not even the
physical goods, nor the intangibles, for the firms using intangibles as
strategy, does this reason tend to be high.
Methodology
It was designed a non experimental, quantitative, longitudinal and co

relational- descriptive research, the reason market value-book value was
calculated using the equation proposed by Moyer et al. (2005) and Besley
& Bringham (2009).
Reason market value to book value = Market price per share

Book value per share
Stock Market Indicators corresponding to 2007, 2008, 2009 y 2010 were

used to get the market price, the book value of the share and the number
of shares per firm. The firms subject to study that quote in the Mexican
Stock Market in the sector of the construction are (Table 1).
BMV’s frequent consumption sector was composed by 20 firms until
January 2011, because it is a longitudinal study and as a result that not
all of them had the information required by this research or because they
had not quoted during de period 2007-2010 there was no information
about them, so the number of firms subject to research decreased to 16.
(Table 2)
77
Table 1
Construction sector in BMV
BMV Key Name

ICA ICA Construcción
HOMEX Desarrolladora Homex
GEO Corporación Geo
CICSA Carso Infraestructura y Construcción
URBI Urbi Desarrollos Urbanos
ARA Consorcio Ara
CMOCTEZ Corp. Moctezuma
SARE Sare Holding
IDEAL Impulsora del Desarrollo Económico
GMD Grupo. Mexicano de Desarrollo
DINE Dine
HOGAR Consorcio Hogar
PYP Grupo Profesional de Planeación y Proyectos
Table 2
Frequent Consumption Sector in BMV
BMV Key Name

BACHOCO Industrias Bachoco
BAFAR Grupo Bafar
BIMBO Grupo Industrial Bimbo
COMERCI Comercial Mexicana
FEMSA Fomento Económico Mexicano
GUEPEC Grupo Embotelladoras Unidas
GIGANTE Grupo Gigante
GMODELO Grupo Modelo
GMODERN Grupo Tablex
GRUMA Gruma
HERDEZ Grupo Herdez
KIMBER Kimberly Clark de México
MINSA Grupo Minsa
NUTRISA Nutrisa
SORIANA Organización Soriana
WALMEX Wal-Mart de México
78
BMV’s telecommunications sector was composed by 10 firms until January

2011, due to the fact that this is a longitudinal study and that not all of them
had the information required for the research or because some of them
didn’t quote over the period 2007-2010 there was no information available,
so the number of firms subject to study decreased to 8 (Table 3).
Table 3
BMV’s Telecommunications Sector
BMV Key Name

AMX América Móvil
AXTEL Axtel
CABLE Empresas Cablevisión
MEGACABLE Megacable Holdings
RCENTRO Grupo Radio Centro
TELMEX Teléfonos de México
TLEVISA Grupo Televisa
TVAZTCA TV Azteca
According to the information relative to the market value of the shares

and their respective book value, it was determined their relationship for
each one of the firms subject to study.
Calculation of the Reason Price Book Value
From the BMV stock indicators corresponding to the period 2007-2010,

as well as from the database INFOSEL the market price, the book value
and the number of shares were obtained. The product of the market price
and the number of shares allowed getting to the knowledge of the market
value and the quotient between the market value and book value of the
shares results in this reason.
79
Obtained results
The values of intellectual capital obtained by the three sectors subject of

study are shown.
Reason Price Book Value in the Construction Sector
The comparison of the different values that were determined for each
year, allows the observation of the behavior of the reason by firm in dif-
ferent moments over the time. For this sector the behavior was not as
volatile but had a low relationship value (Table 4).
Table 4
Relationship Price/Book Value BMV’s Construction Sector 2007-2010
Issuer Price/Book value

2007 2008 2009 2010
CICSA 3,12 1,91 2,40 1,98
ARA 1,70 0,49 1,26 0,97
DINE 4,88 1,36 3,28 1,49
CMOCTEZ 2,54 2,11 3,10 3,13
GEO 2,43 0,72 2,11 1,94
HOMEX 3,75 0,88 1,45 1,56
HOGAR 1,51 0,68 0,96 0,98
GMD 1,04 0,77 0,40 0,67
PYP 1,38 1,38 1,76 1,76
ICA 2,26 0,74 1,24 0,99
IDEAL 4,25 1,86 4,64 5,32
SARE 1,70 0,17 0,62 0,53
URBI 2,93 0,73 1,70 1,70
Average 2,58 1,06 1,92 1,77
Maximum 4,88 2,11 4,64 5,32
Minimum 1,04 0,17 0,40 0,53
80
The minimum value shown by this sector over the period of time studied
was IDEAL 5.32 for year 2010, it must be highlighted that a year before,
that business had also the maximum value, 4.64 and the minimum was
SARE’s 0.17 in year 2008, showing the same trend in 2010 with a 0.53,
the average for the sector showed ranks varying from 2.58 to 1.06, it is
evident that the slowdown in the acceleration of this sector was beginning
to show up giving as a result one of the lowest indexes of the relationship
P/BV, reason why their shares quoted in values close to the ones in their
accounting records.
All this was a consequence of the deterioration in the conditions of
activity of the building firms. In the analysis of that same year, the crisis
subprime is evident. The main issuers affected were the building firms, as
well as the realty ones.
Besides, this sector faces a special opportunity due to the increase on
international prices of some of the raw materials used by it. The issuers of
the sector have not been able to return to the earlier quoting levels in spite
of the fact that the construction contracts are continuously generating.
According to the Mexican Chamber of Construction Industry (2011)
world’s economic situation derived from the 2008 crisis, severely affected
the productive behavior of the building firms, from August of that same
year, when the Gross Value of Production (GBP) had its first fall, show-
ing negative figures during the 24 following months, slightly improving
until August 2010, ending the year with a positive variation of 0.7%. This
is reflected in the market value of the firms of this sector.
As it can be seen there is a considerable recuperation in this sector
during the period of study, IDEAL shows a value of 5.32 times its value
in books, the maximum over the period studied. Nevertheless while the
economic indicators do not improve, and governmental programs are not
operated according to what was budgeted, the effects on this sector will
not be evident.
Reason Price Book Value in the Frequent Consumption Products Sector
The results show the value of the reason P/BV for each firm (Table 5).
The maximum value shown by the frequent consumption products
sector during the period studied was KIMBER with 10.83 for year 2010,
81
Table 5
Comparative of the Reason Price/Book Value
Frequent Consumption Products Sector (2007-2010)
Issuer Key 2007 2008 2009 2010

BACHOCO 1,21 0,65 1,02 0,97
BAFAR 1,86 1,76 1,47 1,68
BIMBO 2,45 1,90 2,70 2,76
COMERCI 1,32 0,18 0,86 1,18
FEMSA 2,29 1,79 2,54 1,78
GEUPEC 2,80 3,40 3,32 3,17
GIGANTE 1,56 0,75 1,08 1,34
GMODELO 2,50 1,90 3,06 3,25
GMODERN 1,89 1,64 1,33 1,22
GRUMA 1,11 0,25 1,88 1,88
HERDEZ 3,54 2,38 2,86 3,17
KIMBER 5,94 6,37 8,37 10,83
MINSA 0,65 1,21 1,40 1,41
NUTRISA 2,45 3,09 4,47 4,37
SORIANA 1,82 1,79 1,90 2,12
WALMEX 2,53 2,23 3,14 5,42
Average 2,25 1,96 2,59 2,91
Maximum 5,94 6,37 8,37 10,83
Minimum 0,65 0,18 0,86 0,97
Source: Own elaboration
it must be mentioned that a year before this firm had also de maximum
value with 8.37 an each year was the highest, while the minimum was
COMERCI with 0.18 in year 2008, observing an increasing trend until
2010 with a 1.18 value, the average of the sector ranked from 2.91 to 1.96.
This sector showed values between 0.65 obtained by BACHOCO and
10.83 by KIMBER, the first has been affected by an increase in the input
related to its operation, at the same time the decrease in prices has been
constantly present, mainly due to an acquisition power decrease of the
population as consequence of the world crisis that crashed in 2008, which
82
has not yet been totally overcome, KIMBER on its part, being a firm
devoted to personal use basic products and of national fabrication that
compete with imported ones, that when receiving the impact of devalu-
ation in the rate of exchange have seen their sales affected, which has
allowed this Mexican firm to have an advantageous position with respect
to their competitors.
In what to the firms that quote in the commercial sector refers,
WALMEX and SORIANA have presented a constant behavior while
COMERCI has had a growth most of all when considering the advance-
ment in its financial restructure because it has accomplished its commit-
ments stemmed from the bad administration in the derivatives markets.
GMODELO on its part showed values from 3.25 to 1.90 during the year
of the crisis, maintaining a more conservative profile, in what to its world
expansion refers, it remains as world leader in beer sales, what they are
seeking is to keep their business in Extra convenience stores which has
been reduced when compared to the one of Oxxo its main competitor
which has excellent results for FEMSA that had values from 2.54 to 1.78
considering the favorable results obtained in its business unit related to
convenience stores.
Reason Price Book Value in Telecommunications Sector
The results show the value of the reason P/BV for each firm and year of
the period selected (Table 6).
The maximum value shown by this sector over the studied period was
MEGACABLE with 9.79 for year 2007, it is worth pointing out that in
2010 this firm had a value of 2.51 what represents a very significant de-
crease, the minimum value in this sector was AXTEL’s with 1.07 in year
2008, showing this trend towards year 2010 with a value of 1.13%, the
sector’s average ranked from 4.55 to 3.05.
AMX issuer shows the highest values excepting for year 2007, when
MEGACABLE shows the highest value 9.79, in the subsequent years the
values shown were 2008 6.82; 2009 with 5.35 and 2010 with 4.77.
The television firms keep a favorable performance because they keep
a high reason, because the average values obtained are between 3.05 and
4.55 times what means a high perception of the investing public with re-
83
Table 6
Comparative of the Reason Price/ Book Value
Telecommunications Sector (2007-2010)
Issuer’s Key 2007 2008 2009 2010

AMX 7,77 5,63 5,35 4,77
AXTEL 4,03 1,07 1,82 1,13
CABLE 3,86 3,85 2,55 2,65
MEGACABLE 9,79 2,09 2,65 2,51
RCENTRO 1,87 1,66 1,70 1,78
TELMEX 1,94 6,82 4,56 4,08
TLEVISA 3,08 3,21 4,06 3,65
TVAZTCA 4,08 3,53 3,57 3,81
Average 4,55 3,48 3,28 3,05
Maximum 9,79 6,82 5,35 4,77
Minimum 1,87 1,07 1,70 1,13
spect to these shares. It must be kept in mind that in this sector no issuer
showed a value under one, the telephone firms showed a value between
7.77 and 4.56 the best performance, except for AXTEL. The television and
cable firms show an average performance between 4.06 and 2.09, the most
discreet performance was RCENTRO’s with results from 1.87 to 1.66.
Comparison among sectors
Sveiby (1996) points out that those companies owning a great amount
of intangible assets tend to have higher priced shares in relation to their
tangible assets. Intangible assets value cannot be deduced as in the case
of the tangible ones, it only emerges indirectly when the company is sold.
Companies who are intensive users of intangibles are generally better
placed, even over consumer products or services companies, while the
latter, whose mission is to handle tangible assets, as in the case of banks,
84
mortgage, insurance and investment firms, they are typically valuated

close to their visible capital.
The book value of tangible assets represents a 100% of the value
provided by the associates and in strict theory, the minimum value that
a share can have in a given sector. It is also an absolute value when con-
sidering the total contribution of the shareholders independently of its
nominal value. Besides, the intangible value represents the number of
times the market is willing to pay for a share in a given sector.
In the case of the sectors under study, the construction one has the
lowest average in R/BV relationships, because it obtained figures be-
tween 1.06 and 2.58 (Table 7) according to theory due to the fact that it
has to intensively use tangible assets, the market values are very close, in
the average for the industry to the values shown in the books of the firms,
it must be pointed out that in this sector there are firms that show in 2010
a relationship of 3.13 as in the case of CMOCTEZ and 5.32 shown by
Ideal (Table 4).
The averages for the relationship P/BV were calculated for the sec-
tor frequent consumption products, they were higher than the ones for
the construction sector with values from 1.96 to 2.91(Table 7) theoretical
reference states that consumption or service firms tend to have a higher
reason in P/BV tan those that use tangible assets intensively for their op-
eration. The values obtained for this reason average higher in construc-
tion sector, that intensively uses tangible goods for its operation, it must
be pointed out that in this sector KIMBER had, along the studied period
the highest relationships with incremental values because in year 2007 it
had a reason of 5.94, in 2008, 6.37; in 2009 8.37 and in 2010, 10.83 (Table
5), which is a consequence of being a firm devoted to basic consumption
products made in Mexico, and are not evidently affected by the changes
in the rate of exchange, so it has an advantageous position in the different
markets it participates.
At last, the Telecommunications sector, had the highest averages in
the relationship P/BV when compared to the other sectors with values
between 4.55 and 3.05 (Table 7) the theoretical reference states that an
intensive use of intangible tend to have a higher reason in this indicator
than those who intensively use tangibles for their operation the values
obtained by this sector are higher than the averages for the Construction
85
and Frequent Consumption Products sectors, that need to use tangible

goods for their operation.
It must be pointed out that in this sector AMX had the highest rela-
tionships during years 2009 with a value of 5.35 and 2010 with 4.77 (Table
6), because of the dominance characteristics of mobile phone services
that Telcel trademark has in the market, and to the corporate move-
ments that have allowed it to consolidate in Mexico and internationally
by grouping operations of other companies from Grupo Carso, to which
it pertains.
Table 7
Average of the Reason Price/ Book Value
of the Three Sectors 2007-2010
Sector/Year 2007 2008 2009 2010

Construction 2,58 1,06 1,92 1,77
Frequent Consumption 2,25 1,96 2,59 2,91
Telecommunications 4,55 3,48 3,28 3,05
Conclusions
The firms with an intensive use of intangible assets or intellectual capital

exhibit, in average, higher values than those that require the intensive
use of tangible ones, as it can be observed, the firms related with Tele-
communications have a better average performance tan those related
with Construction sector, so it is possible to say that in a crisis situation
investors prefer those firms that have a higher intensive use of intangible
assets as is the case of Communications sector over those whose inten-
sive use is of physical assets, as in the case of the Construction sector, on
its part Frequent consumption products sector had intermediate values
when compared with the other sectors, because it does not exhaustively
use its intangible assets and does not depend on the use of tangible assets
(Chart 1).
86
Chart 1
RelationshipChart
Price/1 Book Value
Construction, Frequent
Relationship Consumption
Price/ Book Value Products
Construction,
andFrequent Consumption Products
Telecommunications
and Telecommunications
Source: Ownelaboration
Andriessen (2004) states that book value represents historical value of the firm’s assets, while
Andriessen (2004) states that book value represents historical value of
market value is the same as the present value perceived of future cash flows, so the reason P/BV
allows to the
show firm’s assets,expectations
the market while market value
with is the
respect tosame as the
the firm, present
It must value
be said per-
that book value
ceived ofon
partially depends future cashprofits,
retained flows, so thestem
that reason
fromP/BV allows to
operations show the
involving market capital,
intellectual
besides, oneexpectations with respect
of the investors’ to the
problems firm,
is real It must
value be said
and future that book value
performance of thepar-
entity. From
tially
all this it can bedepends
concludedon retained
that P/BV isprofits,
a relativethat stem that
measure fromoffers
operations involving
a proportional comparison
of the nominal
intellectual capital, besides, one of the investors’ problems is real valuethe stock
values of an organization and an assessment of the yield expectancies
market has at its respect. The way in which both measurements can be related is complemented
and future performance of the entity. From all this it can be concluded
with the information generated by intellectual capital to explain the assessment of the future
performance thatreflected
P/BV isinathe
relative
P/BV. measure that offers a proportional comparison
of the nominal values of an organization and an assessment of the yield
expectancies the stock market has at its respect. The way in which both
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5
The Relationship between Managerial
Capacity and Competitiveness in the Spanish
Logistics Managers Furniture Sector
Gonzalo Maldonado Guzmán1

Ricardo García Ramírez1
Juan Gaytán Cortés2
Octavio Hernández Castorena1
Abstract
The human resources and competitiveness is two key-elements more

valued by firms and that is why firms are trying to hire the brightest minds
of each field to obtainer higher competitiveness level. For this reason,
this paper is focusing in analyzing the relationship between manage-
rial capacities and competitiveness in the Spanish furniture sector. The
empirical analysis was carried out from a sample of 322 firms with twenty
or more employees. The obtained results show that the managers’ expe-
rience, skills and educational have positive effects in their managerial
capacity and, also, that the managerial capacity has a positive influence
in competitiveness.
1. Univesidad Autónoma de Aguascalientes.

2. Universidad de Guadalajara.
91
G. Maldonado Guzmán, R. García Ramírez, J. Gaytán Cortés & O. Hernández Castorena
Keywords: Experience, skills, educational, performance, managerial

capacity, competitiveness.
Introduction
The competitive pressures and the changes in the economic market have
forced firms to re-evaluate the operation and structure of their logistics
systems. The strategy oscillations from local production for a local market
to national or international supply centers for the manufacture and dis-
tribution have very important implications in the organizations, struc-
ture, managers, control systems and customer service costs (Burcher et
al., 2005). Logistics, the biggest function of businesses, has gone through
many changes internally since 1950, when several firms carried out activi-
ties to compact this function in fragmentary bases (Quayle, 1993).
Logistics activities were integrated as a discipline in the 1990s. Nowa-
days, logistics management has developed the traditional way from an
emphasis in operation to a strategic one (Kohn et al., 1990; Burcher et
al., 2005). This evolution has important implications for logistics man-
agers (LaLonde, 1990; Zineldin, 2004). Logistics functions keep gain-
ing a higher visibility in the organizations due to the increase of costs in
logistics activities (Stock & Lambert, 1987; Burcher et al., 2005). This
demands logistics managers that can adapt to changes through time, to
the environment and to the responsibilities that are higher than the ones
faced by their predecessors.
Fortunately, the results of diverse papers focused on logistics manag-
ers (especially about the skills and characteristics required in good man-
agers) are plenty. Several researches analyze the conduct of the manag-
ers in the United States (Murphy & Poist, 1991a; 1991b; 1993; Zsidisin
et al., 2003), the perceptions of logistics managers in Asia (Abdur &
Shafreen, 2001), the complete relationship of managers (Zineldin, 2004),
the strategic decisions in Brazil (Wanke & Zinn, 2004), the preparation
of logistics managers for the European Union (Poist et al., 2001) and the
comparison of logistics managers in Australia and the United Kingdom
(Burcher et al., 2005). These papers provide important aspects to the lit-
erature of this field.
92
The Relationship between Managerial Capacity and Competitiveness in the Spanish...
Literature review
This summary shows the literature review about the managerial capacity
of logistics managers as well as the literature review regarding competi-
tiveness.
Logistics Managers
Since the beginning of the 20th century, the integration of logistics in

the supply chain has gone through a long way from the traditional con-
cern of storage, distribution and goods transport to the concern about
logistics management. In this trend, the function of logistics manage-
ment has evolved and, as a consequence, logistics managers have been
acknowledged for the design and the handling of competitive advantages
(Skjoett-Larsen, 1999; Burcher et al., 2005). The virtual integration of
the operations with material suppliers and services means that logistics
managers have to monitor by themselves, but not a directly controlling,
the performance of actives and activities (Bowersox et al., 2000).
These changes increase the result about the required skills for logis-
tics managers (Myers et al., 2004; Burcher et al., 2005), especially the ones
related to the top level inside the organization (Poist et al., 2001; Burcher
et al., 2005) and the influence that they can have with adequate training
in order to face changes. This has been well established and has had a
relevant interest for the last two decades when discussing the education
and skills sought in logistics managers in the United States (Murphy &
Poist, 1998; Masters & LaLonde, 1998; LaLonde & Pohlen, 2000; Ginter
& LaLonde, 2003) and the European Union (Poist et al., 2001; Abdur &
Shafreen, 2001; Burcher et al., 2005).
The emphasis in the skills that managers need to do their job effi-
ciently has seemed to change in the last three decades. The perception
of the importance of logistics information systems in the 1970s allowed
logistics managers to have a solid knowledge in this field (England &
Leenders, 1978). In the 1980s, the emphasis shifted to quality, interna-
tional outsourcing, negotiation, understanding of costs and the results re-
lated to them. In the 1990s, there were new opportunities for the industry
93
through the creation of new and high technology. All these changes have
made that current logistics becomes highly complex.
The new challenges, the redefinition of roles and the influence of
logistics managers demand the expansion of their skills and knowledge,
which is the basis in the constant change in business environment (Ab-
dur & Shafreen, 2001). Present and future logistics managers must be
multi-skilled and able to make decisions as if they were specialists in each
function of logistics (Murphy, 1990; Richardson, 1991a, 1991b; Gattorna,
1992; Johnson & Wood, 1993; Gooley, 1994a; Pooley & Dunn, 1994; Ab-
dur & Shafreen, 2001; Zineldin, 2004; Burcher et al., 2005). This is the
closest to having an extreme academic training in logistics with an em-
phasis in computing, technical skills and general management as well as
being competent in human relationships and a good dealer (Buxbaum,
1995; Abdur & Shafreen, 2001; Zineldin, 2004).
Several researchers have studied in the United States the relevant el-
ements about the skills, specific functions of experts and training that are
required for logistics managers. Despite the differences in the nature of
operations and the range of the logistics function, the relevant skills for
the level of logistics managers tend to be similar in most firms (Richard-
son, 1991a, 1991b; Abdur & Shafreen, 2001). In order to be successful,
logistics managers must have functionality, management and problem-
solution skills (Herron, 1985; Abdur & Shafreen, 2001); they must have
knowledge and understanding of the customers’ needs, customer ser-
vices and competitive upholding of their experiences (Buxbaum, 1995;
LaLonde & Emmelhainz, 1985; Zineldin, 2004) as well as strategic man-
agement skills (Richardson, 1991a; 1991b; Wanke & Zinn, 2004).
Similarly, they must have communication, leadership and people
skills and computer-related knowledge (Burcher et al., 2005; Poist et al.,
2001; Buxbaum, 1995; Williams & Currey, 1990; LaLonde & Emmel-
hainz, 1985). Researchers have also made reference to knowledge based
in data, management and assessment of monetary flow and the verifica-
tion of their success (Williams & Currey, 1990; Abdur & Shafreen, 2001),
all of this with a high degree of adaptability depending on the conditions
of business (Gattorna, 1992; Burcher et al., 2005). Such skills are highly
desirable in the best logistics managers. In brief, logistics managers need
to attain a wide range of skills that can be incorporated in functional as-
94
pects as well as in the increase of their responsibilities (Stock & Lambert,

1987; Poist et al., 2001; Abdur & Shafreen, 2001; Zineldin, 2004).
It is important to notice that both the personal and academic char-
acteristics have to be considered with less frequency than the skills (Wil-
liams & Currey, 1990; Burcher et al., 2005). However, highly trained lo-
gistics managers tend to join the importance of quantitative techniques
with their less trained parts (Poist & Mattingley, 1975; Abdur & Shafreen,
2001). The concern for lowering costs, poor communication skills, lack of
sophisticated training in management and an inadequate grasp of mar-
keting functions seem to be the biggest weaknesses of logistics managers
(Burcher et al., 2005; Wanke & Zinn, 2004; Poist et al., 2001; Johnson
& Schneider, 1987). Similarly, they need to have primary knowledge re-
lated to business (marketing and accounting, for example) and secondary
knowledge (psychology and public relations, for example). Similarly, they
need knowledge about functions, freight, storage, forecasting and under-
standing of logistics as a subject.
Competitiveness
Competitiveness has constantly been a difficult topic to deal with, a con-

cept that produces a lot of controversy among researchers, academics and
politicians as it is very difficult to agree on a concrete definition. Such dis-
agreement becomes more evident when trying to measure it and the scales
used to do so and, as a result, the interpretation of any result has created
controversy (Ezeala-Harrison, 2005). A considerable amount of ways in
which firms’ competitiveness can be considered relevant has been analyzed
in the current literature (Porter, 1990, 1998; Hamel & Prahalad, 1990;
Casson, 1991; Hill & Jones, 1992; Stalk et al., 1992; Faulkner & Bowman,
1995; Rumelt, 1997; Rugman & Hodgetts, 2000; Gorynia, 2005).
However, only some aspects of competitiveness are considered by
researches and in an arbitrary way (like the ones focused on costs and
competitive prices, which do not explain the notion of competitiveness).
With this perspective, and according to Porter (1990), competitiveness
should be treated as a synonym of productivity. This approach is very
practical if we intend to measure competitiveness, but it is not so useful if
we attempt to understand the reasons or factors of competitiveness. Por-
95
ter (1990) is aware of the limitations to identify competitiveness and pro-

ductivity, and that is why he proposes a series of factors that determine
competitiveness. Such list contains four elements: factor conditions, de-
mand conditions, supporting industries and firm strategies.
Hamel and Prahalad (1990) consider that the concept of competi-
tiveness is connected to three categories: relative position in the market,
sustainable competitive advantage and core competencies of the firm.
Faulkner and Bowman (1995) have helped us to distinguish between op-
erational competitiveness (technology and distribution, for example) and
systematic competitiveness (creation of worth and innovation, for exam-
ple). The concept of competitiveness is widely discussed in both papers,
but it is not defined expressi verbis (Casson, 1990, 1991). It is necessary to
carry out further researches that go beyond the holistic dimension and to
try to understand the multifaceted concept of business competitiveness
so it reflects the complexity about the behavior of rival firms in a con-
stantly increasing competitive market (Gorynia, 2005).
A wide approximation to business competitiveness and the vacuum
created in the concept of competitiveness are presented in the research
done by Gorynia (2005). The purpose of the first part of his paper is the
suggestion of a possible approximation to understanding the problem of
business competitiveness. Simultaneously, this approximation must in-
clude the most important aspects of the competitive behavior of firms. As
a result, it will be possible to suggest a way to evaluate business competi-
tiveness (Gorynia, 2005). However, the research conducted by Buckley et
al. (1988) is, undoubtedly, the most complete one by presenting a mea-
surement scale of competitiveness in four levels (product, firm, industry
and national) as well as the easiest way to measure and interpret it.
These researchers outline three aspects of competitiveness in three
measure groups: competitive performance, competitive potential and man-
agement processes. This taxonomy that measures competitiveness, also
known as the three Ps, describes the different representations of the
competitiveness processes. The starting point is the measurement of po-
tential described in the operation entries, the measurement of perfor-
mance, the results of the operation and the measurement of manage-
ment processes of the operation. From this perspective, competitiveness
96
cannot be considered as a static concept, but rather as an active process

