Concept of The Student

E.J.M.
Volume 14, Number 2, 2014 ISSN: 1555-4015

Special Issue "Human Resources, Human Capital And Psychological Capital In Business And Organizations"
EJM, Volume 14, Number 2, 2014 ISSN: 1555-4015
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Babes Bolyai University, Romania South Stockholm University, Sweden
Special Number for Thematic:
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Psychological Capital In Business And Organizations"
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E.J.M. Volume 14, Number 2, 2014 ISSN: 1555-4015
European Journal of Management

Managing Editors: Dr. Marius D. Gavriletea, Babes Bolyai University, Cluj-Napoca, Romania
Dr. Cheick Wagué, Dean, South Stockholm University, Stockholm, Sweden
Editorial Board:
Dr. David Ward, European School of Economics, Milan, Italy

Dr. Moshe Zviran, Tel Aviv University, Tel Aviv, Israel
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European Journal of Management Volume 14, Number 2, 2014 ISSN: 1555-4015
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TABLE OF CONTENTS European Journal of Management

STAKEHOLDER SALIENCE, GOAL SYSTEM, AND FAMILY BUSINESS: 7

A CORRELATION STUDY
Silvia Payer-Langthaler, Johannes Kepler University, Linz, AUSTRIA

Christine Duller, Johannes Kepler University, Linz, AUSTRIA
RETIREMENT PLANNING AND RESOURCES 21
Joanne Kaa Earl, School of Psychology, University of New South Wales, Australia
Helen Archibald, School of Psychology, University of New South Wales, Australia
A TEST OF MEDIATING EFFECT OF ORGANIZATIONAL COMMITMENT IN THE 37

RELATIONSHIP BETWEEN JOB SATISAFACTION NURSES TURNOVER INTENT
Harif Amali Rivai, Department of Management, Faculty of Economics, Andalas University, Indonesia
COSTING ALLOCATION AND DIFFERENT IMPLICATIONS IN A SMALL CLOTHING 51

MANUFACTURING COMPANY – A CASE STUDY
Margit Malmmose, Aarhus University

Rainer Lueg, Aarhus University
MANAGING ORGANIZATIONAL INNOVATION THROUGH HUMAN RESOURCES, 63

HUMAN CAPITAL AND PSYCHOLOGICAL CAPITAL
Riccardo Sartori, University of Verona, Verona, Italy

Andrea Scalco, University of Verona, Italy
WORK VALUES AND AGING WORKFORCE. A PERSPECTIVE ON VALUE 71

ORIENTATIONS AND MOTIVATIONS FOR POST-RETIREMENT ACTIVITIES.
Piermatteo Ardolino, University of Verona, Italy

Stefano Noventa, University of Verona, Italy
Serena Cubico, University of Verona, Italy
Patrizia Buziol, University of Verona, Italy
Giuseppe Favretto, University of Verona, Italy
Moreno Fiorentini, University of Verona, Italy
Alberto Crescentini, SUPSI University of Applied Sciences and Arts of Southern Switzerland
UNIVERSITIES AS SOURCES OF BUSINESS: 77

ENTREPRENEURSHIP AND DOCTORAL STUDIES

Maddalena Formicuzzi, University of Verona, Italy
Anastasia Ferrari, University of Verona, Italy
Jocilene Gadioli de Oliveira, Coordenação de Aperfeiçoamento de Pessoal de Nível Superior,
Brazil
Ajay K. Jain, Management Development Institute Gurgaon, India
Romina R. Fucà, University of Macerata, Italy
THREAT OF LOSING THE JOB AND DEVIANT BEHAVIOURS AS CONSEQUENCE: 83

COMPARING SOCIAL EXCHANGE PERSPECTIVE AND JUSTICE CONTROL MODEL AS
THEORETICAL EXPLANATIONS
Beatrice Piccoli, University of Verona, Verona, Italy

Massimo Bellotto, University of Verona, Verona, Italy
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THE ROLE OF MANAGEMENT ACCOUNTANTS IN THE USE OF 91

ERP SYSTEMS IN LARGE COMPANIES
Bernhard Gärtner, Johannes Kepler University, Linz, AUSTRIA

Andrea Krichbaum, Johannes Kepler University, Linz, AUSTRIA
EMOTIONAL INTELLIGENCE AND LIFE SATISFACTION: 109

AN EMPIRICAL STUDY ON ITALIAN NURSES
Annamaria Di Fabio, Department of Education and Psychology, University of Florence, Italy

Letizia Palazzeschi, Department of Education and Psychology, University of Florence, Italy
ASSESSING THE IMPACT OF THE ONLINE LEARNING PORTAL ON STUDENT 117

PERFORMANCE IN A BUSINESS/MARKETING COURSE
Con Korkofingas, Macquarie University, Sydney Australia

Joseph Macri, Macquarie University, Sydney Australia
SUPPORTING CRITICAL THINKING THROUGH ANCHORED ASYNCHRONOUS 123

ONLINE DISCUSSIONS
Nimer Alrushiedat, California State University, Fullerton, California, USA
UNDERSTANDING UNIQUE CONSUMER BEHAVIOR: 131

INSIGHTS FROM SOCIAL PSYCHOLOGY
Anja Franck, TU Dresden, Germany

Stefan Wünschmann, TU Dresden, Germany
CREATIVE SELF-EFFICACY, HARDINESS AND RESISTANCE TO CHANGE 147
Gaetano Andrea Mancini, University of Florence, Italy
HUMAN CAPITAL DISCLOSURE: A DETERMINANT OF FIRM GROWTH AND FINANCIAL 153

PERFORMANCE. EMPIRICAL EVIDENCE FROM EUROPEAN LISTED COMPANIES
Silvio Bianchi Martini, University of Pisa

Antonio Corvino, University of Foggia
Federica Doni, University of Milano-Bicocca
Alessandra Rigolini, University of Pisa
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STAKEHOLDER SALIENCE, GOAL SYSTEM, AND FAMILY BUSINESS:

A CORRELATION STUDY
Silvia Payer-Langthaler, Johannes Kepler University, Linz, AUSTRIA

Christine Duller, Johannes Kepler University, Linz, AUSTRIA
ABSTRACT
This article is a response to the numerous calls for the application of stakeholder theory for the
analysis of family businesses and among the first papers that deal with the concept of stakeholder
salience in the family business context empirically. This study extends the literature by hypothesizing
that stakeholder salience differs due to a company’s ownership structure (family business versus
nonfamily business) and the degree of the owner family’s influence. Furthermore, the authors analyze
the interplay between stakeholder salience and a company’s goal system, expecting that a company’s
goal system reflects the claims of the highly salient constituents and that this correlation is influenced
by a company’s ownership structure and the degree of the owner family’s influence. The results from
a survey of large and medium-sized companies in Austria only partially confirm the hypotheses. Our
findings suggest a need for continued emphasis on the empirical research on this topic.
Keywords: stakeholder theory, salience, family business, goal system
1. INTRODUCTION
A recent literature review conducted by Laplume et al. (2008) reveals that stakeholder theory is
increasingly at the forefront of the corporate agenda. In this context, it can be confirmed that research
through the lens of stakeholder theory focuses disproportionately on large publicly traded corporations
(Phillips et al., 2003). In doing so, some authors complain that, thereby, small businesses and family
businesses (FBs) are largely neglected (Sharma, 2003; Laplume et al., 2008).
In general, stakeholder theory (Freeman, 1984) is based on the belief that the ultimate purpose of a
company is to serve the interests of all of its constituents, not only that of its shareholders. One of the
broad themes within stakeholder related research is the definition of stakeholders (Laplume et al.,
2008). In this context, the concept of stakeholder salience has gained attention. According to Mitchell
et al. (1997), stakeholder salience is dependent on specific (combinations of) stakeholder attributes:
power, legitimacy, and urgency.
Although widely cited, there has been limited research using the Mitchell et al. (1997) framework as a
tool for empirical analysis. Most studies take the power, legitimacy, and urgency attributes as given
and describe stakeholders in terms of these attributes (Parent and Deephouse, 2007). The broad
study of Agle et al. (1999) and the multi-method, comparative case study of Parent and Deephouse
(2007) are among the few examples that empirically confirm the theoretical model of stakeholder
salience proposed by Mitchell et al. (1997). Both studies focus on large organizations and confirm a
positive relationship between the number of stakeholder attributes and perceived stakeholder
salience. In addition, Mitchell et al. (2011) recently applied the concept of stakeholder salience vis-à-
vis the FB context in a conceptual manner, but until now there is no empirical study that empirically
tested their assumptions concerning stakeholder salience in family firms.
The aim of the following paper is twofold: firstly, the paper is a response to the numerous calls for the
application of stakeholder theory for the analysis of FBs (Sharma, 2004; Chrisman et al., 2005;
Chrisman et al., 2012; Cennamo et al., 2012). Secondly, taking into account the empirical findings of
a quantitative survey of large- and medium-sized companies in Austria, the following paper is among
the first that empirically deals with the concept of stakeholder salience in the FB context. In doing so,
the author’s focus is primarily on the factors that might have an impact on stakeholder salience and
on the interplay between stakeholder salience and a company’s specific goal system. Supposing a
certain correlation between stakeholder salience and a company’s goal system (Freeman, 1984;
Donaldson and Preston, 1995; Cennamo et al., 2012), the authors empirically answer the following
research questions:
7
Research question 1: Are there differences in stakeholder salience due to a company’s ownership
structure (FB versus NFB) and the degree of family influence?
Research question 2: Does the company’s goal system reflect the claims of the highly salient
constituents and does this correlation depend on a company’s ownership
structure and the degree of family influence?
The article is organized as follows. First, we mention reasons that substantiate the application of
stakeholder theory in a FB context. Additionally, in section two we review the stakeholder salience
literature to highlight some of the key elements that underline the unique salience issues that are said
to occur in FBs. In this context, we assume that stakeholder salience is mainly influenced by the
structure of ownership and the degree of family influence. In FBs, it is difficult to answer the question
whether shareholders are family- or nonfamily-stakeholders. Hence, we additionally focus on a
company’s goal system to shed further light on the influence of stakeholder salience on a company’s
goals. Sections 3 and 4 are dedicated to the methodological principals as well as the statistical
results. Finally, our article concludes with a brief discussion of the main results and mentions some
limitations that should be acknowledged.
In general, the following article is motivated by our belief that the application of the stakeholder
salience concept to the FB context will assist scholars as well as practitioners within this domain to
further explore the processes of prioritization of stakeholders in this unique and important context; and
that a profound analysis of a company’s goal system will shed further light on the stakeholder salience
concept.
In the case of FBs it is obvious to note that the family itself constitutes – among others – one
important stakeholder group (Zellweger and Nason, 2008; Zellweger et al., 2011) and thus, it is a
matter of course, that the owner family gains a higher salience in FBs than in nonfamily businesses
(NFBs). Therefore, it is important to note that this study focuses primarily on nonfamily stakeholders
(Hauswald and Hack, 2013), such as (nonfamily)-shareholders, employees, customers, suppliers,
banks, and the general public (Freeman, 1984; Clarkson, 1995).
2. THEORETICAL BACKGROUND AND DEVELOPMENT OF HYPOTHESES
One of the most influential theses of stakeholder theory is that organizations should be managed in
the interest of all their constituents, not only in that of shareholders, so that the claims of relevant
stakeholders are integrated into an organization’s strategic plans, goal systems, and decision-making
processes (Freeman, 1984; Donaldson and Preston, 1995; Jones, 1995; Kaler, 2003). Furthermore,
stakeholder theorists argue that all persons or groups with legitimate interests participating in an
enterprise do so to obtain benefits and that there is no prima facie priority of one set of interests and
benefits over another (Donaldson and Preston, 1995). In this context, the identification and
prioritization of stakeholders play a central role in stakeholder management (Parent and Deephouse,
2007). In order to answer the questions “Which stakeholders should managers pay attention to?” and
“Which stakeholders do managers really care about?” (Laplume et al., 2008), the concept of
stakeholder salience (defined to be the degree to which managers give priority to competing
stakeholder claims) (Mitchell et al., 1997: 854) has gained momentum. In this context, Mitchell et al.
(1997) use three important social science concepts to characterize stakeholders: power (the ability of
stakeholders to impose their will on a given relationship through coercive, utilitarian, or normative
means (Etzioni, 1964), legitimacy (claims are appropriate, proper, and desirable in the context of the
social system (Suchman, 1995), and urgency (the degree to which a constituent believes its claims
are time sensitive or critical, or generally spoken, the degree to which stakeholder claims call for
immediate attention (Mitchell et al., 1997). Based on these assumptions, Mitchell et al. (1997)
developed a typology of eight stakeholder salience-types based on whether or not a stakeholder has
one, two, or three of the above mentioned attributes of power, legitimacy, and/or urgency.
The core relationship in Mitchell et al.’s (1997) theory was that the more attributes a stakeholder has,
the greater its salience will be (Parent and Deephouse, 2007). One attribute for itself does not
guarantee high salience in a stakeholder-manager relationship. For instance, power only gains
authority through legitimacy, and it gains exercise through urgency (Mitchell et al., 1997). On the other
hand, legitimacy gains rights through power and voice through urgency. Finally, urgency by itself is
not sufficient to guarantee high salience in the stakeholder-manager relationship but in combination
8
with at least one of the other two attributes; urgency will change the relationship and cause it to
increase in salience to the firm’s managers (Mitchell et al., 1997: 870). According to this model,
entities with no power, legitimacy, or urgency will be perceived as having no salience by the firm’s
managers and therefore are so called non-stakeholders (Mitchell et al., 1997).
Given that FBs are undoubtedly one of the most important forms of business in both national and
international contexts (Aastrachan and Shanker, 2003; Villalonga and Amit, 2006), and further given
the undisputed assessment within family firm literature that FBs face unique stakeholder
constellations (Sharma, 2004; Chrisman et al., 2005; Zellweger and Nason, 2008), it is rather
surprising that stakeholder challenges faced by such organizations are – apart from a few recent
exceptions (Stavrou et al., 2007; Zellweger and Nason, 2008; Mitchell et al., 2011; Cennamo et al.,
2012) – being nearly overlooked (Laplume et al., 2008).
The FB literature gives several reasons that substantiate the relevance of applying stakeholder theory
to the family firm context. Firstly, in contrast to nonfamily enterprises, FBs have an additional
stakeholder group, namely the family. According to Zellweger and Nason (2008), it can be stated that
ownership families clearly affect, and are affected by, the achievement of a corporation’s purpose
(Freeman, 1984) and therefore can be labeled as a unique stakeholder category (Zellweger and
Nason, 2008; Zellweger et al., 2011). Secondly, the family form of organization not only involves the
interplay of a number of stakeholders but first and foremost faces a diverse set of economic and
noneconomic goals (Chrisman et al., 2005), with socio-emotional goals in the forefront (Gomez-Mejia
et al., 2007; Berrone et al., 2012). While the family firm literature clearly acknowledges the importance
of nonfinancial objectives, it has been relatively silent about how these firms manage their stakeholder
network (Cennamo et al., 2012: 1155). Hence, incorporating stakeholder theory into future research is
advisable to fill an existing theoretical gap (Chrisman et al., 2005). Finally, it is argued in the literature
that, in contrast to nonfamily enterprises, FBs face unique stakeholder constellations and have a
particular inclination to satisfy multiple stakeholders (Zellweger and Nason, 2008). Based on social
identity theory, Dyer and Whetten (2006) suggest that family entrepreneurs often view their firms as
an extension of the self and their families, which makes them more likely to be socially responsible
and, hence, satisfy societal stakeholders (Tagiuri and Davis, 1992; Zellweger and Nason, 2008).
Tagiuri and Davis (1996) additionally report that FBs display strong community relations and are
deeper embedded in the societal context of their firms.
With regard to long-lasting goal orientation, it is postulated in the literature that FBs have a greater
incentive to produce individual benefits for stakeholders compared with NFBs (Zellweger and Nason,
2008). Additionally, it has been shown that the goal systems of FBs are not solely oriented towards
profit, but also towards stakeholder interests, especially those of customers and employees (Spence
and Rutherford, 2001; Zellweger and Nason, 2008; Hack, 2009). With regard to the employees it is
said that FBs’ employees are more intrinsically motivated (Arregle et al., 2007), that the interaction
between family members and employees is based on faith, trust, and confidence (Tagiuri and Davis,
1992; Habbershon and Williams, 1999), that FBs avoid staff reduction even in times of economic
crisis (Lee, 2006), and that FBs are characterized by a very flexible working culture (Arregle et al.,
2007). In summary it can be said, therefore, that FBs face lower staff fluctuation and higher employee
and customer satisfaction (Miller et al., 2008; Hack, 2009). Moreover, it is said in the literature that
family members in the firm often have strong relationships with their clients, suppliers, bankers and
other external stakeholders (Lyman, 1991; Yeung, 2000) and that family members’ interactions with
the mentioned stakeholder groups are numerous and intense and therefore contribute to the
development of organizational social capital (Arregle et al., 2007).
Whether family firms are more likely than others to engage actively with their stakeholders and why
they would do so has received relatively little attention (Cennamo et al., 2012). Cennamo et al argue
that who controls the firm and the extent to which the controlling party values achieving social goals
explain why some firms are more sensitive than others to stakeholder issues and the ensuing
pressure. The authors suggest that FBs engage proactively in stakeholder management activities
because by doing so, they enhance and protect their socioemotional endowments (Cennamo et al.,
2012).
Following institutional theory (Powell and DiMaggio, 1991), Mitchell et al. (2011) argue that where
principal institutions intersect (i.e. family and market logic) a unique set of challenges emerge in
connection with the question of which stakeholder groups matter most or the principle of who or what
9
really counts (Freeman, 1994). The authors apply the power, legitimacy, and urgency attributes of
stakeholder salience vis-à-vis the FBs context and they show that stakeholder salience (Mitchell et al.,
1997) will be different and more complex in FBs than in organizations where institutions are based on
a single dominant logic (i.e. market logic) (Friedland and Alford, 1991; Thornton et al., 2012). In the
same context, Mitchell et al. (2011) argue that when institutions intersect, such organizations are likely
to experience greater stakeholder conflicts, greater ethical conflicts, and greater cognitive complexity
than other organizational forms. According to Mitchell et al. (2011) there are distinct and idiosyncratic
aspects associated with the FB context (e.g. non-economic goals, socioemotional wealth, family
history, intentions for transgenerational sustainability, altruistic tendencies) that make stakeholder
salience issues more complex and increase the potential for conflict.
According to the above lines of reasoning we suppose that stakeholder salience differs significantly
between FBs and NFBs.
Hypothesis 1: Employees, customers, suppliers, banks and the general public gain a higher salience
in FBs than in NFBs.
According to Chrisman et al. (2012), the growing awareness of FBs being heterogeneous is a call to
focus more on the distinct consequences of family involvement. Therefore, in addition to the structure
of ownership, the impact of the family and their affect on stakeholder salience seem to be interesting.
In our study, the impact of the family is defined and measured according to the Substantial Family
Influence (SFI) concept of Klein (2000). The SFI is an example of a continuous measure of family
involvement or essence that is better suited to capturing varying levels of family involvement than
dichotomous classifications to separate family and non-family firms (Astrachan et al., 2002; Chrisman
et al., 2005; Chrisman et al., 2012). The SFI measures a family’s influence via a combination of the
extent and quality of its ownership, governance, and management involvement (Klein et al., 2005).
Melin and Nordqvist (2007) report that FBs are heterogeneous in the manner in which they view and
respond to the claims and pressures of family and non-family stakeholders. In this context, the
question arises whether a different degree of family involvement has a consequence on the salience
of the considered stakeholder groups. A decreasing (increasing) SFI simultaneously implies an
enlargement (reduction) of non-family ownership, and/or non-family managers and/or non-family
board members. As family member’s attributes of power, legitimacy, and urgency differ in important
ways from general business stakeholder salience (Mitchell et al., 2011), we suppose that stakeholder
salience is influenced, among others, by the degree of family involvement. Hence, given the above
observations, we introduce the following proposition:
Hypothesis 2: Stakeholder salience differs due to a family’s influence: The higher the SFI, the higher
the salience of employees, customers, suppliers, banks, and the general public.
In the words of stakeholder theory, organizational success depends on satisfying multiple stakeholder
interests (Donaldson and Preston, 1995). According to Miles (1980), the ability of the organization to
satisfy the expectations of its strategic constituents can be called synonymic as organizational
effectiveness. As an organization is comprised of many different constituencies, each of these
constituencies may be interested in different aspects of (financial and nonfinancial) performance
outcomes (Simons et al., 2000; Zellweger and Nason, 2008). Furthermore, outcomes are assumed to
reflect the fulfillment of an organization’s goals (Venkatraman and Ramanujam, 1986) and it is evident
that the goal system of a company has to correspond to the different performance outcomes and
stakeholder demands in order to sustain a company’s success (Simons et al., 2000; Otley, 2005;
Merchant and van der Stede, 2007) and an organization’s effectiveness (Miles, 1980).
Referring to Freeman’s (1984) original definition, stakeholders can affect (and are affected by) the
achievement of a firm’s objectives. Bridging the concept of stakeholder salience with Freeman’s
definition of stakeholders, it can be followed that a company’s highly salient stakeholder groups do not
only affect the achievement of a firm’s objectives but they even determine a company’s processes of
goal setting and decision making. As a consequence, it can be stated that the claims of the highly
salient stakeholders determine the contents of a company’s goal system.
10
In order to operationalize the concept of saliency, Agle et al. (1999) designed a survey to examine
distinct relationships among the stakeholder attributes of power, legitimacy, urgency, and salience.
The survey included several items for each of the stakeholder attributes, such as (Agle et al., 1999):
• This stakeholder group had power, (S) when the specific group had access to, influence on,
or the ability to impact our firm, (-) or the power to enforce its claims.
• This stakeholder group exhibited urgency in its relationship with our firm (-) when it actively
sought the attention of our management team or (-) communicated its claims to our firm.
• The claims of a particular stakeholder group were viewed by our management team as
legitimate (-) when the claims of this group were legitimate in the eyes of our management
team.
All three examples give reason to conclude that stakeholder salience has an impact on the
configuration of a company’s goal system. Accordingly, we expected that:
Hypothesis 3: A company’s goal system reflects the claims of the highly salient constituents.
Consistent with the reasoning above, Zellweger and Nason (2008) propose that stakeholder salience
has an impact on the relationship between stakeholder satisfaction and organizational effectiveness.
Stated more formally, they claim that the more salient (hence the more influential or strategic) a
stakeholder group, the higher its impact on organizational effectiveness. In a similar manner,
Chrisman et al. (2012) additionally assume that the salience of a stakeholder has an impact on a
stakeholder’s ability to influence organizational effectiveness or in influencing the goal system.
Thereby, the authors suppose in their recent study on small firms that the degree of family
involvement affects the adoption of family-centered non-economic goals. Furthermore, the authors
empirically confirm that the salience of a stakeholder in influencing the goals, decisions, and actions
of a firm largely depends upon that stakeholder’s legitimacy, power, and urgency (Chrisman et al.,
2012). Consequently, as stakeholder theory provides insights into which stakeholders are likely to
influence a company’s selection of goals, we argue in the following paper that the set of goals
adopted by a company will be influenced – among other things – by the degree of family involvement
(SFI) (Chrisman et al., 2012). Hence, given the above observations, it was reasonable to expect the
following hypothesis:
Hypothesis 4: The correlation between stakeholder salience and a company’s goal system is
affected by its ownership structure and the degree of family influence: the higher the
SFI, the higher the alignment between stakeholder salience and the company’s goal
system.
3. METHODOLOGY: SAMPLING PROCEDURES, MEASURES, AND STATISTICAL TESTS
Empirical evidence presented in this paper is derived from a survey of large and medium-sized
companies in Austria. The required data were gathered by using a standardized online questionnaire
between June and July 2012. An invitation to participate in our survey was sent out by e-mail to the
CFOs of all 5.827 Austrian companies with at least 50 employees (European Commission, 2003).
Contact details were derived from the compass database.
The quality of data was verified by various controls. First, we conducted 10 pretests with corporate
executives in different sized companies and change requests based on these pretests were
integrated into the survey during a final discussion.
Second, we assigned individual token keys to every e-mail invitation to prevent multiple answers from
identical participants.
Finally, representativeness was tested by comparing the first third of the data set with the last third
with respect to size in order to control for non-response bias. There was no indication of non-
response bias, as no significant differences were detected between early and late respondents
(Fowler, 2009).
We received a total of 488 answers, representing a response rate of 8,4 %. In total, 192
questionnaires had to be eliminated as a consequence of incomplete answers. The complexity of the
11
survey probably contributed to the low response rate. Thus, the remaining 296 answers built the basis
of the results presented below.
Because stakeholder salience occurs in the minds of managers (Mitchell et al., 1997), managers play
a key role in the theory (Mitchell et al., 2011). Consequently, our study addressed primarily CFOs. In
prior studies concerning the measurement of stakeholder salience, multiple item surveys were used
to operationalize the construct of power, legitimacy, and urgency (Agle et al., 1999) that made it
possible to create an ordinal-scaled stakeholder salience variable (from low to high): latent, expectant,
and definitive stakeholders (Mitchell et al., 1997 and 2011). In the following study, the focus is
primarily on highly salient (“definitive”) stakeholders.
Thus, we consider a stakeholder as “definitive” (stakeholders exhibiting simultaneously power,

legitimacy, and urgency and thus are perceived by managers with the highest salience) (Mitchell et
al., 1997) when a company’s management incorporates the claims of a specific stakeholder group
during the definition of its performance goals. To answer the question in the survey, the CFOs were
given a list with the following stakeholders: shareholders, employees, customers, suppliers, (family)
owners, general public (community), banks, and others. Obviously, we thus follow Freeman’s broad
definition of a stakeholder (Freeman, 1984), for it leaves the notion of stake and the field of possible
stakeholders unambiguously open to include virtually anyone (Mitchell et al., 1997). In order to control
for Hypothesis 1 and to answer the question whether FBs show differences concerning their
stakeholder salience, it was necessary to explicitly mention family owners as a distinct stakeholder
group (Zellweger and Nason, 2008).
As noted earlier in the article, we identified FBs according to the concept of SFI (Klein, 2000), which
considers strong family influence measured by a family’s (1) share of the capital, (2) seats on the
management board, and (3) seats on the advisory board. Given that the family holds at least some
share in the firm and therefore is not equal to zero, a firm is considered to be a FB if the SFI measure
is equal to or exceeds one.
However, with respect to the delineation and definition of the term FB, there is no general consensus
in the academic literature (Chrisman et al., 2005; Ibrahim et al., 2008) and definitions based on self-
perception are becoming quite common and frequently used in empirical research. According to these
definitions, the classification of firms into FBs and NFBs depends in part, or even entirely, on the
judgment of the person being interviewed (Westhead and Cowling, 1998; Gudmundson et al., 1999;
Gallo et al., 2004). Thus, in addition to the SFI, we asked the participating CFOs whether the
companies they belong to are FBs or not.
One method of identifying organizational goals is simply to ask those persons in charge of an
organization what they believe to be its primary goals (Etzioni, 1961; Tagiuri and Davis, 1992; Lee
and Rogoff, 1996; Westhead, 2003; Chrisman et al., 2012). It is widely acknowledged in the business
literature that goal systems are composed of financial as well as nonfinancial goals (Kaplan and
Norton, 1996; Simons et al., 2000; Ferreira and Otley, 2009).
Numerous scholars have suggested that FBs, compared with NFBs, face particularities in their goal
systems, stemming from the dominance of the controlling families that give a high priority to
nonfinancial goals (Zellweger et al., 2011; Chrisman et al., 2012) and to their socioemotional wealth
(Gomez-Mejia et al., 2007; Berrone et al., 2012).
In order to test the relationship between the stakeholder salience (Mitchell et al., 1997) and a
company’s goal system, a comprehensive question concerning the rating of the importance of distinct
financial and nonfinancial goals was based on a five-point Likert scale in order to get dispersed and
nuanced answers. A rating of one was given to goals with extremely high importance, whereas five
marked the lowest importance of the respective goal.
The applied goal catalogue consisted of 17 distinct goals with each stakeholder group being reflected
(shareholder-, employee-, customer-, supplier-, and family-oriented goals, etc.). In addition, the survey
participants were asked to provide an additional ranking (one to three) of the goals with the highest
importance.
In order to test our Hypotheses we applied one-sided Fisher’s exact tests (significance level 5%).
12
4. RESULTS AND IMPLICATIONS
In Hypotheses 1 and 2 were controlled for the influence of a company’s ownership structure and the
degree of family influence on stakeholder salience. As already stated, the following study focuses
primarily on nonfamily stakeholders as it is not surprising that the owner-family gains a significantly
higher salience in FBs than in NFBs.
FB vs. NFB Family influence (SFI) within FB

FB n = 97 NFB n = 180 Fisher SFI < 2 n = 45 SFI ≥ 2 n = 42 Fisher
counts % counts % p-value counts % counts % p-value
75 77,3 150 83,3 0,144 shareholders 40 89,9 29 69,0 0,021
39 40,2 5 2,8 0,000 owner-family 14 31,1 23 54,8 0,022
39 40,2 71 39,4 0,501 employees 17 37,8 16 38,1 0,575
49 50,5 108 60,0 0,082 customers 22 48,9 20 47,6 0,538
8 8,2 14 7,8 0,530 suppliers 3 6,7 40 9,5 0,461
12 12,4 25 13,9 0,438 bank 4 8,9 50 11,9 0,456
7 7,2 43 23,9 0,000 general public 3 6,7 2 4,8 0,533
TABLE 1: IMPACT OF OWNERSHIP STRUCTURE AND FAMILY INVOLVEMENT ON STAKEHOLDER SALIENCE
As shown above, stakeholder salience differs significantly between FBs and NFBs with respect to one
stakeholder group, namely the general public. Different from our expectations, the result indicates that
the general public (society, community) gains a significantly higher salience in NFBs than in FBs.
Summing up, neither of the expected stakeholder groups gains a higher salience in FBs than in NFBs
and Hypothesis 1, therefore, has to be rejected.
The second part of Table 1 presents the results of the analysis used to test Hypothesis 2, suggesting
that stakeholder salience differs due to a family’s influence measured by the SFI within FBs. Our
results do not justify our assumption that stakeholder salience is influenced by the degree of family
involvement with respect to employees, customers, suppliers, banks and the general public.
Therefore, the general pattern of results leads us to reject Hypothesis 2. Furthermore, our statistical
results indicate that a company’s (nonfamily) shareholders gain a significantly higher salience in FBs
with a low family influence (SFI<2), and once again it is self-evident that the salience of the owner-
family decreases with growing SFI.
FB vs. NFB Family influence (SFI)

FB NFB SFI < 2 SFI ≥ 2
highly salient
goal priority n % n % n % n % n %
constituent
stakeholder stakeholder 52 43,3 19 48,7 33 40,7 6 40,0 7 41,2
stakeholder shareholder 13 10,8 5 12,8 8 9,9 2 13,3 3 17,6
shareholder stakeholder 37 30,8 12 30,8 25 30,9 6 40,0 5 29,4
shareholder shareholder 18 15,0 3 7,7 15 18,5 1 6,7 2 11,8
n= 120 39 81 15 17
Fisher exact test (p-value) = 0,084 0,640 0,060 0,554 0,686
TABLE 2: IMPACT OF OWNERSHIP STRUCTURE AND FAMILY INVOLVEMENT ON THE ALIGNMENT BETWEEN
STAKEHOLDER SALIENCE AND THE COMPANY’S GOAL SYSTEM
Results in Table 2 show that Hypotheses 3 and 4 are not approved. In general, we did not find a
significant correlation between stakeholder-(shareholder-)salience and the dominance of stakeholder-
(shareholder-)related goals in a company’s goal system.
The results are unaffected by the ownership structure and the degree of family influence. Summing
up, we could not demonstrate that companies align their goal systems in accordance with the claims
of their highly salient constituents. Even when a company’s shareholders are perceived by the
managers as highly salient, the goal system does not primarily give priority to typically shareholder-
related goals, as for example corporate growth, assuring short-term financial performance, or
increasing shareholder-value.
13
5. DISCUSSION AND CONCLUSIONS
Our study followed the numerous calls to apply stakeholder theory to examine the particularities of
FBs (Sharma, 2004; Zellweger and Nason, 2008; Laplume et al., 2008). The primary objective of this
study was to test the theoretical model of stakeholder salience proposed by Mitchell and his
colleagues (1997) in the context of FBs as suggested by Mitchell et al. (2011).
The authors’ argument is that where principal institutions intersect (i.e., family and business),
managerial perceptions of stakeholder salience will be different and more complex than where
institutions are based on a single dominant logic. In a similar context, Mitchell et al. (2003) are
convinced that the “one business, two systems” nature of the FB setting thus imposes additional
complexity and therefore creates a unique stakeholder salience setting. Furthermore, the following
study assumes a correlation between stakeholder salience and a company’s goal system and
empirically analyzes if the company’s goal system reflects the claims of the highly salient constituents
and if this correlation depends on a company’s ownership structure and the degree of family influence
measured by the SFI.
FB research through the lens of stakeholder theory is, in general, characterized by the distinction
between family- and nonfamily-stakeholders (Mitchell et al., 2003). In FBs the owner-family has the
role of a key stakeholder (Zellweger and Nason, 2008) and it is evident that the owner-family gains a
higher salience in FBs than in NFBs. The empirical results of our study clearly confirm this assumption
and additionally underline that the salience of the owner-family is significantly higher (p = 0,022) in
FBs with a strong family influence than in FBs with a low family influence or in NFBs (p = 0,000).
In stakeholder theory it is generally acknowledged that the firm is characterized by relationships with
many groups and individuals (“stakeholders”), each with the power to affect the firm’s performance
and/or a stake in the firm’s performance (Freeman, 1984). Thus, it is obvious that a company’s
shareholders are among the firm’s important stakeholders (Jones, 1995). In NFBs the definition and
identification of the stakeholder-group of shareholders is clear. In contrast, it is more complex in the
context of FBs where the question arises whether shareholders are family or nonfamily stakeholders.
The literature on FB is relatively silent with respect to this justified question and most authors avoid a
clear differentiation or assignment of stakeholders (Mitchell et al., 2003; Arregle et al., 2007;
Zellweger and Nason, 2008; Mitchell et al., 2011). As the mentioned papers are primarily conceptual,
a precise classification of stakeholders would be admittedly desirable but is not vital.
As our paper aims at empirically analyzing the concept of stakeholder salience in the context of FBs,
a clear definition of stakeholders is inevitable. In our case, we differentiated between FB owners and
(nonfamily) shareholders. The latter are then regarded as nonfamily stakeholders. The statistical
results (p = 0,022) shown in Table 1 underline this reasoning, indicating a significant relationship
between the degree of the family influence and the saliency of the company’s
(nonfamily)shareholders: the lower the owner family’s influence, the more salient the company’s
shareholders.
The other stakeholder groups (employees, customers, suppliers, banks) are not influenced by the
degree of family influence measured by the SFI. According to the results of our study and in contrast
to our expectations, only the general public (defined by the society in which the firm is embedded)
gains a significantly higher salience in NFBs than in FBs.
Hence, our findings contribute to Morck and Yeung’s (2004) theory that FBs act in self-interested
ways to the detriment of society but are in sharp contrast to recent works by Whetten and Mackey
(2002), Godfrey (2005), or Dyer and Whetten (2006), which suggest numerous reasons why FBs may,
in fact, be more socially responsible than NFBs.
In our study, we concentrated foremost on highly salient (“definitive”) stakeholders. Stakeholders are
then considered as powerful, legitimate, and urgent when a company’s management incorporates
their claims during the definition of its performance goals. Doing so, we could not empirically confirm
Mitchell et al.’s (2011) theoretical assumptions that stakeholder salience – especially the salience of
(nonfamily) shareholders, employees, customers, suppliers, and banks – will be different in FBs
compared with NFBs.
14
Mitchell et al.’s (2011) assessment that stakeholder salience is more complex in organizations where
principal institutions intersect can, according to the statistical findings of our study, be restricted to the
fact that FBs deal with an additional stakeholder group, namely the members of the owner family.
Additionally, our study focused on analyzing the relevance of distinct organizational goals and
whether there is congruence between a company’s goal system and its highly salient stakeholder
groups. According to Chrisman et al. (2012), an understanding of a family firm’s goals should be a
precursor to understanding its behaviors.
In the same context, the authors’ argument is that the relative power of the owner-family influences
the content of a company’s goals system and that goal systems should differ among family firms as
well as between FBs and NFBs. The empirical results of our study (as shown in Table 2) do not
approve our assumption that the highly salient stakeholder groups have a strong influence on the
company’s goal priority.
Even if we take it for granted that the shareholders are among a company’s most important
stakeholders (Jones, 1995), the results presented in Table 2, in general, do not indicate a significant
correlation between a high shareholder salience and a high importance of shareholder-related goals.
Anyway, the non-significant results are, moreover, unaffected by the ownership structure and the
degree of family influence. Therefore, our results indicate that stakeholder salience does not have a
strong impact on the processes of goal setting.
Summing up, our study: a) does not approve that stakeholders such as (nonfamily) shareholders,
employees, customers, suppliers, banks, and the general public gain a higher salience in FBs than in
NFBs (as supposed in Hypothesis 1); b) does not confirm that stakeholder salience differs due to a
family’s substantial influence (SFI) (as suggested in Hypothesis 2); c) does not give evidence that a
company’s goal system reflects the claims of the highly salient constituents (argued in Hypothesis 3);
and finally d) shows, that the alignment between stakeholder salience and the company’s goals
system is uninfluenced by a company’s ownership structure as well as its degree of family influence.
6. LIMITATIONS
Although our study is among the first that empirically deals with the concept of stakeholder salience in
the FB context and therefore contributes to FB studies as well as to studies in the realm of
stakeholder theory, the study has methodological limitations that should be acknowledged. First, our
sample concentrated only on medium- and large-sized companies in Austria (more than 50
employees). Therefore, care should be taken in applying our results to other firms because our
sample is not necessarily representative of all firms, FBs or otherwise.
This holds especially true for small enterprises (less than 50 employees), although these companies
build the vast majority of businesses in the economy (Chrisman et al., 2012). There also may be
important cultural differences between family firms in Austria and those in other nations (Hofstede,
2001).
Furthermore, our study did not explicitly control for the stakeholder salience attributes of power,
legitimacy, and urgency as suggested by Agle, Mitchell, and Sonnenfeld (1999). Instead, we
concentrated primarily on stakeholders with the highest salience and we assumed that stakeholders
are “definitive” (a stakeholder’s claims are simultaneously powerful, legitimate, and urgent) when a
company’s management incorporates its claims during the definition of its performance goals.
Although this assumption seems to be reasonable, future research might fruitfully investigate other
facts that indicate a certain type of saliency to shed further light on the question of which stakeholders
matter most in a FB context.
Finally, our study suggested the structure of ownership, and the degree of family influence as
influencing factors towards stakeholder saliency, assuming that some stakeholders gain a higher
saliency in a FB context or in companies with a strong family influence. As our statistical results did
not confirm any of our hypotheses, it is obvious that other reasons exist that better indicate
differences in stakeholder salience, especially with respect to the comparison of FBs and NFBs.
15
NOTES:
The survey data used in this study have already been used for other publications with different
research focuses (Gärtner, B., Feldbauer-Durstmüller, B. and Duller C., “Changes in the Role of
Management Accountants Following the Introduction of ERP Systems”, European Journal of
Management, Volume 13, Number 3, Pages 33-44, 2013; Gärtner, B., Feldbauer-Durstmüller, B. and
Duller C., “Enterprise Size Impact on the ERP System Implementation”, International Journal of
Strategic Management, Volume 13, Number 3, Pages 17-30, 2013).
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Zellweger, T.M. and Nason, R.S., "A Stakeholder Perspective on Family Firm Performance", Family
Business Review, Volume 21, Number 3, Pages 203–216, 2008.
Zellweger, T.M., Nason, R.S., Nordqvist, M. and Brush, C.G., "Why Do Family Firms Strive for
Nonfinancial Goals? An Organizational Identity Perspective", Entrepreneurship Theory and
Practice, Pages 1–20, 2011.
19
AUTHOR PROFILES:
Dr. Silvia Payer-Langthaler earned her Ph.D. at the Johannes Kepler University (JKU) of Linz,
Austria, in 1991. She is Assistant Professor at the Institute for Management Control & Consulting at
the JKU Linz (currently on maternity leave).
Dr. Christine Duller earned her Ph.D. at the Johannes Kepler University (JKU) of Linz, Austria, in
1999. Currently she is Assistant Professor of Applied Statistics at the JKU Linz.
20
RETIREMENT PLANNING AND RESOURCES
Joanne Kaa Earl, School of Psychology, University of New South Wales, Australia
Helen Archibald, School of Psychology, University of New South Wales, Australia
ABSTRACT
Two ways proposed by the OECD (2011) to reform pensions included increasing workforce longevity
and encouraging independent financial planning. This study explored retirement planning and
resource accumulation behavior (physical health, finances, social, cognitive, emotional and
motivational) in a group of 311 Australian employees aged 45 and over. Antecedents and
consequences of retirement planning and resource accumulation were investigated . Antecedents
included demographics, work centrality, mastery and psychological health. Consequences
investigated were confidence in retirement preparation, planned age at retirement and intention to
participate in bridge employment. Important differences in antecedents and consequences indicate
that the constructs of retirement planning and resource accumulation do not operate interchangeably.
Policy makers, such as the OECD, Organizations and Governments should consider mastery and
resource accumulation as well as planning in promoting better retirement preparation.
1. INTRODUCTION
Since Bismarck first introduced the term “retirement” more than 130 years ago, retirement has been a
concern to economists and social policy makers globally. Despite the predictable nature of aging and
workforce exit, many people aged 65 and over still exist on incomes at around 82% of the general
population. When combined with population ageing there are significant implications not only to this
group but to the broader community. When comparing the number of people working to those on
pensions, economists note an alarming decline. In 1950 there were 7.2 people working for every 1
person on a pension, by 1980 the ratio had dropped to 5.1 by 2025 it is estimated to be 3 and by 2050
just two people will be working for every person on a pension (OECD, 2011) . Our current systems our
unlikley to support economies into the future.
Two of three solutions proposed by the OECD (2011) involve policies aimed at the individual level;
firstly to encourage people to work for longer and secondly to save for retirement to make up for the
reduction in any public benefits. Related implications are firstly, a focus on individual health and well-
being to prolong workforce longevity and secondly, encouraging planning behaviour. Two potential
mechanisms underlying this behaviour are retirement planning and resource accumulation.
Understanding drivers of health, well-being, financial planning behaviours and resource accumulation
are essential in developing policies and interventions aimed at bringing about change.
Planning and resource accumulation are assumed to have a symbiotic effect. Planning deals with the
systematic behaviour directed towards preparing for retirement while resource accumulation enables
the planning to take place. However, the accumulation of resources assumes planning in itself.
Wealth does not accumulate on its own. Similarly good health and its maintenance may require
systematic effort. For example a person may plan to continue to work part-time during retirement and
good health as a resource will enable the plan, but good health might be best promoted through
regular doctor visits and monitoring of blood pressure, cholesterol and hear functioning. A person may
plan to continue leisure activities such as golf in retirement and wealth as a resource enables the
plan. In order to afford golf membership budgeting and a savings plan is required. Although the terms
are often used interchangeably, no studies to date have previously compared the antecedents and
consequences of each. Understanding who is likely to be planning, and who is not, allows for the
development of policies and government interventions targeted for maximal effect. Very little research
exists that extoll the virtues of resource accumulation, and those focusing on planning behaviour
emphasise pre-retirement behaviour.
2. CONSEQUENCES OF RESOURCE ACQUISITION
Retirement Adjustment and Well-Being

The resource perspective is a conceptual framework for understanding retirement well-being across
time. Resources can be broadly defined as the total capability an individual has to fulfil their needs
21
(Hobfoll, 2002). Wang (2007) suggested that in the retirement adjustment context resources could
include physical, cognitive, motivational, financial, social, and emotional resources. Integrated
resource models such as the transactional stress model (Lazarus & Folkman, 1984) and the
conservation of resources theory (Hobfoll, 1989) view fluctuations in resource levels as a mechanism
for explaining changes in well-being. Theories agree that individuals seek to obtain, retain, protect,
and build resources. Furthermore, individuals in possession of adequate resources are less likely to
be affected by adverse events because accumulated resources provide a buffer against stress
(Gorgievski-Duijvesteijn, Bakker, Schaufeli, & van der Heijden, 2005; Wang, Henkens, & van Solinge,
2011).
The resource perspective predicts non-uniform patterns of changes in well-being over time, and
provides one explanation as to why individual differences exist in the retirement transition experience.
Wang et al. (2011) suggested that levels of retirement adjustment fluctuate according to absolute
levels of individual resources and environmental stressors. Wang was able to demonstrate that the
three trajectories for retirement could be explained in terms of differences between the groups in
resources relating to work satisfaction, preretirement planning, health declines, and changes in
finances. The resource perspective brings flexibility to understanding how individuals adjust to
retirement in the context of their individual circumstances.
Wang and Shultz (2010) argue that resources can be both positively and negatively affected by
changes at the societal, organisational, job and individual levels. This suggests that levels of
resources can be both the result of individual actions, as well as a product of the environment that an
individual lives in. Applying a resource perspective to preparation for retirement may lead to better
understanding of preparatory behaviours than a planning perspective alone, as it need not be a
deliberate process undertaken to achieve goals.
Research efforts were hampered by a lack of measurement tools to define and assess resources.
Leung and Earl (2012) designed a 35-item measure but found three factors rather than the six factors
previously advocated by Wang (2007). The three resource subscales were: RT1: emotional, cognitive
and motivational resources; RT2: social resources and RT3 physical health and financial resources.
Retirement resources, as assessed by the RRI, significantly accounted for additional variance in both
retirement satisfaction (16%) and retirement adjustment (22%) above and beyond that explained by
demographic variables. More importantly, results from cross-lagged panel analysis indicated that
retirement resources predicted retirement well-being rather than the reverse.
Although planning and resource accumulation are both behaviours undertaken in preparation for
retirement which have been shown to predict retirement adjustment, research to date has not
investigated resource accumulation in a preretirement sample. This study makes use of a recently
published measure the Retirement Resources Inventory (RRI; Leung & Earl, 2012) to reliably and
validly measure resources in an employee sample. The current study aimed to determine whether
there is evidence that resource accumulation is a type of retirement preparation independent of
retirement planning. Antecedents and consequences of retirement planning and resource
accumulation are compared to determine whether the same precursors and outcomes relate to both.
As described above, many studies have shown that planning has a positive impact on retirement
adjustment (Noone et al., 2009; Reitzes & Mutran, 2004; Wong & Earl, 2009). However, planning has
also been shown to impact upon other aspects of the retirement transition, including confidence in
ability to make the transition, time to transition, and outcomes regarding potential retirement activities
like intention to engage in bridge employment.
3. CONSEQUENCES OF PLANNING BEHAVIOUR
Retirement Adjustment and Well-Being

Retirement planning can assist with the changes in roles, relationships, routines, and habits, along
with concurrent changes in income and health (Lee & Law, 2004). Cross-sectional research using
measures of planning encompassing financial, health, leisure, interpersonal, work, and general
planning suggests that planning is predictive of later life satisfaction in retirees (Donaldson, Earl, &
Muratore, 2010) and that retirement planning has a positive effect on the retirement transition and
adjustment (Noone, Stephens, & Alpass, 2009; Sharpley & Layton, 1998; Wong & Earl, 2009).
22
Recent longitudinal research has confirmed that retirement planning predicts well-being in later life
(Noone et al., 2009; Reitzes & Mutran, 2004; Wang, 2007). For example Wang found that retirement
planning was predictive of well-being throughout the transition period, and non-planners were more
likely to show a decline in well-being immediately before the transition. Meta-analysis reveals a
significant positive relationship between planning and retirement satisfaction (Topa, Moriano, Depolo,
Alcover, & Morales, 2009). These findings provide evidence that the preretirement preparation phase
is critical for a successful transition to retirement.
Research on preparation for retirement has so far focussed on a narrow set of behaviours related to
retirement planning. Retirement planning is conceptualised as conscious, goal directed behaviour
undertaken in preparation for the changes in retirement due to finances, social relationships and
physical health (Noone et al., 2009). Friedman and Scholnick (1997) argued that planning is a
process which requires deliberate understanding of the problem space followed by a decision to start
preparing and then formulation of a plan to fulfil goals. Planning includes formal preparation in
retirement seminars or informal preparation through discussions with partners or friends and reading
about retirement (Kim & Moen, 2001b; Noone et al., 2009; Taylor,Carter, Cook, & Weinberg, 1997).
This conceptualisation of preparation is limited because it assumes an informed decision making

approach, whereby people decide to start planning and make decisions about the timing and
circumstances of their retirement. Theoretical mechanisms which underlie these decisions include the
theory of planned behaviour (Ajzen, 1991), role theory (Moen, 1996) and image theory (Feldman,
1994). These theories presume that people are consciously contemplating their retirement, and that
preparation for retirement is deliberate. However, other models of behaviour change do not require
deliberative planning. For example, the transtheoretical behaviour change model (Prochaska &
DiClemente, 1983; Prochaska et al., 1994) includes a pre-contemplation phase, which requires a
period prior to conscious planning to contemplate and prepare. Applied to retirement planning, this
would suggest pre-planning processes may account for preparatory behaviours in the absence of
conscious and deliberate planning.
Confidence in retirement preparation.