(Buckley et al., 1988).
Competitive Performance: The market share performance is common-
ly used to measure the competitiveness performance. Nevertheless, it
does not explain, for example, why the market can survive despite drastic
price reductions, which inevitably can bring negative effects in the profit
and the possibility to achieve a long-term performance. Moreover, the
measurement cannot deal with the multi-products of companies whose
performance change depending on the product (Kirpalani & Balcome,
1987; Buckley et al., 1988), and the firms from specific marketplaces
(Buckley et al., 1988; Gorynia, 2005).
This paper is concerned about the relationship between managerial
capacity and competitiveness, especially in manufacturing firms, where
suppliers usually have a strong influence in the success of products, in
the capital return measures and sales that have gained importance as
a measurement of the financial performance (Dröge & Germain, 2000;
Corsten & Felde, 2005). Thus, we define the financial performance as the
return of capital, the return of sales and the improvement of measures to
compare the results of firms and/or industries (Corsten & Felde, 2005).
Competitive Potential: Cost-based competitiveness is another com-
mon measurement used to gauge competitiveness at both (company and
industry) levels. The basic principle behind this idea says that if the firm
or industry has low costs, then it can get a higher competitiveness (Artto,
1987; Buckley et al., 1988; Gorynia, 2005). However, the analysis of costs
can fail if it does not explain the performance of enterprises or industries.
This is possible for a company or industry with competitive costs but lacks
a satisfactory return as a result of poor market positioning or negative
product image. If so, are costs really competitive? If the company’s or
industry’s performance is good (apart from low-cost competitiveness, for
example), then they will have chosen markets, strategies and other com-
petitive aspects that have provided them with successful results (Artto,
1987; Buckley et al., 1988; Gorynia, 2005).
In the specific case of this research paper, we will consider purchase
costs that include coordination costs with suppliers, especially those re-
lated to placing orders and freight (Williamson, 1985; Cannon & Hom-
burg, 2001; Corsten & Felde, 2005). From a perspective of total costs,
97
purchase costs are an important determinant about the performance of

the competitiveness performance in firms and industries (Ellram, 1995).
Therefore, we include communication, freight and placement of orders
costs as measurement of performance.
Technology, as an indicator of competitiveness, is another measure-
ment used at corporate and industrial levels. Many recent investigations
about competitiveness have been focused in the technological activity and
the development as a variable of competitiveness. Several indicators of
technical intensity have been proposed as indicators of competitiveness
(Buckley et al., 1988; Gorynia, 2005). These include costs in R&D (Pavitt,
1984; Cantwell, 1987), the use of qualified scientists and engineers, the
number of patents (Patel & Pavitt, 1987), and income from copyrights.
However, these measures have been replaced by some notion of the re-
sults of technology processes (Buckley et al., 1988; Gorynia, 2005).
Apart from this, the different distributions inside R&D can be at odds
with the development. A strong R focused in the industry may not have
an impact for some time. A strong D focused in the industry may seem
less advanced, but it can have a more immediate impact (Sciberras, 1986;
Buckley et al., 1988; Gorynia, 2005). This is a consequence from a R&D,
which is important for both the company and the industry, regardless of
the level of money expense. Firms can make extensive costs in research
and development, but they can fail in the production of products, which
balances the needs and requirements of the chosen market (Buckley et
al., 1988; Gorynia, 2005).
Management Processes: The mission of transforming the competitive
potential into performance is the main task of the management. This is
the development of management that supports the competitive process.
The approval of management performance is essentially qualitative and
the specific elements of the management processes can have individual
results for one or more firms or industries (Buckley et al., 1988; Gorynia,
2005). A detailed literature review about this topic might help us (for
our specific research) to choose the elements of management that will
be taken into account in the complexity of competitiveness. In short, the
fundamental variables regarded to the management processes will be di-
rectly related to the logistics management processes about the industry
and the furniture firms.
98
The indicators of management processes show that when someone

wants to go beyond a clear measurement of competitiveness, there is a
complex creation of factors that explain some of the finest details of the
firms’ abilities to compete (Scott & Lodge, 1985; Buckley et al., 1988).
The experience from managers and firms has showed its influence in
the last years, which has helped to make better strategic decision and,
consequently, attain a strong competitive position. Thus, the experience
and creation of managers are two common variables used by several re-
searchers and academics to measure the development of business man-
agement in firms which, as a result, become a reference when measur-
ing competitiveness (Scott & Lodge, 1985; Buckley et al., 1988; Gorynia,
2005; Banerjee, 2005).
In this context, labor experience is usually operationalized as a long
term service in a given job (McDaniel et al., 1988; Myers et al., 2004). It
is the most frequently used criterion to set ambitions at work (Levine &
Floyd, 1975; Myers et al., 2004), mostly because labor experience and job
performance can be established for that purpose. For example, Schmidt
et al. (1986) considered that labor experience is a casual effect in job per-
formance through indirect impacts in work knowledge, performance and
work capacities. McDaniel et al. (1988) suggest that “for all the levels of
labor experience and for all the jobs with a low or high complexity, the corre-
lation between labor experience and job performance is positive”. Other re-
searches also consider the relationship between labor experience and job
performance (Blankenship & Taylor, 1938; Taylor & Smith, 1956; Fleish-
man, 1965; Myers et al., 2004). Similarly, the increase in job performance
from logistics managers can be associated in a positive way with rises in
their labor experience (Schmidt et al., 1988; Myers et al., 2004).
H1: The higher level of experience, higher level of performance from logistics
managers in firms from the Spanish furniture sector.
The resources can be tangible and intangible, which allows that produc-
tion from companies be efficient as well as to add value to the products
in some markets or groups (Barney, 1991; Myers et al., 2004). Human
resources represent one of the most important intangible resources
used by firms, and human resources include skills and knowledge from
every employee in the firm (Hunt & Morgan, 1995; Myers et al., 2004).
99
Moreover, skills are related with performance (McClelland, 1973; Gole-

man, 1998; Sandberg, 2000; Myers et al., 2004). Hunt and Morgan (1995)
reported that intangible resources such as skills and knowledge are very
essential in the enterprises. However, the discovery and maintenance of
employees with the required skills and abilities is often difficult. Several
firms provide with extra wages for strong abilities and prizes to employ-
ees, whose experience is vital, who find such benefits very attractive
(Cappelli, 2000).
H2: The higher level of skills, higher level of performance from logistics ma-
nagers in firms from the Spanish furniture sector.
The knowledge obtained by means of education provides the logistics
managers with a solid base of information that they can use to achieve
their tasks and intensify work performance. Researchers have looked for
relationships in the academic modifications or education as predictors
of work performance (Hunter & Hunter, 1984; Howard, 1986) but the
results obtained can be rather confusing. The academic modifications
or education could finally predict the lack of experience in work perfor-
mance, but they could also predict in a significant way the management
performance as well as the performance of occupational skills (Singer &
Bruhns, 1991; Myers et al., 2004).
H3: The higher level of education, higher level of performance from logistics
managers in firms from the Spanish furniture sector.
The employee performance represents the way managers achieve goals in
the organizations and support the success of results sought by enterprises.
The performance of the worker influences the way how managers and/or
companies perceive the management capacity of employees (Daugherty
et al., 2000; Myers et al., 2004). If workpeople achieve high levels and a
positive influence, the company’s goals will be attained (maybe due to
more experience, education or high skills levels), employers will want
more management capacity than the one they can give to employees (Ire-
land et al., 2001). In simple terms, the skills of workers will help firms to
create wealth and to survive, to exert an influence in managers about the
perception of employees (Zimmerman, 2001; Myers et al., 2004).
100
H4: The higher level of performance of logistics managers, higher level of

management capacity in firms from the Spanish furniture sector.
If we consider that the management capacity of logistics managers is
regarded as the intellectual capital of companies (Zimmerman, 2001;
Myers et al., 2004), then a better development of such capital will allow
enterprises to increase their competitive capacity (Myers et al., 2004).
H5: The higher level of management capacity of logistics managers, higher

level of competitiveness in firms from the Spanish furniture sector.
Methodology
An empirical research was carried out with firms from the furniture
sector in Spain in order to validate the proposed hypotheses. In short,
the aspect analyzed is the effects produced by the management capacity
of logistics managers in the competitiveness of furniture-manufacturing
firms. In the first stage of the research, a qualitative investigation was car-
ried out (focus groups). In it, detailed surveys were given to the people in
charge of some firms that manufacture furniture. The results obtained in
the first stage provided a better insight of the sector’s situation as well as
being very helpful to define accurately the quantitative stage.
Sample design and data collection
The procedure used to get a reference framework in this research paper

started with the directory and records of enterprises that had twenty or
more employees. They were obtained from the National Association of
Industries and Furniture Exporters from Spain (ANIEME), which had
total of 221 associated companies in August 2006. A directory of 279
companies was obtained from the International Furniture Fair (FIM) in
Valencia in order to see the records of Spanish firms that participated in
the last two exhibitions prior to the research (2005-2006) which included
the ones with twenty or more employees.
This produced a directory with 500 companies, which represents a
little over 38 per cent from the total population of this research (1,300). It
101
is important to highlight that the enterprises associated to ANIEME, just

like the ones from the FIM, belong to different business organizations
(regional and national) so the research did not focus in only one specific
group or association. Similarly, the survey was sent via regular mail to
each one of the 500 selected firms. 334 surveys were answered and re-
turned; 12 of these were discarded as they did not fulfill the established
requirements. This gives a total of 322 valid surveys with an error of ±4.8
per cent and a reply rate of 53 per cent.
Development of measures
Prior to the analysis of results from the research, a reliability and validity
analysis of the used measures was carried out. The variables used (skills,
performance and managerial capacity) are defined by unidimensional
scales. All the items of these variables are created according to on a 5
points Likert scale ranging from 1 = strongly disagree to 5 = strongly
agree as limits. The skills were divided in: social, decision making, solving
problems and time management. The social skills were measured with
a six-item scale adapted from Waldman et al. (2001) and Myers et al.
(2004). The decision making skills were measured with a six-item scale
adapted from Mintzberg y Westley (2001) and Myers et al. (2004).
The solving problem skills were measured with a four-item scale
adapted from Beyer et al. (1997), Wieringa and Van Bruggen (1997), Ire-
land et al. (2001) and Myers et al. (2004). The time management skills
were measured with a four-item scale adapted from Carroll and Gillen
(1987), Wieringa and Van Bruggen (1997), Barry et al. (1997) and My-
ers et al. (2004). The scale for performance was measured with a three-
item scale adapted from Daugherty et al. (2000), Ireland et al. (2001),
Zimmerman (2001) and Myers et al. (2004). Also, the managerial capac-
ity was measured with a five-item scale adapted from Daugherty et al.
(2000), Ireland et al. (2001), Zimmerman (2001) and Myers et al. (2004).
Similarly, the experience was measured by just writing the number of
years reported and it was adapted from McDaniel et al. (1988), Schmidt
et al. (1988) and Myers et al. (2004). Educational was measured from a
possible group of answers and by selecting the one that is adequate to
the current condition and it was adapted from LaLonde y Pohlen (2000),
102
Ginter y LaLonde (2001) and Myers et al. (2004). Finally, the scale used
to measure competitiveness considered three factors: financial perfor-
mance, purchasing costs reduction and technology. The scale was adapt-
ed from Buckley et al. (1988) with three items for each one of them and
made of a Likert-type scale with five options.
Reliability and Validity
In order to evaluate the reliability and validity of the measurement scales, a

Confirmatory Factorial Analysis (CFA) was carried out by using the maxi-
mum likelihood method in EQS 6.1 software (Bentler, 2005; Brown, 2006;
Byrne, 2006). Similarly, the reliability of the proposed measurement scales
is evaluated from Cronbach’s alpha coefficient and the Composite Reli-
ability Index (CRI) (Bagozzi & Yi, 1988). All the values from the scale
fulfilled the recommended level of 0.7 for Cronbach’s alpha as well as CRI
that provides an evidence of the reliability that justifies the internal reli-
ability of the scales (Nunally & Bernstein, 1994; Hair et al., 1995).
The adjustments used in the method were the NFI, NNFI, CFI and
RMSEA (Bentler & Bonnet, 1980; Byrne, 1989; Bentler, 1990; Hair et
al., 1995; Chau, 1997; Heck, 1998). Values of NFI, NNFI y CFI between
0.80 and 0.89 represent a reasonable adjustment (Segars & Grover, 1993)
and a value equal or superior to 0.90 are a good evidence of a good fit
(Jöreskog & Sörbom, 1986; Byrne, 1989; Papke-Shields et al., 2002). RM-
SEA values below 0.080 are acceptable (Jöreskog & Sörbom, 1986, Hair
et al., 1995).
The results of the final application of CFA are presented in Table 1
and they suggest that the final measurement model provides a good fit
(S-BX2 = 126.2715; df = 59; p = 0.000; NFI = 0.961; NNFI = 0.971; CFI
= 0.978; y RMSEA = 0.060). ). As evidence of the convergent validity,
the results from the CFA indicate that all the items of the related factors
are significant (p < 0.001), the size of all the standardized factorial loads
are superior to 0.60 (Bagozzi & Yi, 1988) and the average of the stan-
dardized factorial loads are above 0.70 (Hair et al., 1995).
103
Table 1
Internal consistency and convergent validity of the theoretical model
Variable Indicator Factor Robust Loading Cronbach’s Composite AVE

loading t-Value average alpha reliability
Skills SOS1 0.931*** 1.000a 0.883 0.911 0.963 0.783

DMS2 0.945*** 35.031
PSS3 0.789*** 20.471
TMS4 0.867*** 26.463
Performance PE1 0.689*** 1.000a 0.756 0.741 0.801 0.574
PE2 0.796*** 11.073
PE3 0.784*** 12.174
Managerial WO1 0.691*** 1.000a 0.761 0.743 0.805 0.579
Capacity WO2 0.790*** 12.809
WO5 0.799*** 12.991
Competiti- CRF1 0.841*** 1.000a 0.803 0.842 0.847 0.648
veness CRC2 0.859*** 18.166
CTE3 0.708*** 13.995
S-B X2 (df = 59) = 126.2715; p < 0.000; NFI = 0.961; NNFI = 0.971; CFI = 0.978;
RMSEA = 0.060
a
= Value parameters in the identification process
*** = p < 0.001
Table 1 shows a high internal consistency of the constructs. In each case,

Cronbach’s alpha exceeds the value of 0.70 recommended by Nunnally
and Bernstein (1994). The CRI represents the extracted variance among
the group of observed variables and the fundamental construct (Fornell
& Larcker, 1981). Generally, a CRI above 0.60 is considered as desirable
(Bagozzi & Yi, 1988) and our paper greatly exceeds such value. The aver-
age variance extracted (AVE) was calculated for each construct, which
results in an AVE that is superior to the 0.50 recommended by Fornell
and Larcker (1981).
104
In regard to the evidence of discriminant validity, the measurement is

given in two ways that can be observed in Table 2. First, with a confiden-
tiality interval of 95%, none of the individual elements of the latent fac-
tors from correlation matrix contain the value 1.0 (Anderson & Gerbing,
1988). Second, the extracted variance between the pair of constructs is
superior to its corresponding AVE (Fornell & Larcker, 1981). Based on
these criteria, it can be concluded that the different measurements used
in this paper show sufficient evidence of reliability as well as convergent
and discriminant validity.
Table 2
Discriminant validity of the theoretical model
Variable 1 2 3 4
1. Skills 0.783 0.068 0.084 0.143
2. Performance 0.210, 0.310 0.574 0.075 0.120
3. Managerial Capacity 0.230, 0.350 0.210, 0.338 0.579 0.138
4. Competitiveness 0.320, 0.436 0.273, 0.421 0.300, 0.444 0.648
Diagonal represent the average variance extracted, while above the diagonal the shared
variance (squared correlations) are represented. Below the diagonal the 95% confi-
dence interval for the estimated factors correlations is provided.
Results
We analyzed the conceptual model in this research paper by using the

Structural Equations Model (SEM) in EQS 6.1 software (Bentler, 2005;
Byrne, 2006; Brown, 2006). In order to obtain the statistical results of the
research hypotheses, a SEM was carried out with the same variables to
prove the structure of the model and obtain the results that could allow
the contrast of the established hypotheses. The nomological validity of
the theoretical model was analyzed by the chi-square performance test in
which the theoretical model was compared with the measurement model.
The results indicate that the non-significant differences of the theoreti-
cal model are good in the explanation of the relations observed between
105
the latent constructs (Anderson & Gerbing, 1988; Hatcher, 1994). The
results obtained are presented in Table 3.
Table 3
Structural model results
Standarized
Robust
Hypothesis Path path
t-Value
coefficients
H1: The higher level of experience, higher performance
Experience Performance 0.623*** 9.038
level.
H2: The higher level of abilities, higher performance
Skills Performance 0.793*** 10.038
level.
H3: The higher level of education, higher performance
Education Performance 0.654*** 9.381
level.
H4: The higher level of performance, higher managerial
Performance Man. Capacity 0.826*** 12.103
capacity level.
H5: The higher level of managerial capacity, higher
Man. Cap. Competitiveness 0.797*** 11.488
competitiveness level.
S-BX 2 (82)= 161.9186; p = 0.000; NFI = 0.951; NNFI = 0.968; CFI = 0.975; RMSEA = 0.055
*** = p < 0.001
In regard to the first hypothesis H1, the results obtained, β = 0.623, p <
0.001, indicate that the experience has significant effects in the managers’
performance. The second hypothesis H2, the results obtained, β = 0.793,
p < 0.001, indicate that the skills have significant effects in the managers’
performance. In regard to the third hypothesis H3, the results obtained,
β = 0.654, p < 0.001, indicate that education has significant effects in the
managers’ performance. The fourth hypothesis H4, the results obtained,
β = 0.826, p < 0.001, indicate that the performance has significant effects
in the managerial capacity. Finally, the results obtained in the hypothesis
H5, β = 0.797, p < 0.001, indicate that the managerial capacity have
significant effects in the company’s competitiveness level. To sum up, it
can be proved that the five variables analyzed have positive effects or are
significant (p < 0.001).
106
Discussion
Despite the research papers found in the literature and their emphasis
in critical aspects about the development of human capital in the field
of logistics, it is difficult to attract and keep qualified researchers in this
important area. However, specialized journals in the field of logistics
are starting to publish more papers about human capital in firms in the
last years. Experience, education and managers’ skills are believed to
have a strong influence in the performance and managerial capacity in
most of the researches linked to human capital. The results obtained in
our research paper provide some interesting evidence about this. The
levels of experience, education and skills from managers, all of them are
directly related with the managers’ performance. This means that the
three factors seem to be good predictors of the performance of workers.
Similarly, the performance of workpeople is also directly related with the
managerial capacity and is also a good predictor.
The results obviously indicate that the experience, education and
skills from managers are important factors that help to measure the lev-
el of managers’ performance. In this sense, the results obtained in this
paper can be interpreted as essential requirements to gauge the levels
of performance in logistics managers in firms. Maybe the experience,
education and skills from managers make a substantial difference since
the characteristics of managers are highly assessed in the labor market.
Similarly, the skills of employees can be increased if a traditional obstacle
that is considered a deficiency is avoided. Such problem is the idea that
formal education and/or labor training along with a vast experience can
significantly increase the management skills. Thus, the acquired skills
provide firms with workers whose high cognition can face any labor situ-
ations effectively and efficiently.
In regard to competitiveness, the literature presents different re-
search papers that show a positive relation between managerial capacity
and firms’ competitiveness level. Logistics managers are responsible for
the design and administration of competitive advantages that lead the
enterprise to achieve a privileged position in a constantly globalized mar-
ket. In this sense, the results obtained in this paper show that the mana-
gerial capacity of managers are a good indicator to measure the level of
107
competitiveness in firms. A good management of logistics systems will

have to give good performance results of companies. That is why, and
as we have already mentioned, the experience, skills and education are
important indicators to measure the managerial capacity of managers
and this is, ultimately, a good indicator to gauge the company’s competi-
tiveness.
Implications for managers
The results gathered in this paper show that the experience, education
and skills managers have important implications for both the employ-
ees and employers in enterprises. The experience, education and level of
skills (social, decision making, problem solving and time management)
established a strong influence in managers about the perception of the
managerial capacity of managers from the logistics area. For this reason,
the development of skills in managers represents a potential that can
have a strong, positive influence in the long term for the achievement of
the firms goals. Consequently, workpeople need to determine how much
they must develop their skills to be hired in the labor market by having
formal education, executive training programs, direct observation of their
colleagues’ skills or a rich combination of these programs and others.
From an employer’s point of view, the enterprises are focusing on the
purchasing skills of employees or in the development of skills through
internal education. Alternatively, logistics managers that want to choose
education and development programs in order to increase their skills
levels after being hired by a company will have to answer two basic ques-
tions: what kind of education is more effective depending on their job
position? How can the progress of employees be measured? The evalua-
tion of formal development provides an excellent opportunity for manag-
ers to get honest, reliable feedback about the improvement of their skills
levels. From a theoretical perspective, this research shows that, regard-
ing the assessment of logistics managers, a multidisciplinary approach is
needed in order to grasp all the value about the skills of managers. By
analyzing the most recent papers about the topic, we can observe that
most of them promote a theoretical integration of investigations about
business processes and the role of managers in the companies. Each one
108
of the essential processes of firms is subdivided into a big number of sub-

processes (Srivastava et al., 1990; Myers et al., 2004) and the evaluation
of logistics managers is no exception.
Regarding competitiveness, the managerial capacity of logistics man-
agers will be a key factor for firms to increase their competitiveness level.
Therefore, logistics managers will have to look for ways to increase their
level of managerial capacity since companies depend on this to have a
significant increase in their competitiveness level. Such mechanisms will
have be sought outside and inside the enterprise by means of better man-
agement training in the logistics area as well as updated training in busi-
ness logistics systems. Managers need more involvement in the decisions
taken in the logistics systems of the company because these decisions
will affect the business competitiveness. Therefore, managers will have
to find new performance measures from the different logistics activities.
Additionally, different logistics managers have different levels of experi-
ence, education and skills. Nowadays, the Spanish furniture sector can
probably have a great potential in the development and benefits inherent
to the performance of human capital.
Limitations and future research
This research paper is based on sample whose size represents in itself a

limitation even when this limitation is slightly favored due to the qual-
ity of the interviews and the experience in the logistics area. The use of
a survey via regular mail for data collection can possibly present some
problems with the pitfalls of common methods. Another limitation is the
recollection of information because only a part of it was obtained from
the skills of logistics managers. Since we are interested in pursuing our
research in this transcendental area, it is important to highlight that most
of the firms of the sample consider the information provided highly con-
fidential and private and, as a consequence, the data collected cannot
reflect the true performance of managers.
Nevertheless, other measurement elements of the real development
and the level of the firm’s competitiveness (like the results obtained, for
example) can be desirable in order to increase the validity of results in
future research’s. Similarly, several measurements were operationalized
109
by using scales of three and four items. Further researches will have to fo-
cus the development of more comprehensive measures by increasing the
number of items. The surveys were intended for people in charge of the
logistics area so the results can vary when used in a different population.
It is necessary to repeat and extend the investigation in order to obtain a
better determination of the scale used.
However, the results obtained provide an important insight that can
have a strong impact in the practice of logistics managers and in the com-
pany’s competitiveness. Furthermore, it is important to go beyond the
technical results and discuss the following questions: what would the ef-
fects of using a non-traditional education and more specific kinds of ex-
perience of managers be in the skills of logistics managers? What would
the results be if a more sophisticated model were applied for the assess-
ment of efforts from logistics managers? What specific activities for the
logistics management are the ones that have more impact at the level of
the company’s competitiveness?
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6
The influence of cultural Differences on
the perception of a web site: a comparison
between México and U.S
Juan Antonio Vargas Barraza1

Mónica Libertad Gómez Suárez 2
Antonio de Jesús Vizcaino1
Abstract
Research on cultural differences has been based on disciplines such as

anthropology, business or communication, focusing on cultural differ-
ences and the perception of the site, but always with a technical scheme.
The cultural background in the development of the Website is important
to avoid mistakes that may cause bad image to the customer. Nantel and
Glaser (2008) have found that language, a major cultural factor, is less
important when the quality of the offered products is attractive to the
buyers. To see how the website is perceived by two different cultures a
Website was made by Spanish speaking country (Mexico), but designed
in English, trying to remove traces of the cultural background from the
Mexican company that designed and implemented the website. The
2. Universidad Autónoma de Madrid.
119
J. A. Vargas Barraza, M. Libertad Gómez Suárez & A. de Jesús Vizcaino
Website was designed and developed specifically for this research, using
usability principles, trying to access to a multicultural buyers market, and
simulating a real selling music site.
Keywords: Usability, cultural differences, cross-cultural studies, e-
marketing
Introduction
The first studies about the implementation of a Web site used to focus on
the development and the technical aspects of the site, which has led most
research on web site design to analyze technical aspects of it. Thus, it has
generated a large number of design elements that will apparently make
a web site to be successful: usability, use of images, aesthetics, naviga-
tion and search, site interactivity, elements such as brand power and the
degree of site customization (A°berg y Shahmenhri, 2000).
The purpose of this research is to analyze whether users perceive
the existing cultural background in the development of a Web site when
it is showed to people from cultures with different values, even though
the site has been developed using design elements based on the prin-
ciples of usability, even including other design elements recommended to
minimize cultural shock. In order to accomplish this purpose, the cultural
model that has been most developed in the academic literature on mar-
keting is explored -Hosftede values - to determine if users with similar
values prefer the same type of information, or if countries more influence
by the English language, idiom chosen to develop and implement the
Web site based on the idea of minimizing the cultural background, have
a preference for certain type of information.
According to Falk et al. (2007), not only the technical design of a Web
site is the key to success. Also it should be considered other important
factors such as the culture of the users that the site is focused on. It is not
about adapting the company sites to attract customers from different re-
gions, something that many companies do just by switching the language
(Lynch et al, 2001).
120
The influence of cultural Differences on the perception of a web site
State of the art
Reviewing the literature, it has been found significant cultural issues to

be taken into account in the design of a site. Companies that offer their
products in different markets are willing to improve the usability of their
sites to attract more visitors. Examples of some pieces of work are those
of Ferreira (2002), that examines topics related to language besides to the
metaphors used, the attitudes and preferences that weigh in the cultures
to which the site aims to reach or Nantel and Glaser (2004), which also
focus on the use of language to improve the usability of a site and thus
attract more visitors, offering create sites oriented to each culture rather
than a universal one. In sum, most of these works are based on under-
standing the cultural differences and from there designing a specific site.
The models proposed so far come from computer science. However,
we believe that you cannot leave out the cultural and organizational fac-
tors affecting the development of the site (Ogbonna and Harris, 2007).
Thus, cultural issues and dynamics faced by organizations are a very im-
portant factor that impacts the design, development and implementation
of a site. What if the site is oriented at a different market to the cultural
background of the designer? Nantel and Glaser (2008) have found that
a cultural factor as relevant a priori, as is the language, it is less impor-
tant when the quality of what is offered is attractive to the prospective
buyer. Hence, sometimes the native language of the site seems to have
no impact on the perception of usability and in the purchasing decision
taken by the user. While there are various models for analyzing the cul-
tures from different perspectives, some of the dimensions and their in-
terpretations of how a culture behaves under those values is equivalent
between the different authors. Models, regardless of whether they are
related to areas such as politics or business agree mostly in two dimen-
sions: Individualism vs. Collectivism and risk aversion. Many of the stud-
ies that have been made about culture and the Internet are related to the
reduction of uncertainty or risk at the time of a commercial transaction,
or tried to model sites that may be perceived the same way by different
cultural groups (Hofstede (2010), Trompenaars and Hampden-Turner
(1998), Chaney and Martin (2005), House et al., (2002).
121
Marcus and Gould (2000) made an analysis of several Internet por-

tals where they assess and classify different groups defined according to
the dimensions of Hofstede and found that different cultures affect the
design of their sites. Their conclusion is that culture, expressed through
the dimensions of Hofstede affects the design of Web pages. In the study
by Matei and Ball-Rokeach (2001) it was found that among the ethnic
communities living in Los Angeles the groups of the most collectivist so-
cieties (in this case Korea and China), make from three to two times
more on-line friends than the groups of European origin (while Hispan-
ics were the ones with the lowest percentage at the time to make friends
on-line). Kim and Yun (2007) attribute this to that in collectivist societies is
easier for users to express their emotions in an environment where it would
be impossible to communicate face to face, as is the case of Korea. In the
work of Miura and Yamashita (2007) we observe that the same applies to
Japanese users of blogs. They are more sensitive to the negative responses
on their sites, concluding that this is due to the collectivist mentality of
Japan, where they perceive less risk to say something negative when it is
not say face to face. The work of Nath and Murthy (2004) shows that issues
such as community, income level, the country’s innovation, risk aversion
and masculinity of a culture have a significant impact on Internet penetra-
tion. As far as differences regarding gender, countries with a high level of
masculinity value productivity and try to be the best (Alberts-Miller and
Gelb, 1996), and advertising shows how effectiveness of a product empha-
sizing on all the capabilities of site performance.
Studies have found that much of the risk perception is influenced by
the culture of a country, since this is one way of interpreting the world
(Ueltschy et al, 2004). Traditionally it has been perceived as a higher risk
purchasing services than goods, due to the intangible nature of the for-
mer. Regarding on-line sales is practically saying that all sold products
are intangible, so that the perceived risk increases among consumers and
users (Ueltschy et al, 2004). The same applies for the Internet adoption in
economically undeveloped countries, where users represent less than 1%
of the population like in countries such as Bangladesh, Nigeria, Vietnam
and Zimbabwe (Nath and Murthy, 2004). Yeniryut and Townsend (2003)
found that the lower acceptance of new products can be supported with
power distance and risk aversion, finding that technological innovations
122
are high in countries with small power distance, low risk aversion and
higher individualism. While Linjun et al. (2003) show that power distance
is a key element in the e-mail acceptance in China. The use of color can
also reduce ambiguity for cultures with high levels of risk aversion, or it
can be used to maximize information without redundancy, for cultures
with low levels of risk aversion (Zahir et al, 2002).
Proposed Model and Sample Characteristics
For this research, we have been worked on a site previously designed

with usability principles developed by Nielsen (2002), relating these to
indices of Hofstede’s cultural values. Thus, the hypotheses have been
developed for each cultural value related to Web design as it is indicated
below (Table 1).
Table 1
Summary of the Formulated Hypotheses
Hofstede’s Relationship Hypotheses Element of

values of usability usability
Riskaversion H1a: (-) The higher the risk aversions index from a Security
country, the lower the perception of Web
site security.
H1b: (-) The higher the risk aversion index, the Navigation
lower the perception of navigation easiness Efficiency
of the site.
H1c: (-) The higher the risk aversion index, the Control
lower the perception of control on the site.
H1d: (+) The higher the risk aversion index, the Content
greater the importance of the site content
Collectivism H2a: (+) The higher the index of collectivism, the Control
lower the perception of control on the site.
H2b: (-) The higher the index of collectivism, Navigation
the lower the perception of freedom of Efficiency
navigation on the site.
123
Hofstede’s Relationship Hypotheses Element of

values of usability usability
Collectivism H2c: (-) The higher the index of collectivism, the Emotion
lower the interest in the site.
H2d: (-) The higher the degree of collectivism, the Security
lower the perception of a site as safe.
H2e: (-) The lower the index of collectivism, the Content
greater the importance of the site content.
Masculinity H3a: (+) The higher the masculinity index, the Easiness of
greater the importance in the performance use
of the site and its products (easiness of
use.)
H3b: (+) The higher the masculinity index, the Control
greater the importance of taking control of
the Web site.
H3c: (+) The higher the masculinity index, the Navigation
greater the importance of the navigation Efficiency
easiness of the Web site.
Power H4a: (+) The higher the power distance, the greater Security
distance the perceived need for security features on
a site.
H4b: (+) The higher the power distance index, the Content
greater the importance in the site content.
H4c: (+) The higher the power distance index, the Language
greater the importance in the language
used on the site.
Source: Own Elaboration
Taken into account the principles of usability of Nielsen (2002) for the
design of Table 1, in the case of this variable there are reduce the number
of actions that the user must do in order to avoid losing it, being neces-
sary to convey a sense of security and credibility on the site. FIGURE 1
shows the proposed full model with the entire hypothesis listed.
For the sample college students were selected at the discretion or
convenience from Mexico and U.S. The reasons for choosing these coun-
tries were mainly two: 1) They represent a wide difference between them
regarding the range for risk avoidance, power distance, and individualism
/ collectivism, being the dimension of masculinity / femininity the one
124
that presented a narrower range of difference between the representa-

tives of the participating countries and 2) language, having the largest
number of speakers of English (U.S), the most populous Spanish speak-
ing country (Mexico).
Data collection was performed during the period from April to June
2010, so it has been possible to achieve an appropriate size for the test sta-
tistics. For technical reasons, the survey had to be answered in one session;
therefore it could not be interrupted. 352 participants answered in Mexico,
of which only 332 did correctly. The U.S. sub-sample of participants was
the smallest, due to the more difficult to obtain answers. In order to ap-
proximate the sizes of the various subsamples, 206 questionnaires were
taken from Mexico and 190 from the U.S. To obtain the test results and all
statistical models SPSS version 18 and AMOS 18 were used.
The site and its user interface are based on a model of e-commerce
distribution and sale of music in order it matches with the four elements
that Postava-Davignon et al. (2004) mentioned: a feeling of confidence,
sense of security, sense of interest in the site and desire to return to the
site. It was decided that the criteria of usability of Nielsen (2002) was the
main basis to design the site and also were taken into account the catego-
ries of usability from the Microsoft guide described by Keeker (2004),
including those areas identified by Agarwal and Venkatesh (2002) and
Postava-Davignon et al. (2004). The site is in English and is geared to
selling independent music, as a consequence the language does not have
a representative impact on the perception of usability as the quality of
what is offered is attractive to the consumer (Nantel and Glaser, 2008).
While CD sales have declined, it is still a major source of online sales.
Independent music labels have survived through the sale of formats that
are believed missing -such as vinyl- and a target market consisting of an
informed public, which continues to consume music in traditional for-
mats (Hidalgo, 2009). Using a portal designed in English will also help
to find whether the application of usability elements in site design ef-
fectively reduces the cultural impact of it, fulfilling a major premise that
a Web site allows: it serves as a knowledge distribution channel for both
providers and users of a site (Fang and Holsapple, 2007).
125
Figure 1
Model of the Relations Between Usability
FIGURE 1. Model of theand
Relations
CulturalBetween Usability
Values and and Cultural Values and Their
Their Hypothesis
Hypothesis
H1d (+)
Riskaversion H2e (-) Content
H4b (+)
H1a (-)
Colectivism H2d (-)

Secure
Cultural H4a (+)

H2a (-)
Values
Usability
H1c
H2b (-)
Powerdist
(-) Control
ant
H3b H1b
(+) (-)
H3c (+)
Nevigation
Masculinity eficiency
H2c Emotion
(-)
H3a (+)
Easyto use
H4c (+) Lenguage
126
The method of analysis
The online design and implementation was carried out by a Mexican company that has
The method of analysis
The online design and implementation was carried out by a Mexican

company that has experience in Web sites, even at a governmental level.
The Web site design was the most “culturally neutral” as possible, consid-
ering that there are users whose cultural values are opposite. The model
is based on the Visibility Graph Usability Center at Georgia Tech (Fang
and Holsapple, 2007), that suggests raising a series of instructions for
the participants in order to explore and then execute a series of tasks,
which are: seeking for information or for a particular object. Part of the
demographic information and prior experience, appears in most of the
usability studies and perception of a site, as well in analysis on Internet
usage and satisfaction (Roy et al., 2001, Palmer, 2002; Ferreira, 2002,
Agarwal and Venkatesh, 2002; AMIPCI, 2004). The culture dimensions
are shown in Table 2.
Table 2
Description of the Dimensions of Culture
Dimension Item Description

Risk RISK1 Safety is an important concern in my life
aversion RISK2 Life is so uncertain that I must be in constantly alert
RISK to not be in disadvantaged
RISK3 It is important to consider different points of view
when I take personal and social decisions
Collectivism / INDIVIDU1 I like to share little things with my neighbors
Individualism INDIVIDU2 Being an unique person is important to me
COLECTIVISM INDIVIDU3 The decisions achieved in group are better than
those achieved individually
INDIVIDU4 Usually I sacrifice my own interest for the benefit of
my group
INDIVIDU5 I prefer to rely on others
INDIVIDU6 It is important for me to be useful for others
127

Power POWER1 My manager is a person like any other
distance POWER2 Managers are always inaccessible and distant
POWER POWER3 The way to change society is to make everyone
equally powerful
POWER4 Other people are a threat to my power of one and I
cannot trust them
Masculinity/ MASCUL1 Having a career is more important for men than for
Femininity women
MASCULIN MASCUL2 Men usually solve problems with logical analysis,
women generally are more visceral
MASCUL3 Solving difficult problems usually require a strong
and active approach, which is typical of men
MASCUL4 There are some jobs that a man can always do better
than a woman
Several authors use the site navigation to evaluate perceptions of usabil-

ity (Nielsen, 1994, Agarwal and Venkatesh, 2002; Palmer, 2002, Hall et
al., 2004). The effects on the usability dimensions are restricted to site
navigation tasks such as selecting an item, obtain personal data and prod-
uct selection of a music sales company. The dimensions of culture are
shown in Table 3.
Table 3
Usability Dimensions Description

Security SECUR1 The site is secure
SECUR SECUR2 I trust in the site
SECUR3 I relied more on the site as it has social networking
(myspace, twitter, facebook)
Navigation EFICIENCY The site is simple to navigate
Efficiency
Control CONTROL1 It is easy to do what I want to do
CONTROL CONTROL2 The performance of the site was easy
128

Content CONTENT1 The site provides good information about products
CONTENT CONTENT2 The image quality is good
CONTENT3 The site produces purchase wishes
CONTENT4 I identify with the images of the site
Emotion EMOCION1 The site is interesting
EMOCION EMOCION2 The site is fun
Easiness of use EASY Obtaining information is easy
Language LENGUAGE I identify with the language used on the site
Covariance Structure Model (CSM)
In order to formulate the covariance structure model there were carried

out two stages proposed by Anderson and Gerbing (1988): 1) To analyze
the goodness of the psychometric properties of the measuring instru-
ment used, performing a confirmatory factor analysis (CFA). 2) After
the goodness acceptance of the measuring instrument, this is modified
including the theoretically proposed structural relationships that are ana-
lyzed by a Structural Equations or Covariance Structure Model (CSM).
Before using these tools, prior analysis was required, such as inspect-
ing the homogeneity of the standard deviations and doing multicollinear-
ity and normality testing of variables. Subsequently it was conducted an
exploratory factor analysis that allowed to observe the structure of rela-
tionships among variables.
Preliminary Analysis: Homogeneity, Multicollinearity and Normality
First, it was found that there is consistency among the variables due to
the observance of averages and standard deviations. Thus, we ensure
good adjustment goodness in later models, it is advisable that there are
no variables in the model with a lot of variability and others with few.
The multicollinearity test of the tolerance statistical values are above 0.1
and the inflation variance factor (IVF) is below 10, therefore it is not
129
perceived a possible problem of multicollinearity for any variable. Thus,

the variables of the model met the requirements for their use.
Exploratory Factor Analysis
To preliminarily assess the unidimensionality of the latent concept, this is,

if the factor structure underlying the data is acceptable, we performed an
exploratory factor analysis. The extraction procedure has been the Princi-
pal Component Analysis (PCA) for the dimensions of cultural values and
usability. Regarding the results of the usability dimensions, the measure
of sampling adequacy Kaiser-Meyer-Olkin (KMO) has a value of 0.873,
higher than the acceptable value of 0.7, while the Bartlett’s sphericity test
has a p-value inferior than the significance level (0.05) to reject the null
hypothesis that the correlation matrix is an identity one; therefore it is
concluded that the factor is adequate. Concerning the test for the vari-
ables of culture, the measure of sampling adequacy Kaiser-Meyer-Olkin
(KMO) has a value of 0.720, higher than the acceptable value of 0.7 and
the Barlett´ssphericity test has a p-value lower than the limit of level
of significance (0.05) to reject the null hypothesis that the correlation
matrix is an identity matrix, so we conclude that the factorial is adequate.
Model Applied to the U.S.
The U.S. model (Figure 2) consists of seven latent variables: all are con-
structs of culture, where only the dimension of “risk aversion” is missing
within the dimensions of Hofstede. To complete the seven latent vari-
ables, four variables of usability, security, content control, and emotion
are considered.
For the U.S. also are taken into consideration three observable vari-
ables related to usability, navigation efficiency, ease of use and language.
Table 6.20 shows the significant p-values for the model and the relations
between them. The first column shows the influence of some elements of
usability regarding cultural variables. In the fourth column are located the
correlation coefficients obtained through a weighted regression and in the
last column the estimated values acquired by a standard weighted regres-
sion. In the penultimate column are shown significant p-values, represent-
130
ed by *** for 1%. Significant values for 5 and 10% are illustrated with their
numbers. In the table are also pointed up the values of the reflex variables,
written in italics. Table 4 shows the results of structural equations.
Table 4
Results of Structural equations for the U.S.
Relation between variables Estimates Correlation P Estimate

coefficients
CONTENT <--- COLLECTIVISM 10,843 3,683 *** ,981
SECURITY <--- COLLECTIVISM 6,913 3,447 *** ,607
CONTROL <--- COLLECTIVISM 11,439 3,735 *** ,999
EMOTION <--- COLLECTIVISM 10,250 3,583 *** ,909
SECURITY <--- POWER ,393 3,385 *** ,271
CONTENT <--- POWER ,353 3,638 *** ,251
INDIVIDU1 <--- COLLECTIVISM 1,000 ,055
POWER1 <--- POWER 1,000 ,398
POWER3 <--- POWER ,688 3,444 *** ,252
MASCUL1 <--- MASCULIN 1,000 ,631
MASCUL2 <--- MASCULIN ,942 6,808 *** ,631
MASCUL3 <--- MASCULIN ,914 7,143 *** ,843
MASCUL4 <--- MASCULIN ,644 4,723 *** ,389
SEGUR1 <--- SECURITY 1,000 ,810
SEGUR2 <--- SECURITY 1,172 11,595 *** ,896
CONTENT1 <--- CONTENT 1,000 ,682
CONTENT2 <--- CONTENT ,852 9,328 *** ,720
CONTENT3 <--- CONTENT ,574 4,453 *** ,341
CONTENIDO4 <--- CONTENT ,838 6,188 *** ,506
CONTROL1 <--- CONTROL 1,000 ,732
CONTROL2 <--- CONTROL ,948 9,721 *** ,693
SEGUR3 <--- SECURITY ,485 2,992 ,003 ,249
EMOTION1 <--- EMOTION 1,000 ,705
EMOTION2 <--- EMOTION ,813 7,317 *** ,580
EFFICIENCY <--- COLLECTIVISM 12,132 3,696 *** ,737
LANGUAGE <--- POWER ,380 2,548 ,011 ,162
EASINESS <--- MASCULIN ,164 3,539 *** ,151
131
It is noted that the U.S. index of collectivism affects four usability vari-
ables (security (λ = 3.444), content (λ = 3.683), control (λ = 3.735) and
emotion (λ = 3.583)), being control the variable most significant, fol-
lowed by content. In addition, collectivism also influences an observable
variable (navigation efficiency (λ = 3.693)). The significant level in all of
them is 1%. Collectivism dimension is therefore an important factor to
explain the differences in perception of a Web site.
The power distance dimension has effects in the three usability vari-
ables, two of them as latent and one as observable. In addition, security
(λ = 3.385) and content (λ = 3.638) impact language (λ = 2.548).
With regard to sex ratio, it only influences the observable variable
“easiness of use” (λ = 3.539). No relationships were found that could
indicate the influence of risk aversion in the perception of the site. The
formulated hypothesis and results are showed in Table 5.
Table 5
Verification of the formulated hypothesis for the U.S.
Constructs/ HIP. Formulation Verification

Variables
Collectivism H2a: (-) The control over the processes of a Web Yes, the sign
site has a negative correlation regarding the changes
index of collectivism. The higher the index because
of collectivism, the lower the perception of individualism
control on the site. was measure
H2b: (-) The degree of openness and freedom Yes, the sign
concerning navigating a system has a negative changes
relationship with the collectivist culture. The because
higher the index of collectivism, the lower the individualism
perception of navigation freedom on the site. was measure
H2c: (-) The interest (emotion) that produces a site Yes, the sign
has a negative correlation with the degree changes
of collectivism. The higher the index of because
collectivism, the lower the interest in the site. individualism
was measure
132
Constructs/ HIP. Formulation Verification

Variables
Collectivism H2d: (-) There is a negative relationship among Yes, the sign
the security of a site and the degree of changes
collectivism. The higher the degree of because
collectivism, the lower the perception of a site individualism
as safe. was measure
H2e: (-) There is a negative relationship among the YES
index of collectivism and the content of a
site. The lower the index of collectivism, the
greater the importance of the site content.
Masculinity H3a: (+) There is a positive relationship among sex YES
ratio and the performance of a product (ease
of use.) The higher the sex ratio, the greater
the importance in the performance of the site
and its products.
Power H4a: (+) Perceived safety at a site has a positive YES
distance relationship concerning the power distance.
The higher the power distance, the greater
the perceived need for security features on a
site.
H4b: (+) There is positive relationship among the YES
index of power distance and site content. The
higher the power distance index, the more
importance the content has in the site.
H4c: (+) There is a positive relationship between an YES
index of power distance and language used in
a site. The higher the power distance index,
the greater the importance of the language
used on the site.
133
Figure 2
Structural Equation Model for U.S.
SECURE
Chi-square= 11,24
d.f = 12 EASY
p-value = 0,124
RMSA= 0,025 3,539
GFI= 0,98 3,447 (,151***)
AGFI=0,97 (,607***)
3,385
(,271***)
3,683
(,981***) CONTENT
COLECTIVISM
3,638
(,271***)
3,735
(,999***)
CONTROL
POWER 3,583
(,909***
)
3,693
(,737***
)
Note *** Significative 1% 2,548 Emotion
** Significative 5% (,162**)
* Significative 10%
EFICIENCY
MASCULIN
LENGUAGE
Source: Own Elaboration Source: Own Elaboration
Model Applied to Mexico

Model Applied to Mexico
The model for Mexico only comprises two cultural variables: Sex ratio vs. femininity and
collectivism.
The modelThe two
forappear as latent
Mexico onlyvariables and all
comprises twoenclose their variables:
cultural reflex variables
Sex(Fig. 3). In
ratio
terms of usability variables, four of them are exposed as latent variables and two as observable
vs. femininity and collectivism. The two appear as latent variables and all
variables.
The enclose their
observable reflexare
variables variables (Fig.
efficiency and3). In terms
easiness of usability
of use, which arevariables,
influencedfour
by the
of them are exposed as latent variables and two as observable
masculinity variable λ = λ = -2.929 and -3.224 respectively. It can be noticed that variables.
values have
negative signs. There is a latent variable that influences also masculinity, control (λ = -2.016).
The three variables have a different weight, being the ones with the greatest influence easiness
of navigation followed by the navigation efficiency. The three variables are significant at 1%.
The estimators for the collectivism variable are: 134
efficiency of navigation, which is an observable
variable with λ = -2.968. The other four appear as latent variables, being content the one with
most significance (λ = 3.166), followed by excitement (λ = 3.110), control (λ = 3.045) and finally
safety (λ = 2.693), all with positive signs.
The weight of the significant variables and their influence can be noticed in TABLE 6, marked in
The observable variables are efficiency and easiness of use, which are
influenced by the masculinity variable λ = λ = -2.929 and -3.224 respec-
tively. It can be noticed that values have negative signs. There is a latent
variable that influences also masculinity, control (λ = -2.016). The three
variables have a different weight, being the ones with the greatest influence
easiness of navigation followed by the navigation efficiency. The three vari-
ables are significant at 1%. The estimators for the collectivism variable are:
efficiency of navigation, which is an observable variable with λ = -2.968.
The other four appear as latent variables, being content the one with most
significance (λ = 3.166), followed by excitement (λ = 3.110), control (λ =
3.045) and finally safety (λ = 2.693), all with positive signs.
The weight of the significant variables and their influence can be no-
ticed in TABLE 6, marked in italics are each of the reflection variables.
Table 6
Results of Structural Equations for Mexico
Relation among variables Estimates Correlation P Estimates

coefficients
CONTENIDO <--- COLLECTIVISM 2,332 3,166 ,002 ,999
SEGURIDAD <--- COLLECTIVISM 1,574 2,963 ,003 ,586
CONTROL <--- COLLECTIVISM 1,968 3,045 ,002 ,999
EMOTION <--- COLLECTIVISM 2,256 3,110 ,002 ,786
CONTROL <--- MASCULIN -,094 -2,016 ,044 -,171
INDIVIDU1 <--- COLLECTIVISM 1,000 ,245
INDIVIDU2 <--- COLLECTIVISM ,869 2,400 ,016 ,252
MASCUL1 <--- MASCULIN 1,000 ,710
MASCUL2 <--- MASCULIN 1,147 8,995 *** ,779
MASCUL3 <--- MASCULIN 1,060 8,870 *** ,764
MASCUL4 <--- MASCULIN ,764 6,532 *** ,520
SEGUR1 <--- SECURITY 1,000 ,806
SEGUR2 <--- SECURITY 1,056 8,635 *** ,857
135
Relation among variables Estimates Correlation P Estimates

coefficients
CONTENT1 <--- CONTENT 1,000 ,575
CONTENT2 <--- CONTENT ,930 9,707 *** ,530
CONTENT3 <--- CONTENT ,943 6,067 *** ,453
CONTENT4 <--- CONTENT ,856 5,241 *** ,376
CONTROL1 <--- CONTROL 1,000 ,550
CONTROL2 <--- CONTROL 1,258 6,924 *** ,636
SEGUR3 <--- SECURITY ,338 2,737 ,006 ,209
EMOTION1 <--- EMOTION 1,000 ,758
EMOTION2 <--- EMOTION ,974 7,447 *** ,696
EFICCIENCY <--- COLLECTIVISM 1,678 2,968 ,003 ,495
EFICCIENTY <--- MASCULIN -,216 -2,929 ,003 -,207
FACILITY <--- MASCULIN -,190 -3,224 ,001 -,206
Again, it is collectivism the cultural dimension that best represents cul-

tural differences. These values are consistent with what has already been
shown in other studies (Yano and Seo (2003), Zandapour and Harich
(1996), Matsumoto et al., (1998)) on these dimensions, which also
explains the behavior and characteristics of many countries and are also
key parts to deduce the origins of cultural differences that cause prob-
lems to achieve success with a website. Table 7 shows the assumptions
that have been demonstrated for each cultural dimension regarding the
variables of usability and, as well, those that could not be verified.
Table 7
Verification of the hypothesis set out for Mexico
Variables HIP. Verification