Effective retirement planning should improve a sense of preparedness for the changes in finances,
social relationships and health that accompany retirement (Taylor & Shore, 1995). Planning is
associated with reducing anticipatory anxiety regarding the retirement decision (Glass & Flynn, 2000).
Evidence suggests that planners have greater confidence in their ability to adapt to retirement than
non-planners (Elder & Rudolph, 1999; Kim, Kwon, & Anderson, 2005; Taylor‐Carter et al., 1997).
Wang and Shultz (2010) suggest that formal planning focuses people on establishing themselves
financially, and informal planning helps set expectations for retirement and both increase confidence.
We expected to find that people who have undertaken more planning are more confident about their
preparedness. Furthermore, we also anticipated that possession of resources positively predicts
confidence in preparation.
Timing of retirement.
Research has shown that people who have prepared for retirement and feel prepared, are more likely
to take an earlier retirement than those who have failed to plan (Reitzes, Mutran, & Fernandez, 1998;
Taylor & Shore, 1995). The relationship between planning and anticipated age of retirement is
thought to be mediated by confidence in preparation, such that those who have planned are more
decisive about taking retirement (Dorfman, Kohout, & Heckert, 1985). In the current study, we
expected to find that individuals who have engaged in more planning, report closer proximity to
retirement than those who have engaged less in planning behaviours. However, as resource theory
reports no proposed differences according to age, we expected to find no relationship between total
resources and time to retire.
Participation in Bridge Employment.

Bridge employment is defined as an older persons’ participation in the workforce as they move toward
full retirement (Wang, Zhan, Liu, & Shultz, 2008). This can include full or part time, paid or voluntary
work, which can be related to the career of the individual, or in a new industry or occupation. Wang et
al. found that thinking about retirement was negatively related to bridge employment. Davis (2003)
also found that retirees who had more concrete retirement plans were less likely to participate in
bridge employment. Davis suggested this was because individuals who had comprehensively
prepared for the financial, social and health changes inherent in the transition to retirement were less
23
likely to feel compelled back into work. Bridge employment affords the opportunity to compensate
financially, socially or otherwise for the loss of the worker role. In the current study, we expected to
find that bridge employment is negatively related to retirement planning but not related to possession
of resources for retirement.
4. ANTECEDENTS OF PLANNING BEHAVIOUR AND RESOURCE ACQUISITION
Recent research has focused on the determinants of retirement planning. This research has focused
on the characteristics that make individuals more likely to plan for their future. It has focused on two
main areas, demographic characteristics, including age, gender, income and education, and
psychosocial characteristics including health, mastery and centrality of the worker identity.
Demographic predictors
Demographic predictors of planning have been well-researched. In general we know that older
individuals, those with higher levels of education (DeVaney & Su, 1997) and income (Bassett,
Felming, & Rodrigues, 1998) invest more time and energy into planning for retirement (Glass &
Kilpatrick, 1998; Muratore & Earl, 2010; Petkoska & Earl, 2009). Ekerdt, De Viney, and Kosloski
(1996) suggest that people with these demographic characteristics are more able to engage in
planning because they have greater access to opportunity structures than other cohorts. Health is
also a good predictor with poor physical health (Datta Gupta and Larsen ,2010) and good
psychological health both significant positive predictors of retirement planning and adjustment (Noone
et al. 2009; Donaldson et al. 2010). The relationship between gender and retirement planning
however remains problematic (e.g. Petkoska and Earl, 2009; Quick and Moen, 1998).
Collectively these results suggest that demographic and health variables predict retirement planning.
In the current study, we expected older, more highly educated people with higher income and poorer
health to be more likely to engage in retirement planning than younger, less educated and less
wealthy individuals with good health.
The influence of demographic and health variables on resources is less clear, mainly due to a deficit
of existing evidence. Leung and Earl (2012) found no direct effects of age on levels of resources.
Age may make indirect contributions to resources, through its effects on other resources (e.g. the
effect of age on health), but we would not expect age to make an independent contribution to
resource levels. Gender is expected to have differential effects on different types of resources.
Females typically earn less over a lifetime than males (ABS, May 2012), so it could be expected that
males have higher levels of financial resources than females. However, from Petkoska and Earl
(2009), we expected females to have developed more social resources than males. However, the
resource perspective does not offer overall predictions regarding gender and total resources and we
expected to find that, on balance, males and females have accumulated similar levels of resources.
Education, income and health indicate, by definition, high levels of resources, they also increase
access to other types of resources, including social and motivational resources. In the current study,
we therefore expected that higher education, increased income and good health were positive
predictors of overall resource levels but age and gender have no effect on total level of resources.
Psychosocial predictors
Work centrality is the extent to which work is important to an individual, compared to their other life
roles and provides an indication of an individual’s affective commitment to work. In a longitudinal
study Feldt, Hyvönen, Oja-Lipasti, Kinnunen, and Salmela-Aro (2012) found that job involvement prior
to retirement negatively predicted the number of retirement goals eleven years later, arguing that
goals for retirement are predictive of satisfaction with retirement adjustment. In a meta-analysis, Topa
et al. (2009) found that work involvement was negatively related to retirement planning behaviour,
signifying that individuals who are more committed to work are less likely to plan for their retirement.
Work centrality is known to be related to self-esteem and goal pursuit (Rich, Lepine, & Crawford,
2010), two key elements of motivational and emotional resources. In employee samples, job
involvement is shown to be related to job performance (Diefendorff, Brown, Kamin, & Lord, 2002)
which relates to individual outcomes that could influence financial resources (e.g. bonuses or
promotion). This suggests that individuals with high work centrality are also likely to have higher
resources.
24
Mastery is the degree to which one feels a general sense of control over what goes on in one’s life
and captures elements of locus of control and self-efficacy (Skaff, Pearlin, & Mullan, 1996). Skinner
(1997) theorised that a sense of control over one’s life is a prerequisite for planning, as individuals
who have the cognitive ability to plan, will not do so if they feel that the desired outcome is out of their
control. An individual’s sense of control is considered a major determinant of well-being in older
adults and has been shown to improve retirement adjustment (Donaldson et al., 2010; Kim & Moen,
2001a, 2001b). Additionally, the related constructs, locus of control and self-efficacy, have been
shown to positively correlate with retirement planning (Noone, Stephens, & Alpass, 2010).
Motivational resources relate to strategies available to individuals in their transition to retirement, and
are focused on goal setting, goal adjustment and goal persuit. Self-efficacy has been shown to
predict goal setting and persistance to a goal (Berry & West, 1993) as well as goal achievement
(West, Welch, & Thorn, 2001).
Taken together, these results suggest that psychosocial variables influence planning. In the current
study we expected to find that people who have high work centrality or low mastery to have engaged
in less planning. In contrast, we anticipated finding that individuals with high work centrality or high
mastery had more resources than individuals with lower work centrality or mastery.
5. THE CURRENT STUDY
The resource perspective is an emerging theoretical framework for understanding the individual
drivers of retirement adjustment and satisfaction. This research aimed to investigate whether
resources offer an useful perspective to understanding retirement preparation in an employee sample
beyond that already explained by retirement planning. Furthermore, this study aimed to investigate
whether the resource perspective can be differentiated, by antecedents and consequences, from
behaviour more traditionally defined as retirement planning. Based on the literature and empirical
evidence reviewed the following hypotheses were proposed:
Hypothesis 1: Increased age, higher income, higher education, poorer psychological

health, lower work centrality and increased mastery will be positive predictors of retirement
planning activities.
Hypothesis 2: Higher income, more education, better psychological health, increased
mastery, and increased work centrality will predict retirement resources. Age and gender will
not predict resources.
Hypothesis 3a: Planning and resources will be positively correlated
Hypothesis 3b: Planning and resources will both make an independent contribution to
predicting confidence in retirement preparation
Hypothesis 3c: Planning will predict proximity to retirement, but resources will not.
Hypothesis 3d: Planning will negatively predict intentions to engage in bridge employment
but resources will not
6. METHOD
Participants
Participants were recruited through PureProfile.com. PureProfile is an Australian based panel
provision and database management company. Participants were invited to take part in the study
through PureProfile if they were working and aged 45 years or older. Remuneration was provided in
the form of a small cash incentive (approximately $5). 371 people registered to complete the survey.
Of the sample 29 indicated that they were not currently working, or that they were already retired,
were younger than forty-five years of age and 24 were deemed to be responding randomly
(Respondents were asked to respond to three questions that were embedded in the middle of other
items and were designed to capture random responding. Participants who responded incorrectly to at
least two of these questions were deemed to be responding randomly) and were removed from all
further analyses. The final sample therefore was 311 participants representing 84% of people who
registered to complete the survey.
Measures
Demographic information.
25
Demographic information including age, gender, highest level of education and current income was
collected from participants. The demographic profile of the sample broadly matched that of the
Australian population (ABS, 2011). There were 153 males in the sample (49.2%) and 155 females
(49.8%) with three participants not reporting gender. The mean age of participants was 55.8 (SD=6.7
years, range 45-72 years). Income was measured in $10 000 bands, using midpoint values, the
mean income of the sample was $56,456 (SD= $39 460). The sample was roughly split between
those with secondary school education or lower (27.7%) and post-secondary/bachelor degrees
(38.6%).
Retirement Planning Questionnaire (RPQ).

The RPQ is a 36-item instrument which measures retirement planning behaviour in four domains:
financial/general, health, interpersonal/leisure, and work. The RPQ was developed with an Australian
sample and has been shown to have a clean four-factor structure that predicts retirement planning
behaviour (Petkoska & Earl, 2009). Consistent with past research, internal reliability was high
(Cronbach’s α = .940).
Retirement Resources Inventory (RRI).

The RRI is a measure developed with Australian retirees to measure resources relevant to retirement
well-being (Leung & Earl, 2012). This research adapted some items from the RRI as necessary for
application to an employee (i.e., rather than retired) sample. In this study the three subscales showed
good internal consistency (Cronbach’s α was .89, .88 and .84 for RT1, RT2 and RT3 respectively).
Total resources also showed good internal consistency (α = .90).
Work Centrality.
Soon and Tin’s (1997) four-item measure of work centrality was used. Items include “I enjoy my job
more than my leisure time”, “I love my job”, “I am fully devoted to my job” and “I am very motivated to
perform the duties and responsibilities of my job”. This scale has been supported with moderate
internal consistency (Cronbach's α = .73; Soon & Tin, 1997). In the current study, the internal
reliability was slightly higher (Cronbach’s α = .89).
Mastery.
Pearlin and Schooler’s (1978) seven-item mastery scale was used. Items include “I have little control
over what happens to me”, and “I can do just about anything I set my mind to”. Internal reliability in
the current study (Cronbach’s α = .83) was comparable to previous studies (e.g. Donaldson et al.,
2010; Cronbach’s α =.88).
Psychological Health.
The General Health Questionnaire (GHQ; Goldberg & Williams, 1988) is a 12 item global measure of
psychological well-being. Sample items include “I have recently been able to concentrate on what I'm
doing” and “I have recently been losing confidence in myself”. Respondents rate the frequency with
which they have experienced each item over the past two weeks on a 4-point scale, ranging from (1)
not at all to (4) much more than usual. Higher scores on the GHQ indicate better psychological
health. Consistent with past research (e.g. Donaldson et al, 2010; Cronbach’s α = .87), internal
reliability in the current study was high (Cronbach's α=.83).
Confidence in preparation.
Confidence in preparation was measured with a single item “How well prepared do you think you will
be for your retirement?” measured on a five point scale from (1) not at all prepared, to (5) extremely
well prepared. This item has been used by the Healthy Retirement Project to measure confidence in
preparation (Wells, deVaus, Kendig, Quine, & Petralia, 2006).
Years to retirement.
Participants were asked to indicate the age at which they intended to retire. Years to retirement was
calculated by subtracting current age from the age they indicated they intended to retire.
Planned bridge employment.

Participants were asked if they intend to work after retirement and answered on a binary yes or no
scale. For the purposes of this research, participants were told that “work” could include paid or
unpaid positions which were either similar or different to their current role.
26
7. RESULTS
Predictors of Planning
We expected that older age, higher income, more education, poorer health, lower work centrality and
increased mastery would predict more retirement planning. Means, standard deviations and
correlations for these variables and retirement planning and retirement resources are shown in table1.
Table 1
Means, standard deviations, and correlations for the individual difference variables, retirement
planning and retirement resources, and outcome variables
M SD 1 2 3 4 5 6 7 8 9 10 11 12
1. Gender 1.50 0.50 -
2. Age 55.80 6.74 -.02 -
3. Income 7.73 6.06 -.21** -.09 -
4. Educati
2.77 1.53 -.01 -.11* .15* -
on
5. Work
29.82 4.58 .07 .05 .04 .03 -
Centrality
6. Psych.
26.97 3.35 .06 .20** -.01 -.06 .14* -
Health
7. Mastery 15.95 3.19 .08 .21** .10 .04 .25** .57** -
8. Plannin
16.26 9.26 .18** .17** .10 .22** .14* .09 .25** -
g
9. Resour 113.1
16.99 .19** .04 .14* .16** .28** .36** .48** .40** -
ces 3
10. Confide
2.92 0.98 .03 .20** .05 .07 .10 .33** .37** .37** .35** -
nce
11. Years
to 8.90 6.25 -.07 -.69** -.03 .05 .07 -.18** -.18** -.27** -.13* -.31** -
Retirement
12. Bridge
.70 0.46 .01 .12* .05 .11 .19** .07 .17** .19* .20** .02 -.00 -
Emp.
Gender (male = 1, female = 2); Education (1 = secondary or lower, 2 = certificate, 3 = diploma or
advanced diploma, 4 = bachelor degree, 5 = graduate certificate or graduate diploma, 6 =
postgraduate); Confidence (1= Not at all prepared, 2 = not very prepared, 3 = Moderately prepared,
4= Very well prepared, 5 = extremely well prepared); Years to Retire. (Age intend to retire – current
age); Bridge Emp. (0 = I will not work after retirement , 1 = will work after retirement) ** p<0.01
*p<0.05
As shown in table 1, gender, age, education and mastery all have significant small to moderate
correlations with retirement planning. When entered into a multiple regression analysis, as shown in
table3, the demographic variables, gender, age, income and education account for approximately
12% of the variance in retirement planning scores.
Each of these, excepting income, makes an independent contribution to understanding variance in

retirement planning activity. When adding the psychosocial predictors, psychological health, work
centrality and mastery to the model, the full set of predictors account for an additional 3% of variance
in retirement planning.
However, this variance comes from the effect of mastery, as work centrality and psychological health
do not account for variance in retirement planning activities, independent of the other variables in the
model. Hypothesis 1 is therefore partially supported.
Increasing age, education and mastery are all associated with more retirement planning behaviour;
however income, psychological health and work centrality were not predictors of planning.
27
Table 2
Hierarchical multiple regression analyses predicting planning antecedents and consequences from
demographic, psychosocial, planning and resource variables.
Outcome Measure
Antecedents Consequences
Confidence in Years to
Total Planning Total Resources
Preparation Retirement
2 2 2 2
Step 1 ∆R =.12** ∆R = .09** ∆R = .06** ∆R = .50**
Gender .22** .25** .08 -.14**
Age .20** .07 .21** -.71**
Income .12 .18** .06 -.13**
Education .21** .11 .11 .02
2 2 2 2
Step 2 ∆R = .03* ∆R = .21** ∆R = .13** ∆R = .02*
Gender .20** .18** .03 -.15**
Age .17** -.04 .13* .71**
Income .09 .13** .03 -.19**
Education .19** .10 .11 .02
WorkCentrality .05 .14** .02 .13**
GHQ -.07 .16** .20** -.02
Mastery .19** .32** .23** .00
2 2
Step 3 - - ∆R = .04** ∆R = .00
Gender - - -.01 -.14**
Age - - .14* -.71**
Income - - -.01 -.13**
Education - - .08 .03
WorkCentrality - - -.02 .14**
GHQ - - .16* -.01
Mastery - - .15* .02
Resources - - .25** -.06
2 2
Step 4 - - ∆R = .04** ∆R = .01*
Gender - - -.04 -.12*
Age - - .09 -.69**
Income - - -.02 -.13**
Education - - .04 .04
WorkCentrality - - -.02 .14**
GHQ - - .19** -.03
Mastery - - .13 .04
Resources - - .17* -.02
Planning - - .24** -.12*
2 2 2 2 2
Total R R = .16** R = .31** R = .28** R = .53**
** p < .01 * p < .05
Predictors of Resources
As shown in table 1, the correlation between gender and total resources is significant and positive,
such that females have more resources than males. Increased income, psychological health and
mastery are also positively correlated with total level of resources. Total resource level is correlated
with education, such that the higher the level of education, the more resources available to an
individual. Interestingly, age is not correlated with total resources (r = .04, p > 0.05).
When entering the predictors into a hierarchical regression, gender, income and education are
associated with resources and account for 9% of the variance in resource scores (see table 3 step 1).
When introducing the psychosocial predictors in step 2 of the model, work centrality, health and
mastery all account for variance above that accounted for by the demographic predictors. Taken
together, the six predictors in the model account for 31% of the variance. As predicted in Hypothesis
2, increased income, psychological health, mastery and work centrality are all positively predictive of
total resources available to an individual. However, the hypothesis suggested that there would be no
effect of gender, and yet we found that gender made a significant contribution, such that females have
more resources than males. As expected, age did not predict resource levels independently of the
other variables. Thus, Hypothesis 2 is partially supported.
28
Role of Planning and Resources Predicting Outcomes

The results of the analyses above, suggest that while the dependent variables of planning and
resources share some antecedents, others are unique. The fourth hypotheses related to the role that
planning and resources would play in predicting confidence in retirement preparation, planned age of
retirement and intention to participate in bridge employment. Table 1 has the mean, standard
deviation and correlations between planning, resources and the three outcome measures. Looking at
table 1, it is clear that there is significant overlap between the planning and resource scales (r = .40, p
< 0.01) confirming Hypothesis 3a.
Table 2 shows the results of a multiple regression analysis predicting confidence in planning and
years to retirement from the full set of demographic (step 1) and psychosocial predictors (step 2) that
were shown above to predict retirement planning and resources. Step three of the model adds
resources and the final model (step 4) includes retirement planning. Resources were entered in a
separate, earlier model than retirement planning, because resources are theorised to be a result of
processes which commence earlier than conscious retirement planning (Wang & Shultz, 2010). The
results of the previous analysis support resources as being relatively independent of age, as it was
shown that age predicts retirement planning but not resources. However, given the scarcity of
research comparing resources and retirement planning it is acknowledged that planning could be
entered in the same or earlier model than resources. Conducting this analysis would not change the
conclusions presented below.
Looking first at confidence in retirement preparation, most respondents consider that they will be
“moderately prepared” for their retirement (M = 2.92, SD = .98). Hypothesis 3b suggested that both
planning and resources would make significant, independent contributions to predicting confidence in
preparation. From table 1, both planning and total resources are significant correlated with confidence
in planning (r = .37, p < 0.01 and r = .35, p < .01 respectively). Demographic variables account for
nearly 6% of the variance in level of confidence, although this effect is entirely driven by age, such
that older individuals feel more prepared for retirement than younger individuals (β = .21, p < .01). In
step 2, it can be seen that psychological health and mastery both account for variance in confidence
above the demographic variables, such that health (β = .95, p < .01) and mastery (β = .23, p <.01)
predict higher confidence. When resources are entered in the third step, they account for 4% of
variance above the predictors already in the model (β = .25, p < .01). Finally retirement planning was
entered and accounts for an additional 4% of variance (β = .24, p < .01). In the final stage, all
predictors are accounting for 28% of variance in confidence, and in the final model, both resources
and planning are significant predictors of retirement confidence. This suggests, as predicted in
Hypothesis 3b, both retirement planning and resource accumulation independently help an individual
feel prepared for retirement.
Considering years to retirement, it was hypothesised that planning would predict proximity to
retirement, but resources would not (Hypothesis 3c). Looking at the regression analysis in table 2 step
1, it is clear that time to retirement is negatively predicted by current age (β = -.71, p <.01). Females
are more likely to be planning earlier retirements (β = -.14), as are individuals with higher incomes (β
= -.13, p < .01). Together, the demographic predictors account for just over 50% of the variance in
predicted age of retirement. Psychosocial predictors in step 2 account for a further 1.6% of the
variance, which is due to the effect of work centrality (β = .13, p < .01). This suggests that individuals
who have a strong worker identity intend to retire later than those who place less value on their work
role, when controlling for demographic effects. Retirement resources, entered in step 3, do not
predict time to retirement above the demographic and psychosocial predictors (β = -.06, p > .05),
however entering planning in the final model, accounts for an additional 1.1% of variance. Planning
for retirement negatively predicts years to retirement (β = -.12, p < .05), suggesting that people who
have done more conscious and deliberate planning are expecting to retire sooner than those who
have not. These results support Hypothesis 3c, that planning for retirement predicts a sooner
retirement but resources do not.
Table 1 shows that most respondents (70%) intend to take some form of bridge employment before
full retirement. Given the question regarding bridge employment was dichotomous, a logistic
regression using intention to take bridge employment as the dependent variable, and the full set of
demographic, psychosocial, resources and planning as predictors entered in four steps as described
above was conducted. The results of this analysis can be seen in table 3.
29
Table 3
Logistic regression with demographic, psychosocial, resources and planning predicting intention to
engage in bridge employment
2
Step χ B SE OR 95% CI for OR
Step 1 8.49
Gender -02 .27 .96 .59, 1.74
Age .04* .02 1.04 1.00, 1.08
Income .02 .03 1.02 .97, 1.06
Education .18* .09 1.20 1.00, 1.44
Step 2 11.77*
Gender .14 .28 1.15 .66, 2.01
Age .03 .02 1.04 .99, 1.08
Income .01 .03 1.01 .96, 1.06
Education .17 .09 1.18 .98, 1.42
WorkCentral. .12* .05 1.13 1.03, 1.24
GHQ -.04 .04 .97 .90, 1.04
Mastery .10 .05 1.10 .99, 1.22
Step 3 4.67*
Gender .28 .30 1.33 .74, 2.37
Age .04 .02 1.04 .99, 1.08
Income .00 .03 1.00 .95, 1.05
Education .14 .09 1.15 .96, 1.39
WorkCentral. .10* .05 1.11 1.01, 1.22
GHQ -.05 .04 .95 .87, 1.02
Mastery .06 .05 1.06 .96, 1.18
Resources .02* .01 1.02 1.00, 1.04
Step 4 .37
Gender .31 .30 1.36 .76, 2.43
Age .04 .02 1.04 .99, 1.08
Income .00 .03 1.00 .95, 1.05
Education .14 .10 1.14 .95, 1.38
WorkCentral. .10* .05 1.11 1.01, 1.22
GHQ -.05 .04 .96 .89, 1.03
Mastery .06 .05 1.06 .96, 1,18
Resources .02* .01 1.02 1.00, 1.04
Planning .01 .02 1.01 .98, 1.04
2
Total χ 25.30*
Bridge Employment coded 0 – I will not engage in bridge employment; 1 = I will engage in bridge
employment** p < .01 * p < .05
Demographic predictors, were entered in step 1 and these predictors did not significantly predict
2
intention to take bridge employment (Model χ (4, N = 311) = 8.49, p > .05; Cox and Snell pseudo
2 2
R =.03; Nagelkerke R =.04). The psychosocial predictors entered in step 2, improved the model fit
2 2 2
(Model χ (7, N = 311) = 20.26, p < .01; Cox and Snell pseudo R = .07; Nagelkerke R = .10).
Specifically, work centrality is a significant predictor of intention to take bridge employment (B = .12, p
< 0.05, OR = 1.13). This suggests that employees with a one-unit high rating of work centrality were
1.13 times more likely to indicate their intention to participate in bridge employment. Psychological
health and mastery are not predictive of intention to engage in bridge employment. In the third block,
2
resources were included as a predictor. Resources improve the model fit (Model χ (8, N = 311) =
2 2
24.93, p < .01; Cox and Snell pseudo R = .09; Nagelkerke R = .12), and is a significant predictor of
intention to take bridge employment (B = .02, p < 0.05, OR = 1.02). This suggests that individuals
with a one-unit increase in resources were 1.02 times more likely to engage in bridge employment.
Including planning in the fourth model did not significantly improve the model fit, and planning was not
a predictor of intention to undertake bridge employment independent of the other variables. This data
therefore rejects hypothesis 3d, and suggests that resources are predictive of intention to engage in
bridge employment but planning is not.
30
8. DISCUSSION
Main Findings
This research was aimed at understanding the preretirement preparation phase of retirement well-
being. It investigated whether the resource theory of retirement adjustment could be applied to
retirement preparation and if accumulation of resources is distinguishable from retirement planning as
preparatory behaviour. The RRI was used to measure resources, and was shown to be a valid and
reliable instrument to measure resources in an employee sample. Overall, this study compared
retirement planning and resources with respect to their antecedents and consequences and found
that accumulation of resources can be considered preparatory behaviour distinct from planning.
Interventions focusing on planning alone may not achieve the end goals required. Resource
accumulation must also be investigated as an important enabler.
Antecedents of planning and resources.