H1a: (-) NO
Risk aversion H1b: (-) NO
H1c: (-) NO
H1d: (+) NO
136
Variables HIP. Verification

Collectivism H2a: (-) YES. The measured variable is individualism
H2b: (-) YES. The measured variable is individualism
H2c: (-) YES. The measured variable is individualism
H2d: (-) YES. The measured variable is individualism
H2e: (-) YES. The measured variable is individualism
Masculinity H3a: (+) YES
H3b: (+) YES
H3c: (+) YES
Power distance H4a: (+) NO
H4b: (+) NO
H4c: (+) NO
No relationships were found between control, efficiency of navigation

and masculinity / femininity. Also, it should be noted that the assump-
tions for risk aversion could not be verified, since this construct does not
appear in the model derived from the structural equations.
Results and conclusions
This paper has sought to extend the study of the relationship between
cultural differences and electronic commerce, and to observe, interpret
and understand the perceptions of participants, separated by cultures
and nationalities about Web design.
Issues related to security were taken into account to increase control
on the site, while the designer had to consider about the site content as
well as the freedom limit of navigation. This issue was perceived posi-
tively by a collectivist culture like Mexico, but it was also effective for the
U.S. In our study it is confirm that this cultural dimension has the greatest
weight concerning the design of Web sites. Masculinity has also proven to
be a cultural dimension that appears in the two countries. Mexico has the
highest score in the measurement of masculinity, according to Hofstede.
137
Figure 3
Structural Equation
FIGURE 3. Structural Model
Equation for
Model forMexico
Mexico
Chi-sqr= 22.41 SECURITY

d.f.=13
EASY
p-value=0.064
GFI=0.97 2.693
AGFI=0.96 (.586***)
3.166
(.999***) CONTENT
COLLECTIVISMmM
O
2.968
(.495***)
3.045
(.999***)
Note *** Significance at 1%
** Significance at 5% 3.110 CONTROL
* Significanceat 10% (.786***)
-2.016
(-.171***)
-3.224
(-.206***)
EMOTION
-2.929
(-.207***)
EFFICIENCY
MASCULIN
Source: Own Elaboration Source: Own Elaboration
Results
For theandU.S.
conclusions
also the three formulated hypotheses regarding the cultural
dimension of power distance were accepted, which has a positive influ-
This paper has sought to extend the study of the relationship between cultural differences and
ence on commerce,
electronic language,andsite content
to observe, and perceived
interpret and understandsafety on the site.
the perceptions We must
of participants,
remember that this
separated by cultures nation has
and nationalities aboutaWeb
higher
design.value on power distance than
Issues
the related
U.S., to security
having thiswere
lasttaken into account
country moretoequitable
increase control on the between
relations site, while the
the
designer had to consider about the site content as well as the freedom limit of navigation. This
structures of power. Mexico has no relations between power distance
issue was perceived positively by a collectivist culture like Mexico, but it was also effective for the
and risk
U.S. In ouraversion for the
study it is confirm thatmodel. And
this cultural most has
dimension important,
the greatest this isconcerning
weight the countrythe
design ofelements
where Web sites. Masculinity
of culture hashave
also proven to be a cultural
less influence ondimension
design.thatForappears
U.S, inthere
the
are more design elements influenced by a greater number of cultural ele-

ments; thus it was demonstrated that 85 participants in this study have noted
138
that the site was developed by a different culture to them, while Mexicans
accepted a better design.
As it was expected, the resulting models were different for each coun-
try; meaning that users from USA perceived differently the site designed
by Mexicans. As the site has been designed in English, but considering
the collectivist culture (Mexico), issues related to security had to take
into account to increase the control on the site, prioritizing the site con-
tent as well as limiting the freedom of navigation. This is consistent with
authors such as Barber and Badre (1998), who stated that there are ele-
ments prevailing in the interface design within a given culture, such as
cultural markers.
Despite the facts that a site can be written in a language such as Eng-
lish and can be directed to an international market, it must have a design
that emphasizes the quality of the offering, to create interest in the pro-
spective buyer. Nevertheless, many companies create multicultural de-
signs or different versions for distinct markets but with an ethnocentric
view, which is detrimental to the success that the site may have (Becker
and Mottay, 2001). Again, is the consideration of cultural issues a key to
the successful design of a site and avoid that if it will be translated, it is
transformed with mistranslations and grammatical inconsistencies that
are not appropriate to the culture.
The issue of designing influences the reduction of uncertainty in a
site, when it allows confidence and enables the navigation to be more ac-
cessible. The usability-engineering design of a site helps to make it more
efficient and reduce any potential fears, but this is not enough. Once
more it is emphasized that cultural differences should be considered
(Nielsen, 2002; Quesenbery, 2001, Agarwal and Venkatesh, 2002, Gray
and Salzman, 1998). It is precisely in the study of culture that has been
confirmed that designing forms vary according to cultural values of a
country (Marcus and Gould, 2000), in this case, using Hofstede’s cultural
dimensions to test the hypothesis it was proved that there are indeed dif-
ferent appreciations on a site, according to the culture that visits. This
study indicates that not only is necessary to make use of usability, but also
to considerate cultural issues. It is especially important to note that one
of the cultural dimensions that represent a weighty role in cultural issues
is individualism / collectivism (Ferreira, 2002).
139
Limitations of work and future research
The most important limitation of this work comes from its exploratory
nature and foremost from the source of data collection. The survey was
based on a sample of convenience that cannot be regarded as homog-
enous. Firstly, because although it has been distributed mainly among
university students in Mexico and U.S, other users have had access the
Web and therefore have produced biases related to age or educational
level, mainly. Therefore, in subsequent studies it will be considered con-
clusive this limitation by designing a sample that, although it could be
convenience, has the same amount for sociodemographic variables that
may produce a higher bias in relation to the cultural dimensions or the
principles of usability.
Second, the participants are not necessarily music buyers and collec-
tors of records, consequently the user characteristics of collectors are not
reflected in the site preferences. For further studies, we believe manda-
tory to use samples that truly represent the people who visit such sites.
Another limitation regarding the chosen sample is that although the web
is the model actually used by several companies, it does not represent one
of the major industrial markets. Although sales of vinyl records in formats
have increased, it is a fact that the music industry is in crisis and buyers of
such products are a very definite segment with their own characteristics
in the industry. The Mexican sample is basically formed by students from
Guadalajara, making it fairly homogeneous, while the American sample
has been more dispersed and for that reason more heterogeneity.
Given that the U.S. is a country where many people live from dif-
ferent national origins, also it could even be perform a segmentation in
which the Hispanic market is compared with other segments.
Structural limitations from Mexico must be considered, such as the
technological infrastructure and economic development that may af-
fect the development of the site performance. The lower the country’s
economic development is, slower some of the site´s features and higher
the users perception of risk and low security items (Jungles and Watson,
2004). This study represents a starting point that corresponds to a clear
contribution in the field of electronic commerce. Future studies will in-
corporate cultures that do not have a Western origin, including emerging
140
markets like China and India. Other countries where Internet is already
well established and developed but they belong to cultures other than
the Western world can be also incorporated, such as Korea and Japan. In
addition, Brazil also will be contemplated since it is an emerging country
and Latin America, but also has a historical background and current de-
velopment different from its Latin American neighbors, and Argentina,
the other big player in Latin America growing Internet market.
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7
Successful hotel website dimensions and
attributes– an exploratory research in Mexico
Celestino Robles Estrada1

Areli Herrera de la Cruz2
Alberto Suástegui Ochoa1
Abstract
This article presents an exploratory study in which questionnaires

applied to web browsers and purchasers of travel services online were
used to gain insight on best practices for usability of hotel Web sites. The
research reports on a study that examined 58 surveys applied to online
browsers and purchasers of travel services, on their perceived importance
level of specific dimensions and attributes on hotel Websites. To achieve
this goal, this work builds on research by Law and Hsu, who developed
a model to assess the effect of the design factors on five dimensions and
40 attributes in destination Web sites. Empirical evidence showed that,
for Mexican consumers, the most important dimension in Hotel Website
design is contact information. They considered the reservation informa-
tion dimension as the least important. The top important attribute is
online payment security and the least important is information on the
2. Instituto Tecnológico de Tepic.
145
Celestino Robles Estrada, Areli Herrera De La Cruz & Alberto Suástegui Ochoa
number of rooms in the hotel. The study goes in depth in the findings
evaluating them by online buyers and online browsers.
Key Words: Tourism research, Web site evaluation; e-satisfaction; e-
quality.
Introduction
Since the 1980s, the Internet in general, and the World Wide Web in
particular, have had an unprecedented effect on the hospitality industry.
Hospitality firms use the Internet to provide information and to promote
and distribute their products and services. To remain competitive in the
industry, most hotels have established their own Web sites for promotion,
marketing, and online transactions. Hotels the world over, clearly have
embraced the idea that information technology is shaping a brave, new
world of marketing.
The travel and tourism industry is indeed one of the largest applica-
tion areas on the Internet. Cox (2002) stated that travel spending is the
number one growth driver for e-commerce as a whole. There are numer-
ous advantages for Internet applications in the tourism and hospitality
industries. Researchers have argued that the Internet can benefit cus-
tomers from direct communications with suppliers, and from searching
and purchasing their preferred products and services without any geo-
graphical or time constraints. More important, customers can easily ar-
range for their own tailor-made products or services (O’Connor & Frew,
2002; Toms & Taves, 2004). Similarly, tourism and hospitality suppliers
can establish a direct connection with their customers everywhere in the
world and at any time.
Travel and tourism are illustrating how e-commerce can change the
structure of an industry—and in the process create new business oppor-
tunities. This industry is the leading application in the B2C (business-to-
consumer). The Web is used not only for information gathering, but also
for ordering services (Hannes & Ricci, 2004).
Hospitality firms use the Internet to provide information and to pro-
mote and distribute their products and services (Buhalis & Main, 1998;
Olsen & Connolly, 2000; Raymond, 2001). Hotels all over the world have
146
Successful hotel website dimensions and attributes– an exploratory research in Mexico
clearly embraced the idea that information technology will drive a brave,
new world of marketing—providing marketers figure out how IT can
help them (Dev & Olsen, 2000). At this point, few hoteliers are question-
ing whether to support a web site, but they seem to be struggling over
how best to use the worldwide web (Porter, 2001). Issues to address in-
clude on-line strategies, such as distribution models and dynamic pricing,
as well as which attractive web-site features to incorporate. Given that
web-site bells and whistles can be expensive to purchase, implement, and
maintain, the problem is that the benefits of web-site enhancements are
hard to measure (Connolly, 2000).
From the perspective of consumers, the Internet allows them to com-
municate directly with hotels to request information and to purchase ser-
vices and products without any geographical and time constraints. For
hotel managers, in particular sales and marketing managers, the success-
ful factors for hotel Web sites are lower distribution costs, higher rev-
enues, and a larger market share (O’Connor, 2003). In addition, hoteliers
can remotely control their servers to display information of services and
products at an electronic speed to global customers and without the need
of the traditional intermediaries such as travel agents in the pre-Inter-
net era (Buhalis & Licata, 2002); Nevertheless, in spite of the increasing
popularity of Internet applications to the hotel industry, and the large
number of published Internet-related articles in the hospitality and tour-
ism literature, the topic of the usability and functionality of Web sites
has been largely overlooked by hospitality and tourism researchers. In
other words, the ease of use and the performance of hotel Websites re-
main largely unknown to hotel customers, practitioners, researchers, and
policy makers. The number of published articles that scrutinize the view
of on-line travel purchasers regarding the factors for a successful travel
Web site appears to be very limited.
Literature review
The introduction of Internet technology to general business has led to

its wide-scale application in the hotel industry. Consumers have been
increasingly using the Internet to search for accommodation-related
147
information on hotel Websites. To facilitate a better understanding of

e-commerce, hospitality and tourism researchers have shown the impor-
tance of establishing content-rich and user-friendly Websites.
Existing articles in the travel and tourism literature have emphasized
the importance of e-commerce and the Internet in travel and tourism.
For travel suppliers, the Internet provides a method whereby they can
sell their services and products globally to potential travelers at any time
(Connolly, Olsen, & Moore, 1998; Bernstein & Awe, 1999; Lubetkin,
1999). These suppliers can remotely control their servers to display ser-
vice and product information at the electronic speed of computer net-
works. The benefits for suppliers to successfully launch a travel Web site
include lower distribution costs, better revenues, and a larger market
share (Kasavana, Knutson, & Polonowski, 1997; Cano & Prentice, 1998;
Mader, 1999).
Hotel Web sites are not only a place to display information about
products and services, but they also have commercial value in terms of
profitability. As such, trust largely influences the customers’ intention
to make a purchase on the Web site. Building trust and confidence is
the first and most important phase of an online purchase activity (Lee,
2002). Prior studies have shown that there is a direct relationship be-
tween the design of a Web site and the perceptions of customers toward
the company. Kim and Moon (1998), for instance, conducted a study that
indicated that the manipulation of different Web interface design factors
could win the confidence of customers (Kim & Moon, 1998). Similarly,
Rhodes (1998) suggested that good contents, a simple design, and few er-
rors in the use of language are needed to establish trust (Rhodes, 1998).
Hospitality and tourism researchers have also conducted various
studies examining the performance of hotel Web sites. For instance,
Murphy, Forrest, Wotring, and Brymer (1996), Procaccino and Miller
(1999), as well as Weeks and Crouch (1999) examined the overall con-
tent and features of hotel Web sites. O’Connor and Horan (1999), con-
ducted in-depth studies of the Web reservation facilities of international
hotel chains. Other researchers applied a set of criteria to evaluate the
effectiveness of hotel Web sites (Morrison, Taylor, Morrison, & Morri-
son, 1999). Chung and Law (2003), Law and Chung (2003), and Liang
and Law (2003) presented different models to measure the functional-
148
ity—the richness of content information of hotel Web sites in Hong Kong

and Mainland China.
In spite of the presence of numerous hotel Websites and hotel man-
agers’ eagerness to know the effectiveness of the contents of their Web-
sites, the existing hospitality literature has rarely analyzed users’ per-
ceived importance of specific hotel Website features in a holistic fashion.
This absence of published studies is particularly true in the context of
Latin-American hotel Websites in general and Mexican hotel Websites
in particular.
Most of the prior studies on Website effectiveness evaluation largely
concentrated on assessing the general characteristics of Website features
such as content and design (Huizingh, 2000), log file data (Murphy, 1996),
and usefulness and social acceptability (Lu & Yeung, 1998). Other stud-
ies have profiled Internet users (Bonn, Furr, & Susskind, 1998; Weber &
Roehl, 1999); examined users’ perception on general shopping features
on the Internet (Shankar, Smith, & Rangaswamy, 2003), and evaluated
specific Websites with the involvement of general as well as student us-
ers (Roy, Dewit, & Aubert, 2001; Jeong, 2002; Selvidge, Chaparro, &
Bender, 2002).
Method
This research was carried out using a structured questionnaire, consisting

of three sections, that was developed based on prior studies (Kasavana,
Knutson, & Polonowski, 1997; Morrison, Taylor, Morrison, & Morrison,
1999; Weeks & Crouch, 1999; Chung & Law, 2003; Law & Chung, 2003)
and adapted by Law and Hsu (2006). The first section was related to
the perceived importance of specific dimensions and attributes on hotel
Websites. Respondents were requested to provide their perception on a
7-point Likert scale ranging from 1 (very unimportant) to 7 (very impor-
tant) on five dimensions and 37 attributes. To ensure stable participant
responses, Preston and Colman (2000) recommended that a 7-point scale
should be used to allow respondents to make more detailed differentia-
tion on the importance level of the attributes and dimensions. First, the
five dimensions were assessed directly. After that, attributes that were
149
related to each of the dimensions were rated individually. Following

prior studies on initial investigation of hotel Website features (Chung
& Law, 2003), there were the five dimensions of Facilities Information,
Reservations Information, Contact Information, Website Management,
and Surrounding Area Information in this study. Each of these dimen-
sions contained 11, 8, 10, 5, and 6 attributes, respectively, to evaluate the
specific components of the general dimensions.
The second section asked for respondents’ level of agreement on the
importance of the overall performance and/or quality of the dimensions
and attributes when they make online purchases of hotel rooms in differ-
ent hotel categories. A 7-point Likert scale was used for the questions in
this section, with ratings ranging from 1 (strongly disagree) to 7 (strongly
agree). Respondents could also choose NA (Not Applicable) in this sec-
tion if they had no prior experience of booking hotel rooms online for
any of the hotel categories. The third section was used to collect demo-
graphic data, including country of residence, gender, age group, educa-
tion level, and annual personal income. These are the standard demo-
graphic variables used in most tourism research questionnaires (Kozak
& Rimmington, 1999; Chen & Gursoy, 2000; Dossa & Williams, 2001;
Rittichainuwat, Qu, & Leong, 2003). At the beginning of the question-
naire, there was a qualifying question that asked whether a respondent
had ever visited any hotel Website(s) in the past 12 months. In addition,
all qualified respondents had to answer the question of whether they had
made reservations on any hotel Website(s) in the past 12 months. This
question was used to distinguish between online browsers and online
purchasers. Because this survey was conducted for Mexican travelers (all
of them having Spanish as their native language), the English question-
naire was translated into Spanish by the authors. Both versions of the
questionnaire were double-checked by the project investigators, who are
bilingual, to ensure that questions in the two languages had the same
meaning. Details of questionnaire applied can be found in Annex 1.
A non probabilistic quota sampling method was used in this survey.
At the end, 58 usable questionnaires were collected; Descriptive statis-
tics were performed for all variables to provide a demographic profile
of respondents and means of all ratings. Chi-square tests were used to
identify differences between e-browsers and e-bookers among various
150
demographic groups because both sets of variables were categorical. In-

dependent sample t tests were used to examine differences between the
two groups of Internet users in their ratings of attributes and dimensions
as well as of the importance of performance for various star-rated hotel
categories. According to Muijs (2004), independent samples t tests are
used to compare the means of two sets of scores for two different groups
of participants. Similarly, Motulsky (1995) states that unpaired t tests are
the appropriate methods to compare the means of two unpaired groups.
Findings, analysis and discussion
Demographic Characteristics of Respondents
Table 1 presents the main characteristics of the 58 respondents. Among

these respondents, 20 had made reservations on hotel Website(s) in
the past 12 months. These were identified for this research purpose as
“online buyers”. The remaining 38 respondents who had not made any
reservations on any hotel Website(s) in the past 12 months were called
“online browsers”. Overall, the largest group of respondents was 18 to 25
years old, college/university graduates.
The propensity to purchase online increased with age, and brows-
ers tended to be younger respondents. Travel products and services are
generally considered luxury goods (Gee, Makens, & Choy, 1989). The
younger generations, who usually earn lower incomes compared to their
senior counterparts, are therefore less likely to reserve hotel rooms. This
finding was consistent with the age and income characteristics of e-trav-
elers in the tourism literature (Bonn et al., 1998; Weber & Roehl, 1999).
Importance of Dimensions
A Cronbach’s alpha for the attributes within each of the a priori dimen-
sions was calculated to assess scale’s internal consistency. According to
Roy et al., (2001), the Cronbach’s alpha value indicates the consistency of
the evaluation and the homogeneity of the items in the scale (Roy, Dewit,
& Aubert, 2001). The five dimensions of reservations information, facili-
151
Table 1
Demographic Profile of the Respondents
Have You Made Reservations on Any Hotel Website(s) in the Past 12 Months?
Overall Overall Yes (n = 20) No (n = 38)
Variable number % number % number %
Gender (n = 58)
Male 30 51.70 12 60.00 18 47.37
Female 28 48.30 8 40.00 20 52.63
Age (n = 58)
18 to 25 46 79.31 13 65.00 33 86.84
26 to 35 9 15.52 6 30.00 3 7.89
36 to 45 1 1.72 0 - 1 2.63
46 to 55 0 - 0 - 0 -
56 to 65 2 3.45 1 5.00 1 2.63
Education (n = 58)
Secundary 2 3.45 0 - 2 7.14
High school 12 20.69 2 10.00 10 35.71
College/University Degree 42 72.41 17 85.00 25 89.29
Postgraduate degree 2 3.45 1 5.00 1 3.57
ties information, contact information, surrounding area information,

and Website management had alpha values of 0.752, 0.700, 0.695, 0.708,
and 0.711, respectively. These values were considered satisfactory as this
research is exploratory by nature and Cronbach’s alpha can be improved
in a further research using a wider sample. Internal reliability can be
ascertained if the alpha values are at least 0.70 (Hatcher, 1994; Nunnally
& Bernstein, 1994 ).
Table 2 lists the five dimensions and their perceived importance by
online browsers and online purchasers. These dimensions included res-
ervations information, facilities information, contact information, sur-
rounding area information, and Website management. All dimensions
received mean values of above 5.0, indicating that respondents viewed
these dimensions as important. Online purchasers and online browsers,
however, viewed the importance of the dimensions differently. For in-
stance, online browsers seem to evaluate every dimension more impor-
tant than online purchasers.
152
Independent sample t tests were used to compare the overall impor-

tance mean ratings for online purchasers with the corresponding values
for online browsers for the 5 dimensions. The results showed a significant
difference for reservations information and contact information. In other
words, online browsers viewed reservations information as significantly
more important than online purchasers.
Importance of Attributes
The dimension of reservations information was related to facilities and

services that were available on the Website for online reservations. The
mean perceived importance scores of the 11 attributes in reservations
information are presented in Table 3. Basically, all but one attribute
received mean scores of above 5; it shows that the respondents per-
ceived these attributes as important. Both online purchasers and online
browsers viewed security payment systems as the most important attri-
bute. Room rates were second important attribute to security payment
systems for both as well. Special request forms, the last attribute in this
dimension, however, had average mean scores of less than 5.0 for online
buyers while it went above 5 for online browsers. This indicated that this
attribute was considered neither important nor unimportant for online
buyers and important to online browsers.
Results of independent sample t tests showed online purchasers
viewed three attributes significantly more important than online brows-
ers. These attributes were security payment systems, room rates and spe-
cial request forms. Because online purchasers had reservations and In-
ternet experience, they would unsurprisingly consider security payment
systems more important than the online browsers. On the other hand
online browsers being younger and less probably less affluent, considered
room rates more important than the online buyers, they also considered
special request forms as a more important attribute.
Table 4 shows results for the dimension of facilities information. This
dimension accounts for general description of the hotel property, and
information of facilities and services that are available to customers.
Results of independent sample t tests showed online purchasers viewed
153
Table 2
Perceptions of Online Browsers and Online Purchasers on the Importance of Different Dimentions
t-test for Equality of Means
Levene's Test for 95% Confidence Interval
Yes (n = 20) No (n = 38) Equality of of the Difference
Variable Mean Std. Dev. Mean Std. Dev. F Sig. t df Sig. (2-tailed) Mean Diff. Std. Error Diff. Lower Upper
Contact information 6.34 0.576 6.41 0.502 0.6843 0.4116 -0.5078 56 0.6136 -0.0741 0.1459 -0.3662 0.2181
Website management 6.17 0.630 6.22 0.835 2.2120 0.1425 -0.2148 56 0.8307 -0.0458 0.2131 -0.4727 0.3812
Surrounding area information 5.99 0.647 6.06 0.888 0.8697 0.3550 -0.3017 56 0.7640 -0.0679 0.2250 -0.5186 0.3828
Facilities information 5.79 0.417 5.84 0.727 3.8746 0.0540 -0.3037 56 0.7625 -0.0536 0.1764 -0.4070 0.2999
Reservations information 5.56 0.799 5.72 0.922 -0.6489 0.8304 -0.6489 56 0.5191 -0.1582 0.2438 -0.6465 0.3302
Note: Importance scale: 7 = very important, 6 = important, 5 = somewhat important, 4 = neither important nor unimportant, 3 = somewhat unimportant, 2 = unimportant, 1 = very unimportant.
154
Table 3
Perceptions of Online Browsers and Online Purchasers on the Importance of Attributes in Reservation Information
Yes (n = 20) No (n = 38) Levene's Test for 95% Confidence Interval
Variable Mean Std. Dev. Mean Std. Dev. F Sig. t df Sig. (2-tailed) Mean Diff. Std. Error Diff. of the Difference
Lower Upper
Security payment systems 6.65 0.813 6.42 1.030 2.555 0.116 0.862 56 0.393 0.229 0.266 -0.303 0.761
Room rates 6.34 0.576 6.41 0.502 0.6843 0.412 -0.508 56 0.614 -0.074 0.146 -0.366 0.218
Online/real time reservations 6.30 0.979 6.13 1.359 2.605 0.112 0.490 56 0.626 0.168 0.343 -0.520 0.856
Check rates and availability 6.10 1.373 6.24 1.747 0.301 0.301 0.301 56 0.301 0.301 0.301 0.301 0.301
View or cancel reservations 6.00 1.257 6.18 1.291 0.06 0.808 -0.521 56 0.604 -0.184 0.354 -0.892 0.524
Check in and check out time 5.90 1.119 5.71 1.754 4.542 0.037 0.438 56 0.663 0.189 0.433 -0.678 1.057
Worldwide reservations phone number 5.85 1.424 5.89 1.689 0.768 0.385 -0.101 56 0.920 -0.045 0.443 -0.933 0.843
Reservation policies 5.25 1.552 5.53 1.520 0.237 0.628 -0.653 56 0.516 -0.276 0.423 -1.123 0.571
Special request forms 4.40 1.569 5.24 1.700 0.593 0.445 -1.829 56 0.073 -0.837 0.458 -1.754 0.080
155
Table 5
Perceptions of Online Browsers and Online Purchasers on the Importance of Attributes in Contact Information
Lower Upper
Telephone number 6.70 0.733 6.64 1.032 0.002 0.968 -0.142 56 0.888 -0.037 0.260 -0.557 0.484
Email address 6.70 0.571 6.66 0.966 0.345 0.559 0.179 56 0.859 0.042 0.236 -0.430 0.514
Address 6.55 0.999 6.79 0.622 3.682 0.06 -1.125 56 0.266 -0.239 0.213 -0.666 0.187
Frequent asked questions 6.50 1.147 6.74 0.554 2.968 0.09 -1.064 56 0.292 -0.237 0.223 -0.683 0.209
Feedback forum 6.45 0.887 6.24 0.913 0.126 0.724 0.853 56 0.397 0.213 0.250 -0.287 0.714
Fax Number 5.20 1.963 5.42 1.638 0.610 0.438 -0.456 56 0.650 -0.221 0.485 -1.192 0.750
Contact person 3.60 2.113 4.13 1.891 0.647 0.425 -0.977 56 0.333 -0.532 0.544 -1.621 0.558
three attributes significantly less important than online browsers and one
attribute more important than online browsers.
Online buyers care for information on hotel location maps while
online browsers care for hotel promotions, restaurant information and
guest room facilities. Employment opportunities received mean scores
of less than 5 for online buyers and exactly five for online browsers. It can
be explained as online browsers, being younger and less probably less af-
fluent are more prone to be unemployed and looking for a job position.
Table 5 show results for the seven attributes in the contact informa-
tion dimension. This dimension measures direct communications web
capacity between a hotel and its customers and Table presents the per-
ceptions of respondents on these attributes. Both online purchasers and
online browsers viewed the first six attributes as important (with means
over 5.0).
Two attributes in this dimension show significant difference in per-
ception between online purchasers and online browsers: Address infor-
mation and Frequent asked questions capability. Both attributes were
considered less important by online buyers. It can be explained by the
possible online browsers’ lack of experience that leads them to be more
interested in getting as much communication as possible.
The dimension of surrounding area information was for information
related to the nearby environment. This dimension consisted of five at-
tributes, and Table 6 presents the perceptions of respondents on these
attributes.
In general, respondents considered all attributes as important (with
mean scores over 5.0). The attributes of main attractions of the city and
transportation had attained significant differences in mean scores be-
tween online purchasers and online browsers. Information on main at-
tractions of the city seems to be more important for online browsers.
Such significant difference could be due to the online browsers’ desire
for all types of information of a destination. On the other hand, transpor-
tation appears to be more important for online buyers indicating their
interest in evaluating different transportation alternatives to chose from.
The seventh dimension, Website management, included five attri-
butes that were related to whether a Website could be maintained in an
156
Table 6
Perceptions of Online Browsers and Online Purchasers on the Importance of Attributes in Surrounding Area Information
Lower Upper
Transportation 6.35 0.813 6.24 1.025 0.343 0.56 0.427 56 0.671 0.113 0.265 -0.417 0.643
Main attractions of the city 6.30 0.801 6.55 1.005 0.025 0.875 -0.972 56 0.335 -0.253 0.260 -0.773 0.268
Airport information 6.00 1.556 6.87 1.398 0.091 0.764 0.328 56 0.744 0.132 0.402 -0.673 0.936
General information about the city 5.90 1.252 6.05 1.064 0.497 0.484 -0.488 56 0.627 -0.153 0.313 -0.779 0.474
Information on local public holidays 5.40 1.353 5.58 1.426 0.034 0.855 -0.462 56 0.646 -0.179 0.387 -0.955 0.597
157
Table 7
Perceptions of Online Browsers and Online Purchasers on the Importance of Attributes in Website Management
Lower Upper
Up-to-date information on the site 6.85 0.366 6.71 0.694 3.272 0.076 0.837 56 0.406 0.139 0.167 -0.194 0.473
Website download time 6.75 0.444 6.66 0.708 2.382 0.128 0.528 56 0.599 0.092 0.174 -0.257 0.441
Multilingual site 6.20 1.056 6.16 1.151 0.511 0.478 0.136 56 0.892 0.042 0.309 -0.578 0.662
Site map 5.80 1.281 6.03 1.385 0.249 0.62 -0.607 56 0.547 -0.226 0.373 -0.974 0.521
Links to other related businesses 5.25 1.517 5.53 1.517 0.105 0.747 -0.605 56 0.548 -0.276 0.457 -1.192 0.639
efficient and effective way for customers to access the relevant and up-
to-date information.
Both online purchasers and online browsers considered all attribute
as important with mean scores over 5.0, as can be seen in Table 7. Two
attributes in this dimension show significant difference in perception be-
tween online purchasers and online browsers: Up-to-date information of
the site and Website download time, showing a more exigent customer in
those who buy online.
In a study-wide discussion of the results, it can be stated that findings
in this research indicated that there was no significant difference between
online purchasers and online browsers in the importance ratings for most
of the included hotel Website dimensions and attributes. Because more
than sixty percent of hotel Website users were online browsers and the
two groups had similar views on the hotel Website attributes, hotel prac-
titioners could focus on the most important dimensions and attributes in
Website design and maintenance, and they probably do not need to treat
these two groups of Website users differently.
Conclusions and further research
This study’s findings contribute to the present body of knowledge; and

also highlight Web site quality dimensions that customers utilize in their
assessment of overall online satisfaction. Research findings indicated
that most hotel Website viewed most of the included Website features
as important. As most international hotel chains have been trying to
regain control of their own distribution systems on Websites by offer-
ing competitive rates and attractive Web pages; Dube, Le Bel, and Sears
(2003) agreed that hotels needed to appeal to the senses of their guests
on web pages that invoke pleasant experiences. This study, therefore,
contributed to the hotel industry by providing useful information about
the preferences of hotel Website dimensions and attributes from the per-
spective of Mexican hotel online purchasers and online browsers. Hotel
managers can then take these preferences into consideration when devel-
oping their Websites, and attempt to maintain the useful and attractive
contents of the vital attributes. Although the study findings are useful
158
for hotel practitioners and academic researchers to better understand

e-consumers’ purchasing and information searching preferences, this
research was limited in scope of time span and sample size. Considering
the exploratory nature of this study, it is difficult for this article to make
any claim about the generalization issue to the hotel industry at large. It
is, therefore, inappropriate to make any generalized conclusions based
on the research findings. In addition to repeating the study with a larger
sample, future research projects should be carried out to enhance the
results of this exploratory study and to scrutinize the many unanswered
questions, for example, evaluating hotel Websites attributes appealed by
online buyers and browsers based on star rating, finding more attributes
valuable to online buyers and browsers, and so on.
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Annex 1. Questionnaire
Universidad de Guadalajara
Universidad de Occidente – Instituto Tecnológico de Tepic
Verano de la investigación científica Delfín 2010
“Use of e-commerce in the hospitality sector in Mexico”
a) PSICODEMOGRPHIC INFORMATION
Gender Male Female Age:
Education
1. Junior High [ ] B) High School [ ] C) College/University
Degree [ ] D) Graduate studies [ ]
Income (Mexican Pesos/Month)

a) Less than 5,000 []
b) 5,0001 a 10,000 []
c) 10,001 a 15,000 []
d) 15,001 a 20,000 []
e) 20,001 or more []
2. Have you made online hotel reservations in the last 12 months?

Yes []
No []
a) RESERVATIONS INFORMATION
How important is for you each of the following in a hotel’s Website?
Attribute 1 2 3 4 5 6 7
1. Security payment systems
2. Room rates
3. Online/real time reservations
4. Check rates and availability
5. View or cancel reservations
6. Check in and checkout time
7. Worldwide reservations phone number
8. Reservations policies
9. Special request forms
163
b) FACILITIES INFORMATION
Attribute 1 2 3 4 5 6 7
1. Hotel location maps
2. Hotel promotions
3. Hotel description
4. Photos of hotel features
5. Virtual tours
6. Restaurants
7. Hotel facilities
8. Frequent guest programs
9. Guest room facilities
10. Meeting facilities
11. Employment opportunities
c) SURROUNDING AREA INFORMATION

Attribute 1 2 3 4 5 6 7
1. Transportation
2. Main attractions of the city
3. Airport information
4. General information around the city
5. Information on local public holydays
d) CONTACT INFORMATION
Attribute 1 2 3 4 5 6 7
1. Telephone number
2. Email address
3. Address
4. Fax number
5. Frequent asked questions
6. Feedback forum
7. Contact person
164
e) WEBSITE MANAGEMENT
Attribute 1 2 3 4 5 6 7
1. Up-to-date information of the site
2. Website download time
3. Multilingual site
4. Site map
5. Links to other related businesses
165
8
The impact of public policies
as elements of competitiveness for SMEs
in the State of Aguascalientes
Luis Aguilera Enriquez1

Martha González Adame1
R. Rodrigo Rodríguez Camacho1
Abstract
This research carries out an approach to the impact that may have public
policies in the elements of measuring competitiveness, based on a specific
differentiation, which takes as its reference five States of development of
enterprises. New companies are those that have less than a year, recent
companies are between 1 year and 3 years, young companies are between
3 and 7 years, the grow up between 7 and 11 years and consolidated enter-
prises will have more than 11 years. The objective is to analyses the factors
involved in business competitiveness, identifying the level of influence and
their interrelationships, taking the entrepreneurial age as a distinctive fea-
ture to access government support. The results suggest that age of business
affects the way they perceive their environment and their ability to identify
benefits for access to programs of Government support.
Keywords: SMEs, public policies, competitiveness, support programs.
1. Universidad Autónoma de Aguascalientes.
167
Luis Aguilera Enriquez, Martha González Adame & R. Rodrigo Rodríguez Camacho
Introduction
Every company was created to achieve specific objectives and to meet

them is needed to analyze the events of the environment and the own
situation under a scheme of temporality to anticipate specific situations.
Andrews (1998) proposed a model of objectives, purposes and main
goals as well as the policies and plans aimed at achieving these goals.
What is still on the table for discussion is the role of public policy at
the time of offering alternative solutions to certain constraints that have
been detected in the acting business.
Among the authors who have investigated Mexican SMEs found
Aragón & Rubio (2005) argue that “the ability of the company to ob-
tain superior results depends crucially on its ability to acquire and coor-
dinate resources”. So employers must recognize its internal weaknesses
that could guide them to seek opportunities for partnership with other
companies to collaborate on manufacturing, the introduction of a prod-
uct or service in the market, or the development of capacities in striv-
ing to improve its competitive position. Blazquez et al (2006), emphasize
that one of the fundamental objectives of the business is the generation
of value for owners and the return of utilities based on the investment
(where competitive position is a result which complements indicators
of profitability). The essence of the company defined by Cuervo (2007)
as a specialization of functions, it has the same meaning of establishing
mechanisms to achieve objectives of sales, use of assets and generation of
value, they implied the definition of competitiveness.
Similarly, red and González (2007) Express business growth occurs
through new investments in the company itself or by acquisition, partici-
pation or establishment of agreements with other companies. It is this
sense that public policy can be inserted as element for business results,
however the process of formulation of programs of support takes as its
basis a set of companies divided by the traditional scheme of organiza-
tion, number of employees and the antiquity of the same. Therefore the
present research tries to perform an approximation to the impact that
may have public policies in the measurement of competitive elements,
on the basis of a specific differentiation which takes as its reference five
States of development of enterprises; New companies are those that have
168
The impact of public policies as elements of competitiveness for SMEs...
less than a year, recent companies are between 1 year and 3 years, young
companies are between 3 and 7 years, the mature between 7 and 11 years
and consolidated enterprises will have more than 11 years.
The relative importance of the State of Aguascalientes goes hand
in hand of their productive potential and the emergence of companies
that can take advantage of trade opportunities, below is the comparison
between the total national and the State of Aguascalientes in the areas of
economic units and jobs generated by size of enterprise.
Table 1
Distribution of businesses by size
(National and State of Aguascalientes)
National Micro Small Medium Large

Economic units 3,550,472 147,435 30,142 7,298
95.1% 3.9% 0.8% 0.2%
Busy staff 8,418,441 3,032,770 3,126,380 5,677,135
Aguascalientes
Economic units 38503 2,068 402 91
Busy staff 98,992 42,628 41,159 63,583
40.2% 17.3% 16.7% 25.8%
Source: (INEGI, 2010)
As you can see in the box, SMEs added a little more than 83.000 jobs and
are nearly on par of micro-enterprises in this indicator. With regard to
the characteristics of companies in key sectors can analyze the following
table to manufacturing, trade and private services financial do not rep-
resent the main economic activities at the national level and at the State
level by which investigations to determine the behavior of firms in these
sectors, acquire sufficient relevance to be analyzed.
For the State of Aguascalientes, the economic slowdown has become
increasingly apparent in the previous graph shown how the trend is rather
of stabilization, where the risk is that failure to take the necessary action
to strengthen economic activity and job creation would reverse a negative
trend in the economy of the State.
169
Graph 1
GDP Aguascalientes (millions of pesos)
SOURCE: (INEGI, 2010)

Source: (INEGI, 2010)
For the State of Aguascalientes, the economic slowdown has become increasingly app
the The authors
previous graphwho havehow
shown dedicated to the
the trend study of stabilization,
is rather the factors that de- the risk is that
where
termine economic growth indicate that “the development of local
take the necessary action to strengthen economic activity and job creation would r and
regional
negative economies
trend in thelies in interpreting
economy the processes of capital accumula-
of the State.
tion
The that drivewho
authors economic growth” (Vázquez
have dedicated B., 2000).
to the study of the factors that determine economi
indicate that "the development of local and regional the
Some research highlights a trend (García, 2007) fate of the
economies liessales
in interpreting the p
and purchases according to the size of the enterprise and argues, “There
of capital accumulation that drive economic growth" (Vázquez B., 2000).
is a positive correlation between larger and stronger presence in foreign
markets, especially in relation to sales.” The more diversified market cor-
Some research
responds to thehighlights
medium-sizeda trend (García, and
enterprises 2007) thethe fateconcentrated
most of the sales andon purchases acc
the size
the localoflevel,
the enterprise and argues,
micro-enterprises. "There is there
In addition, a positive correlation sig-
are statistically between larger and
nificant of sale differences, while medium-sized businesses sell a 50.5%more diversified
presence in foreign markets, especially in relation to sales." The
corresponds
of to the
its production medium-sized
at the enterprises
local level, small sold the and60.6%
the most concentrated on the lo
and micro-en-
micro-enterprises.
terprises the 75.3%.In “Ataddition, there
the opposite aremedium-sized
pole, statistically enterprises
significant ex-of sale difference
medium-sized
port 10.2% to the businesses sell a market,
international 50.5% ofwith its production
2.7% of small at and
the local
2.4%level,
of small sold th
and micro-enterprises the 75.3%. "At the opposite pole, medium-sized enterprises expo
micro-enterprises”.
to the international market, with 2.7% of small and 2.4% of micro-enterprises".
Table No. 3 % sales and purchases by size according to size of the enterprise
Micro- Small Medium-
170
enterprises sized
Local market sales % 75.3*** 60.6*** 50.5***
% Sales market State 7.3** 14.9** 17.0**
% Sales market nationally 15.0 21.8 22.3
Table 3
% sales and purchases by size according to size of the enterprise
Micro-enterprises Small Medium-sized

Local market sales % 75.3*** 60.6*** 50.5***
% Sales market State 7.3** 14.9** 17.0**
% Sales market nationally 15.0 21.8 22.3
% Sales market international 2.4*** 2.7*** 10.2***
Micro-enterprises Small Medium-sized
Local market purchases % 53.5 52.5 45.3
% Shopping market State 12.4 13.6 18.9
National market purchases % 31.4 30.6 31.1
% Shopping market international 2.7 3.3 4.7
Statistically significant differences: (*): p < 0,1; (*): p < 0,05; (*): p < 0.01.
Source: (García, 2007)
Review of the literature
One of the principal goals for managers is to understand the competi-

tive environment, (INEGI, 2010), (Aceves, 2004) among others cite to
(Porter, 1980 & 2008) as one of the main exponents of the competitive
forces analysis, Porter`s point of view is that there are five forces that
determine the consequences of profitability in the long term of a market
segment. The underlying idea is that the company must evaluate their
objectives and resources against these five forces that govern industrial
competitiveness. However, the configuration of these five competitive
forces will have specific differences depending on the industry, because
there are no universal consumption habits and values of weighting for
each force are different in each context. The full importance of the five
forces determines the earning potential in an industry, considering it in
terms that measure the return on capital investments; where it is under-
standable that not all industries have the same capacity of return on
investment. About the vision of the environment from Haugstad (1999)
he makes the precision that the strategy is a pattern of actions that inte-
grates political goals and procedures of an organization in a consistent
171
sequence of actions. That allows the Organization to use its resources

in a unique position and viable based on their competence in internal
in order to anticipate changes in the environment of business and the
actions of the competitors.
At this point it becomes necessary to define the attributes of the com-
petitive advantages from the internal point of view, are fundamental ca-
pabilities that put a firm over others; It is what the organization is much
better than rival companies, so it represents a force to compete that oth-
ers cannot match. One competitive advantage is the “know-how”, un-
derstood as the essential factor for the development and survival of the
company. Aceves (2004) citing (Sainte Marie, 1995) identifies four ways
of knowing:
• Conventional, based on the time that is used to design and carry out
a work.
• Specialized service refers to the marketing of a specific in a field skill
particularly.
• Technology, which requires the mastery of advanced technologies in
an organization consolidated.
• Associate, usually related to the sale of own articles requiring the
domain wide a sector market.
Business competitiveness is one of the topics that more discussion has

generated, because the different points of view, either by the strategic
position by the participation in sales in a specific market sector, the
development potential of innovations and even factors associated with
profitability. They emphasize the works presented by (neighborhoods,
Acosta, & Correa, 2007) (Hadjimanolis, 2000) (García, 2007) (Marren,
2007) (Sengupta, 2005), among others.
The strategies guide the decisions and allow that an operational plan
are carried out concurrently to the achievement of the objectives of the
company; then refers to the direction in which need human and material
resources in order to increase the chances of meeting goals and targets.
Burgelman (2002) defines the concept of strategy as the theory that se-
nior management has based on their past and future successes, this con-
cept indicates the vision of what you want to be. Figueroa y Fernández
172
(1997) defines that for the importance to assess the environment. The
focus of this work is the identification of the structure and identifica-
tion of competitive elements and their interaction with the companies
of the sector in question. This analysis of the competitive environment
part of the concepts expressed by Porter (1980, 1996) where competitive
forces were identified. However the own complexity in the definition of
the concept growth and its measurement via indicators, it is necessary to
understand that the decision to carry out a strategy defined by the enter-
prise managers were linked to concepts of internal and external to the
Organization itself.
Act of enterprises, is generally heterogeneous, for example in specif-
ic aspects González (2006) suggests that greater strategic integration of
purchasing strengthens the link between capabilities and business results,
although in his research he found no significant evidence that linked the
efficiency of the Department of purchases against the results of growth
or profitability of the company. The same applies to try to refine the con-
cept of innovation that has countless investigations from diverse points of
view, Hadjimanolis (2000) points out that most of the studies on innova-
tion focused on large enterprises, which by its organizational structure
and its nature of market-oriented are naturally innovative. In fact, the
Oslo Manual (2005) identifies substantial elements which serve to guide
the research. However, we need to recognize that small and large enter-
prises play a different role in the innovation activities by its requirement
of skills and resources, small businesses have unique characteristics of
scarce resources, little influence on the market, non-formal communica-
tion schemes. But his strength lies in the flexibility and motivation that
managers can give their employees, also if there is some bias toward in-
novation will be strongly conditioned by the regional or national context
of industry where he is involved.
Martínez (1999) defines that the motivation of businesses to coop-
erate, is the improvement of competitiveness, which is evident to leave
the company its isolation and introduce a series of relationships between
companies, seeking him greater flexibility and greater effectiveness, to
enable him to participate in new knowledge and information on the ac-
tivities that make up its value chain. One of the guidelines for public
policies is to promote such cooperation between different companies, by
173
the origin of their purchases or markets, or the complementarity of their

productive activities and services. Orchard & Pedraja (2008) indicate
that if cooperation between enterprises under the scheme of Joint Ven-
ture2http://www.microsofttranslator.com/bv.aspx?from=es&to=en&a=
http%3A%2F%2F207.46.192.232%2Fbvsandbox.aspx%3F%26dl%3De
s%26from%3Des%26to%3Den%23_ftn4 should be identified as a form
of strategic alliance with contractual and temporary features:
• Joint Venture with a partner dominant.
• Joint Venture Management and operation shared.
• Joint Venture independent.
Kaplinsky & Saints (2005) the companies which have an area of research
and development does not necessarily are who generate more innovations,
but if you are carried out in a manner more structured and geared towards
the achievement of the fundamental objectives of the organization. In addi-
tion, his research shows that there is a strong correlation between the price
of new products and the magnitude of the efforts by innovation, except for
those based on the use of resources for manufacturing.
The argumentation of Motta, Oviedo, & Santini (2010) notes that
the Government can have impact on the competitive by reducing im-
provement by having direct relationship with the emergence of new en-
terprises. Also identify the duration of operation of the companies has
to do with the initial capacity of solving requirements and initial regula-
tions, so reducing the barriers to entry is linked to the productivity and
competitiveness. At the same time (Klapper & Love, 2010) and (Klapper
& Quesada, 2007) indicate that where there is strength in governmental
institutions there will be better conditions to survive any crisis and there
would be no decline in the emergence of new enterprises.
While it is necessary to recognize that financing is one of the first
obstacles, companies must overcome (JaeHoon, 2007) indicate that the
size of the market and the dynamics of emergence of new companies de-
fined characteristics and availability of funding schemes. You must recog-
2. It is a form of business cooperation between two or more companies national or foreign,

through the integration, interaction and complementarity of their activities and resources
seeking attainment of common ends
174
nize that there are business accompaniment to new businesses supports

so-called “angel investor” in developed economies “seed capital” in the
hands of a growing reduction in tax burdens for newly created firms. In
this sense (Bozeman, 2000) and (Hogwood & Gunn, 1984) they point out
that there is a clear and proper definition for all economic activities of
the concept of technology transfer, so that governmental efforts as well
as those of the universities to develop innovations are important and is
the responsibility of employers come to assess the potential of every in-
novation. According to (Lindblom, 1959) and (Lasswell, 1971) for the
definition of public policies need to setting the agenda; the definition of
alternatives for the election; the own selection among the alternatives
listed and implementation translated into a program of specific support
defined rules of operation, responsible and temporality. Clearly, the goal
requires the competition of many elements (economic aspects, popular
discontent, political problems, international aspects, Government con-
tradictions) largely beyond the control of regulatory officials.
At the micro level, public policies are related to the Organization
and structure of the business unit, with the dominant organizational cul-
ture and the efficient management of it, both in the section on manage-
ment of human resources and the production process. The above, would
devise public policies as an agent of systemic competitiveness, resulting
investment and its instruments will promote the competitiveness of the
economic system as a whole.
Objective
Analyzing the factors involved in business competitiveness, identifying

the level of influence and their interrelations, starting from the age of the
company as a distinctive feature to access government support programs.
Hypothesis
H1 the results of competitiveness are different depending on the degree

of maturity of the companies.
175
H2 managers of firms identified the benefits offered by a specific pro-

gram of Government support.
H3 a better understanding of Government support programs, better will
be the results of competitiveness.
H4 productive factors have greatest impact on the result of competitive-
ness that efforts to innovate.
H5 grow up companies have a greater predisposition be informed on
Government support programs.
The approach of the hypotheses oriented research because it seeks to

provide elements for discussion on the behavior of the SMEs analyzed
under the set of selected variables, so that it can draw conclusions about
the magnitude of the relationship between variables and the combined
impact of these.
Methodology
Research was carried out in the city of Aguascalientes, with a sample of