Turning to specific hypotheses, there was partial support for Hypotheses 2 and 3. Consistent with
past research, older individuals with more education and a sense of mastery were shown to have
invested more energy in planning (e.g. Petkoska & Earl, 2009). Contrary to expectations, income,
psychological health and work centrality were not shown to be related to retirement planning.
Considering the demographic predictors of resources, consistent with resource theory, age was not
related to total level of resources. Also consistent with Hypothesis 3, income, work centrality, health
and mastery were positive predictors of resources.
Comparing planning and resources with respect to antecedents, it is clear that they can be
differentiated by both demographic influences and psychosocial influences. Regarding demographic
influences, age and education predict planning activities, while income predicts resources. Only
gender is a common influence on both planning and resources. However, no studies have shown that
females are planning more than males using a general measure of planning so this finding is novel
and bears further investigation. Interestingly, females were also shown to have accumulated more
resources than males. Investigating the motivations of women may provide useful insights that could
be shared with men to encourage greater participation in planning and resource accumulation.
Importantly, individuals with higher income are likely to perceive higher adequacy of financial
resources for retirement (Stoller & Stoller, 2003) although income was not an important driver of
planning. Furthermore, resource theories do not predict that resources are related to age, which is
supported by the results.
Turning to psychosocial predictors, only mastery was shown to predict planning but work centrality,
psychological health and mastery were all predictors of resources. Our finding regarding mastery is
significant at a policy level. Clearly herding people into workshops to improve planning will have little
effect if people do not truly believe they have the power to influence outcomes. For example I may
recognise that greater wealth will be accumulated if I re-negotiate my mortgage with my bank
manager but I do not believe that I am capable of such a conversation, so I do nothing. Unlike
retirement planning, all psychosocial variables predict resources. The current findings suggest that
individuals who have a strong worker identity have more resources useful to retirement than those
who have a weaker work role identity but that these individuals are not planning for retirement. It may
be that a strong work identity and commitment to keep working results in the incidental accumulation
of resources (e.g. wealth) but the assumption is that they will never retire.
Consequences of planning and resources.

This study compared three established outcomes of retirement planning, and considered the
incremental contribution of retirement resources. Hypothesis 4b suggested that both planning and
resources would independently predict confidence in retirement preparation (Taylor‐Carter et al.,
1997), and this study supports this. However, this study extended this finding, and found that
resources also predict confidence in preparation, independent of planning. In fact, both planning and
resources account for similar levels of variance in confidence when controlling for demographic and
psychosocial effects.
Hypothesis 4c was also supported as planning for retirement was, above the effects of demographic
and psychosocial variables, a negative predictor of time to retirement but resources were not a
predictor of proximity to retirement. This result, along with the finding that resources are not predicted
by age, suggests that resources are relatively independent of time. This supports the view that
31
accumulation of resources, unlike planning, is not related to life stages, as continuity theory (Atchley,
1999) or role theory (Moen, 1996) would suggest, but are affected by personal actions and by
changes in the environment. It may be that the inclination for resource accumulation exists throughout
the life span, and those people who earlier in life ignored the accumulation of resources continue to
do so. The implications here are clear, encourage resource accumulation early as there is no
evidence of a resource accumulation “gene” activated by age.
Hypothesis 4d was not supported, as it was shown that retirement planning was not a predictor of
intention to engage in bridge employment when controlling for demographic, psychosocial and
resource variables. Instead, it was shown that resources and work centrality increased the odds of
intending to participate in bridge employment. The current results favour the findings of Warburton,
Le Brocque and Rosenman (1998) who noted that volunteerism in older Australians was related to the
availability of social and personal resources. One alternative explanation could be in the
operationalization of bridge employment to include both paid and voluntary employment in the current
study, in previous research only paid employment was considered (e.g. Wang et al., 2008). Work
centrality has been previously shown to predict bridge employment, and is assumed to work through
the continuation of the worker role (Griffin & Hesketh, 2008; Templer, Armstrong-Stassen & Cattaneo,
2010).
Theoretical and Practical Implications

The current study makes several important contributions to the theory and practice of retirement
preparation. Primarily, this study has shown that the resource model can be applied to the
preretirement phase of retirement planning to understand the precursors of preparation and to predict
relevant outcomes. Furthermore, this study has shown that retirement planning can be successfully
differentiated from retirement resources in an employee sample, using predictors and outcomes of
these preparatory behaviours. Practically, this research has shown that the RRI is a valid, cost-
effective way of measuring resources that are useful for retirement well-being in an employee sample.
This tool was designed to provide individuals with feedback to assist their preparation for retirement,
and guide an intervention to improve retirement preparation (Leung & Earl, 2012). The current
research supports these goals for the RRI, as it has shown that the factor structure in an employee
sample matches that of the retirement sample on which it was developed.
Extending the concept of retirement preparation.

The resource perspective has been shown to successfully model the retirement transition, and the
current study extends resource theory into the preparatory phase of retirement. This has important
implications for theories of retirement preparation, as well as for development of interventions aimed
at preparation for retirement. Models of behaviour change, along with the current results, show that
resources are useful in preparing for major changes in life. For example, the dynamic equilibrium
model of resources (Gorgievski-Duijvesteijn et al., 2005) is a model disentangling the cause and effect
relationships between material resources and well-being. Through this model, it is clear that
individuals have stable trait-like baseline levels of resources, which can be increased or decreased by
environmental stressors. Individuals are innately able to use their cognitive and motivational
resources as well as to apply deliberative planning and actions to protect their resources and maintain
stable levels. This model is one example of how both innate resources and deliberative planning can
be used to counter environmental stressors. Applied to retirement preparation, individuals could be
coached to understand their resources, and provided strategies, including planning, to maintain well-
being and cope with the transition to retirement.
As outlined earlier, the transtheoretical model has also been shown to be applicable to financial
planning and savings interventions (Gutter, Hayhoe, & Wang, 2007; Shockey & Seiling, 2004; Xiao et
al., 2004). This type of behaviour is distinct from that which is traditionally defined as planning, due to
the unconscious or non-deliberate nature of the preparation.Together, the dynamic equilibrium and
transtheoretical models along with the current results, suggest that interventions designed to improve
retirement preparation should target both planning and resource accumulation to assist holistic
retirement preparation. Future research should also investigate how resources and planning interact
to maintain well-being as individuals move into retirement.
Limitations and Future Directions
One of the most obvious limitations of the current study is the generalizability of the findings.
Although a large, national sample was secured, all participants were recruited and paid for
participation through an online panel operator. Respondents were shown to be largely similar to the
32
national sample with respect to education, income, industry, and type of employment. However, use
of online panels has been associated with non-representative data due to panel conditioning from
ongoing survey participation (Goritz, 2007). However, other research has found that online panel
based research is associated with lower response rates than traditional mailed surveys, while
simultaneously producing higher data quality due to fewer item non-response (Shin, Johnson, & Rao,
2012). Replication of this data with participants sourced using traditional sampling methods would
determine the extent of any differences.
Like any cross-sectional study, the results presented here provide only a static picture of the
retirement planning process. Future studies that use a longitudinal design are needed to map the
dynamic nature of the relationships between individual and psychosocial variables and their impact
upon retirement planning and retirement resources.
9. CONCLUSION
Accumulation of resources required for retirement has been shown to be evidence of preparatory
behaviour distinct from retirement planning. This research has shown that planning and resources
are affected by similar, but distinct sets of demographic and psychosocial predictors, and that
planning and resources independently predict outcomes relevant to the retirement transition and well-
being. Policies advocating change by the OECD and others may be better to look beyond planning to
resource accumulation and mastery in promoting self-sufficiency and workforce longevity. The current
study highlights the importance of adopting a holistic view of retirement preparation in order to assist
older individuals prepare for retirement and to ensure that they have access to appropriate resources
in their retirement.
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AUTHOR PROFILE:
Please address all correspondence to:
DR JOANNE EARL
School of Psychology
University of New South Wales
Sydney, NSW 2052
Australia
Telephone: (61-2) 9385-3017

Fax: (61-2) 9385-1193
Email: j.earl@unsw.edu.au
36
A TEST OF MEDIATING EFFECT OF ORGANIZATIONAL COMMITMENT IN THE RELATIONSHIP

BETWEEN JOB SATISAFACTION NURSES TURNOVER INTENT
Harif Amali Rivai, Department of Management, Faculty of Economics, Andalas University, Indonesia
ABSTRACT
This study aims to test a model of nurses’ intention to leave from their current workplace. Precisely, it
addresses on the issue how do individual attitudes (i.e., job satisfaction and organizational
commitment) related to behavioural outcome (i.e., turnover) of employees. Current study argued that
nature of organisational commitment could not be explained by any one single dimension; but is more
fully explained by the multidimensional nature of commitment – affective, normative and continuance
commitment. The proposed theoretical model of the study considered job satisfaction as antecedent
of organizational commitment. Further, the three types of the commitment predicted as mediating
variable between job satisfaction and turnover intent. The model was estimated using structural
equation modeling with a sample of nurses drawn from several Indonesia private hospitals (N=428).
An examination of goodness-of-fit model provided strong support that the model fit well with the
sample. The findings noted that among three dimensions of commitment, affective commitment has
the most significant affect and directly influence on turnover intent, and job satisfaction has also direct
influence on turnover intent. Implications for human resources management and managers are also
discussed.
Keywords: job satisfaction, commitment, turnover intent.
1. INTRODUCTION
Organisational advancement is determined by employees’ knowledge, skill, and the capability of

human resources themselves. Most companies want to retain their employees, and attempt to
decrease employee turnover rate. A high level of turnover may lead to negative consequences on
either employees or organisations, such as lower company productivity, lower organisational
performance, and increased costs of human resource investment.
Increased employee turnover or intention to leave an organisation is likely to be stimulated by work-

related perceptions and attitudinal factors (i.e. job satisfaction and organisational commitment). Work-
related perceptions and attitudinal factors, such as job satisfaction and organisational commitment,
can be deemed to be contributory factors to the intention to leave an organisation . In essence, actual
employee turnover is generally provoked by individual withdrawal cognition, such as thoughts of
leaving or intention to quit.
There is considerable volume of research literature in relation to antecedents of turnover intention

(e.g., Samad 2006, Parry 2008, Parẻ & Tremblay 2007, Cotton & Tuttle 1986, Clugston 2000,
Mobley, Griffeth, Hand, & Meglino 1979, Mowday, Porter, & Steers 1982). However, the research
about nurses’ turnover which considered different effect of each dimensions of commitment in
Indonesia context is still rare. As noted by Meyer et al. (2000) that work-related commitments can be
identified as multiple dimensions of commitment that may have the compliment or conflict to each
other. Therefore, the relationships between various targets of multiple dimension of commitment are
still arguable. The current study attempts to explain how employees come to produce behavioural
intention (i.e., turnover intent) and relate this to job satisfaction, and multiple dimensions of
commitment (affective commitment, normative commitment, and continuance commitment).
Intention turnover as a behavioural outcome can be seen as result of psychological stages that guide
the individual to take a course of action. The psychological stages may be contingent on work-related
perceptions and experiences in the work setting. Understanding how employees perceive the
characteristics of the work setting seems to be important. Moreover, employees tend to look more
broadly at the organisational environment that leads to motivational forces to behave. Individual
behavioural outcomes may emerge as a consequence of individual assessments of the prevailing
system in the organisational environment. This would indicate that relevant research will be
concerned with how job satisfaction, and organisational commitment influence the intention to leave.
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The current study attempts to explain how employees (i.e., nurses) come to produce behavioral
outcomes (turnover intention) and relate this to individual perceptions and experiences in the
workplace. At the core of the argument is that the behavioral outcomes have emerged as result of
psychological stages that guide the individual to take a course of action. The psychological stages
may be contingent on work-related perceptions and attitudes in the work setting which can be
indicated by job satisfaction and commitment. Their relationships are illustrated in Figure 1.
2. REVIEW OF THE LITERATURE
2.1. Organizational Commitment And Turnover Intent

Meyer and Allen’s three-component model of commitment has emerged as the predominant
conceptualization of organizational commitment which consists of affective, normative, and
continuance commitment (Clugston 2000). Among these components, affective commitment is more
widely studied in organizational research. Affective commitment is defined as an emotional
attachment to an organization, which includes support for organizational objectives and organizational
values (Meyer & Allen 1984). Continuance commitment refers to one’s perceived investment in the
organization (both psychological and economic), thus that it is associated with the perceived exiting
an organization. Normative commitment reflects a feeling of obligation to continue employment
(Meyer & Allen 1991). Allen and Meyer (1990) said ‘employees with strong affective commitment do
so because they want to, those with strong continuance commitment because they need to, and those
with strong normative commitment because they feel ought to do so’ (p. 3).
Affective commitment has also been found to have a greater influence on behavioral intention than
continuance and normative commitment (Somers, M & Birnbaum 2000). According Hartmann and
Bambacas (2000), work experience and personal characteristics may contribute to affect affective
commitment. Consequently, it appeared that shared values engender conformity between the
individual and organization, which eventually creates feelings of belonging, a sense of attachment and
willingness to work toward the organization’s mission. Therefore, affective commitment is regarded as
an important factor that guides suitable behavior directed toward maintaining membership status
within the organization.
The employee-organization link may also be affected by individual continuance commitment. This
type of commitment reflects ‘member’s dedication to the survival of the organization’ due to her or his
personal sacrifices and investments which makes it costly to leave the organization (Kanter 1968; as
cited in Mowday, Porter & Steers 1982, p. 23). However, an employee who demonstrates this type of
commitment, does not intend to stay with the organization due to emotional attachment, but because
the costs of leaving the organization are simply too high. Leaving an organization could mean that the
employee would feel lost or will waste the time, money or effort that have been invested (Meyer &
Allen 1997). Thus, economic reasons can be seen as a binding mechanism to the organization, and
individual’s decision to stay can be because of his perception of investment he has made in the
organization and the potential loss if he quits. This idea is parallel to Becker’s (1960) notion, who
proposed the idea of ‘side-bets’ as influences that produce a willingness to remain attached to the
object of commitment. Individuals’ rewards and benefits are elements in an exchange process in an
organization. When side-bets are applied to an organization (e.g. pension plans or benefits), the
individuals are aware the possibility of losing those investments. Thus, they may be reluctant to lose
their investments and are more likely to stay longer in the organization (Stevens, Beyer & True 1978).
Somers (1995) and Hackett, Bycio, Hausdorf (1994) have demonstrated the dominant role of affective
and normative commitment in explaining turnover behavior. The normative commitment will be
influenced by an individual’s experiences based on his familial/cultural socialization before joining an
organization (Wiener 1982). After entry into an organization, normative commitment will be influenced
by organizational socialization. In relation to familial/cultural socialization, an employee would have
strong normative commitment to the organization if significant others (e.g. parents) have been long-
term employees of the same organization and encourage loyalty (Allen & Meyer 1990). Normative
commitment is emphasized in an individual who consider reducing their level of effort or even choose
to quit the organization, once they believe they have repaid their debt owing rewards they have
received. Therefore, the reciprocity motive (e.g. social exchange) can be a characteristic of normative
commitment which suggests that individuals who receive benefits from an organization are required to
repay them in some way (McDonald & Makin 1999).
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In terms of a sense of psychological belonging, Meyer et al. (2000) noted that neither continuance nor
normative commitment is as strong as affective commitment, because the concerns of each of these
commitments have a different focus. All the three components of commitment show a link between
the employee and organization which decrease the likelihood of turnover, but the nature of these links
may be different. Nevertheless, the impact of all three commitments is not mutually exclusive (Meyer,
Irving & Allen 1998). For example, although the desire to remain with an organization (affective
commitment) is not the same as the feeling of obligation to do so (normative commitment), both
conditions can co-occur (Allen & Meyer 1990), leading to an intention to remain with an organization.
Similarly, continuance commitment, as a consequence of the high cost of leaving, may reduce the
intention to leave. Therefore the study proposed the hypotheses:
H1a: The higher the level of employees’ affective commitment, the lower the employees’ intention to
leave their current organization
H1b: The higher the level of employees’ normative commitment, the lower the employees’ intention to
leave current organization
H1c: The higher the level of employees’ continuance commitment, the lower the employees’ intention
to leave their current organization
2.2. The effect of job satisfaction on organizational commitment

The proposition that job satisfaction is an antecedent of organizational commitment, has been
demonstrated in the previous research primarily research on the turnover model (e.g., Bluedorn 1982;
Price & Mueller 1981). The major reason for this relationship is that job satisfaction is a more
immediate affective response to one’s work which can develop once a person enters an organization.
DeCotiis and Summers (1987) have expressed a similar view, that job satisfaction as determinant of
commitment, satisfaction is a more immediate consequence of one’s perceptions of that
correspondence. Thus, commitment can reduce the dysfunctional effect of short-term idiosyncratic
behavior on the part of the organization towards an individual employee (DeCotiis & Summers 1987).
For example, an employee who has a high affective commitment is unlikely to show a negative
reaction in regard to a pay rise which they perceive to be inadequate.
Meyer and Allen (1987) have exemplified employee behavior as being affected by three component of
commitments (affective, normative and continuance commitment). Despite the fact that those kinds of
commitment reflect individual attachment to an organization, the magnitude of each level of
commitment can be different. Affective commitment refers to emotional attachment to, identification
with and involvement in the organization. Continuance commitment is related to the perceived cost
associated with leaving the organization, and normative commitment reflects a perceived obligation to
remain in the organization (Meyer & Allen 1984).
An employee with weak affective commitment tends to experience stress and feels displeasure when
organizational changes take place (Begley & Czajka 1993). It can be argued that individuals with
strong affective commitment appear to be buffer against the impact of stress and displeasure. If the
employee feels unhappy because of changing conditions in the organization, the workers with strong
affective commitment are able to strengthen their attitude toward organizational outcomes (e.g. a
reduced intention to quit).
Employees’ satisfaction is also likely to be linked with the fulfillment of personal needs. Affective
commitment may develop on the basis of psychologically rewarding experiences. The development of
affective commitment in an organization might be influenced by the extent that the organization is able
to satisfy employees’ needs, meet their expectations, and allow them to achieve their goals (Meyer,
Allen & Smith 1993). The meta analysis of Mathieu and Zajac (1990) found that affective commitment
is likely to be low among employees who are unsure about what is expected of them or who are
expected to behave in ways that seem incompatible with organizations’ values. Experiences that
employees find particularly satisfying are likely to increase the affective commitment felt toward the
organization; those experiences that are not satisfying might reduce the feeling of attachment.
Job satisfaction can be seen as conformity between two perceptions which can be explained as the
‘balance concept’, between the degree of similarity or difference an individual perceives between what
their work should be and what it actually is (Igalens & Roussel 1999). Positive work attitudes that
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reflect job satisfaction may also develop from initial entry to an organization, i.e. new workers would
be satisfied when their expectations of the job and/or organization are confirmed by their experiences.
Investigations of relationships among normative commitment, continuance commitment, and job
satisfaction have received less attention, especially in non-western literature. Meyer, Allen and Smith
(1993) argued that this is because adequate measures of continuance commitment and normative
commitment are fairly rare in the recent literature on commitment. In terms of normative commitment,
positive experiences such as reflection of job satisfaction will influence feelings of obligation which
exist as a result of early socialization (i.e. from family and culture). The major focus of normative
commitment is the belief that it is appropriateness to be loyal to one’s organization, particularly the
organization to which the employee belongs (Meyer, Allen & Sulsky 1999). Individual’s feeling of
obligation to remain with the organization can be the result of a particular kind of investment that the
organization makes in the employee, which should be reciprocated by employees (Meyer & Allen
1991), for instance, organization-sponsored tuition payments made on behalf of employees. Yousef
(2002) revealed that job satisfaction directly and positively influences affective commitment and
normative commitment. Therefore, happy workers are likely to be more willing to remain in the
organization, either because they want to do so, or because they feel they ought to do so.
The effect of job satisfaction on continuance commitment is concerned with the economic exchange
process (McDonald & Makin 1999). The level of continuance commitment is based on the recognition
of the cost associated with leaving the organization. Continuance commitment can be related to
satisfaction when economic reasons (i.e. satisfaction of payment) individual expectations are unmet.
The rewards related to current job (i.e. pay) may be associated with the employees’ commitment,
which influences their intention to find another organization or job (Meyer & Allen 1997). In terms of
continuance commitment, employees view their investments as an input to exchange process
between themselves and their organization (Stevens, Beyer & True 1978). As described in equity
theory, the investment or job input (e.g. skill, abilities and training), might be the most important
component of job satisfaction (Adam 1965), that are likely to affect a feeling of satisfaction. In keeping
with continuance commitment, those inputs can be seen as the individual investment which is taken
into account when the employee intends to leave organization. Therefore, it can be argued that job
satisfaction is also likely to be associated with continuance commitment.
Clugston (2000) contended that the relationship between job satisfaction and intent to leave is
partially mediated by affective, normative and continuance commitment. That model described job
satisfaction as significantly associating with all three types of commitment and that all three types of
commitment mediate the relationship between job satisfaction and intent to leave. Further, the
findings noted that satisfaction also has a direct relationship with intent to leave. On the basis of the
existing literature, the research proposes that job satisfaction lead to all types of commitment, thus:
H2a: The higher the level of job satisfaction perceived by employees, the higher the level of
employees’ commitment to the organization, in terms of their affective commitment
H2b: The higher the level of job satisfaction perceived by employees, the higher the level of
employees’ commitment to the organization, in terms of their normative commitment
H2c: The higher the level of job satisfaction perceived by employees, the higher the level of
employees’ commitment to the organization, in terms of their continuance commitment
2.3. The effect job satisfaction on turnover intent