205 SMEs of all productive sectors, to each head (Manager) was applied
a questionnaire validated by Cronbach alpha (0.91) with reactive 174
(88 per cent on a Likert scale) and the remaining in dichotomous ques-
tions (which serve as elements of differentiation). The responses were
coded using SPSS, were the analysis of correlation between variables,
simple regression (including the calculation of the coefficient R2) and
factor analysis. This last was added rotation procedure el by varimax
and of those results raised analysis el loads factorials to determine the
impact of each of the factors (including proof of KMO and total variance
explained).
Results
In the first instance the analysis of correlation between variables, taking

as a distinctive variable age of enterprises and questions relating to public
176
policy as the axis of comparison, it turned out the analysis of factors;

questions about public policy whose correlation was significant were:
Table 3
Correlation significant (questions of public policy)
The Manager of the company has Mechanisms for cooperation with the
sufficient information programs universities of the region have been
supporting SMEs assessed
Public policies are an opportunity for the Support programs encourage innovation
growth of enterprises
Support programs promote modernization Support programs fostering
of SMEs competitiveness improvements
It has decreased the bureaucratic process The Government encourages research /
to access the Government support development / innovation in the sector
Whereas companies new as those who have less than a year, recent com-
panies are between 1 year and 3 years, young companies are between 3
and 7 years, the mature between 7 and 11 years and consolidated enter-
prises will have more than 11 years.
Table 4
Aanalysis of factors by age of the company
Type of company New Recent Young Grow up Consolidated

KMO 0.6 0.6 0.8 0.7 0.8
Total variance explained 86% 78% 86% 77% 82%
Cronbach’s alpha .860 .841 .927 .788 .853
Factor analysis is expressed in the following table on a percentage basis

to identify the specific weight of each variable and each type of company.
177
Table 5
Analysis of factors by age of the company (expressed in %)
New Recent Young Grow up Consolidated

Support programs A.1 31% 37% 24% 28% 30%
A.2 32% 28% 33% 30% 30%
A.3 34% 34% 31% 26% 30%
A.4 3% 1% 12% 16% 10%
Improves bureaucratic (B)1 43% 42% 36% 30% 39%
process (B)2 57% 58% 64% 70% 61%
Information and (C)1 12% 1% 51% 39% 45%
cooperation (C)2 88% 99% 49% 61% 55%
Where were the variables coded in the following way:
Table 6
Encoding for questions of public policy
A.1 Support programs encourage innovation

A.2 Support programs promote modernization of SMEs
A.3 Support programs fostering competitiveness improvements
A.4 The Government encourages research / development / innovation in the sector
(B)1 Public policies are an opportunity for the growth of enterprises
(B)2 It has decreased the bureaucratic process to access the Government support
(C)1 The Manager of the company has sufficient information programs supporting
SMEs
(C)2 Mechanisms for cooperation with the universities of the region have been
assessed
Later was conducted regression analysis and adjustment of R2 for each

type of company, so you could compare each effect of each variable. The
reason for choosing the comparison group took as an element to the
adjustment of the equation R2 where it was determined that to compare
rates will be new companies and the mature by his better fit. As you can
see in the following table equations which better conform to the behavior
178
of the data correspond to the new and mature companies (R2 = 0.98 and
R)2= 0.63).
Table 7
Equations of regression by age of the company
New R2 = 0.98 F = 3.58 + .12A1 - .56A2 + .09A3 + .81A4 - .77B1

- .03B2 - .04C1 + .27C2
Recent R2 = 0.55 F = 1.43 + .10A1 - .02A2 + .19A3 + .12A4 + .05B1
+ .03B2 + .24C1 - .10C2
Young R2 = 0.38 F = 2.17 - .25A1 + .10A2 + .03A3 - .06A4 + .16B1
- .23B2 + .34C1 - .12C2
Grow up R2 = 0.63 F = 1.00 - .01A1 + .21A2 + .02A3 + .05A4 - .12B1
+ .40B2 + .07C1 + .12C2
Consolidated R2 = 0.14 F = 2.76 + .02A1 - .02A2 + .10A3 + .16A4 - .05B1
- .16B2 + .06C1 + .18C2
Where the dependent variable is defined as financial results under the

following questions (evaluated in the same way with the Likert scale):
a) Estimated the company’s profitability

b) Has a strategy to solve the debts
c) Monthly the company cash flow is positive
d) The rate of return on investment of the company, is located on top of
what it was planned
e) Ability of financially sustainable growth
f) Balanced financial position
g) Patterns of (self-financing) suitable for the accumulation of intangible
With this guideline through the analysis of factors you can see 4 interest-
ing situations which include variable innovation, bureaucratic improve-
ment, cooperation with universities, information that Al Manager of the
company on Government support and the overall comparison between
new and mature companies.
179
Table 8
Comparative public policy and age of the company
The results indicate that older company However the perception of improvement in
encouraged greater innovation activities bureaucratic processes is slightly larger as
companies age is higher
As the age of the company exceeds two The innovation efforts are favoured as it
things happen, stop first of all have an progresses the age of enterprises; the same
interest in seeking mechanisms of coope- applies to information search and the per-
ration with universities; on the other hand ception of bureaucratic improvement. It only
increases the search for the Manager decreases the propensity to cooperate with
information on government programs. universities.
Globally we included other variables production aspects (P), efforts in

marketing (M), implementation of ICT’s (T), innovation (IN); included
in the instrument submitted to the company managers, and expanded the
dependent variable with the inclusion of competition-related questions:
180
a) The company is highly competitive in price

b) The company presents high power of negotiation on suppliers
c) Clients have low bargaining power
d) Periodically assesses the competitive business position
e) There is a formal and documented cooperation with suppliers strategy
The resulting general equation of the applied instrument, as could

be determined with these extensions form included the value of R2 to
observe the adjustment of the equation with the overall performance of
the variables included.
Comparative global equations by age of the company
Eq. Global R2 = 0.99 Competitiveness = 0.60+. 36A +. 08B-. 59C1 +. 14

Company C2 + . 89IN
New -.48M+ .12P +. 33T
Eq. Global R2 = 0.84 Competitiveness= 0.92 +. 10A +. 17B-. 05C1 +
Company .01C2 + .27IN
Grow up +.03M+. 40 P -.14T
Beyond you can check the value of each coefficient in the equations, that:
a) New business components with greater influence are innovation,
marketing efforts and programs in support of innovation.
b) Companies mature the most important factors are the productive as-
pects and and lesser extent, the way in which have been reducing the
process bureaucracy.
Hypothesis testing
(H)1. the results of competitiveness are Not reject H1

different depending on the degree The resulting equations have different
of maturity of the companies. specific weights in each variable
(H)2. managers of firms identified the Reject H2
benefits offered by a specific It is up to the age of the company
program of Government support
181
(H)3. a better understanding of Reject H3

Government support programs, It is up to the age of the company
better will be the results of
competitiveness.
(H)4. productive factors have Reject H4
greatest impact on the result of It is up to the age of the company
competitiveness that efforts to
innovate.
(H)5. grow up companies have a greater Not reject H5
predisposition be informed on They have greater willingness than the
Government support programs. rest of the types of companies
Discussion
The formulation of public policies is not a simple mechanism of calcula-

tion that relates ends and means, but it also includes the processes related
to the incorporation of topics on the public issues, which defines power
relations and shared responsibility. The way in which employers identify
opportunities within public policies and support programs derived from
them, depends on the ability to stay informed of the environment, as
well as knowledge of the strengths and weaknesses of the company itself.
While the previous ideas have a simple logic, not always business man-
agers understand the importance of carrying out appropriate strategies
for your organization. For Zapata (2004) there are internal factors in
enterprises that make it difficult, to varying degrees, the efforts to seek
cooperation schemes. One of them is a relative resistance to the profes-
sionalization of its senior commanders.
At the end of this research, is important to see how the efforts of
managers to perceive its environment change according the age of the
company, one remarkable issue is to assume that public policies for the
design of support programs should be subject to understanding such be-
havior to offer schemes that can actually be exploited by employers. This
could be true in enterprises of specific branches of production or servic-
es, processing or marketing. This opens the argumentation to generate
new lines of research, which are considered some other factors related to
the actions of the manager and their specific environment.
182
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184
9
Customer satisfaction in the
restaurant industry at Guadalajara’s
Metropolitan Area
Óscar Alejandro Espinoza Mercado1

José Sánchez Gutiérrez1
Guillermo Vázquez Ávila1
Carlos Enrique San Andrés Rivadeneira2
Abstract
Some determinants of customer satisfaction such as service quality,

expectations, performance, dissatisfaction and desires have already been
widely discussed (Churchill and Suprenant 1982; Oliver 1993; Patterson et
al. 1997; Spreng, et al 1996; Szymanski and Henard 2001). This is mainly
the reason why in the present study we examined four specific variables:
service quality, food quality, environment and price. It was considered
that way in order to glimpse the restaurant industry under a scheme
aimed at customer´s satisfaction. To achieve such a goal, an analysis was
conducted by a representative sample of customers whose habits and
lifestyles include frequent visits to certain restaurants in Guadalajara´s
2. Universidad de Guayaquil, Ecuador.
185
O. A. Espinoza Mercado, J. Sánchez Gutiérrez, G. Vázquez Ávila & C. E. San Andrés Rivadeneira
Metropolitan Area. More specifically, the current study was based on 170
people who were frequent customers at a certain category restaurants.
Keywords: Satisfaction, service, restaurant industry.
Introduction
There is a wide range of determinants of customer satisfaction and

underlying dimensions of satisfaction judgments that prove to be specific
rather than global (Rust and Oliver 1994). For example, exploring the
use of evaluative criteria to form expectations about the performance has
had a considerable impact which turns out to be much more important in
the study of consumer behavior (Bettman 1970, Fishbein 1963, Fishbein
and Ajzen 1975, Oliver 1993, 1997, Mittal and Tsiros 1999, Rosenberg
1950). The evaluation criteria may include attributes such as price targets,
brand name, country of origin or even some subjective attributes such as
quality, comfort and design (Grapentine 1995, Myers and Shocker 1981).
All of it as a whole is somehow what is intended to study, but without
losing sight of the study aim, since it is focused on services rather than on
products. Therefore, one can argue that customer satisfaction in the res-
taurant industry is likely to depend on those judgments concerning their
attributes related to the service itself.
Justification
An important factor in the decision to carry out this research is the fact
that in recent years the restaurant industry has been considered to be
as a good option for businesses with great potential for success as an
entrepreneur. Somehow it generates good profits due to the ascent of
the industry. Large percentage of household budget is spent in such an
industry, having a great demand within this segment, but regardless this
business covers a basic need for which there is always a market, a high
percentage of new restaurants fail in their first operation months or years.
As for the research, as mentioned above, it is focused on the custom-
er, from whom it will be likely to obtain accurate data in order to facili-
186
Customer satisfaction in the restaurant industry at Guadalajara’s Metropolitan Area
tate interpretation and analysis of customer satisfaction. Furthermore,

this study is due to the large number of dissatisfied customers whose de-
sires and expectations are not fully covered as they are supposed to be,
hence, it was important to identify the determinants involved in his or her
sole perception and satisfaction so that solutions can be found out, allow-
ing us to assess the best solutions that enhance the experience rendered
regarding the restaurant industry in the metropolitan area of Guadala-

jara. It is therefore necessary to study both the perception and customer
satisfaction in the industry, since this depends on their performance.
Problem
The physiological need for food, socializing and interacting comfortably

are some of the motives that make individuals want to have the desire of
attending to a certain restaurant.
Therefore, from the moment guests arrive at a restaurant and have
created an expectation of the experience which will take place, however,
afterwards they might realize about the lack of good service that they had
been predisposed to experience. Thus, it is noted that an upset customer
with a poor service satisfaction provided competition may prefer simply
not to come back ever.
That is why the study is meant for, to help make the restaurant in-
dustry in the metropolitan area of Guadalajara improve various aspects
through their current clients, identifying the main determinants the cli-
ent takes into account regarding the satisfaction degree gained through
the experience the service provides.
General purpose
Identify the most important determinants that influence the perception

and customer satisfaction in the restaurant industry in the metropolitan
area of Guadalajara.
187
Specific objectives
• Analyze customer’s viewpoints with respect to such industry within

the metropolitan area of Guadalajara,
and thus, identify the positive
and negative factors that influence the positioning of a restaurant.
• Analyze the frontier knowledge regarding perception and customer
satisfaction in the restaurant industry.
• Determine criteria and methods of investigation that will be used
within the current study.
Customer Satisfaction
Customer satisfaction is considered as the most researched measurement

in marketing (Gupta and Zeithaml, 2005). Many researchers consider it an
important way of measuring both performance and quality. It may even be
said to have had an impact even in the current competitive environment,
because it serves as a basis for comparison of the various organizations
(Paula, Long and Weiner). In these terms, the ability to satisfy customers
is vital for a huge number of reasons, especially in the restaurant industry.
On the other hand, this concept has attracted considerable scholarly
attention for many years (eg, Caro and García, 2006; Homburg, Kos-
chate, and Hoyer, 2006; Ofir and Simonson, 2005, Peterson and Wilson,
1992; Fornell, Johnson, Anderson, Cha, and Bryant, 1996; Spreng and
Mackoy, 1996, Bernhardt, Naveen, and Kennett, 2000, Churchill and
Surprenant, 1982). Most authors, from the classics to the newest, agree
that satisfied customers represent a considerable value to a company. In
fact, Peterson and Wilson (1992) posit that “satisfying customers are the
first obligation of a company” because the business model of companies
are now directed towards customers.
188
Quality
Back to the roots and basing us on very classic research, satisfaction is

also conceived as the result once the characteristics of the product or
service meet the needs of customers. It takes place when the company
meets or exceeds customer’s expectations during the life of a product or
service (Juran 1981). On the other hand, considering another approach,
Jones and Sesser (1995) suggested that the simple act of providing some-
thing unusual may be the only reliable way to achieve true customer sat-
isfaction. As described, the companies must realize that different actions
make the difference between a neutral and a satisfied customer, as well
as from a dissatisfied customer to a very satisfied.
However, in order to have the notion of quality, the product must
be experienced, or if it is a service, the provider experience. Without ex-
perience, you just may not be able to judge or assess the level of service
provided.
Quality of food
Today, in modern life, conducting a good choice of food is crucial, espe-

cially for consumers with a healthy lifestyle, healthy people also try to
consume only products of high nutritional value. Certainly, consum-
ers are looking for quality, value and desirable environment away from
everyday pressures (Soriano, 2002). Counting on a purchasing power and
an educated society, today’s consumers demand higher quality food.
Thus, factors such as safety, freshness, storage, preparation, con-
sumption, price, packaging, and place of purchase are factors that can
create consumer trends in purchasing behavior and consumption. Both
the quality and safety are important elements in consumer perception
regarding decisions related to food choice (Grunert, 2005, Rohr et al.,
2005). In fact, among the four elements that are considered in this study,
the price is not the first factor that the consumer takes into account at a
first glance, so it is important to mention that those who are able to serve
good quality food will always know how to gain and keep a customer.
However, consumers are always searching for better value upon their
money (Klara, 2001). On the other hand, it has been determined that the
189
quality of food and fresh ingredients is the most important reasons for
customers to return to a particular restaurant (Brumback, 1998).
Quality of Service
Although it might be difficult to define “quality service” marketing

theory has recently accepted as a personal and subjective, where the cus-
tomer’s perception is essential. Consequently, the most common defini-
tion of quality regarding service specifies the customer’s overall opinion
with respect to the superiority of the service (Parasuraman, Zeithaml and
Berry, 1988), taking into account the service that the customer expects to
receive and the perception of the company that offers this service (Grön-
roos, 1994; Parasuraman, Zeithaml and Berry, 1985).
According to the contribution of Cronin and Taylor (1992), service
quality is an antecedent of consumer satisfaction, which in turn, affects
the purchase intentions. Consumer satisfaction also increases the value
for the restaurant industry (Anderson, Fornell, and Mazvancheryl, 2004).
In fact, this applies to virtually any industry. This study focuses primarily
on the restaurant industry, so it is understood that the restaurant is able
to provide a better service and value in order to have a considerable com-
petitive advantage (Stevens, Knutson and Patton, 1995).
Price
We all make purchasing decisions on a daily basis. These consumption

decisions, which often include the choice of brand, are often influenced
by a variety of internal and external stimuli. Such as cream dreadful reac-
tion to the amount of advertising efforts which are now exposed (Bawa,
Srinivasan and Srivastava, 1997), and the response to this kind of adver-
tising (Soman, 1998; McCall, Eckrich, and Bruneau, 2007).
As a consequence of this whole dynamic, traders have always been
interested in how consumers respond to changes (large and small) in the
marketing environment. In fact, it is not surprising that a specific and
significant influence direct decision making in consumption is price. Ray-
mond Corey Harvard Business School, once proclaimed that all market-
190
ing efforts are focused on reaching the decision to pricing (Nagle and
Holden, 2002). Given the importance of price, this part of the study ex-
amines the role of perception regarding value, quality, price and knowl-
edge that apply to price sensitivity.
Research questions
• How can opinions be assessed within the metropolitan area of

Guadalajara and thus, how to identify the positive and negative fac-
tors that influence the positioning of a restaurant?
• What are the main determinants influencing customer satisfaction
in the restaurant industry in the Metropolitan Zone of Guadalajara?
• What are the most recent contributions in relation to consumer satis-
faction in the restaurant industry?
• What kind of screening criteria will be most suitable for the develop-
ment of the current study?
Hypothesis
H1. The higher the personal attention to clients, the greater perception
of satisfaction from them.
H2. The greater the importance of price in the services, the client expe-
riences higher perception of satisfaction
H3. The greater importance being given to food and beverage restaurant,
higher perception of satisfaction
Methodology
Throughout the research conducting a quantitative tool that can facili-

tate analysis of data obtained is expected. It is also necessary to use the
following methods.
191
Research Methods
In developing the study, we consider the following method:
• Descriptive: because it seeks to specify the important properties of

individuals, groups, communities or any other phenomenon that is
under analysis (Dankhe, 1989).
• Inductive-deductive method and analytical-synthetic: Inductive-
deductive method and the analytical synthetic follow the scientific
process of reasoning. The inductive-deductive studies individual cases
to reach a generalization, conclusion or rule, and then we deduce the
individual standards. The method decomposes an analytic-synthetic
unity in their simplest elements examines each of them separately,
returning the parties to consider grouping together.
• Statistical Methods: This particular method, which is also managed as
a research technique is used to collect, process, and interpret nume-
rical data through the search for them and their subsequent orga-
nization, analysis and interpretation. The usefulness of this method
focuses on the calculation of sampling and interpretation of data co-
llected.
• Canonical correlation analysis: multivariate statistical model facilita-
tes the study of the interrelationships between multiple variables cri-
terion (dependent) variables and multiple predictors (independent),
i. e, while multiple regression predicts a single dependent variable
from a set of multiple independent variables, the canonical correla-
tion simultaneously predicts multiple dependent variables from mul-
tiple independent variables (Hair, Anderson, Tatha & Black, 2005).
Interview
The questionnaire and, if interviews are research techniques, properly

speaking it is not precisely a method, rather than that, a set of questions
that aims to obtain data for an investigation.
192
Questionnaire
For the collection of information, a questionnaire based on Likert scale

with five alternatives ranging from Totally unsatisfied to Totally satisfied
was used:
• Totally insatisfied
• Insatisfied
• Indiferent
• Satisfied
• Totally satisfied
Questions will be related to:
• Food’s presentation
• Availability of sauces, utensils and napkins
• Food’s Temperature
• Personal attention
• Restaurant’s atmosphere
• Food’s price
Likert Scale
Refers to a scaling procedure in which the individual incentives assigned

a specific set of categories or linguistic quantifiers (very satisfied, sat-
isfied, indifferent, etc.) (Isabel Sánchez Alfonso Cañadas Osinski and
Bruno, 1998).
Space and time limits
It was carried out in the Guadalajara’s metropolitan area, specifically at

the best restaurant zones and some neighborhoods with good reputation.
It was carried out during the course of the first semester 2011.
193
Sample type
It was conducted through analysis of a representative sample of custom-

ers whose habits and lifestyles including frequent visits to certain restau-
rants in Guadalajara’s metropolitan area. To achieve such a thing, we
used the equation for infinite populations, giving the following results:
(1.81)2 x 0.5 x 0.5
Muestra
(0.07)2
Analysis
As a result, 170 customers were surveyed in restaurants categorized as

special category in Guadalajara’s metropolitan area, from which 48.2%
were female, while 51.8% were males; this through a random selection of
through aindividuals, so the same
random selection age rangessowere
of individuals, the according
same age to the following
ranges chart: to the
were according
following chart:
Figure 1
Figure 1
26-33 34-41
As shown in Figure 1, the group of 18 to 25 years represented the major-

As shownityinofFigure
women 1, respondents
the group ofwith
18 39
to items, while
25 years 27 interviews
represented were com-
the majority of women
pounded
respondents with 39by men.while
items, However, the trend
27 interviews mark
were above 26byyears
compounded men.male gender
However, the trend
mark above 26 years male gender is predominant, this is mainly because at the time of answering
the survey of household heads took the role of compilers of consumer preferences.
194
Hypothesis 1.- The greater the personal attention to clients, it is assumed greater perception of
satisfaction from them.
is predominant, this is mainly because at the time of answering the survey

of household heads took the role of compilers of consumer preferences.
Hypothesis 1. The greater the personal attention to clients, it is as-
sumed greater perception of satisfaction from them.
To prove this supposition, customer satisfaction will be considered
as the dependent variable and personal attention, repurchase intention,
suggestions from waiters when ordering a new or outstanding dishes well
as professionalism regarding service are taken as independent variables
in order to get the analysis started.
A feasibility study of the variables through the Bartlett sphericity test
and study of Kaiser-Meyer-Olkin is depicted on table 1 (KMO).
Table 1
Bartlett’s test of sphericity and KMO study
Adecuational measurement KMO .523

Barlett’s sphericity test Chi square 253.299
Liberty degree 78
Significance level .000
Source: Based on survey data.
As shown in Table 1, the KMO measure of adequacy is at a rate of 52%,

given the above variables can be inferred that this relationship has such
average, so we can say that the dependent variable has a very closely
impact with the independent variables, that is why the Bartlett test of
sphericity and through Chi Square statistic can be seen to have excellent
potential to further the process of additional data, this implies that in the
study of commonalities fluctuate between 4-7, which indicates that the
variables can be crossed with each other to obtain an estimate up to 70%
confidence.
Also within the total explained variance was taken based on the ei-
genvalue 1, the correlation trend remains above 50% referring to the
clarity and cleanliness of the study conducted in the field.
To continue with the study an analysis of variance with the variables
was chosen to really know if the data is valid and thus can confirm or
195
reject the proposed hypothesis, the ANOVA was performed through the
Games-Howell method, which according to Levy (2000), it is the most
recommended for administrative economic studies.
Approximately within the variable crosses the trend made the cor-
relation observed between the groups has a maximum above 10, with a
significance level of .000 indicating that despite marked a possible error
to compensate for surveys are outliers but may also represent the senti-
ments of one of the members surveyed in the same way in the Games-
Howell study shows that there are correlations above 70% indicating
consumers the fact that attention quality of staff is directly reflected in
consumer satisfaction, which means that consumers in restaurants the
quality of the service is good, but for their kindness is synonymous with
satisfaction.
Given this hypothesis, it is fully accepted.
Hypothesis 2: The greater the importance of price in the services, the

higher perception of satisfaction.
A Bartlett’s test of sphericity and KMO were performed to know the cor-
relation of variables and to know how they can be processed for this sec-
tion. Total Consumer Satisfaction will be taken again as the dependent
variable and price as independent (regarding dishes, beverages and value
for money), the results from the initial study are:
Table 2
Barlett & KMO sphericity test

Liberty degree 6
The processed data shows a very standardized behavior, therefore, the

measure of sampling adequacy KMO is within the range of 71.3% which
196
means that the data correlation is very high compared with other similar
studies and it is also confirmed by the Chi square since only 6 degrees of
freedom are required for processing it, it indicates that within the Gauss-
ian bell curve it is a very light one.
To better visualize it the data table below (Table 3) describes it more
in detail:
Table 3
Correlation Matrix
Sig. (Unilateral) Food was Beverages You paid In general, the restaurant
expensive were more than offers a good value upon
expensive expected money
Food was expensive .000 .000 .396
Beverages were .000 .000 .042
expensive
You paid more than .000 .000 .445
expected
In general, the restaurant .396 .042 .445
offers a good value upon
money
As it is seen, money value is the main variable against which it is pos-

sible to correlate the rest of them, which is why it is interesting to know
through an analysis of variance (ANOVA) one way how variables behave
that exist and how they are correlated, this is the way we proceed to apply
the analysis which provides such results:
197
Table 4
Descriptive of the ANOVA
Confidence 95%
Typic error
Maximum
Minimum
Deviation
Lower Superior
Media
limit limit
N
Food was expensive Yes 152 3.71 .904 .073 3.57 3.86 1 5
No 18 3.17 1.043 .246 2.65 3.69 1 5
Total 170 3.65 .931 .071 3.51 3.79 1 5
Beverages were Yes 152 3.70 .812 .066 3.57 3.83 1 5
expensive No 18 3.00 .840 .198 2.58 3.42 2 5
Total 170 3.63 .841 .065 3.50 3.76 1 5
You paid more than Yes 152 3.63 .904 .073 3.49 3.78 1 5
expected No 18 3.56 1.042 .246 3.04 4.07 1 5
Total 170 3.62 .916 .070 3.48 3.76 1 5
In general, the Yes 152 1.13 .410 .033 1.07 1.20 1 3
restaurant offers a good No 18 1.22 .428 .101 1.01 1.43 1 2
value upon money Total 170 1.14 .411 .032 1.08 1.20 1 3
Source: Based on survey data
It is noted that the existing values reflect that the variation of the stan-
dard deviation is very consistent with what is being observed in previ-
ous studies. However, according to the variance analysis complete, linear
terms are higher levels of significance, they are above 0.74 which indi-
cates that the relevance of the data is not representative and therefore
the hypothesis is discarded as valid, since the price for customers is not a
factor for the satisfaction of the experience in restaurants.
Hypothesis 3. The greater importance being given to food and drinks

from the restaurant, the customer will experience higher perception of
satisfaction.
For this hypothesis the data obtained from statistical software, based
on the variables of food color, taste of food, temperature of the beverage,
food texture, variety of drinks and food on the menu and satisfaction as
the dependent variable were as follows (Table 5):
198
Table 5
Bartlett’s test of sphericity and KMO

Liberty degree 66
Source: Based on survey data
The values in the table number 5 seem to be highly satisfactory and prac-
tically can be inferred that the contribution of the study is reflected in the
customers to take into account the quality of food as part of complete
satisfaction upon experience in restaurants. The correlation of variables
is more focused on the foods’ flavor and their temperature.
Finally, ANOVA was applied. It can be observed that the most rep-
resentative variables are food’s flavor, temperature and variety of drinks,
which in the table are the most representative observed behavior when
crossing the variables.
That is why the hypothesis is accepted, considered as valid.
Conclusion and recommendations
• As for customers, it is important to feel satisfied. However it is inter-

esting to note that the price is not a problem, it indicates that within
certain restaurants individuals are willing to pay high prices but enjoy
the experience.
• The food itself is a factor to look inside the restaurant, if it does not
have the minimum elements required, the customer will not be satis-
fied and might not come back.
• In addition to the food, the client requires personal attention but not
extremely careful, but with a normal level of courtesy and frequent
reminder to customers, it helps to build trust in the staff and it is
recommended that restaurants in Guadalajara’s metropolitan area
care of this issue to keep customers captive.
199
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10
Effects on the Mexican peso-us dollar
exchange rate risk as a result of the present
European debt crisis
Mario Alberto Lagunes Pérez1
Abstract
The European debt crisis, compounded by the economic and financial

crises in the United States, has impacted almost all international finan-
cial markets. The objective of this research not experimental, quantita-
tive, correlational and descriptive focuses on a methodological approach
to appreciate how the negative information originated in Europe, has
affected the volatility of the exchange rate of the peso against the U.S.
dollar. The results suggest that up to April 15, 2011, the behavior of the
stock indexes have had a significant effect on the exchange rate volatility,
Nevertheless the European debt crisis, has also affected the same.
Keywords: Risk management, Financial Contagion, Exchange Rate,
European Crisis.
1. Universidad Popular Autónoma del Estado de Puebla.
203
Introduction
The management of the exchange rate risk is an essential component for

businesses since the variability and volatility of the same, can create situ-
ations that the company should be able to manage to achieve the goals
planned by the administration.
Once again due to the European debt crisis, most companies have
faced challenges as a result of the volatility of financial markets, having
to take the best decisions as quickly as possible, take advantage of any
business opportunity, or get covered from any negative event.
Most of the markets, such as the Mexican one, are immersed in a glo-
balized environment, so surprising changes in the volatility of the assets
are not caused only by internal conditions, but from situations originated
by external agents.
In such a way it is no longer necessary a financial crisis to occur in a
developed market to have an effect in another, an adverse situation in
small countries may also increase the volatility of the financial assets of
world markets, that is the reason that during the 1990’s emerged in the
financial literature a large number of researches trying to explain this
type of events that became known as financial contagion (Karolyi, 2003;
Dungey et al., 2004).
This situation seemed to be less recurrent at the beginning of the
21st century however the economic and financial situation of countries,
such as Spain, Greece, Ireland and Portugal, began to affect the financial
markets of their trading partners and to the rest of the world.
This article aims to look at the ways in which adverse movements
derived from the European debt crisis affects national markets, since the
phenomenon of financial contagion seems to be every day more impor-
tant for firms, it is of utmost importance analyze the elements that can
help explain it and thus to have better tools for efficient management of
the risk.
On this occasion will be analyzed the impact of The European debt
crisis on the volatility of the Mexican peso-US dollar exchange rate.
This study will consider the financial channel as the origin of the
transmission of volatility between the financial assets, because adverse
information can lead to rapid movement of capital, re-composition of
204
Effects on the Mexican peso-us dollar exchange rate risk
portfolios and the so called herd effect that it is useful to explain the
contagion in the absence of strong commercial relationships between
Mexico and the European Union.
Financial contagion and risk management.
The performance of companies is closely related to an efficient risk man-

agement, allowing it to plan in advance the movements to achieve the
goals proposed by the company.
Authors such as Christoffersen and Diebold (1998) and Andersen et
al. (2005) argue that a fundamental element that should be discussed to
ensure proper administration of the risk is the grade of volatility experi-
enced by the prices of the main instruments of the financial markets.
An important source of increase in the volatility of financial assets
was the so-called international financial contagion, which was originated
from financial and/or economic crises that occurred in some emerging
markets in the 1990´s. Rocha et al. (2008) explains that financial conta-
gion has very important extensions in the administration of portfolios, as
it impacts the main element of the theory of portfolio which is the risk
diversification.
Mexican financial markets have not been protected from interna-
tional financial contagion, as they have been affected by the Asian crisis
in 1997 and the Russian one in 1998 (Alba et al., 1998; Calvo, 1999; Baig
and Goldfajn, 2000; Dungey et al., 2004; Jaque, 2004 and Mandilaras and
Bird, 2007).
International financial contagion
Among different authors it is found out that there is no consensus about

what the financial contagion is, what it represents and the characteristics
of it (Forbes and Rigobon, 2002; Boschi, 2004).
In a first approach some authors suggest that the contagion is that
event that occurs when the extension of the crisis in a country can be
205
explained by which occurs elsewhere (Caramazza et al., 2000; Hernandez

and Valdez, 2001; Mosser, 2003).
In order to assess the existence of contagion, some authors studies
the ocurrence of significant increases in the correlation of variables form
those markets analysed, which must occur after a negative economic or
financial event in a country or group of countries (Eichengreen et al.,
1996; Dornbusch et al., 2000; Forbes and Rigobon, 2002). In more spe-
cific terms, this increase in the correlation of variables must occur during
a period of crisis (Calvo and Reinhart, 1996; Frankel and Schmukler,
1996; Baig and Goldfajn, 2000; Forbes and Rigobon, 1999).
Another group of authors, rather than measuring the increase in the
correlation and volatility of the markets, assume that the contagion also
involves the behavior of investors. Bayoumi et al. (2003); Calvo (1999);
Calvo and Mendoza (1999); Pritsker (2000); Kumar and Peraud (2001);
Kodres and Pristker (2002), define the financial contagion as that event
caused by the so-called herd effect, which occurs when less informed in-
vestors follow the actions taken by investors assumed to have better in-
formation.
Volatility Contagion
In a study about the episodes of financial contagion in the 1990´s,

Edwards and Susmel (1999) found out that these are followed by a sig-
nificant increase in the volatility of the prices of the financial assets,
which may occur in the absence of economic or financial relations with
the region caused by contagion (Dungey et al., 2004).
Transmission of contagion by trade relations
Literature about financial contagion, attributed the increase in the cor-

relation and volatility in the financial variables to the presence of close
trade relations between the country that presents primarily the crisis
and the one affected (Glick and Rose 1999 and Hernández and Valdez,
2001). However Caramazza et al. (2000) found that although the trading
channel is relevant to explain the contagion, there have been episodes of
206
this phenomenon in which trade relations are not explanatory, as it was

the case of the Russian crisis in 1998.
Transmission of Contagion by financial relationships
Another literary segment makes emphasis on financial relations as the

main propagator of the crises in the 1990s (Baig and Goldfajn, 2000; Car-
amazza et al., 2000; Kaminsky and Reinhart, 2001 Van Rijckeghem and
Weder, 2001).
Wake up call
This phenomenon occurs when investors receive adverse information

about the economic and/or financial situation in one country, so they
change their own expectations, and withdraw their funds from countries
which have similar characteristics to the one which has the adverse situa-
tion (Goldstein, 1998; Forbes and Rigobon, 1999; Caramazza et al., 2000;
Kaminsky et al., 2003; Forbes, 2003 and Mosser, 2003).
Portfolio re-composition
This effect causes an outflow of capital that is detonated by a small

number of individuals which are generally adverse to risk and so they sell
their assets, either to avoid losses or minimize them. (Shleifer and Vishny
1995; Calvo, 1998 and Dornbusch et al., 2000).
Herd effect
This kind of contagion can be caused by the so-called herd effect, which
assumes that investors copy the information given by other investors, if
they consider it is good for them to continue that behavior. Bikhchandani
(1992); Kaminsky et al., (2003) and Karolyi (2003) call this situation as
irrational contagion.
207
Factors which have an impact on the volatility of the exchange rate
Since this study will analyze the existence of contagion on the volatility of
the Mexican Peso-US dollar exchange rate, it will be proceeded to make
a brief review of the literature about the short-term determinants of the
exchange rates.
When it is considered the correlation between stock market indexes
and exchange rates, the literature does not reach a consensus on the ex-
istence of a correlation between both of them, Aggarwal (1981) for ex-
ample finds a direct behavior between the two variables; On the other
hand Soenen and Hennigar (1988) argue for the existence of an inverse
relationship, Chow et al., (1997) conclude that there is no significant re-
lationship between these variables. Ravazzolo and Phylaktis (2000) warn
that the discrepancies in the obtained results can be a consequence of the
methodology and the periods of time used in the studies.
Choi and Beak (2004) analyze the literature related to the role that
play international reserves and found that although the fixed exchange
rates demand a large amount of foreign reserves, the transition to the
use of flexible exchange rates has not diminished this demand, on the
other hand many authors do not find a significant relationship between
international reserves and foreign exchange.
Methodology
This study aims to analyze if the volatility experienced by the Mexican

peso-US dollar exchange rate can be considered as an event of finan-
cial contagion caused by the debt crisis in Europe. To achieve this objec-
tive, an econometric model will be used to determine which variables are
those that have had a significant impact on it.
This research use the following variables: the change of the Mexican
peso-US dollar exchange rate, the Mexican stock price index (Mexico),
the Dow Jones index (New York Stock Exchange), the interbank interest
rate of the Mexican market, the variation in the level of Mexican interna-
tional reserves and a dichotomous variable that captures adverse finan-
cial news about the European debt crisis.
208
In fact there are other variables that may influence the exchange rate,
but they are excluded from this model because they do not have the char-
acteristic of provide high frequency data.
Empirical model specification
Engle (2001) asserts that financial time series have two features to take
into account before making any estimation or forecast: the first of these
refers to the fact that the variance of the errors is not constant, a phe-
nomenon that is known by the name of heteroskedasticity. The second
feature is that the change in the variance does not occur in a random way,
but that periods of low volatility are followed by periods of an increase
in the same.
This situation implies that the variance of errors should be modeled,
the models more used are the ARCH ones, which estimate the variance
future through a weighted average of the squares of the residuals of past
observations (Engle, 2001). Bollerslev (1986) introduces the GARCH
model which also uses a weighted average of the squares of the residuals
of the past, where the weights are decreasing but never reach zero, and
allows to get significant coefficients.
The existence of contagion in the volatility will be verified using a
modified version of a model presented by Edwards (1998), this allows
modeling variance, to determine if the volatility of a variable contained
in that model transmits or “spread” volatility to the dependent variable.
(1) rt = ab+btrt-1+ηt
(2) σ2t=φt+αtη2t-1+ βtσ2t-1+ γtDt-1+ δtYt-1+ εtTt-1+ ζtIt-1+ θtκt-1
Where:
rt is the variation of the Mexican peso-US dollar exchange rate in the
period t.
ab Is the constant term.
rt-1 is the variation of the Mexican peso-US dollar exchange rate in the
period t-1.
ηt is the random error term.
209
σ2t is the conditional variance.

φt is the constant term of the model of the variance.
αtη2t-1 is the ARCH term and indicates the effect of it on the model.
βtσ2t-1 is the GARCH term and indicates the effect of it on the model.
γj is the coefficient of the model of the variance of the Mexican stock
index.
Dt-1 is the performance in the period t-1 of the Mexican stock index.
δt is the coefficient of the model of the variance of the Dow Jones Index.
Yt-1 is the performance in the period t-1 of the Dow Jones index.
εt is the coefficient of the model of the variance of the performance of the
Mexican interbank interest rate.
Tt-1 is the performance in the period t-1 of the Mexican interbank interest
rate.
ζt is the coefficient of the model of the variance of the change in the level
of international reserves.
It-1 is the performance at period t-1 of the change in the level of Mexican
international reserves.
θt It is the coefficient of the model of the dichotomous variable.
κ t-1 Is the value at time t-1 of the dichotomous variable (it takes the va-
lue of 1 every moment there is adverse financial news from the euro
zone).
Since there is the possibility of contagion on exchange rate that does

not occurs at the same time that any of the variables used in the model
changes, but in a later period, equation (1) expands in the following way:
rt = ab+btrt-i+ηt, con i =0,1,2 (3)
It is important to note that the study does not intend to predict the value
of the variation of the exchange rate, but the volatility that a market
transmits to another. Therefore the focus of contagion focuses on the
value and the significance of the coefficients γt, δt,. εt,, ζt y θt
210
Hypothesis
If the contagion of the Mexican peso-US dollar exchange rate volatility is

explained by the adverse financial news in Europe, the estimated coeffi-
cient which measures the volatility should be significant and greater than
zero.
Ho: |θt| ≠ 0; |θ| > |γt, δt,. εt,, ζt |
Períod of time
In order to be able to capture the series of events concerning the Euro-

pean debt crisis that could lead to contagion, the data and information is
taken from December 8, 2009, date in which Fitch reduces the rating for
Greece form A - to BBB + with a negative expectation, until April 15,
2011 date that Moody´s lowers Ireland debt rating to Baa1.
It is unquestionable that the European debt crisis is still a contem-
porary issue, which has taken new boom from June 2011, however the
considered time period allows to analyze how far the crisis has impacted
the Mexican exchange rate market, at the same time it allows to avoid
adverse data coming from United States regarding the poor performance
of the nation both in the economic field and in the unemployment rate.
Data source
In this study the data used to determine the daily FIX Mexican peso-US
dollar exchange rate value, the TIIE value (interbank interest rate) and
the weekly value of international reserves was obtained from the data-
base of the Bank of Mexico. The daily values of the Mexican stock index
values and the Dow Jones index was obtained with information collected
from the Mexican stock exchange. The indicators of negative economic-
financial news originated from Europe were obtained from Reuters news
agency, the International Monetary Fund and of the European Central
Bank.
211
Econometric results
Before proceeding to estimate the model, there are realized the tests LM
and White, whose intention is to look for the presence of autocorrelation
and heteroskedasticity . The obtained results show the existence of both
elements, therefore it is advisable to estimate the model with the proce-
dure GARCH (1,1).
Contagion from the European debt crisis (estimate without including

international reserves)
Table 5.1 shows the results of the model with and without one period for-
ward where it can be observed a significant relationship of the percent-
age change in the exchange rate and the behavior of the Mexican stock
index and the Dow Jones index, this relationship is also significant for the
interbank interest rate but only with one period forward. It is important
to note that the flow of adverse information on the financial and eco-
nomic sample have a significant coefficient in the model estimated with
0 and 1 period forward.
The previous results allows to conclude that the behavior of the ex-
change rate responds immediately to both the behaviour of the Mexican
stock index and the Dow Jones index, they also shows that there are im-
mediate response to negative information from Europe. This shows that
the expectations that are created on the zone, have an impact on the
volatility of the Mexican peso-US dollar exchange rate.
In analyzing the interbank interest rate it can be seen that the foreign
exchange market does not react immediately to changes in the interest
rate, since the coefficient of this variable is meaningful only with a period
forward, which suggests that the information is incorporated more slowly.
It is important to note that during all the period analyzed, variations
in the exchange rate have been responding immediately to changes in
the financial and dichotomous variables, since in none of the cases the
coefficients have been significant with 2 or more periods forward, it al-
lows to suppose that investors have reacted immediately and suggests the
existence of the so-called “herd effect” argued by the theorists of inter-
national financial contagion.
212
Table 4.1
Econometric Results of the model of contagion from the European
debt crisis on the Mexican peso-US dollar exchange rate (excluding
international reserves)
Periods αt βt γt δt εt θt
forward
0 0.12 -0.01 0.15 0.17 0.04 0.10
(1.65)* (-2.03)* (2.95)** (3.01)** (0.64) (5.34)**
1 0.14 -0.02 0.14 0.07 0.03 0.02
(3.70)** (1.68)* (3.11)** (2.88)** (1.77)* (5.87)**
2 -0.04 0.19 -0.01 -0.04 0.02 0.01
(-0.31) (0.05) (-0.35) (-0.39) (0.54) (0.11)
* Significant to 5 %, ** significant 1 %. The data in parentheses under the coefficient is
the value of the statistical Z.
Contagion from the European debt crisis debt

(estimate including international reserves)
When weekly information on the behavior of international reserves is
included, the estimation of the model generates no significant coeffi-
cients, which confirms that during the analyzed period the exchange rate
variation reacts immediately to the behavior of the analyzed variables
since weekly data can´t explain this behavior.
Table 4.2
Econometric Results of the model of contagion from the European
debt crisis on the Mexican peso-US dollar exchange rate
(including international reserves)
Periods αt βt γt δt εt ζt θt
forward
0 0.02 -0.04 0.02 0.04 0.05 0.09 0.02
(0.79) (-2.14)* (0.23) (0.42) (0.73) (0.12) (0.55)
1 0.19 0.18 -0.04 0.07 0.09 0.07 0.03
(0.12) (2.45)* (-0.43) (0.08) (0.19) (0.14) (0.37)
2 0.05 0.32 0.01 0.00 0.03 0.02 0.01
(0.26) (0.34) (0.58) (0.38) (0.62) (0.35) (0.24)
* Significant to 5 %, ** significant 1 %. The data in parentheses under the coefficient is
the value of the statistical Z.
213
Conclusions and limitations
The authors that analyze the risk management, note that this is an impor-
tant component to achieve the goals planned by the companies, this
article focuses primarily on the administration of foreign exchange risk,
specific to potential sources of volatility of the Mexican peso-US dollar
exchange rate.
Given the process of the Mexican financial market integration to the
international market it is found that it is disturbed by the volatility that
can be caused by internal elements and/or movements in the internation-
al financial markets, including those in which there is not a close financial
or trade relationship.
In the last few decades the external contagion of the exchange rate
volatility, has had as its main source, the economic and/or financial crises
that have experienced the markets both emerging and developed.
As a result of the close trade and financial relationship of Mexico
with the United States the impact of the crisis in this country has been
notorious in the performance of the Mexican economy, also its effects
have been spread worldwide and had led other least developed countries
to deal with adverse situations as it was the case of Iceland and other
countries with weak fundamentals in the European Union. In this article
we analyze how negative information on the development of the debt
crisis of the European Union has had an impact on the volatility of the
Mexican Peso-US dollar exchange rate caused by an event of interna-
tional financial contagion. While the European debt crisis seems to be
far from conclusion, it could get worse and spread to other regions, so it
is important for a correct decision making analyze its effects so far.
The estimated results with daily information and that therefore ex-
clude the international reserves, show that while the behavior of the
Mexican Stock Price Index and the Dow Jones impact heavily the behav-
ior of the exchange rate of the Mexican peso, the adverse information
from Europe also has an important impact over it. During the analyzed
period it is possible to conclude that the variables included in the model
have had an immediate impact since using 2 or more periods forward, the
coefficients stop being significant.
214
In the estimation of the model with the inclusion of international

reserves, which involves taking weekly data given the periodicity in which
the information is revealed, it was found that none of the variables is
statistically significant, which notes that the exchange rate reacts imme-
diately to the movements in the variables analyzed above, which may as-
sume that investors reacts according to the so-called herd-effect, so the
most important source of contagion are financial relations.
So that the administrators of the currency exposure, should include
into their decisions the economic and financial information that is gener-
ated in the day, even that which comes from nations without strong trade
or financial relations, since part of the changes in the volatility experi-
enced by national markets can be explained by what happens in other
economies.
It is also recommended to risk administrators the use of derivatives
with the aim of reducing the negative effects that a sudden increase in
the volatility could have in their business, facing an environment that
appears to be more complicated because the possible recession scenario
that could affect the economy of the United States.
This article presents the limitation that only covers the effects on the
Mexican peso exchange rate, in addition to that it does not cover the
daily behavior of the value of the international reserves so it is recom-
mended to analyze the impact on other currencies in the Latin American
region, and in the long term include variables of low frequency that could
help to explain the behavior of the exchange rate.
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11
Corporate governance structure in Latin
America and its impact on human resource
management and financial performance
Jorge Pelayo Maciel1

Carlos Yoshio Cuevas Shiguematsu1
Abstract
In the present paper we study the impact of corporate governance struc-

ture in human resource management and financial performance in the
Latin-American context. For this purpose, it will analyze the concept
of corporative governance. Later, we will be discussed two streams that
study both the structure of corporate governance as the behavior of man-
agers, the agency theory and stewardship theory.
We find that the structure of corporate governance and distinctive
capabilities of human resource are positively related to company perfor-
mance.
Keywords: Corporate governance, agency theory, stewardship theory,
financial performance, human resource management.
219
Introduction
This paper analyzes the corporate governance structure and its impact on
human resource management and financial performance in Latin Amer-
ica, particularly for the countries of Mexico and Colombia. Therefore
we start by studying the context of corporate governance in Mexico and
Colombia, and then go into the theories that explain corporate gover-
nance, agency theory and stewardship theory. Then we passed to observe
different empirical studies have sought to test the relationships pro-
posed above and thereby make the assumptions that underlie each of the
hypotheses. It ends with the conclusions which are that the vast majority
accept the hypotheses and generate a structural model that explains the
relationship between corporate governance structure, the generation of
human resource competencies and financial performance.
Context of corporate governance in Mexico and Colombia,

its ownership and control
The structure and operation of the business can be analyzed by its cor-
porate governance, which can be defined as institutional arrangements,
formal and informal, so that companies resolve disputes arising from
the interaction of stakeholders. These institutional arrangements define
the structure of ownership and control, and its functions include the fol-
lowing (Chavarín-Rodriguez, 2011): operation of the board, the role of
investors, the incentives for managers and workers, control mechanisms
to management, and how to finance companies.
In emerging economies external monitoring institutions aimed at
monitoring the management are only beginning to be created, this usually
resolves with the concentration of ownership and direct management of
the company, particularly through controlling families (Khanna and Pa-
lepu, 1999) . Another reason for what business ownership is concentrated
on cultural grounds of a society, understanding this as the set of shared
beliefs that influence individual behavior (Smircich, 1983). These cultural
elements are socially created and therefore can not be assumed that the
structure of corporate governance is entirely a product of rationality.
220
Corporate governance structure in Latin America and its impact on human resource...
Under this theoretical assumption, the way relationships are cre-

ated or formal or informal links into and between firms depends on the
particular cultural values prevailing
in society. In societies with an un-
bounded confidence such as Mexico and Colombia, where the affinity
and credibility is given exclusively in family or close friend is where you
create economic groups, which are networks with strong ties business but
limited in scope . There is a personal trust that reduces risk of oppor-
tunistic behavior. In countries where most of this type of culture, such
as the American, encourages the concentration of ownership, because it
distrusts those who do not belong to the family or social network (Lans-
berg Gersick and 2006).
Theoretical Framework
This section will examine the theories underlying the present investiga-
tion, we first discuss the concept of corporate governance, understood as
the system by which business corporations are directed and controlled
through the distribution of rights and responsibilities different partici-
pants in the corporation such as the board of directors, managers, share-
holders and other interest groups (stakeholders). Subsequently, the two
streams try studying both the structure of corporate governance and
managerial behavior, agency theory and stewardship theory.
Concept of Corporate Governance
The Organization for Economic Cooperation and Development defines

corporate governance as (OECD 1999, cited in Clarke, 2004), the system
by which business corporations are directed and controlled. The corpo-
rate governance structure specifies the distribution of rights and respon-
sibilities among different participants in the corporation, as the board
of directors, managers, shareholders and other stakeholders, explaining
the rules and procedures for corporate decision making, and provide the
structure and foundation of the establishment of objectives, the means to
achieve and ways to monitor their implementation.
221
Agency Theory
The agency theory says that ownership in large companies is diversified