Turnover has been conceptualized in many studies as a psychological response, and it is believed
that turnover is an individual choice behavior. Presumably, dissatisfied employees react to poor
working conditions by more readily abandoning their current employment (Mobley 1979; Price &
Mueller 1986). According to Porter and Steers (1973), fulfilled expectations are the central
determinant of employees’ decisions about turnover. They contended that, although most employees
value pay, promotions, supervisory relations and peer-group interactions, individuals have distinctive
sets of expectation. Dissatisfaction will appear when the individual’s set of expectation is not found in
the organization; consequently the intention to leave the organization is likely to increase.
Price and Mueller (1981) found that the single most important reason for nurses’ turnover is job
dissatisfaction. They pointed out that there is an indirect effect between job dissatisfaction and
turnover behavior, through the formation of the intention to leave. Thus, job dissatisfaction has a
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direct effect on intention to leave. Testing of the relationship between job satisfaction and intention to
leave by including mediating effect of organizational commitment has also been conducted by
Clugston (2000). He found that job satisfaction has both direct and indirect effect on intention to leave.
Cotton and Tuttle (1986) noted that overall job satisfaction, satisfaction with work itself, pay
satisfaction, satisfaction with supervision and organizational commitment were negatively correlated
to turnover. Meta-analysis findings from Tett and Meyer (1993) demonstrated that satisfaction and
commitment each contribute independently to the prediction of intention, and that intention is
predicted more strongly by satisfaction than by commitment.
A study of the predictive relationship between job satisfaction and intent to leave using different
samples has been conducted by Schaubroeck, Cotton & Jennings (1989). Using analysis Structural
Equation Modeling, he found that job satisfaction has a significant and negative effect on employee’s
intent to leave among civilian federal government manufacturing and university maintenance workers.
The direct and negative impact of job satisfaction on employees’ intention to leave is also found by
Igbaria and Guimaraes (1993)and Netemeyer, Burton and Johston (1995).
Although there is some research that tests the causal effect between job satisfaction and turnover by
including organizational commitment variable as mediating variable, yet that mediating variable,
except for the Clugston’s study (2000), is not subsumed into affective, normative, and continuance
commitment. Thus, simultaneous examination of the direct effect of job satisfaction on turnover intent,
as conducted in the current research, is predicted to reduce the spurious effect of job satisfaction and
commitment on turnover intent by including these three types of commitment as mediating variables.
Therefore, the study advances the following hypothesis:
H3: The job satisfaction perceived by employees will be negatively directly related to the employees’
intention to leave the organization.
3. METHOD
Sample and Data Collection

Data were obtained from full-time nurses of private hospitals in Sumatera Island, Indonesia. There
were seven hospitals to give consent to take part in this study. A survey packet consisted of the
demographic characteristics of the respondents and multiple-item (positively and negatively worded)
survey instruments. A mail survey with non-probability sampling method was administrated to all four
hundred and fifty nurses across the hospitals. The questionnaires were sent along with a cover letter
explaining the importance of the research. They were addressed to personnel managers of the
selected hospitals to be distributed to the respondents by supporting Chief Nurse Executive.
Participation was voluntary and responses were treated with confidentiality. Data were collected over
a 3-month period. Each respondent received a personalize envelope, and completed questionnaires
were returned sealed in envelops provided by the researcher to a specially marked box in hospital’s
human resource department. The result of survey produced a usable response rate of 85.11 percent
(N=428).
Measurement of variables
Job satisfaction scale was measured by four items scale which was developed by Brayfield and Rothe
(1951). These items was intended to measure a global index of satisfaction of the worker in the
workplace. The sample items are ‘I am contented with my job itself’ and ‘I like my current job’, with
the anchors very dissatisfied (1) and very satisfied (5). Affective commitment, normative
commitment, and continuance commitment scale was adapted from Allen and Meyer (1990) in which
the respective scale consist of eight items. The sample items of each component of commitment are:
(a) ‘I would be very happy to spend the rest of my career with this hospital’, (b) ‘I think that people
these days move from hospital to hospital too often’ (reverse coded), (c) ‘I am not afraid what might
happen if I quit my job without having another one lined up’ (reverse coded), respectively, with
anchors strongly disagree (1) and strongly agree (5). Intentions turnover was measured by a 3-item
scale that contained information about individual’s intention to look for another job and their possibility
of leaving the current organization. The items were adapted from Lum et al. (1998) who also studied
turnover intent in the hospital work setting. A sample item such as “In the last few months have you
ever thought seriously about looking for a nursing job at another hospital”.
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Analysis
Data analysis was conducted in two stages. Firstly, checking for data entry includes reliability of
variables, identification outliers and normality of the data. Unidimensionality of measures was
assessed by Principal Component Analysis (PCA) Secondly, testing of a fit model was conducted by
using Structural Equation Modeling (SEM). AMOS computer program was utilized to run data from
questionnaires. ‘Goodness-of-fit’ model were assessed by three criteria: absolute fit measure,
incremental fit measure and parsimonious fit measure.
4. RESULTS
Demography of the Sample
The majority of the sample were female (86.4 percent) with a mean age of 29.3 years (ranging
between 20 to 69 years). Seventy-six per cent were under 30 years of age, 15.1 percent were
between 30 and 40 years of age, 6.8 percent were between 40 and 50 years of age, and the
remaining 2.1 percent were above 50 years of age. The education level reported was 29.9 percent at
the baccalaureate in nursing level, 67.2 percent at diploma level, and 3 percent at bachelor degree
nurses level. The majority of educational level of nurses was diploma level. The average number of
years as nurse in this sample was 8.3 years, which had the largest proportion (42.6 percent) ranging
between one to five years. Meanwhile, the average employment with the hospital was 6.6 years with
the largest proportion (57.4 percent) ranging between one to five years. Most of the nurses (57.4
percent) received low level income, that is less than IDR 2000,000.
Psychometric properties of the scales

We first examined the distribution of each row scores for outliers. An unusual pattern of response
across a range of variables, or extreme scores on a single variable, may confound a research result.
To address these potential concerns, outlier scores were trimmed as follows. Standardized scores
each scale which have a value greater than 3.29 (p< .001), indicates that the score is a potential
outlier (Manning & Munro 2004). Three cases were identified as outliers and they were not included in
subsequent analysis. A variation of the normal distribution can be assessed from the skewness of
distribution. All distribution of the scales was normally distributed.
Further, each measurement variable was tested using principal factor analysis (PCA) to assess
whether the items represent a single underlying construct. Unidimensionality of the construct can be
demonstrated by extracting a single component with an eigenvalue greater than 1. Furthermore, items
with factor loading are 0.50 or greater; they are considered practically significant (Hair et al. 1998).
Results of PCA asserted that not all measure indicated single underlying construct. The constructs of
affective commitment, normative commitment and continuance commitment show more than one
factor. Therefore several items of commitment were dropped from those instruments. The
psychometric properties of scales are reported in Table 1.
Constructs Number of Alpha Mean S.D

items
Job satisfaction 5 .69 3.61 .58
Affective commitment 5 .70 3.32 .65
Continuance commitment 6 .71 3.25 .61
Normative commitment 5 .70 3.29 .93
Turnover intent 3 .74 3.27 .94
Table 1. Psychometric Properties of the Scales
The reliability of composite variables is also presented in Table 1 using cronbach alpha. Hair et al.
(1998) suggested that usual lower limit for Cronbach alpha is .70, but in exploratory research this limit
may decrease to .60. The larger reliability of the construct will indicate the smaller the error. The
reliability implies high intercorrelation within the construct. Lack of high reliability is to a great extent
accounted for when using structural equation modeling (Bollen & Lennox 1991). The coefficient
(cronbach’s alpha) of of job satisfaction, turnover intent, affective commitment, continuance
commitment, normative commitment is found acceptable, with coefficients: .69, .74, .70, .71, and .70,
respectively. The estimated correlation matrix for the constructs can be seen in Table 1 and shows
that estimated correlation among constructs do not indicate multicollinearity problem of lack of
discriminant validity.
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Test of the Structural Model

The initial theoretical structural model was tested using SEM. To run the SEM analysis, AMOS 6
software was utilized. The chi-square of the theoretical model was 90.428 with 16 degree of freedom
(df), and significant at p<.001. Although SEM requires a nonsignificant chi-square, ‘statistical
nonsignificance does not assure the researcher that another model would not fit as well or better’
(Hair et al. 1998, p. 654) because chi-square values are sensitive on sample size. For this reason
2
others fit indices (χ /df ; GFI ; RMSEA ;AGFI ; TLI ; NFI ; CFI), that may minimize the effect of sample
2
size, are utilized to assess the fit model. The fit model requires: χ /df ranging between 1 and 5; GFI,
AGFI, TLI, NFI, and CFI should be greater than .90; RMSEA less than .08 (Hair et al. 1998;
Tabachnick & Fidell 2001). The result of the structural equations test of the composite variables
2
indicated that the theoretical model did not achieve an acceptable fit to the data, (χ /df = 5.372; GFI =
.95; RMSEA = .11 ;AGFI = .87; TLI = .82; NFI = .89; CFI = .91).
Jöreskog (1993) pointed out that evaluation of the model and assessment of fit are not entirely
statistical matters. If the model is judged not to be good on substantive or statistical grounds, it should
be modified within a class of models suitable for the substantive problem. A review of the modification
indices identifies area of misfit in the model. Therefore, it can be concluded that some modification in
initial model is needed to improve the model. An acceptable level of indices as indicative of a good fit
model.The results of modification model (see Figure 2) indicate a substantially better fit than the
2
previous model (χ /df = 2.735; GFI = .98; RMSEA = .075 ;AGFI = .94; TLI = .93; NFI = .95; CFI =
.97).
Furthermore, to answer each hypothesis, the test statistic for parameter estimates is assessed by
critical ratio value (c.r) (Table 3). It represents the parameter estimate divided by its standard error.
Critical ratio values are larger than 1.96 indicating the path coefficient to be statistically significant
(Byrne 2001).
Affective
.34*
Commitment -.34**
.68**
.17*
Job Normative Turnover
.06 .15*a -.030
Satisfaction Commitment Intent
-.20**
Continuance
Commitment
Notes: *significant at p<.05, **significant at p<.01
Figure 1. The theoretical model relationships among satisfaction, commitment, and turnover intent
Correlations, means, and standard deviation for the composite variables are shown in Table 2. These
Correlations, means, and standard deviation for the composite variables are shown in Table 2. These
correlations all moderate in size, except the correlation between job satisfaction and normative
commitment (r=.699**, p<.05). As Hair et al. (1998) said that ‘the simplest and most obvious means of
identifying colinearity is an examination of the correlations (generally .90 and above) is the first
indication of substantial colinearity’ (p. 191).
Thus, there is no multicolinear effect of the composite variables. Job satisfaction significantly
corelates to affective, normative and continuance commitment and turnover intent (r = .34**;
.70**;.13*; -.19**, respectively). It can be argued that job satisfaction may have a significant
relationship between commitment and turnover intent.
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Variables 1 2 3 4 5
JS (1) 1.00
AC (2) .342(**) 1.00
CC (3) .133(*) .027 1.00
NC (4) .699(**) .196(**) .244(**) 1.00
TOI (5) -.194(**) -.371(**) -.027 -.038 1.00
** Correlation is significant at the 0.01 level (2-tailed). * Correlation is significant at the 0.05 level (2-
tailed).
Table 2. Correlation of the Variables
Hypothesis Path Standardize Critical Judgment

Regression Value
Weight (β) (t)
H1a ac------ toi -0.34** -6.35 Supported
H1b nc------ toi 0.17* 2.48 Not supported
H1c cc------ toi -0.03 -0.67 Not supported
H2a js-------ac 0.34** 6.67 Supported
H2b js------ nc 0.70** 17.95 Supported
H2c js------- cc 0.06 1.19 Not supported
H3 js------ toi -0.20** -2.69 Supported
**β coefficient is significant at level p< 0.05, *β coefficient is significant at level p< 0.001. ac = affective
commitment; nc = normative commitment; cc = continuance commitment; toi = turnover intent; js = job
satisfaction
Table 3. Standardize Regression Weight and Critical Value
Although the model has been tested to assess the overall fit of the model, individual tests of the
hypothesized relationship were also conducted. The critical t value (CR) used to assess the
significance of the relationship between the two paths is 1.96 (p< .05). A CR value above 1.96 means
the relationship of the causal model is significant. The summary results of the hypotheses testing are
shown in Table 3.
Traditionally, research focusing on the linkage between turnover intent and commitment was
concerned with a single-model commitment (global commitment). However, more recently, a
developing body of literature demonstrates an extension of the concept into three types of
commitment: affective, normative and continuance commitment. Although global commitment
demonstrated a significant role in explaining turnover intent, it is restricted to value and goal
congruence between individual and organization. However, individual attachment can not be
explained by the goal and value congruence alone, but must consider desire, need and obligation of
an individual to maintain membership status in an organization (Meyer & Allen 1991). The concept of
organizational commitment is highly complex. The empirical evidence of this research contribute by
showing those types of commitment have different effects on turnover intent. This should be
considered in future research.
5. DISCUSSION
The results of the hypotheses testing showed that affective commitment is a strong predictor of and
negatively associated with turnover intent, as hypothesized. The results reflect that as employees
perceives a higher level of affective commitment; they are more likely to have a lower level of intention
to leave the organization. This result is consistent with the previous research (Allen & Meyer 1990;
Meyer & Allen 1991; O'Reilly & Chatman 1986). Individuals’ intentions to remain with an organization
might increase parallel with the escalation of their emotional attachment. This kind of attachment
implies an individual’s desire to continue the relationship with an organization which develops as a
consequence of the propensity to establish a rewarding relationship with that organization
(identification) and/or the compatibility of the goals and values held by the individual and the
organization (internalization) (Meyer & Allen 1991). Therefore, Hypothesis 1a suggested that
employees with high emotional attachment to the organization should be able to stay longer those
with low emotional attachment.
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The relevant part of the model indicates that affective commitment has significant impact on turnover
intent. A willingness to maintain membership status in an organization may be due to employees
feeling a congenial organizational climate. In other words, value and goal conformity between
individual and organization will reduce employee intention to leave their current organization.
Alternatively, it can lessen the attractiveness of other organizations. O’Reilly and Chatman (1986)
note that affective commitment, as a reflection of value conformity, can maintain individuals’ positive
behaviors, for instance, reduce the intention to leave and also create feelings of pride towards the
desired affiliation with the organization.
The pattern of mean of each type of commitment in the table of correlation revealed that statistical
comparison among the three forms of commitment measured indicated that employees in the
organization studied had means slightly above the scale mid-point, which the highest value was
shown in response to affective commitment. The most interesting bivariate correlation results of
affective commitment negatively related to turnover intent (r= -.37**). Interestingly, normative and
continuance commitment did not significantly correlate with turnover intent. In summary, amongst the
three components of commitment, affective commitment is the highest and significantly correlates to
turnover intent.
With reference to the model, the results from the path analysis showed an unexpected finding (H1b),
in which there is a positive, significant relationship between normative commitment and turnover
intent. In other words, even if employees possess a fairly good normative commitment, they are still
more likely to leave the organization. Normative commitment refers to a sense of duty, obligation, or
motivation to work in organization. A sense of duty and obligation to remain with an organization
develop from familial/cultural and organizational socialization, and pressure of significant other (e.g.
parent) who encourages loyalty to the employer (Allen & Meyer 1990). A contributory factor to this
commitment is that the particular kind of organizational investment, which requires employees to
reward the organization, may increase the normative commitment. In the case studied, for instance, if
an organization sponsors tuition payments for nurse to improve their education level (e.g. training for
a special skill), or the hiring policy allows recruitment by finding favour with someone, normative
commitment could be increased as may be required to reciprocate by staying longer, due to
indebtedness.
One possible explanation is that the current findings of this study may be confounded by the
combination in the sample, of permanent workers and contractual workers. Though they were equally
full-time workers, the dissimilarity of membership status may produce different effects on attitudes and
behaviors (McDonald & Makin 1999), as the contractual workers have a time limit in terms of their
membership status in the organization. Normative commitment may be seen as a transactional
obligation which is based on societal norms, to build the relationship between employee and
organization (McDonald & Makin 1999). Contractual workers’ contracts are likely to constrain their
intentions to reward their organization through sense of duty. Therefore, although the workers
possess a high normative commitment, they are likely to look for other organization where they can
exercise their sense of duty.
It may be surmised that a pragmatic position for contractual workers exists, in which they are
commonly viewed as being on the periphery of organizational activity. These workers have a greater
distance and less contact within the organization. Perhaps normative commitment existed before
individuals joined their current organization, but due to their status as contractual workers, their sense
of duty towards the organization could not be implemented. Consequently, although they have a high
normative commitment, but it does not warrant that they will stay longer in the organization.
The nature of individuals’ attachment to an organization is also indicated by continuance commitment.

The current study found a non-significant effect of continuance commitment on intention to leave
organization. This can be interpreted as meaning that the degree of individuals’ continuance
commitment would not influence their willingness to stay, whether or not they continue relationship
with current organization. Perhaps it means that while individuals with high continuance commitment
have general concerns with costs and benefits, their primary focus is the exchange relationship
between the organization and themselves. If the exchange relationship is not beneficial, they might
demonstrate other ways to balance the condition (e.g. being absent). This study failed to find a
significant relationship between continuance commitment and turnover intent could be caused by the
measurement of continuance commitment variables which need for a clear definition of individual
45
sacrifices, investment, and lack of job alternatives. Therefore, understanding statements in the survey
questionnaire may affect respondents in response to the questionnaire. Another possibility is the
nature of demography of the respondents which are related to value of individual investment.
Intuitively, the assessment of investment will be much more important if the nurses have a greater
tenure and a high level of education (e.g. bachelor degree), and will affect the magnitude of the
nurse’s investments in their career. The majority of respondents (76 percent) were young age nurses
with ranging from 20 to 30 years old. A large proportion (57.4 percent) of them has a fairly short
tenure, less than five years, and their level of education is predominantly at diploma level. In short, the
consideration of investment for this sample does not affect the nurses’ intention to look for other
hospitals, or clinics.
In conclusion, the impacts of commitment on employees’ behavioral intention (i.e. turnover intent) may
depend on the way individuals view their membership status within their organization. Therefore,
there is a possibility that its effect is not mutually exclusive (Meyer, Allen & Topolnytsky 1998). An
employee may deem the acceptance of and identification with organizational goals, involvement in an
organization, and emotional attachment as important factors rather than their individual investment.
These employees may neglect the calculative type of commitment. Thus, the affective commitment
appears to be the salient point of individuals’ attitudes toward an organization in terms of intention to
continue relationship with an organization.
Testing for hypothesis 2a and 2b demonstrated that job satisfaction has a positive, direct influence on
both affective (.34*; p < .05) and normative commitment (.68**; p < .01). Nevertheless, the influence of
job satisfaction on continuance commitment was found to be not significant. These results mean that
employees who feel satisfied with their job will remain ‘affectively committed’ and ‘normatively
committed’ to their organization, as long as the exchange relationship is satisfactory but that the
feeling of satisfaction would not affect their continuance commitment. The part of the model supports
previous research on the impact of job satisfaction on both affective and normative commitment
(Yousef 2002). An individual who experiences positive emotional states, or are happy with their job,
will show a stronger emotional attachment to their organization (Allen & Meyer 1990).
In addition to affective commitment, normative commitment is significantly influenced by job

satisfaction. The nature of normative commitment is a feeling of obligation or belief about one’s
responsibility to the organization which is influenced by organizational socialization (Wiener 1982).
Organizational socialization causes individuals believe to that the organization expects their loyalty.
The socialization process can develop prior to and following entry into the organization (Wiener 1982).
The majority of the nurses with short-term tenures, as in this study, are likely to have strong normative
commitment because they may have this kind of commitment before entering an organization.
Hypothesis 2c proposed that job satisfaction has a significant influence on continuance commitment.
However the model failed to support this hypothesis. This means that job satisfaction was not found to
be a significant predictor of continuance commitment. The result may be due to the function of the
questionnaire items, as the composite nature of the scale did not contain items about satisfaction with
pay. Clugston (2000) suggested that if items of job satisfaction depend on component satisfaction
with the pay, job satisfaction measure may be likely to have a positive influence on continuance
commitment. Additionally, it might be surmised that perception of investment are less meaningful for
the nurses who were respondents for this study, because they were younger in age and employed on
short term tenures. Mayer and Schoorman (1998) support the view that organization tenure,
education and age are positively correlated with continuance commitment.
Furthermore, the research model also highlights the relationship between job satisfaction and
turnover intent. As hypothesized, job satisfaction has a direct, negative influence on turnover intent
(β= -0.20**, p<0.01). The relationship proposed in the model is consistent with previous empirical
evidence (Igbaria & Guimaraes 1993; Mobley et al. 1979; Netemeyer, Burton & Johnston 1995; Price
& Mueller 1981; Price & Mueller 1986). That is to say, the higher the level of employees’ job
satisfaction, the lower their intention to leave the organization. Based on path analysis findings, job
satisfaction has an indirect effect in addition to its direct effect on turnover intention. The indirect effect
between job satisfaction and turnover intention is mediated by the three components of commitment.
The findings of this study affirm result of previous studies in this regard (Clugston 2000; Meyer &
Allen 1991; Williams & Hazer 1986).
46
6. CONCLUSION
An integrated model used in this study presents a picture of the impact of attitudes on individual
behavioral outcomes. The model pointed out that job satisfaction and affective commitment are
significant determinant of turnover intent in terms of the Indonesian context. One of the important
contributions of this study is to clarify the relative effects of various types of commitment on intention
to leave the organization. Unlike previous studies conducted in Western context which support all
three components of commitment as leading to turnover intent. Current study revealed that affective
commitment has the strongest affect on turnover intent, in which affective commitment directly affects
turnover intent, and mediates the relationship between job satisfaction and turnover intent.
Overall the model of this research strengthens the existing insight of researchers and managers that
turnover intent can be viewed as a psychological stage, which consists of the components of job
satisfaction and affective commitment. Feelings of satisfaction or dissatisfaction with a job are
influenced by of individuals’ perceptions in the workplace. Then, job satisfaction is a function of
affective commitment that eventually drives individual to behave positive (i.e. intention to leave).
The study provides several implications of understanding individual’s attitude and behavior in the work
setting. First, implication for the health care industry in Indonesia is that various type of commitment
demonstrated dissimilar effects on the intention to leave an organization, and the effect of affective
commitment has dominated these dimensions. The result advocates that it would be more
advantageous for an organization to build affective commitment in order to lessen intention to leave,
rather than develop either normative or continuance commitment. Second, the findings demonstrate
the importance of understanding the consequences of job satisfaction by individuals in the health care
industry (i.e. hospitals and clinics). The effect of job satisfaction on organizational commitment might
be different in this setting. Managers must be aware that the impact of satisfaction which can
strengthen organizational commitment, particularly affective commitment. Thirdly, job satisfaction
does not only appear to affect turnover intent directly, but also indirectly influence turnover intent
through organizational commitment (i.e. affective commitment). Therefore, organizations can reduce
the degree of employees’ intentions to leave by means of developing affective commitment.
Nevertheless, developing organizational commitment takes a time longer than developing job
satisfaction. Alternatively, organizations can also directly control turnover intent through improving job
satisfaction.
It is important to consider the limitations of the reported research findings. Although the SEM findings
supported the prediction that most the hypotheses in the model fitted with the data, the direction of
causality is somewhat difficult to interpret as the data were collected at a single point in time rather
than longitudinal data. Secondly, the data collection of this study relied on self-reports. All variables in
the study were measured from the same respondents and attempts were made to interpret their
correlational nature, thus, common method variance problems could emerge to affect the correlation
among variables. Finally, the limitation on the number of samples caused the study did not separate
between permanent employees and contractual employees. Therefore, it surmised that this has
engendered unexpected findings in the study. The findings could be improved and refined in future
studies by separating permanent and contractual employee respondents.
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50
COSTING ALLOCATION AND DIFFERENT IMPLICATIONS IN A SMALL CLOTHING