across multiple shareholders who transfer authority in making decisions
to CEO in order to achieve optimum business performance. The fact
that shareholders have a small equity stake results in a difficult access to
information on actions taken by its managers (Berle and Means, 1932,
cited by Davis et al., 1997, Jensen and Meckling, 1976), control is costly
and information is costly to obtain, especially for a person.
For this reason there is the possibility that CEOs pursue their own
goals even to the detriment of the interests of shareholders. The separa-
tion of ownership and control is the main problem to avoid possible op-
portunistic behavior of CEOs that could affect security on the investment
return of shareholders (Jensen and Meckling, 1976).
Williamson (1985) defines opportunism as an effort to make prof-
its through the dishonesty in transactions. This can take two forms: the
strategic concealment of information (which gives the agent a benefit)
and the inability to obtain a commitment of responsible behavior during
execution.
The agency problem arises when the welfare of a person depends on
another: the agent is the person who acts and the principal is the person
that affects the action. One major problem for investors is that CEOs can
pursue their own goals, even at the expense of obtaining lower profits for
owners. In any negotiation between two parties establishing a relation-
ship of agent and principal, which is characterized by the existence of
a hierarchical relationship, which can be established through a formal
or informal channel. One party has possession of an asset or senior ad-
ministrative role, the principal, the other party manages the assets of a
company, which is called “agent” The key feature of this relationship
is the asymmetry of information, the agent has more information about
the daily operation of the organization and the primary has only generic
information, thus incurring high costs to monitor the actions of the agent
(Jensen and Meckling, 1976).
This is given by the absence of contracts made in full, therefore, iden-
tifies some actions that the principal can do to narrow differences to their
222
interests, which are based on systems and incentive to incur costs moni-
toring to limit the aberrant activities opportunistic agent.
In particular, this model promotes the use of independent power
structure, which does not match one person in the position of CEO and
chairman of the board of directors of a company, in order to avoid op-
portunistic behavior of managers (Jensen and Meckling, 1976).
Moreover, the agency problem has been widely criticized, as it faces
a problem between managers and owners only and the shareholders are
not the only ones affected by the activities of the company but also find
that all the stakeholders (groups interest) are also affected by the orga-
nization; therefore arise stewardship theories such as described below.
Stewardship Theory
Stewardship theory is a model opposite to that established by the agency

theory; the model holds that the interests of CEOs are aligned with the
interests of the principal, in contrast to the selfish motivations that sup-
ports the agency theory. According to this theory, the CEOs seek to bal-
ance the interests of shareholders and interest groups, stakeholders, and
therefore try to make decisions in benefit all of them.
Davis, et al. (1997), determine the characteristics of behavior that
should have the perspective of managers as stewards who are motivated
to act proactively and collectively, which has a high value compared to an
individualistic and selfish actions. Due to the high need for growth and
achievement, psychological motivations, the manager appreciates the
value of collaboration using their initiative to promote success, establish-
ing bonds of trust with them. This has a positive attitude towards group
harmony by avoiding conflict or confrontation.
For all the above we can say that with a stewardship structure, in-
ternal stakeholders such as managers and the employees develop a high
identification with the company while generating value and commitment
to the organization, and both the manager and investors (shareholders)
have a motivation to self-realization, that thanks to general manager
looking for the involvement of all members of the organization of your
223
employees, managers and investors seek to generate investment and en-

suring long-term yields at the cost of short yields term.
Literature Review
In this section we propose some assumptions underlying each hy-
pothesis; the paper propose that the separation of ownership and control
results in better performance, then analyze how the attitude of the CEO
(steward type) can build capacity distinctive human resource manage-
ment and employee collaboration.
The structure of Corporate Governance, Stewardship

and Company Performance
As already mentioned, the agency theory assumes that the separation of

owners (principal) and CEOs (agents) increases the attitude of the latter
to take actions that do not maximize shareholder wealth (Jensen and
Meckling, 1976). However, to Fama and Jensen (1983), the separation
of ownership and control within the firm reduces agency costs and thus
leads to high performance, which implies that the chairman of the board
is different from the CEO.
In stewardship theory, the CEOs are inherently trustworthy and not
prone to divert company resources (Donaldson and Davis, 1991). It is be-
lieved that CEOs are good stewards for the primary and will be effective
in setting strategies to increase shareholder wealth. The duality between
ownership and control encourages flexibility in the workplace and reduce
conflicts between the board and management, which lead to high levels
of returns to shareholders (Davis, 1997).
Both theories of agency and stewardship reflect two types of leader-
ship in any organization. According to Said, Yaacob, Awang and Ismail
(2009), one of the strongest debates about corporate governance is the
question of whether the general manager of the company should also be
the chairman of the board of directors. The general manager who heads
the organization’s decisions while the president of the board is responsi-
ble for working for the council, ensuring that all essential matters on the
agenda, the council monitor and supervise the rectification of strategic
initiatives of the company and oversee the hiring, firing, evaluation and
compensation of the CEO of the company.
224
Therefore there must be evidence that the duality of corporate gover-

nance brings better returns for the firm (Finkelstein and D’Aveni, 1994;
Martinez, 2004), but there is also some evidence that shows otherwise
(Daily and Dalton, 1994; Judge, Naoumova and Koutzevol, 2003) and
others found that the results are mixed and inconclusive (Chowdhury and
Geringer, 2001) so we feel the need to further analyze these structures
using best practices. From this follows the first premise:
Premise 1: In companies with duality in the control system generate

better business performance.
With this premise we propose the following hypotheses:
H1: Companies with dual control structures generate behaviors steward
of the director general.
H2: Companies with dual control structures generate good financial
performance.
Stewardship and the Effects on Human Resource Management

and Firm Performance
The evolution of governance models, presented by stakeholder theory

and stewardship theory, extends the company’s obligations beyond
shareholders and this is based on the assumption that the company has
responsibilities to society and a variety of ethical and moral obligations
(Caldwell, Karri and Vollmar, 2006).
The role of leadership in human resource steward type in the gover-
nance of the organizations has received increased attention in the post-
Enron era (Caldwell, Hayes, Karri and Bernal, 2008; Hernández, 2008).
Caldwell, Truong, Linh and Tuan (2010) describe the stewards CEOs,
as leaders who have a complex set of obligations to stakeholders. These
obligations generate long-term wealth to achieve the benefits of all stake-
holders and highlight the obligations of the company with society.
The success of the strategic management of human resources in-
volves the design and implementation of a set of policies and practices
ensure that employees share knowledge, skills and abilities that contrib-
ute to achieving the objectives of the organization (Huselid, Jackson and
Schuler, 1997).
225
Becker and Huselid (2006) note that the intangibility of human re-
sources is essential to achieve a sustainable competitive advantage, which
depends on whether the leader of a company understands how to in-
tegrate people into the achievement of organizational goals. Supangco
(2006), mentions that successful human resource practices in organiza-
tional capacity building help the organization to adapt to changes in a
global environment, these practices provide the necessary infrastructure
to enable the organization to create value in the market
If we consider human capital as part of unique and valuable knowl-
edge of the employees, they will be relevant features to generate a sus-
tainable competitive advantage. The value of knowledge reflects the
power to improve efficiency and effectiveness of the firm, exploiting mar-
ket opportunities and / or neutralize potential threats, while the unique
knowledge helps to differentiate from competitors
As Barney and Wright (1998) suggest, a resource creates value by
lowering costs or differentiating the product/service in a way that the
company can charge a high price, then a valuable knowledge will gener-
ate high returns in growth markets with rate benefit to consumers on
their associated costs. For López Cabrales et al. (2009) define the value
to the extent that human capital provides low cost or an increase in the
characteristics of the goods or services that matter to consumers.
However, some authors note that the resources of a company should
not only be valuable and unique, to provide superior performance, it is
also necessary to have an appropriate organizational structure to achieve
an advantage of these resources (Barney and Wright, 1998; López Ca-
brales et al., 2009). Goffee and Jones (2001, cited by Caldwell, 2006)
mention that leaders must build relationships with employees to develop
a sense of commitment in a competitive global market This brings sys-
tems management practices of human resources, called collaborative or
partnership/alliance (Lepak and Snell, 1999; López Cabrales, et al., 2009;
Martinez Lucio and Stuart, 2005). The literature also emphasizes the im-
portance of working in groups or teams to raise awareness of the unique
and valuable members of the organization (Nonaka and Takeuchi, 1995;
Lepak and Snell, 1999, cited by López Cabrales, et al., 2009). In the col-
laborative system, the ability to work as a team is necessary to move any
selection process and these skills are the focus of training initiatives. In
226
sum, the evaluation process and compensation provided complete with

a criterion group (Helleloid and Simonin, 1994; Lepak and Snell, 1999).
Therefore, the design teamwork is to generate a competitive advantage
in the organization.
As we can see there is a paucity of empirical studies on the relation-
ship between human resource management and corporate governance,
which creates an opportunity for research to define the type of relation-
ship. So we suggest the following premise.
Premise 2: In companies with CEOs steward attitudes generate collab-

orative and distinctive capabilities in human resource management.
Based on this premise, we propose the following hypotheses:
H3: Attitude steward of the CEO generates distinctive capabilities.
H4: Attitude steward of the CEO generates collaboration with emplo-
yees.
H5: The employee collaboration creates distinctive capabilities.
H6: The distinctive capabilities produce good financial performance.
Methodology
In the present study makes use of recursive models model. To this
end, single equation methods are used which are the most used because
they may be less sensitive to specification errors (Gujarati, 2004).
To make the sequence analysis, the dependent variables constitute:
distinctive capabilities (CD) and financial performance (DF). On the
other hand, the independent variables: duality in the control (DC), stew-
ardship attitude (ST) and collaboration (C).
To measure the relationships are presented in the following model
equations:
CD = α1 + α2ST + α3C + ε1 (1)

DF = b1 + b2DC + b3CD + ε2 (2)
ST = γ1 + γ2DC + ε3 (3)
C = ϕ1 + ϕ2ST + ε4 (4)
As control variables we take the company size, family background (in

case of family businesses) and the structure of the board.
227
We use the recursive OLS model equations taking as an assumption

that the errors (ε) are not correlated with the dependent variables, in
other words to the equation (1) has only independent variables on the
right side of the equation and so therefore uncorrelated with the error
term ε1, therefore this equation meets the basic criteria MCO. In equa-
tion (2), which contains a dependent variable (CD), as an explanatory
variable along with other non-stochastic independent variable, you can
also apply OLS as CD and ε2 are uncorrelated, which is the same case of
Equation (4).
For the conduct of the investigation we developed a questionnaire
with items derived from the hypothesis, appropriate for a Likert scale
(Hayes, 1999), often called grading method combined. This scale is also
a widely accepted technique with which the participant indicates the
amount of agreement or disagreement you have with a variety of state-
ments about a particular attitude object. For this survey takes the in-
struments developed by López Cabrales, et al. (2009) and Rodrigo and
Arenas (2008).
To measure the financial performance variables take the sales, assets,
ROA, available at the Revista Dinero. from Colombia. And in this Jour-
nal, the statistical base activity, ultimately, is 1,300 companies selected,
were the most important because after review of their location by region,
which was a response from 40 companies. In addition, for Mexico, using
the list of 500 most successful companies in Mexico by Revista Expansión,
of which had a response from 48 companies, in total we have 88 compa-
nies at random from the two countries.
For variables distinctive competencies, attitudes stewardship and
collaboration is making a set of items to measure them. It is part of a
population where it operates a set of variables and it tries to find several
factors that could reveal the deep structure of that reality. For this, all
the variables that form a factor must be correlated and yet be relatively
independent of the rest. To validate the study used the Cronbach alpha
resulting in 0.98, so one can assume that the factors have a good level of
reliability.
228
Analysis of results
At the time of estimate equation CD = α1 + α2ST + α3C + ε1 in table

1 can be seen that α2 model 1 is not significant, it has a very low 0.1274
R2, but considering the statistical F of global significance level is 95%,
so it rejects the null hypothesis that the coefficients are equal to zero,
in other words, in its entirety the variable stewardship and collaboration
explained to distinctive employee capabilities, that is a positive relation-
ship in two variables.
By running the model with variable control size of company (Model
2) had an explanatory power of 90%, and in general the level of signifi-
cance of α1, α2 and α3 have the same explanatory power than the pre-
vious model; analyzing the equation with the variable structure of the
Council of shareholders and the family origin of the company you can
see that there is no major changes in the explanatory power of models,
but when taking into account the companies which have not undergone
a generational change can be seen that the model as a whole becomes
more robust with a.576 R2, so the variables stewardship and collaboration
explained almost 60% of the distinctive competences of employees and
may also be noted that to see the F test has a global significance of almost
99%. This is logical with the theory of the family business where there are
incentives so that the director-general have a steward behavior and this
in turn transmit it to the generation of better skills in employees.
By previous statistical analysis cannot reject our hypothesis that the
companies that develop more distinct powers in employees, are execu-
tives with attitudes steward and that also generate systems of collabora-
tion with employees.
We also applied the White test to verify the non-existence of het-
eroskedasticity models and concludes that it is rejected since these are
75% and 50% critical value. This manages to test the hypothesis 5, but
you must consider the level of significance, is achieved test partially the
hypothesis 3, given the non significance coefficient, and not acceptable
levels in a globally manner.
229
Table 1
Estimated Equation CD = α1 + α2ST + α3C + ε1
Constant ST C R2 F Control Variables

Model 1 0.576462 0.114891 0.30135 0.127415 5.621765
se = (0.24796) (0.095496) (0.105908) Prob(0.005261)
t = (2.324764) (1.203108) (2.84538)
p – value (0.0227) (0.2326) (0.0057)
Model 2 0.667492 0.10968 0.289416 0.131598 3.839023 Company size
se = (0.290916) (0.096277) (0.10816) Prob (0.0129)
t = (2.294452) (1.139208) (2.675804)
p – value (0.0245) (0.2582) (0.0091)
Model 3 0.706937 0.110921 0.321194 0.133534 3.904211 Structure of
se = (0.305902) (0.095937) (0.109627) Prob (0.011924) the board of
230
t = (2.310995) (1.15618) (2.929871) shareholders
p – value (0.0235) (0.2512) (0.0045)
Model 4 0.788702 0.10012 0.321987 0.136532 4.005712 Family
se = (0.343192) (0.09703) (0.108518) Prob (0.010551) background
t = (2.298139) (1.031847) (2.967125)
p – value (0.0243) (0.3054) (0.004)
Model 5 0.2688 1.356841 0.097253 0.57609 20.83787 There has been
se = (0.29665) (0.224714) (0.083595) Prob (0.000000) no succession
t = (0.90612) (6.038066) (1.163384)
p – value (0.3696) (0.0000) (0.2507)

In table 6, you can see that in the equation DF = b1 + b2DC + b3CD

+ ε2, in model 1 b2 coefficient does not have an acceptable significance
level, but b3 has it at 90% reliability and test F of global significance is
achieved accept the model to a level of global significance of 90%, what
he wants to say that the distinctive competences of employees, duality
and control of the company 90% of the behaviour of the variable finan-
cial performance explained in a comprehensive manner. That increase
the distinctive competences of employees will be achieved improve finan-
cial company performance, that one can observe a relationship that is
positive in duality and control of the company. By running the following
models not be seemed a significant change in the level of significance of
variables or the level of global significance.
We applied the White test to verify that there is no heteroskedastic-
ity, found that he rejects the heteroskedasticity model 1 to 25% of critical
value in the model 2 is that there are heteroskedasticity, 3, 4 and 5 it can
be concluded that you there is a critical level of 5%.
231
Table 2
Estimated Equation DF = b1 + b2DC + b3CD + ε2
Constant DC CD R2 F Control Variables

Model 1 -1.950657 0.960313 2.135316 0.082382 3.456441
se = (2.020847) (1.95248) (0.840425) Prob (0.036517)
t = (-0.965267) (0.491842) (2.540757)
p – value (0.3374) (0.6242) (0.0131)
Model 2 -1.934292 1.19119 2.15725 0.084833 2.348309 Company size
se = (2.031704) (2.028275) (0.846204) Prob (0.079214)
t = (-0.952054) (0.587292) (2.549328)
p – value (0.3441) (0.5587) (0.0128)
Model 3 -2.771689 1.042638 2.214289 0.090763 2.528867 Structure of the board of
se = (2.249874) (1.958758) (0.847333) Prob (0.063536) shareholders
t = (-1.231931) (0.532296) (2.613244)
232
p – value (0.2218) (0.5961) (0.0108)
Model 4 -2.328418 0.855472 2.166763 0.084648 2.342714 Family background
se = (2.210387) (1.977681) (0.847996) Prob (0.079757)
t = (-1.053398) (0.432563) (2.555157)
p – value (0.2955) (0.6666) (0.0126)
Model 5 -4.034588 0.467417 3.42077 0.120364 2.098118 There has been no
se= (3.424261) (3.184487) (1.432791) Prob (0.113462) succession
t = (-1.178236) (0.146779) (2.387487)
p – value (0.2448) (0.8839) (0.0211)

For the equation ST = γ1 + γ2DC + ε3 we may be raised that the assump-

tions cannot be accepted that in each of the models are variable duality
in control has negative and that is significant so there is no evidence of a
relationship positive between the duality in the control of the companies
and the steward of the director-general of the same behavior, as pro-
posed by the theory.
In the develop tests for internal consistency (White test), it found
that there is no heteroskedasticity in the models and therefore confirms
that there is a negative relationship between the variables, in other words
at the time that a company hires external directors to take the reins of
the company this new agent will have a steward behaviour or service was
the company.
233
Table 3
Estimated Equation ST = γ1 + γ2DC + ε3
Constant DC R2 F Control Variables

Model 1 2.034726 -1.396303 0.070809 5.943969
se = (0.495989) (0.572719) Prob (0.017042)
t = (4.102362) (-2.438026)
p – value (0.0001) (0.017)
Model 2 2.050323 -1.315768 0.07416 3.083856 Company size
se = (0.499173) (0.595264) Prob (0.05148)
t = (4.107437) (-2.210392)
p – value (0.0001) (0.03)
Model 3 2.088856 -1.403521 0.071369 2.958868 Structure of
se = (0.558707) (0.577225) Prob (0.057805) the board of
234
t = (3.738732) (-2.431498) shareholders
p – value (0.0004) (0.0174)
Model 4 0.704857 -0.154784 0.01156 0.274832 Family background
se = (0.283014) (0.319784) Prob (0.760912)
t = (2.490539) (-0.484025)
p – value (0.0163) (0.6306)
Model 5 2.240349 -1.335378 0.080684 3.378942 There has been no
se = (0.545593) (0.577255) Prob (0.039211) succession
t = (4.106267) (-2.313324)
p – value (0.0001) (0.0234)

With the estimation of the equation C = ϕ1 + ϕ2ST + ε4, we might see

that results are consistent with the theory, i.e. that the steward of the
director-general behavior causes a collaboration on the human resource,
this generated by training and development plans.
For analyzing consistency internal applies the White test and will re-
ject the heteroskedasticity in the first four models that when we were do-
ing this analysis with variable control “there has been no succession” we
find that there are heterogeneous data between samples.
235
Table 4
Estimated Equation C = ϕ1 + ϕ2ST + ε4
Constante ST R2 F Control Variables

Model 1 0.818872 0.170762 0.035866 2.901576
se = (0.24836) (0.100248) Prob (0.092475)
t = (3.297124) (1.703401)
p – value (0.0015) (0.0925)
Model 2 1.045283 0.150563 0.067923 2.805607 Company size
se = (0.282422) (0.099978) Prob (0.066664)
t = (3.701136) (1.505951)
p – value (0.0004) (0.1362)
Model 3 0.367494 0.172552 0.094725 4.028506 Structure of
se = (0.315223) (0.097771) Prob (0.02168) the board of
t = (1.165823) (1.764852) shareholders
236
p – value (0.2473) (0.0816)
Model 4 0.430266 1.35603 0.2549 8.039402 Family
se = (0.513806) (0.338559) Prob (0.000993) background
t = (0.837409) (4.005293)
p – value (0.4066) (0.0002)
Model 5 0.318458 0.195325 0.079319 3.316851 There has been
se = (0.358572) (0.099435) Prob (0.041516) no succession
t = (0.888128) (0.099435)
p – value (0.3772) (0.0531)

Conclusions
This work is a study of both empirical and theoretical research which

argue that the structure of corporate governance can positively affect the
performance of the company with the generation of skills to improve their
financial performance. Is a contrast between the Agency and stewardship
theory and develop six hypotheses, which are accepted in total five, the
ThisH1 fails
work is ato be accepted
study and that
of both empirical andthe relationship
theoretical researchobtained between
which argue that thevari-
structure of
ables attitude steward (ST) and the duality in the company control
corporate governance can positively affect the performance of the company (DC)
with the generation
of in
skills
the ST = γ1 + γ2DC + ε3 is negative, so there is no evidence of that in and
to improve their financial performance. Is a contrast between the Agency
stewardship
reality willtheory
be and develop
explain thatsixexposes
hypotheses,
thewhich
theory. are accepted in total five, the H1 fails to
be accepted and that the relationship obtained between variables attitude steward (ST) and the
Therefore it can be concluded that there is evidence to assert that
duality in the company control (DC) in the ST = γ1 + γ2DC + ε3 is negative, so there is no
they of
evidence succeed in companies
that in reality withthat
will be explain dual structures
exposes better financial perfor-
the theory.
mance,it in
Therefore addition
can to thethat
be concluded attitude
there isofevidence
the director-general of type
to assert that they steward,
succeed in companies
withgenerate distinctive
dual structures better competencies in human
financial performance, resources
in addition andattitude
to the this inofturn a
the director-
good financial performance, also we can assert that developing plans
general of type steward, generate distinctive competencies in human resources and this in turn a for
goodcollaboration in employees,
financial performance, also wewillcanhelp tothat
assert obtain better plans
developing distinctive skills.
for collaboration in
This canwill
employees, behelp
shown in the better
to obtain following structural
distinctive skills. model.
This can be shown in the following
structural model.
Ilustration 1
Estrutural
Ilustration Model Model
1. Estrutural
Stewardship X2
H3
Distinctive
competencies Y1
H5 H4
H6
collaboration X2
Financial
performance Y2
H6
Duality of control
X2
237
Among the limitations of the study we can mention there are differences between the samples
obtained in Mexico and Colombia, through this, it´s needed to develop evidence of structural
change and implement the estimator of differences in differences, which will be explained in
future research. Also as a part of future lines are the elaborations of case studies to complement
Among the limitations of the study we can mention there are differences
between the samples obtained in Mexico and Colombia, through this,
it´s needed to develop evidence of structural change and implement the
estimator of differences in differences, which will be explained in future
research. Also as a part of future lines are the elaborations of case stud-
ies to complement this type of research that quantitative methods often
leave variables that are impossible to measure numerically.
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Strategies For Competitiveness.

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Strategies For Competitiveness.

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Strategies for Competitiveness

JOSÉ SÁNCHEZ GUTIÉRREZ

D.R. © 2012, Red Internacional de Investigadores en Competitividad

Impreso y hecho en México

1. An Exploration of Strategic Issues Impacting Wine Co-operatives

2. Complexity of a socioeconomic system: the family enterprise . . . . 27

3. Competitiveness and its relationship with Corporate Social

4. Comparative analysis of the issuing firms of the Mexican Stock

5. The Relationship between Managerial Capacity and Competitiveness

7. Successful hotel website dimensions and attributes– an exploratory

8. The impact of public policies as elements of competitiveness for SMEs

9. Customer satisfaction in the restaurant industry at Guadalajara’s

10. Effects on the Mexican peso-us dollar exchange rate risk

11. Corporate governance structure in Latin America and its impact

Alfredo Manuel Coelho1

Co-operatives are non-profit organizations and therefore are a branch of

Alternative models of business strategies2

particular case, the competitiveness is based on cost-advantages corre-

A first typology of vertical integration models in wine co-operatives

The specialization of the production basins where bulk wines dominate

The organizational model of “collection-winemaking-bulk”

In this model, vertical integration downstream is partial because co-oper-

The organizational model of “collection-winemaking-bottling-sales ”

Complete vertical integration (collection-winemaking-bottling-sales) of

to the bulk specialists, co-operatives are required to invest in terms of

Convergence of form or function? What exactly is converging

Ronald Gilson (1996) distinguished ‘formal convergence’ and ‘functional

The convergence debate

of wine co-operatives (see Touzard et al., 2008). However, it also rec-

On the convergence of wine co-operatives: The necessary

Is there an optimal model of wine co-operatives? Are national systems

managers to administrate the wine co-operatives and, to a less extent, the

Bélis-Bergouignan, M. C. (2008). Fusions des coopératives vinicoles et ancrage

Cook, M. L. (1995). The future of U.S. agricultural cooperatives: a new institu-

Roudié, Ph., Hinnewinkel, J. C. (2001). Une empreinte dans le vignoble. XXème

Lack of opportunities and poverty level in Colombia (more than half of

1. Universidad Nacional de Colombia.

Finding strategies of development according to the situation of our coun-

principal way of this transformation which will impact in relocation and

Since the implementation of the neoliberal model in Colombia (1991),

rate of unemployment has been high and constant, regardless economi-

There is a recent acknowledgement of the differences of gender in the intensity and

About 60 % of all the women employed in Colombia work in the informal

Familiar business entrepreneurship, an alternative of solution

Linking complexity and the contributions of the different disciplines as

The importance of the women and specifically of the entrepreneur

Family Enterprise as a complex, living and open system.

The study of the enterprise is relatively recent, initiating with descrip-

A familiar Enterprise is the one in which an entrepreneur or director in the actual

Several authors agree that familiar Enterprise is composed of three sys-

Trying to understand the formal and informal systems that compose

㻌 ORGANIZATIONAL SYSTEM ORGANIZATIONAL SYSTEM

㻌 Level: Rank, Competences Level: Functions, Profiles,

According to the current research, the complexity paradigm, with a sys-

Strategic planning and the approach of balance scored card, as tools

management, low capacity to present projects, insufficiency of market-

Defining and adapting of the structure

Source: Elaborated by the author based on Leonard Goodstein /Martha Pérez.

the implementation phenomena like synergy, for the analysis, decision

Solidarity Economy: Coactive Paradigm

Social, economic, and cultural conditions, as well as the extended indi-

with social enterprises ( subset of social entrepreneurship) which objec-

6. Italics for the author