MANUFACTURING COMPANY – A CASE STUDY
Margit Malmmose, Aarhus University

Rainer Lueg, Aarhus University
ABSTRACT
This case study provides a thorough training and/or examination of students’ basic costing skills
linked to pricing and touching some behavioural aspects of management accounting as well. The
case study is divided into three specific areas and concerns of the organization enabling both
interrelations between the three subsections but also isolation in the use of the subsections. The
subsections provide each their theme to the case. The case study is, thus, applicable both as an
exam and as a case study for class exercises. It provides quite specific elements of cost allocation
and allows for further reflection of the various areas of a small international organization’s co-
ordination and management challenges. The issues are aimed at management accounting students
but may be beneficial for all types of business students. The case study enables students to
demonstrate their comprehensive costing skills and understanding within an international business.
Likewise, used as class exercises, it will prepare students for an exam situation and should enhance
an understanding of costing behaviour.
Keywords: Costing allocation, activity based costing, traditional costing, pricing, motivation, case
study, teaching notes, management accounting, international organization.
1. COMPANY BACKGROUND
Shiraz is a large national manufacturer in high performance quality marine shoes and clothing. It is a
well-known and well-established company with a strong brand. In general, Shiraz signals high quality
and expensive marine clothing. Many sailors are devoted fans of this particular brand.
Shiraz designs, produces, sells, packs and ships the clothes itself. The design, selling, packing and
shipping departments are located nationally whereas two separate departments are established in
Asia in order to handle the production which is run from the head quarter. The reason for the
production to be located in Asia is a strong cost control focus within productions. There are two
production departments: One handles clothing and one handles shoes.
Nationally, the design department has five local, but well-educated designers. The sales department
consists of four sales representatives, two telephone assistants to handle order inquiries over the
phone and other customer services, one national sales area manager, and one international sales
manager.
The international sales manager has the contact to agents who are situated throughout 10 European
countries. The agents are not employed directly by Shiraz but are on a commission contract of 15% of
the sales, they provide. The four local sales representatives are paid a base salary and a 10%
commission when a specific sales level is achieved.
Shiraz’ administration primarily consists of an IT department and an accounting department. In the IT

department, there are four people employed. They handle the daily IT system, automatic currency
updates, and the primary contact to the two Asian production departments and the ten European
agents. Here they continuously assist in developing the right framework for information access and
registration which includes everything from proper customer registration, inventory updates, cost
prices correctly linked to products and so on.
The accounting department consists of an administration assistant, two book keepers and a financial
controller. These four employees assist, in particular, the two Asian production departments but
naturally they also handle sales invoices for the national sales department and the ten European
agents.
51
Below is an organizational chart for your assistance:
2. THE CURRENT SITUATION
The financial controller, David Soulam, is currently struggling with three different situations within the
company’s management control system. The problems are not directly interrelated and hence, must
be dealt with individually. They concern the IT department, the clothing department in Asia and the
internal sales representatives.
The situation of the IT department

The financial controller, David Soulam, is in doubt whether the IT department is actually worth having
internally in the company. It is a quite expensive department amounting to € 2,000,000 per year. Their
expenses are allocated to the accounting department and the two Asian production departments.
David is in doubt which allocation method to use. For some time he has used the direct method, but
then he decided to use the sequential method by allocating the IT expenses first. But the IT
department also uses some of the accounting department hours. The following shows the total costs
for each manufacturing facility and for each support department.
Variable costs Fixed costs Total costs by department

Information technology (IT) € 500,000.00 € 1,500,000.00 € 2,000,000.00
Accounting € 100,000.00 € 900,000.00 € 1,000,000.00
Clothing € 3,000,000.00 € 7,000,000.00 € 10,000,000.00
Shoes € 2,500,000.00 € 5,500,000.00 € 8,000,000.00
Total costs € 6,100,000.00 € 14,900,000.00 € 21,000,000.00
The total costs of the support departments (IT and accounting) are allocated to the production
departments (clothing and shoes) using a single rate (for each individual support department) based
on the following:
- Information technology: Number of IT labour hours worked by the department

- Accounting: Number of employees supported by the department
52
Department IT hours used Number of employees

Information technology (IT) 4
Accounting 200
Clothing 500 12
Shoes 300 4
Required:
a) What are the total costs of the production departments (clothing and shoes) after the support
department costs of IT and accounting have been allocated, using the three following
methods:
i. The direct method
ii. The sequential method (allocate IT first)
iii. The reciprocal method
Given that IT = (€2,000,000 + 0.20 accounting) and Accounting = (€1,000,000 + 0.20
IT)
b) Please state the advantages and disadvantages of each of the above methods. Please
distinguish between variable and fixed costs in your answer.
c) Assume that all of the work of the IT department could be outsourced to an independent
company for €197.50 per hour. If Shiraz no longer operated its own IT department, 30% of the
direct fixed costs and all variable costs of the IT department could be eliminated. Discuss the
advantages and disadvantages of Shiraz outsourcing its IT services. (Consider the relation
between the IT and accounting departments)
The situation of the clothing department in Asia

A different situation is currently developing in the Asian clothing department. Together with the
manager of the clothing department David has made a forecast of the estimated production for the
upcoming calendar year. The clothing production is growing rapidly due to an increasing international
sale through the agents. The clothing department produces two types of clothing: T-shirts and shorts.
Overhead costs are currently allocated using the number of units produced (as allocation base) but
David is in doubt whether this allocation method is sufficient for understanding the costs of t-shirts and
shorts. Therefore, together with the controller of the Asian clothing department he has decided to
change to an activity based costing (ABC) system. They have collected the following information
concerning next year’s production:
T-shirts Shorts
Estimated unit production 320,000 units 200,000 units
Direct materials costs € 2,000,000 € 2,000,000
Direct labour costs € 1,504,000 € 1,590,000
The activity-based costing system uses three activity cost pools for allocation of overhead costs. For
the current period the data relating to these activities are:
Activity Cost Pool Cost drivers Costs T-shirts Shorts

Machine setups Number of setups € 164,000 16 24
Product design Number of parts € 96,000 112 48
General factory Number of units € 260,000 160,000 100,000
€ 520,000
Required:
a) Calculate the predetermined overhead rate under the current method and determine the full
unit product cost of each product for the current year.
b) Determine the full unit product cost (detailing all activity levels) of each product for the current
period using ABC.
53
c) Determine which product/s are over- or under-charged under the current traditional costing
system and by how much on a per unit basis compared to the cost calculations under ABC.
d) In general, what are the advantages and disadvantages of a traditional ABC allocation.
Please elaborate.
e) Consider an alternative of time driven ABC in the above costs. There are 28 workers working
on the three tasks of machine setups, product design and general factory. Each employee
work 160 hours per month and the practical capacity is 80%. David estimates that it takes 10
hours to set up a machine, 4 hours to handle each product design, and 0,5 minutes for
handling general factory issues per product. Please estimate the overhead cost driver, the
cost driver rates, and total costs (you may use the help scheme below)
Activity Number of Time per Total time Cost Total allocated

activities activity used rate costs
unit
Machine setups 40 10
Handling 160 4
product designs
General factory 260000 0,00833
issues
Total
i. What else does this exercise tell us?
The situation of the internal sales representatives

The sales representatives’ main work function is to attend exhibitions during February (for the fall
collection) and August (for the spring collection). At these exhibitions 70% of Shiraz’s retail sales
volume is created through pre orders. The existing 30% of retail sales volume is made in between
seasons with follow up orders and sales representatives visiting new customers. On top of the sales
representatives’ fixed salaries, they receive a 10% bonus in the months where sales are above €
1,000,000. If sales are below € 1,000,000 within a specific month, they do not receive a bonus.
Required:
a) From the above information, please explain a possible reason for the sales
representatives’ demotivation in between exhibitions.
b) Please provide two different possible solutions to the above problem. Elaborate on your
suggestions.
c) David also finds out that the sales representatives manipulate the prices at the exhibitions
in order to get as many orders as possible. Shiraz has a general turnover rate of 20 % on
sales. If the customer pays within 8 days, the sales representatives may deduct a
discount of 3%. This is in order to increase cash flow. Moreover, some of the customers
receive a marketing discount of up to 8% for doing commercials for Shiraz’ products.
David finds out that sometimes the sales representatives give a customer up to 10%
discount in order to place a large order at the exhibition.
i. Please explain the complications of these discounts.
ii. Please explain the impact of adjusting the sales price when considering the
company’s costs and revenue.
iii. What should David do in the above situation? Consider that David learned in
business school that the biggest clients are either the most profitable or the
most unprofitable. How can he verify that? What can he do about it if this is
actually the case?
3. TEACHING NOTES
The case allows for broad knowledge application based on most management accounting teaching
books. This case study may be particular applicable for teaching using the teaching book
th
‘Management Accounting – information for decision making and strategy execution’ 6 edition by
Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, and S. Mark Young (2011). However,
the case study may very well be applicable to support various aspects of other management
accounting text books. Below we suggest a guided solution to the case study:
54
The situation of the IT department
Question a:
I. The direct method is the most widely used method which allocates service department costs
directly to production departments, but it ignores the fact that service departments also,
sometimes, provide services to each other. The rates have to be calculated prior to the
allocation. See below:
The direct method:

IT department Accounting
department
Total costs € 2,000,000.00 € 1,000,000.00
Hours/number of 800 16
employees
Single rate € 2,500.00 € 62,500.00
Clothing department 62.5% 75%

Shoes department 37.5% 25%
Allocated costs:
Clothing department € 1,250,000.00 € 750,000.00
Shoes department € 750,000.00 € 250,000.00
Total € 2,000,000.00 € 1,000,000.00
The total costs of the clothing departments are now

€1,250,000+€750,000+€10,000,000=€12,000,000
The total costs of the Shoe departments are now

€750,000+€250,000+€8,000,000=€9,000,000
II. The sequential method allocates the costs of one service department to the other department,
but no subsequent costs are allocated back to it. It is stated that the IT department costs
should be allocated first. After allocating the IT departments costs, the accounting
departments IT costs should be added before allocating its service costs to the production
departments:
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E.J.M. Volume 14, Number 2, 2014 ISSN: 1555-4015 Special Issue "Human Resources, Human Capital And Psychological
Capital In Business And Organizations"
The sequential method:

IT department Accounting Clothing Shoes
Costs prior to € 2,000,000.00 € 1,000,000.00 € 10,000,000.00 € 8,000,000.00
allocation
Allocation of IT % 20% 50% 30%

Allocation of IT € -2,000,000.00 € 400,000.00 € 1,000,000.00 € 600,000.00
costs
Allocation of 75% 25%

Accounting %
Allocation of Acc. € -1,400,000.00 € 1,050,000.00 € 350,000.00
Costs
€ 12,050,000.00 € 8,950,000.00
There is a difference of €50,000 in the allocation compared to the direct method.
III. The reciprocal method is the most accurate method since it allocates the service department costs interrelated. The IT department’s use of the
accounting department’s service is 20% of the accounting department’s resources available. The accounting department’s use of IT is also 20%. This
gives the following:
IT = €2,000,000 + (0.20 x Acc)
Acc = €1,000,000 + (0.20 x IT)
IT=€2,000,000+0.20(€1,000,000+0.20IT)
IT=€2,000,000+€200,000+0.04IT
IT-0.04IT=€2,000,000+€200,000
0.96IT=€2,200,000
IT=€2,200,000/0.96
IT=€2,291,667
Acc=€1,000,000+0.2(€2,291,667)
Acc=€1,000,000+€458,333
Acc=€1,458,333
56
The reciprocal method:

IT department Accounting Clothing Shoes
Costs prior to allocation € 2,000,000.00 € 1,000,000.00
Allocation of IT % 20% 50% 30%

Allocation of IT costs -€ 2,291,667 € 458,333.40 € 1,145,833.50 € 687,500.10
Allocation of Accounting % 20% 60% 20%

Allocation of Acc. Costs € 291,666.68 € -1,458,333.40 € 875,000.04 € 291,666.68
€ 2,020,833.54 € 979,166.78
57
Question B:
When describing the advantages and disadvantages of the direct method, sequential and reciprocal
method, it is important to consider the criteria for the step by step and reciprocal method which are:
- Does the activity in one user department influence the amount charged to another
user department?
- Are the user departments encouraged to consume the ‘right’ quantity of service?
- Are inefficiencies in the service department passed on to the user departments?
Naturally the direct method is easier and quicker to use, however, this method does not take other
service departments into consideration.
In each of the methods, it is important to divide the costs into variable and fixed costs. The variable
costs are easier to allocate according to a sufficient charge/rate like in the above case of man hour
which can directly be allocated to the services given. The fixed costs are more problematic, but should
be allocated on a basis of ‘normal usage’ which, however, is difficult to determine. The question is
whether it is considerate to allocate all fixed costs. Issues may arise on the ‘fairness’ of allocation
among the departments. Further issues relating the case could be discussed; for example why costs
are not allocated to the sales department.
Question C:
There are significant savings to be obtained by outsourcing the IT department.
Outsourcing IT
Total hours 1000

Price € 197.50
Total costs € 197,500.00
Savings:
Variable costs € 500,000.00
Fixed costs (30%) € 450,000.00
Costs of outsourcing € -197,500.00
Total savings € 752,500.00
Based on the above data, there is no doubt that Shiraz should outsource their IT tasks. This also
seems reasonable considering the size of the total company and the size of the IT department. For
such a small company, the cost in maintaining a whole IT department is too large. Taking the
accounting department into consideration, there may in fact be additional savings to be obtained since
20% (supporting 4 employees out of 20 employees) of the accounting department time is used on the
IT department.
It could further be discussed whether it is realistic that the costs of the IT and accounting departments
are not allocated to the sales department and international agents since they must receive support as
well.
A third discussion point is the natural complications in outsourcing tasks where consultant companies
do not have the full knowledge of the company and the needs of the employees which may create an
obstacle. However, the pricing difference is so large that it should be outweighed.
58
The situation of the clothing department in Asia
Question A:
T-shirts Shorts
Full cost allocation 320000 200000
€ 3,504,000 € 3,590,000
Allocation rate per unit direct 10.95 17.95
costs
Overhead rate 1 1
Total assigned costs per € 11.95 € 18.95
product
Total overhead costs € 520,000

Total units 520000
Costs per unit €1
Question B:
The first step is to define the total allocation key and the activity costs:
Activity Cost Cost Costs T-shirts Shorts Total Activity

Pool drivers allocation key costs
Machine setups Number € 164,000 16 24 40 € 4,100
of setups
Product design Number € 96,000 112 48 160 € 600
of parts
General factory Number € 260,000 160,000 100,000 260,000 €1
of units
€ 520,000
The next step is to then calculate the amount allocated to each production line according to the
defined number of activities per product line and the activity cost:
Activity Cost Pool Cost drivers Activity costs T-shirts Total costs
number of
activities
Machine setups Number of 4,100 16 65,600

setups
Product design Number of 600 112 67,200
parts
General factory Number of 1 160,000 160,000
units
292,800
Activity Cost Pool Cost drivers Activity costs Shorts Total costs
number of
activities
Machine setups Number of 4,100 24 98,400

setups
Product design Number of 600 48 28,800
parts
General factory Number of 1 100,000 100,000
units
227,200
59
Then these costs can be divided into units which show the following difference in the two methods:
Overhead costs per unit ABC Traditional

T-shirt € 0.92 € 1.00
Shorts € 1.14 € 1.00
Question C:
The differences in the ‘charge’ of the two methods are given above. ABC shows that T-shirts are in
general cheaper to produce per unit than anticipated by the traditional allocation method. On the other
hand shorts are more expensive to produce. This can be elaborated upon regarding setting the right
sales price and so onS
Question D:
There are two major issues with the traditional ABC system which are the resources spend on actually
doing and maintaining the system, and it is an issue that unused resources are also allocated to the
costing objects. These particular two disadvantages are dealt with in the time-driven ABC system.
Additional disadvantages are access to information on time and costs, the reason for implementing
ABC regarding motivation which is essential in order to gain the needed changes, possible lack of top
management engagement, lost in details and thereby losing an overview, general opposition to
change.
Advantages of ABC are the possibilities of planning the use of costs and act accordingly, larger and
deeper understanding of the company’s costing behavior, increasing focus on the right products and
customers, sales pricing becoming more accurate. There may be additional advantages and
disadvantages.
Question E:
Adding David’s observations to a time driven method will give us the following estimates:
Time driven ABC

Overhead costs 145.09 per hour
Workers 28.00
Hours 128.00
Total hours available 3,584.00
Cost driver rate Total costs Total hours

Machine setups 10 145.09 1,450.89 400
Handling product designs 4 145.09 580.36 640
General factory issues 0.00833 145.09 1.21 2166.67
3206.67
By doing a time driven ABC, we can now identify unused resources which in this case is 3,584 hours
minus 3,206.67 hours = 377.33. This is more than two workers. Additionally, the total costs of this
time driven method is:
Cost driver rate Total allocation Costs per activity Total costs
key
Machine setups 40 1,450.89 58,035.71
Handling product designs 160 580.36 92,857.14
General factory issues 260,000 1.21 314,360.12
465,252.98
60
Which means that we have €520,000 - €465,252.98 = €54,747.02 that we cannot allocate.
The situation of the internal sales representatives
Question A:
Naturally, the sales representatives are unlikely to be motivated in between the exhibits since it may
be difficult for them to reach the bonus target of €1,000,000 per month during these months. This
brings the issue of the target to be too difficult to reach and thereby creating dysfunctionalities. It may
also bring forward a gaming element where they will wait on processing an order until the month
where they know that they will reach the target because then they will actually receive a bonus for the
sales provided which will not happen if it is processed during a month when they will not reach sales
target.
Question B:
Each sales representative could have a sole basic salary or they could be provided with a linear
bonus agreement where they always receive 10% bonus of the sales provided. This could be
elaborated onS for example, a linear bonus will not encourage the risk adverse sales representative.
Different discussions could be made upon using bonuses or not. Another solution could be
implementing non-financial performance measures, asking for xxx amount of customer visits per
week, month or other. Some students may suggest a Balanced Scorecard which would be beneficial if
argued for. The two suggestions should neither way, be well defined and argued for.
Question C:
This whole issue may be rooted in price setting. The company needs a better price setting structure
with coordinated discount abilities. A pricing catalogue could be beneficial in this situation. In that way,
all parts, both internally in the company and the customers, are aware of the different options and
their implications.
a. The complications in the case are naturally that some customers receive several
discounts resulting in a lack of profit in the sales to those particular customers.
However there could also be other benefits (short term) like getting new customers,
keeping existing customers – increasing market share and public knowledge (through
the marketing discounts) on Shiraz products which could have tremendous positive
long term effects.
i. This discussion could be increasingly complex by adding a discussion of

large versus small player on the market, long versus short term strategy,
whether the company is a price taker or a price setter. The Pareto rule could
also be discussed here – 20/80 rule – that you make your 80% of your profit
on 20% of your customers – additionally the whale curve may be added
where you actually loose income on some customers which is what is going
on in this case.
b. The impact of adjusting the sales price just slightly is quite significant on the bottom
line. If you increase your sales price with 1%, your profit (after having deducted fixed
and variable costs) will increase with a higher impact if the costs are stable. The
same happens if you decrease the sales price, so even though it may not seem like a
high discount of 10% on the sales price in order to get the order, if e.g. the profit was
20%, then the discount is actually 50% of the profit.
c. Other initiatives could be done (than those already stated) in order to increase
customer profitability: improve internal processes, customer ABC, or establish a price
waterfall. Essential is precision in price setting. A price catalogue and internal rules
(e.g. as non-financial measures) could here be beneficial
In this section, the student should be graded according to well defined arguments, consistency in
argumentation, the ability to see pros and cons, and the ability to state several implications.
61
REFERENCES:
Atkinson, A. A., Kaplan, R. S., Matsumura, E. M., & Young, S. M., Management Accounting,
International Edition, Pearson, New Jersey, NJ, 2011.
Lueg, R., Clemmensen, S. N., & Pedersen, M. M., "The role of corporate sustainability in a low-cost
business model – A case study in the Scandinavian fashion industry", Business Strategy and
the Environment (forthcoming), 2013.
---, & Lu, S., "Improving efficiency in budgeting - An interventionist approach to spreadsheet accuracy
testing", Problems and Perspectives in Management, 10 (1), 2012, 32-41.
---, & Lu, S., "How to improve efficiency in budgeting - The case of business intelligence in SMEs",
European Journal of Management, 13 (2), 2013, 109-120.
---,, & Lueg, K., "The Balanced Scorecard and different Business Models in the textile industry - A
case study", International Journal of Strategic Management, 13 (2), 2013, 61-66.
62
MANAGING ORGANIZATIONAL INNOVATION THROUGH HUMAN RESOURCES,

HUMAN CAPITAL AND PSYCHOLOGICAL CAPITAL
Riccardo Sartori, University of Verona, Verona, Italy

Andrea Scalco, University of Verona, Italy
ABSTRACT
The article aims at making a series of considerations on the concepts of innovation and, more
specifically, organizational innovation, in order to show what literature says about the role of human
resources, human capital and psychological capital in the matter. Starting from some definitions of
innovation given in the introduction, the paper goes on by dealing with organizational innovation and
the role of human and psychological capital in the innovation processes. Although most of the
consulting books underline the importance of people in the innovation process, little research on the
implications on human and psychological resources has been carried out and research has not
explored in an extensive way the human side of innovation. So, the final part of the article stresses
the existing links between innovation and the so-called human factor and reports a summary table
with the competences literature has identified so far which are useful to implement innovation.
Keywords: Organizational Innovation; Human Resources; Human Capital; Psychological Capital
1. INTRODUCTION
When it comes to such concepts as organizational continuity and competitiveness, innovation seems
to play a key role. Three concepts seem to be particularly linked together: training, development and
innovation (Ceschi, Dorofeeva and Sartori, 2014). The present article focuses on the latter.
As stated in Sartori, Favretto and Ceschi (2013), nowadays several definitions of innovation exist,
depending on the type of innovation authors refer to and the context where innovation is taken into
account (organizations, public administrations, companies, etc.). According to Mulgan (2007), for
example, innovation in organizations means new ways of organizing things, new ways of rewarding
people and new ways of communicating.
Distinctions are sometimes made between policy innovations, service innovations and innovations in
such fields as democracy or international affairs.
Quoting Zhuang (1995), Glor (1997) underlines that innovation can mean (1) Unique and new
activities or ideas; (2) The people who innovate; (3) Improving existing processes; (4) The
dissemination of new activities or ideas.
Van der Meer’s (2007) synthesis suggests that innovation is the total set of activities leading to the
introduction of something new resulting in strengthening the defendable competitive advantage of an
organization, while the Oslo Manual published by OECD (Organization for Economic Cooperation and
Development - It is composed of the following Countries: Australia, Austria, Belgium, Canada, Chile,
Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland,
Israel, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland,
Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States) and
Eurostat in 2005 specifies that innovation can be new to the organization (it may have already been
implemented by other organizations, but it is new to one specific organization), new to the market (an
organization is the first to introduce it in the market) and/or new to the world (an organization is the
first to introduce it for all markets and organizations).
The simplest definition of innovation states that it is about new ideas that work towards creating value.
The ideas have to be at least in part new (rather than improvements); they have to be taken up (rather
than just being good ideas); and they have to be useful.
Finally, Wallin and von Krogh (2010) see innovation as a process that covers the creation of relevant
knowledge for the development and introduction of something new and useful.
63
2. THE CONCEPT OF ORGANIZATIONAL INNOVATION
According to the Oslo Manual, innovation is the implementation of a new or significantly improved
product (good or service), or process, a new marketing method, or a new organizational method in
business practices, workplace organization or external relations.
The OECD (2011) distinguishes four forms of innovation:

1. Product innovation, the introduction of a good or service that is new or significantly improved in
terms of its characteristics or intended uses;
2. Process innovation, the introduction of new or significantly improved production or delivery
methods;
3. Marketing innovation, the implementation of a new marketing method with changes in product
design or packaging, product placement, product promotion or pricing;
4. Organizational innovation, the implementation of a new organizational method in the organization’s
business practices, workplace organization or external relations.
As for the latter, Chesbrough (2003) states that organizations in the Twentieth Century thought that
successful innovation required control: they invested heavily in internal R&D (Research and
Development), engaged the best and brightest people, enabled them to develop innovative ideas and
breakthrough discoveries, and protected them with Intellectual Property Rights. The generated profit
realized by more sales was reinvested into internal R&D, creating a virtual cycle of innovation with the
following steps: (1) Technology breakthroughs; (2) New products; (3) Increased sales and profits; (4)
Increased investment in R&D. These four steps represent the paradigm of the so-called Closed Model
of Innovation or Stage-Gate Model (Cooper and Kleinschmidt, 1986; Tidd, Bessant and Pavitt, 2005),
which is based on the assumption that technology developed outside does not guarantee the same
quality, availability and capabilities than technology invented by internal collaborators. Organizations
that still adopt this model have solid boundaries: ideas are internally generated, evaluated and
selected, and only potentially successful projects are further developed and taken to the market.
There is no access for ideas from outside the organization, nor are there paths for products and
services taken to the market.
On the contrary, the so-called Open Innovation Model considers external ideas as important as
internal ideas. Open innovation enhances access to novel and heterogeneous knowledge belonging
to customer needs, technical solutions and problem solving activities (von Hippel, 1994). Access to
external knowledge provides adaptation of products and services for customer needs and can reduce
the development time. Lowering costs of innovation and commercial utilization of knowledge and
technology that otherwise would remain unutilized are also possible. Other factors that attract
organizations in adopting open innovation are the shared risks in product and service development
and enhanced organization image and reputation (Wallin and Von Krogh, 2010).
Closed innovation and open innovation are not binary in their application. Besides, other than
benefits, innovation, both closed and open, carries risks. For example, it is based on teamwork and
cooperation. Studies on teams underline that “while working in teams can potentially create synergies
so that the team produces an output which is better than could have achieved by any individual
member working alone, teams can also produce outputs which are worse than could have been
produced by the most competent team member” (Newell and Swan, 2000, p. 1291). Some of the
potential problems associated to teamwork include conformity and obedience (Asch, 1956; Milgram,
1965), groupthink (Janis, 1972) and group polarization (Isenberg, 1986).
3. FROM HUMAN RESOURCES TO PSYCHOLOGICAL CAPITAL
In organizations, innovation, both closed and open, involves the collaboration of people and teams
with different knowledge, experience and expertise. There is a prolific research literature on the
question of what makes teams and work groups effective. Part of this issue lies in the concepts of
team and work group and in their differences. Team is conceived as a group of agents adopting the
appropriate joint and individual mental attitudes. Instead, work group is defined as multiple individuals
acting as a bounded whole in order to get something done. In general, members of teams tend to
develop greater interdependence and a stronger sense of collectivity than members of work groups,
even if the sole social-identification processes cannot be used to explain which factors have a
significant influence on work groups and teams’ practices (Ceschi, Dorofeeva and Sartori, 2014).
64
Kelley (2010) stresses the idea that innovation is not realized by a single skilled worker, but can only
be pursued in collaboration: ‘While many people give Thomas Edison, Alexander Graham Bell, and
the modern-day equivalent, Dean Kamen, credit for being lone inventors, the fact is that the lone
inventor myth is just that – a myth. All these gentlemen had labs full of people who shared their
passion for creative pursuits’. In fact, innovation seems to be the outcome of three social activities
described as follows (Kelley, 2010; Sloane, 2011):
1. Social inputs – At the beginning, organizations seek to identify key insights for innovation. Through
such social research methods as focus groups and ethnographic studies or connections to other
organizations and disciplines, they can gather insights that can inspire new solutions.
2. Social evolution – Organizations adopt innovation teams, not sole inventors, to transform key
insights and elaborate new solutions.
3. Social execution – It includes such social outputs as trials, beta programs and trade shows. It is
critical for customer groups to be educated so that they can recognize their needs for innovation.
Henry Ford summed up this problem with his famous quote ‘If I had asked people what they
wanted, they would have said: faster horses’.
The life cycle of innovation is an interactive process that starts with exploration and ends with
exploitation (Ferrary, 2011). Exploration is the preliminary step for knowledge generation; exploitation
is when the knowledge that produces innovation is industrialized and commercialized. Exploration and
exploitation stages are dependent on the human and the (positive) psychological capital.
According to the OECD (2011, p. 18), human capital is ‘the knowledge, skills, competences and
attributes embodied in individuals that facilitate the creation of personal, social and economic well-
being’. Positive psychological capital is defined as the positive and developmental state of an
individual as characterized by Hope, high self-Efficacy (Bandura, 1997), Resiliency and Optimism
(Luthans and Youssef, 2004; Luthans, Luthans and Luthans, 2004). Note that the first letters of these
four constructs give rise to the acronym HERO.
Different models have been developed to represent the process of the collaborative knowledge
creation: the Knowledge Creation Model by Nonaka and Takeuchi (1995), the Information Processing
Model by Huber (1991), the Social Learning Cycle of the New Knowledge Flows by Boisot (1986), the
3-T Framework by Carlile (2004), the Experiential Learning Cycle by Kolb (1984) and others. Du
Chatenier et al. (2010) analyzed all these models and found out the following four stages in common:
1. Externalizing and sharing – Professionals share their information, (implicit) knowledge and needs
through verbal communication with other professionals. This communication takes place at group
level and results in distributed knowledge among the participants.
2. Interpreting and analyzing – Professionals absorb, interpret and analyse the previous information
by associating it to their own knowledge. This process happens at an individual level and the
outcomes result in different interpretations representing the experience of the single person.
3. Negotiating and revising – At group level, professionals assemble and order these different
interpretations. In this collective process, they gather shared knowledge, a common
communication language, shared meanings and common understandings about ideas, roles, tasks
and goals.
4. Combining and creating – At this stage, which can happen at both individual and group level,
professionals combine different knowledge bases and create new ideas for innovation. They also
define common goals and action plans to realize their ideas.
4. INNOVATION AND THE SO-CALLED “HUMAN FACTOR”
Although most of the consulting books underline the importance of people in the innovation process,
little research on the implications on human and psychological resources has been carried out. To aid
with successful implementation of innovation practices, it is crucial to understand better the conditions
that allow a mutual working relationship between two or more parties. In order to let the outside ideas
reach the people best equipped to exploit them, Whelan, Parise, de Valk and Aalbers (2011) suggest
that organizations nominate idea scouts and idea connectors. Idea scouts are the antennae of the
R&D units and collect the signals on emerging scientific and technological developments that are
broadcast from institutions around the world. Idea connectors have an extensive network together
65
with the know-how needed to distribute the technological information. Connectors are the hub of the
organization’s social network and much of their expertise lies in knowing who is doing what. They
have the ability to translate external information into a form understandable and relevant for internal
colleagues, and are also able to convince other network members to take the needed actions.
Although literature underlines the crucial role of individuals in the innovation process, research has
not explored in an extensive way the human side of innovation. Several consulting books describe the
skills needed by innovation teams, but their description is mainly based on their experience and not
supported by research. Sloane (2011) divides into hard skills and soft skills. Hard skills refer to
specific tasks and activities, such as developing a project, evaluating technology or overall project
management. Soft skills are a combination of personal traits, attitudes and interpersonal abilities that
are applied broadly across innovation tasks and activities. Du Chatenier et al. (2010) refer to the term
of competence as human knowledge, attitudes and skills related to their work practice. Some of the
required characteristics for individuals working in innovation teams are:
- An entrepreneurial mindset (Sloane, 2011, Lindegaard and Kawasaki, 2010);

- Strong communication skills, which combines listening and articulation skills (Shockley-Zalabak,
2008);
- Ability to comprehend complex technical requirements and articulate them in simple terms in
relation to partners from other organizations (Kanter, 2006; Sloane, 2011);
- Skills for relationship building and maintenance in order to facilitate collaboration across various
departments or external partners (Kanter, 2006; Sloane, 2011; Lindegaard and Kawasaki, 2010);
- Curiosity, as natural desire to learn new concepts and technologies, and to determine how they
can fit together to meet or support strategic goals and objectives (Lindegaard and Kawasaki,
2010);
- Holistic point of view: the ability to decipher the internal political landscape that will impact the
ability to move innovation forward (Ritter and Gemünden, 2003).
5. FINAL CONSIDERATIONS
Innovation requires ideas, ideas come from people and people can be described in terms of their
human and psychological capital: knowledge, skills, competences (OECD, 2011), self-efficacy
(Bandura, 1997), optimism, hope and resiliency (Luthans and Youssef, 2004; Luthans, Luthans and
Luthans, 2004). An extensive study has been conducted by du Chatenier et al. (2010) which tries to
define the competences required for professionals working in innovation teams.
By combining literature on inter-organizational learning, innovation management, business alliances

and networks in organizational management and human resources studies, the competence profile
has also been supported by an empirical survey. In interviews and focus groups, participants were
asked to talk about critical incidents or challenging situations they experienced in innovation contexts
and to describe how they dealt with those critical incidents.
The challenges and competences mentioned varied among the respondents. The interviews collected
a great variety of answers with seemingly contradictory competence elements. This could be related
to the fact that respondents participated in different innovation teams, with differences in partnerships,
collaboration methods and goals. Furthermore the variety of answers might be a result of the specific
background and context of the interviewees. The result of the study is the list of competences
reported in table 1, which also shows the relationships found between competences, contextual
factors and team performance.
66
Table 1: Competences for innovation

Competences of extra importance in certain contexts
Involve: Identifies human, material and experiential resources for accomplishing various
kinds of learning objectives. Identifies situations for participative group problem solving,
using the proper degree of participation, and recognizes obstacles and corrective actions.
Knows who to inform and when.
Project Management
Influence: Appropriately adapts, calibrates ones behavior to each situation in order to elicit
particular responses from others. Uses influencing skills (as opposed to instructing): position,
coalition, stimulation. Knows how to play the political game.
Create learning climate: Shares success, allows people to make mistakes. Is honest:
possesses high levels of integrity, authenticity, sincerity and genuineness. Can be counted
on to represent situations fairly. Develops, maintains and uses effective networks. Is
approachable, develops friendships easily and strong beneficial alliances and coalitions.
Develops a team spirit. Deals with unexpected situations, is flexible with plans, deadlines,
improvises. Is not too systematic, rigid. Deals with a flexible team composition.
Prevail: Has an overall picture of the project and influencing factor. Understands and
Both
manages complexity. Supports many things on his/her mind at the same time. Has self-
confidence. Is competent: able to perform the tasks required by his or her position.
Take on: Is aware of, and regulates, own thinking and feeling. Manages tensions created by
multiple accountabilities, tasks and roles. Has perseverance, keeps on thinking positively,
Complex alliances
having end-goal in mind. Is reliable: ensures that the others can depend upon him/her to
come through for them, acts consistently, follows through. Is pro-active. Comes up with ideas
him/herself and takes initiatives.
Communicate clearly: Creates a vision. Appreciates the learning domain and has the
motivation to learn, has a sense of urgency. Is open: shares information freely with others,
even when (s)he is not sure. Communicates clearly and understandably. Recognizes open
and supportive communication methods.
Competences related to team performance
Monitor: Coordinates and synchronizes activities, information, and tasks between team
Positively
members. Designs a plan of strategies. Carries out the plan systematically and sequentially.
Feels responsible for the team and acts as such. Monitors, evaluates, and provides feedback
on overall team and individual performance. Accepts feedback about his/her performance
non-defensively. Collects evidence of accomplishments. Asks many critical questions. Trusts
the other party.
Negatively
Compete: Is critical but constructive. Is aware that (s)he represents an organization; refuses
to accept less.
67
Handle conflicts: Openness: treats differences as important opportunities. Respects, values

Positively or negatively
and appreciates people and their ideas. Possesses basic knowledge and perceptions of
various technical/professional areas and business languages. Has experience working in
partnerships. Is assertive, extroverted. Communicates own perceptions and feelings (in a
diplomatic way). Is straightforward.
Analyse: Wants to learn from others. Understands social situations as well as interpersonal
interactions. Is sensitive to the roles and responsibilities of all partners, aware of their
collaborative motivations and expresses understanding and empathy. Has good reflective
skills and applies techniques of lateral thinking or divergent thinking.
Other relevant competences
Decide mindfully: Knows what his/her qualities are, does not take the position of the
underdog. Possesses basic knowledge and perceptions. Establishes specific, challenging,
innovation professionals
accepted team goals. Diagnoses, formulates learning objectives in performance outcomes

(but not too quickly). Is benevolent: has the best interests of others at heart.
Relevant for all
Explore: Combines high advocacy (egocentrism) with high inquiry. Recognizes types and
sources of conflict, encourages desirable conflict but discourages undesirable conflict. Picks
up signals, sees opportunities, has intuition for innovation. Balances short- and long-term
goals. Identifies problems. Discerns sub from main issues.
Combine: Employs integrative (win-win) negotiation strategies rather than distributive (win-
lose) strategies. Brokers solutions or outcomes. Thinks in ways that differ from established
lines of thought. Agrees to disagree (lose-lose strategy). Considers common goals mostly
important. Adapts without violating own ideas.
Collected from: du Chatenier et al, 2010: 278-279.
REFERENCES:
Asch, S.E., “Studies of independence and conformity: A minority of one against a unanimous
majority”, Psychological Monographs: General and Applied, Vol. 70, 1-70, 1956.
Bandura, A, Self-efficacy: The exercise of control, W.H. Freeman, New York, 1997.
Boisot, M.H., “Markets and hierarchies in a cultural perspective”, Organization Studies, Vol. 7, 135-
158, 1986.
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AUTHOR PROFILE:
Riccardo Sartori got his Ph.D. at Padua University and is currently Assistant Professor in Work and
Organizational Psychology at Verona University (Department of Philosophy, Education and
Psychology).
Andrea Scalco is a work and organizational psychologist and a Ph.D. student at Verona University
(Department of Philosophy, Education and Psychology).
70
WORK VALUES AND AGING WORKFORCE. A PERSPECTIVE ON VALUE ORIENTATIONS AND

MOTIVATIONS FOR POST-RETIREMENT ACTIVITIES.
Piermatteo Ardolino, University of Verona, Italy

Stefano Noventa, University of Verona, Italy
Patrizia Buziol, University of Verona, Italy
Moreno Fiorentini, University of Verona, Italy
Alberto Crescentini, SUPSI University of Applied Sciences and Arts of Southern Switzerland
ABSTRACT
Population ageing is not only linked to social or health problems, but it also concerns economic and
HRM strategies and policies in work organizations. Elderly and retired workers are often still active
and recent literature in social sciences has indeed focused on the management and motivation of
ageing workforce. The present work aims to explore the relationships between reasons to stay active
and the work values of elderly workers, by examining how value orientations affect the reasons
behind post-retirement activity. A questionnaire was administered to a sample of 480 north-Italian
elderly, retired from different jobs who continued to work. Part of questionnaire adopted the Work
Important Study/Work Values Scale (WIS/SVP) to explore the work values of aging workforce. As a
result, people in retirement appear to be moved mainly by reasons of social connections and
usefulness. More personal dimensions related to the need of being appreciated, self-realized, or the
need of keep themselves active and busy are considered less important. Interestingly, financial
reasons and work continuity are considered not important. In addition, work values and value
orientations influence to various degrees these motivations to stay in activity after formal retirement.
These findings suggest that HRM practices and policies, capable of motivating older workers to
continue to work, should address social and relational issues rather than financial related aspects or
continuous career development.
Keywords: Aging Work-force, Retirement, Work values, Silver Workers, H.R.M.
1. INTRODUCTION
In Western World life expectancies are rising and birth rates are noticeably falling. As time goes by,
governments and policies are more and more required to tackle complex topics like health, disability,
pension funds, incomes or salaries of elderly people. Population aging also forces older and retired
workers to replenish the economical void left by the lack of generational change in industries and
work organizations.
Understanding how to manage these processes is fundamental to acquire a best knowledge of future
human resources. Literature on the so-called Silver Workers can be found in the fields of economic
and social sciences and focuses on work values and orientations of elderly people, organizational
performances and motivations in the ageing workforce.
2. LITERATURE REVIEW
Among the theories of aging focused on psycho-social aspects like thought processes and behaviors,
Disengagement Theory, Activity Theory and Continuity Theory, are particularly relevant (see, e.g.,
Payton Fay, 2004). Disengagement Theory describes aging as “an inevitable, mutual withdrawal or
disengagement, resulting in decreased interaction between the aging person and others in the social
system he/she belongs to” (Cumming and Henry, 1961, p.14).
On the contrary, Activity Theory affirmed that people in retirement maintained participatory activity
levels, social networks and were less likely to withdraw from social contacts or become lonely
(Havighurst and Albrecht, 1953). As to Continuity Theory, it emphasizes how coping with aging is
strengthened by the continuity of basic personality traits, attitudes, and behaviors during all the life
course (Havighurst, 1968; Atchley 1971, 1989). In addition, the last decades has seen an increasing
71
consideration about Lifespan Psychology in which human development is considered to be multi-

directional, multi-disciplinary, and multi-dimensional, to occur across the entire life, and to be affected
by plasticity, socio-cultural conditions, interactions of age-graded, history-graded, and non-normative
historical influences (Baltes, 1987; Birren and Schaie, 1996). In this perspective an important topic is
working-life beyond retirement (see, e.g., Cyr, 1996; Lang, 1999; Kim and Feldman, 2000; Clifford,
2005; Kooij et al., 2008). Some authors deal with the issue from a psycho-social approach (see, e.g.,
Moen, 1996; Weiss, 2005), while others focus on the transition to retirement of senior workers (see,
e.g., Taylor and McFarlane-Shore, 1995). Feldman (1994), Kim and Feldman (2000), explored the
topic of paid work in retired workers.
Another interesting aspect concerns the retirees interests in both paid or un-paid activities. Deller et
al. (2007), in an empirical study on German pensioners, identify reasons for post-retirement activities.
Silver workers are indeed those possessing skills, experience and expertise, work values and
motivations to stay active.
Other studies focused on values in general and work values (see, e.g., Rokeach, 1973; Roe and
Ester, 1999), influence of work values on the importance of work in the life of the individual (see, e.g.,
Šverko, 1989). In particular, the Work Importance Study (WIS) provided a rich cross-cultural
exploration of both peoples’ life roles and of the values that people seek in their careers and life in
general (Super and Šverko, 1995).
3. RESEARCH
The present work aim to explore the relationship between value orientations and the reasons that
bring retired people to stay active. The sample consisted of 480 North-Italian retired elderly (F = 155,
M = 355) but still active (both paid or unpaid job). The mean age is 65.8 years with a standard error of
0.2 years. The 72% percent of the sample is married, 8% divorced, 4.6% widowed, 5% bachelor,
2.5% cohabitee and a 7.2% did not respond. The 0.8% has a master or a Pd.D. degree, the 11.5% a
university degree, the 49.8% an upper secondary degree, the 30.8% a junior secondary schools and
the 6.5% primary schools degree, the 0.6% did not respond.
Subjects were asked to fill a questionnaire with their demographics and to rate on a four points scale
(“Strongly disagree”, “Disagree”, “Agree”, “Strongly Agree”) the appealing of the reasons why they
engaged in activity after retirement. Options were adapted from the “Silver Workers Research” (Deller
et al., 2007). Subjects were also administered the Italian adaptation (Trentini et al., 1995; Bellotto,
1997) of the Work Important Study/Work Values Scale (WIS/SVP, Super and Šverko, 1995) allowing
to estimates the scale values of the subjects on the following value orientations: Material, Self, Social,
Independence, and Challenge.
4. RESULTS
Elderly workers appear to be moved toward post-retirement activities more by reasons of social
connections and usefulness rather than personal or financial needs. As it can be noticed, subjects
shows higher medians to items (Table 1) like “Social activities/help people” and “To stay in contacts
with other people” (Mdn = 4) rather than items (Table 3) like “I want to be occupied/to have something
to do”, “Joy/fun/Interest”, “To stay fit/to stay active”, “Appreciation/fulfillment/valuation” (Mdn = 3).
Interestingly, items associated to economical dimensions (Table 2), like “Continuation after regular
career” (Mdn = 2) and “To have financial resources” (Mdn = 1), are considered less appealing.
In the following tables each rationale has been regressed respect to the different value orientations to
analyze the strength of the relation. Interestingly, the higher the expressed rating, the higher is also
the number of value orientations involved. Standardized beta coefficients and associated t-test have
been reported where they showed at least a statistical tendency. R-squared and adjusted R-squared
have been also reported as a measure of goodness of fit.
72
TABLE 1. HIGH-RATED ITEMS RELATED TO POST-RETIREMENT ACTIVITIES AND

REGRESSION ON VALUE ORIENTATIONS.
Item Value Orientations Standardized β t-test p-value

Material Orientation -.335 -6.277 < .001
Social activities/help Self-Orientation .405 5.879 < .001
people
Social Orientation .212 3.551 < .001
(Mdn = 4,
2 2
R =.26, adj-R =.25) Independence -.270 -3.914 < .001
Challenge .175 3.066 < .01
Material Orientation -.131 -2.368 < .05
To stay in contacts with Self-Orientation .196 2.950 < .01
2
other people (Mdn = 4, R Social Orientation .331 5.717 < .001
2
=.21, adj-R =.20) Independence -.147 -2.167 < .05
Challenge .181 3.102 < .01
The most appealing items, associated to social connections (Table 1), appear to involve all the five
value orientations at the same time. In particular, the expressed ratings are on the one side enhanced
by self-orientation, social orientation and challenge, while on the other side they are reduced by a
material orientation, and independence.
Notice that, although the percentage of variance associated to value orientations suggests that most
of the variability is at the individual level, it is however not negligible. A completely different situation
can instead be depicted by considering those items that are associated to an economical dimension
(Table 2).
TABLE 2. LOW-RATED ITEMS RELATED TO POST-RETIREMENT ACTIVITIES AND


To have financial Material Orientation .429 7.603 < .001
resources
(Mdn = 1, Social Orientation -.134 -2.292 < .05
2 2
R =.20, adj-R =.18)
Continuation after Self-Orientation .253 3.551 < .001
regular career
2
(Mdn = 2, R =.09, adj- Challenge .169 2.676 < .01
2
R =.08)
The item regarding the need of financial resources appears to be the least appealing (Mdn = 1) and
shows a significant positive effect of material orientation and a negative effect of social orientation.
The value of the R-squared suggests that those two value orientations explain a substantial part of
the variance. Similarly, the idea of working to continue the career appears to be positively affected by
both self-orientation and challenge, nevertheless the quota of variance is lower than before.
Finally, Table 3, summarizes the effects of value orientations on items with a moderate rating (Mdn =
3). As it can be noticed, the number of involved value orientations changes from case to case and the
percentage of variance explained is lower than the previous cases though not negligible.
73
TABLE 3. MODERATELY RATED ITEMS RELATED TO POST-RETIREMENT ACTIVITIES AND

I want to be occupied/to Self-Orientation .293 4.140 < .001

have something to do Social Orientation .140 2,316 < .05
2
(Mdn = 3, R = .12, adj-
2
Independence -.184 -2.574 < .05
R = .10) Challenge .123 2.052 < .05
Material Orientation -.144 -2,537 < .05
Joy/fun/Interest Self-Orientation .121 1,774 < .10
2
(Mdn = 3, R = .15, adj- Social Orientation .182 3,066 < .05
2
R = .14) Independence .128 1,889 < .10
Challenge .110 1,850 < .10
To stay fit/to stay active Self-Orientation .202 2.829 < .01
2
(Mdn = 3, R =.13, adj-
2
R =.12) Social Orientation .226 3.670 < .001
Material Orientation .164 2.795 < .01
Appreciation/fulfillment/ Self-Orientation .300 4.354 < .001
2
valuation (Mdn = 3, R
2
=.14, adj-R =.13) Independence -.151 -2.147 < .05
Challenge .186 3.021 < .01
5. DISCUSSION
The present study reports some preliminary results obtained in a wider research regarding the
relationship between value orientations and the rationale that moves retired people to stay in activity.
The findings suggest that elderly people appear to be drawn to post-retirement activities mainly by
reasons of socialization rather than personal realization, profit or economic advantage; and that value
orientations influence to various degrees these motivations to stay in activity after formal retirement.
Social connections and usefulness appear to be perceived as challenging, self-oriented and social
oriented rationales that favor working after retirement in less independent and material persons. More
personal dimensions, related to the need of being appreciated, self-realized, or the need to keep
themselves active and busy, are considered slightly less important though still substantial in the
choice of working after retirement.
Interestingly, economical reasons like financial means and work continuity are not considered
important by the retiree and involve lower number of value orientations. As an example, financial
resources appear to be more appealing in subjects with higher values of material orientation and
antisocial behavior. It is also worth to be noticed that the higher the number of value orientations
involved in a rationale, the higher appears to be its appeal. In addition, some of the value orientations,
like self-orientation and social-orientation, generally affect positively the appeal of all the retiree
motivations, while other orientations, like independence, generally affect negatively the rationale. As it
can be noticed in the previous section, indeed, the direction of the effects of the value orientations is
always coherent with the nature of the item. This is particularly evident in the case of the rationale “to
have financial resources”, that is also the one with the lowest rate, in which value orientations reverse
the effect respect to the other cases. This suggests that not only the number of value orientations
involved in an item, but also their direction, affects the appealing of the motivations.
These findings suggest that HRM practices and policies might be more effective in motivating elderly
people to continue to work whenever they address social and relational issues rather than financial
related aspects or continuous career development. Several issues however remain to be investigated
and the present results should be considered just a preliminary analysis. Indeed, the complexity of the
depicted phenomenon, to be fully understood, would require to control and account for other effects
74
that influence retiree behavior, motivations and attitudes, like gender disparity, power, political and
socio-cultural differences, and the interrelation between the different strata associated to age, social
structures and roles (see, e.g., White Riley, 1974; Tanner and Harris, 2007). In spite of this limitation,
the present results appear to be coherent with the main idea, expressed by current literature, about
the perceived importance of social connections after retirement.
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76
UNIVERSITIES AS SOURCES OF BUSINESS: ENTREPRENEURSHIP AND DOCTORAL STUDIES

Maddalena Formicuzzi, University of Verona, Italy
Anastasia Ferrari, University of Verona, Italy
Jocilene Gadioli de Oliveira, Coordenação de Aperfeiçoamento de Pessoal de Nível Superior, Brazil
Ajay K. Jain, Management Development Institute Gurgaon, India
Romina R. Fucà, University of Macerata, Italy
ABSTRACT
Universities are called upon to contribute to economic development; work on education, patenting,
licensing, and support in the spin-off of scientists is a way of doing this. In this scenario, the research
aims to investigate the entrepreneurial potential in scientific and technical Ph.D. students. The results
highlight that doctoral courses do not provide dedicated entrepreneurship training and that Ph.D.
students need to be encouraged to improve their entrepreneurial competences or, at least, to think
about an entrepreneurial future, in order to resemble colleagues who are already entrepreneurs.
Institutional and policy roles in creating a model of entrepreneurship education are also underlined.
Keywords: entrepreneurship, education, PhD, academic entrepreneurship, scientists
1. INTRODUCTION
“Approximately 15 years ago Etzkowitz (1998) and Clarke (1998) alerted the world to the emergence
of an ‘entrepreneurial university’” (Trencher et al., 2014, p. 151).
The role of the universities in these years of economic difficulties and recession is increasing, in that
they have the responsibilities of giving more attention to and investing in helping scientists in spin-off
processes and technology transfer (Meyer, 2003; Rasmussen, Borch, 2010). “There is national (U.S.)
and international recognition of the importance of innovation, technology transfer, and
entrepreneurship for sustained economic revival- research universities are being asked to play a
central role in our knowledge-centered economy by the technology transfer of their discoveries,
innovations, and inventions” (Sanberg et al., 2014, p.6642).
Entrepreneurship is important in the development of welfare states, and is seen as a precondition for
economic development. The EU has extended its responsibilities, competencies and ability to
recommend national states to change their entrepreneurial policies (Martens et al., 2010).
The European Parliament Council defines entrepreneurship as “an individual’s ability to turn ideas into
action. It includes creativity, innovation and risk-taking, as well as the ability to plan and manage
projects in order to achieve objectives. This supports everyone in day-to-day life at home and in
society, makes employees more aware of the context of their work and better able to seize
opportunities, and provides a foundation for entrepreneurs establishing a social or commercial
activity.” (European Parliament and Council, 2006, pp. 17-18) and “Skills [that] relate to proactive
project management (involving, for example the ability to plan, organise, manage, lead and delegate,
analyse, communicate, debrief, evaluate and record), effective representation and negotiation, and
the ability to work both as an individual and collaboratively in teams. The ability to judge and identify
one’s strengths and weaknesses, and to assess and take risks as and when warranted, is essential”
(European Commission, 2007, p. 11). In order to make the Lisbon strategy for growth and jobs
successful, Europe needs to stimulate the entrepreneurial mindsets of young people, encourage
innovative start-ups, and promote a culture that fosters entrepreneurship and the growth of small and
medium-sized enterprises. It also becomes important to know how to analyse entrepreneurial spirit
and behaviour (European Commission, 2004).
In last few decades we have been witnessing “... the emergence of the entrepreneurial university as a
response to the increasing importance of knowledge in national and regional innovation systems and
the recognition that the university is a cost effective and creative inventor and transfer agent of both
knowledge and technology” (Ertkowitz et al., 2000, p. 313).
77
In this scenario, the Italian university system has worked to improve competencies in patenting and
licensing activities through the establishment of the Technology Transfer Offices-TTO, part of Netval
(Network per la Valorizzazione della Ricerca Universitaria – the Italian University Research
Improvement Network) which studies academic spin-offs and activities related to services that foster
university-industry technology transfers (Balderi et al., 2009).
These actualities demonstrate the importance of giving attention to and carrying out research on
strategies related to technology transfer in universities, considering that “the more successful
universities have clearer strategies towards the spinning out of companies and... were found to
possess greater expertise and networks that may be important in fostering spin-out companies”
(Lockett et al., 2003, p. 185).
2. RESEARCH
Context
The setting of the research is the Ph.D. Schools of Verona University (Italy); with a medium term
object to design adaptable interventions in entrepreneurship education in these Ph.D. courses, the
Regional Agency for the Right to Educations (ESU Verona) support provided backing to the Centre for
Young Entrepreneurship of this University to carry out a survey on the Ph.D. students.
Ten Ph.D. Schools were surveyed (Humanities; Human Science and Philosophy; History of Art;
Historical, Geographical and Anthropological Studies; Management; Economics; Law; Health and Life
Science; Translational Biomedical Sciences; Science Engineering Medicine) with a total of 588
students (in 2013).
We present the result of the research conducted on the group of Ph.D. students from scientific and
technical schools (Health and Life Sciences; Translational Biomedical Sciences; Engineering Science
in Medicine; total population= 295).
Objectives
The main objective of the research is to comprehend the entrepreneurial potential (training, presence
of entrepreneur, attitude, job project, skill, aptitude) in scientific and technical Ph.D. students (S&T-
Ph.D.).
The specific objectives of the research are:

- to recognize if the S&T-Ph.D. receive entrepreneurship education;
- to measure how many S&T-Ph.D are entrepreneurs;
- to define the image of a future job situation and attitudes toward an entrepreneurial role;
- to identify entrepreneurial competences that the S&T-Ph.D. are aware of possessing;
- to describe the entrepreneurial potential of the S&T-Ph.D.;
- to highlight the links among the analysed entrepreneurial variables.
Sample
We analysed a group of 109 subjects participating in the research (37% of the population of the
Scientific and Technical Ph.D. students in Verona - Italy):
- age average 29.97 (s.d. 4.95)
- male 60.6%
- Health and Life Sciences 24.8%; Translational Biomedical Sciences 40.4%; Engineering
Science in Medicine 34.9%.
Instrument
The instrument is an on-line questionnaire (http://cig.univr.it/questionario_PhD/; 60 multiple-choices
items; 53 for non-entrepreneurs?) that analyses: personal and professional data; entrepreneurial
networks of acquaintances (relatives, friends) and support perception; perception of becoming an
entrepreneur; entrepreneurial skills, attitudes toward an entrepreneurial role (semantic differential);
entrepreneurial aptitude (Entrepreneurial Aptitude Test-TAI®; Cronbach's Alpha=.896; described in
Cubico et al., 2010); information about the enterprise creating process.
78
3. RESULTS
Entrepreneurial Training
In the description of the learning objectives and in the official curriculum of the analysed Ph.D.
entrepreneurship or similar (like business, company, entrepreneurS) courses with dedicated training
do not emerge. In spite of this, some students (17%) have the perception that this topic has been
covered. It is interesting that this perception is more present in non-entrepreneurs than entrepreneurs
(only one of the latter reports this); perhaps non-experts see topics as “entrepreneurial in nature”
when they are not.
Entrepreneur or non-entrepreneur
The results show that 10% of scientific and technical Ph.D. students are entrepreneurs and we did not
find significant differences between gender and specific Ph.D. courses (Chi square analysis). When
we analysed student workers (32% of Ph.D. Students) we found that 31% of them are entrepreneurs.
Entrepreneurial Role and Future

The involved Ph.D. students appear partially optimistic about their future job potential, with less risk of
unemployment (mean 2.6/5). The entrepreneurial future proves to be a secondary choice especially in
the medium term (5-years; mean 2.0/5).
In particular, non-entrepreneurs see themselves mostly in the medium term in a position of research
fellow (mean 3.2/5; a choice that decreases over time as the perception of the risk of unemployment)
or as employed (a choice that increases). We noted that the specializations of this Ph.D. students are
defined as being “strong” in the labour market (Ballarino, Bratti, 2009; Buonanno, Pozzoli, 2009) and
they also think that it will be easy to be hired.
Future potential as an entrepreneur increases when the students see themselves in long-term
scenarios; this characterises the group of the Engineering Science in Medicine Ph.D. Students, who
present significant differences in average levels (2.94, s.d. 1.76; Anova; p value .000). This choice
appears influenced, more than any other, by gender (females state a stronger interest) and by the
presence of entrepreneurs in their network of acquaintances.
As expected, significant differences exist in: students who state that they have “already thought”
about a future as an entrepreneur are more oriented to seeing themselves as such (5-years: 2.69,
s.d.1.23; 10-years: 3.14, s.d. 1.27); entrepreneurs see themselves in the same position as a higher
possibility (5-years: 3.64, s.d.1.21; 10-years: 3.91, s.d. .94).
Students have a positive attitude towards the entrepreneurial role, which they define as: active,
flexible, stimulating, prestigious, various, new, satisfactory, and interesting (more than regular
employment). These attitudes are similar among non-entrepreneurs and student entrepreneurs (no
significant differences emerged) and show that Ph.D. Students have a positive idea of their future as
entrepreneur (with or without direct experience).
Entrepreneurial Skill
The questionnaire investigates the self-evaluation that students made on his/her entrepreneurial
competences; the listed competences are extracted from the model of the (eight) key competences
for lifelong learning (European Commission, 2007).
Scientific and technical Ph.D. students feel that they possess skills mostly in organizing (4.2/5) and
planning (4.2/5), followed by managing (3.9/5) and analysing (3.8/5); less present are leadership
(3.2/5) and delegating (3.1/5). The differences are significant (Anova) in many cases among
entrepreneurs (much higher) and non-entrepreneurs.
Entrepreneurial Aptitude
As in another study, we define entrepreneurial aptitude as “the potential toward creating and
developing enterprise and self-employment” (Cubico et al., 2010, p. 427) and we use a standardized
instrument crated ad hoc (Entrepreneurial Aptitude Test-TAI® detailed in Cubico et al., 2010). The
average of TAI® score for the entrepreneurs is 3.57 (s.d. .54), significantly higher for the group of
non-entrepreneurs (3.02, s.d. .51; T test; p value= .002) and similar to other entrepreneurs (Cubico et
al., 2013).
79
Scientific and Technical Ph.D. Students and Entrepreneurial Competences

In the group of non-entrepreneurs, interesting correlations emerge between entrepreneurial
competences and other variables synthetized in Table 1.
TABLE 1: CORRELATIONS BETWEEN ENTREPRENEURIAL COMPETENCES, FUTURE AND

PERCEIVED DIFFICULTIES IN NON-ENTREPRENEURS PH.D. STUDENTS
(n= 88; Rho Spearman)
Skills and Aptitude Future and Difficulties

Planning - entrepreneurial intention: 5-years (.239*); 10-years (.315**)
- perceived difficulties: to have information in enterprise creation (-.325**)
Organizing - perceived difficulties: to have information in enterprise creation (-
.311**);
Managing - entrepreneurial intention: 5-years (.335**); 10-years (.404**)
Leading - entrepreneurial intention: 5-years (.297*); 10-years (.309**)
- perceived difficulties: personal characteristics (-.227*); to possess
competences (-.225*)
Delegating - perceived difficulties: to possess competences (-.291*)
Analyzing - perceived difficulties: to individuate members and staff (-.266*); to have
information in enterprise creation (-.398**); personal characteristics (-
.229*); to possess competences (-.244*)
Communicating - entrepreneurial intention: 5-years (.243*); 10-years (.247*)
- perceived difficulties: bureaucracy (-.319*); to have information in
enterprise creation (-.315**); personal characteristics (-.354**); to
possess competences (-.344**)
Evaluating - perceived difficulties: *); to possess competences (-.243*)
Recording - perceived difficulties: to have information in enterprise creation (-.251*)
Identifying one's - entrepreneurial intention: 5-years (.241*); 10-years (.270*)
strengths - perceived difficulties: to individuate members and staff (-.312*);
personal characteristics (-.234*)
Identifying one's - entrepreneurial intention: 10-years (.236*)
weaknesses
Taking Risks - perceived difficulties: to individuate members and staff (-.248*);
personal characteristics (-.341**); to possess competences (-.387**)
Entrepreneurial Aptitude - entrepreneurial intention: 5-years (.398**); 10-years (.440*)
(TAI® -score) - skills: planning (486**); organizing (.455**); managing (.426**); leading
(.556**); delegating (275**); analyzing (.379**); communicating (.234*);
debriefing (.291**); evaluating (.270**); to record (264*); identifying
one's strengths (.470**); identifying one's weaknesses (.242*); taking
risks (.489**)
(pvalue: *= .05; **=.001)
These results highlight in a synthetic way the relationship between skills, entrepreneurial intention
(positive) and perception of difficulties (negative): Acquiring entrepreneurial competences permits one
to see oneself in an entrepreneurial future with less difficulty. This considerations have a strong link to
Ph.D. courses in which it is possible to dedicate part of the curriculum to improving transversal (as
leadership, planning, organizingS) and specific (as debriefing, evaluating S) skills required for an
entrepreneurial job.
4. DISCUSSION
We consider these results a step in understanding the human capital of entrepreneurship in Scientific
and Technical Ph.D. courses, and these data permit us to identify those characteristics that may
influence the choice of becoming an entrepreneur during or after an academic training.
Our results show that entrepreneurial potential in the Ph.D. Students is rich in quality and may be
influenced by competencies, attitude, and networking. Such an awareness invites university policies
into putting more emphasis on the organization of PhD programs (cf. Brush et al., 2003): courses
80
more oriented to the growth of entrepreneurial culture and attitude than a career in
academia/research and more focused on expanding networks of doctoral students than in rewarding
“pure” scientific language.
The process to sustain entrepreneurial intention and success for scientists is made up of different
fields of interventions (Brennan et al., 2005; Di Gregorio, Shane, 2003; Krabel, Mueller, 2009; O,
Shea et al., 2008): environment (institution, network, policy, financial, infrastructures, information,
economic system, ...), person (culture, attitude, aptitude, experience, competence, motivation, ...), and
organization (vision, mission, goals, strategy, form of ownership, business area, management,
resources, ...). The long-term objective of the research carried out by the Centre for Young
Entrepreneurship of University of Verona is to create an intervention model that includes these
variables and permits us to facilitate our Ph.D. Students to create businesses using their own
knowledge and ideas (in sciences and humanities).
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82
THREAT OF LOSING THE JOB AND DEVIANT BEHAVIOURS AS CONSEQUENCE:

COMPARING SOCIAL EXCHANGE PERSPECTIVE AND JUSTICE CONTROL MODEL AS
THEORETICAL EXPLANATIONS
Beatrice Piccoli, University of Verona, Verona, Italy

Massimo Bellotto, University of Verona, Verona, Italy
ABSTRACT
In the current context of economic crisis, more flexibility from the workforce and organizations is
required by the labour market. Job insecurity is a major source of psychological strain during these
organizational changes. Research suggests that stressful working conditions may contribute to
employees engaging in counterproductive work behaviours in an attempt to regain control over their
environment. Alternatively, the fear for uncertainty may lead to avoid any behaviour increasing the
likelihood of job loss. In this study we compare two different mediating mechanisms to investigate the
relationship job insecurity and deviant behaviours in order to understand the psychological processes
underlying. Specifically, psychological contract, rooted in the exchange perspective, and procedural
justice, explained by the control model, are the theoretical explanations that we propose. In a sample
of 322 blue-collar workers, the results showed that job insecurity is positively related to deviant
behaviours indirectly (full mediation) through both breach of psychological contract and procedural
injustice: both indirect effects have the same strength in explaining the relationship. The
consequences of these findings for theory and practice are highlighted in the discussion.
Keywords: Job Insecurity; Deviant Behaviours; Psychological Contract Breach; Social Exchange
Theory; Procedural Injustice; Justice Control Model; Multiple Mediation Model.
1. INTRODUCTION
The economic crisis in these recent years caused an increase in feelings of uncertainty, stress and
anxiety for many workers about the existence and the features of their job. The experience of job
insecurity refers to the perceived threat to one’s job continuity and the powerlessness to counter the
threat (e.g., De Witte, 2005). Numerous studies have documented the negative consequences of job
insecurity for both the individual and the organization (for an overview, see Sverke, Hellgren, &
Näswall, 2002). While there has been extensive research on health and psychological outcomes, very
few studies have been conducted on influence of job insecurity on deviant behaviours, i.e.,
behaviours that violate organizational rules, a performance domain of central importance to
organizational effectiveness.
In general, research on stressful work conditions support for a positive relationship between work
stressor and counterproductive behaviours. But in the case of job insecurity, which is considered as
one of the most important job stressor, the effects on these behaviours may be less clear-cut. On the
one hand, job insecurity can lead to aggressive tendencies in an attempt to regain control on the
environment. On the other hand, the fear for the uncertainty may lead to avoid any behaviour
increasing the likelihood of job loss. In effect, in the few studies on the association of job insecurity
with deviant behaviours, there are both these contradictory results.
Therefore, in this research we intend to better understand this relationship examining the mediating
processes underlying. Specifically, two theoretical explanations are proposed and compared: social
exchange perspective and justice control model. The former is the theoretical foundation of the
psychological contract breach, a mechanism investigated in various studies in order to explain how
job insecurity may be experienced. The latter perspective, can add theoretical nuance to our
understanding, introducing the mediational role of procedural injustice.
1.1. Job Insecurity, Psychological Contract and Procedural Justice: Social Exchange
Perspective and Justice Control Model
Job insecurity is a perceived threat of job loss and the worries related to that threat (De Witte, 2005).
It refers to a subjective experience based on both a cognitive (i.e. likelihood of job loss) and an
affective component (i.e. fear that it would occur). Thus, workers in the same objective situation may
83
differ in their perceptions of job insecurity. Numerous studies have documented the negative
consequences of job insecurity for both the individual and the organization (for an overview, see e.g.,
Sverke et al., 2002). In fact, research suggests that a change in working conditions, from having been
secure to being uncertain, will have an impact not only on employees’ well-being, but also on their
work attitudes and behaviours and, in the long run, on the vitality of the organization (De Witte, 1999).
As stated by Greenhalgh and Rosenblatt (2010): “Workers react to job insecurity and their reactions
have consequences for organizational effectiveness” (p. 438).
Various theoretical frameworks can be used to explain employees’ reactions to job insecurity. For
example, the framework utilized in research on psychological contracts may be used to understand
the organizational consequences of job insecurity. The psychological contract is described as the
perceived mutual obligations between two parties, the employee and the employer (e.g., Robinson,
Kraatz & Rousseau, 1994). It consists of the duties and commitments that the employee perceives to
have in the employment relationship as a response to rewards expected for the fulfilment of
obligations and for being loyal to the employer. According to the exchange process underlying the
psychological contract, the individual and the organization have expectations of each other regarding
opportunities and behaviours. The individual expects to receive specific rewards from the
organization; at the same time the organization places demands on the individual. Within the
psychological contract, the idea of balance is fundamental: a perceived imbalance between efforts
and rewards results in the perception of a violation of the contract.
Therefore, the experience of job insecurity can lead to the perception of a breached psychological
contract (De Cuyper & De Witte, 2006), given that the individual considers secure employment as part
of his or her implied agreement with the employer. A breach of the psychological contract may give
rise to negative reactions by the party experiencing the violation and may seriously impair the
relationship (Robinson & Morrison, 2000).
Thus, psychological contract theory defines job security as a key element of the psychological
agreement. Moreover, the literature also suggests that adverse reactions could be related to an
unwelcome change in the psychological contract, rather than to job insecurity per se.
Therefore, in keeping with this evidence, we hypothesize:

Hypothesis 1: Job insecurity is positively related to perceptions of psychological contract breach.
On the other hand, job insecurity can also be related to organizational justice perceptions.
Organizational justice is defined as the set of rules and social norms governing how outcomes should
be distributed, the procedures used for making such distribution decisions, and how people are
treated interpersonally (Folger & Cropanzano, 1998). Organizational justice lays the foundation for
perceptions of control and predictability. In particular, this applies to procedural justice: it measures
the extent to which managerial procedures promote consistency, bias suppression, accuracy,
correctability, representativeness and ethicality (Niehoff & Moorman, 1993). Underlying procedural
justice evaluations, there are two criteria: process control (e.g., the ability to voice one’s views and
arguments during a procedure) and decision control (e.g., the ability to influence the actual outcome
itself). That is, people are more likely to evaluate a decision-making process as being fair when the
procedures followed give them control over or input into the decision-making process. This
instrumental explanation suggested by Thibaut and Walker (1975), suggests that people value
process control because it provides them with indirect influence over the outcome of the decision-
making process.
On the other hand, stemming from job stress research, Furda and Meijman (1992) suggest that job
insecurity generates feelings of reduced control and unpredictability regarding one’s future in the
present organization. Unpredictability and uncontrollability constitute two key dimensions of the
construct of job insecurity (De Witte, 2005): an uncertain future makes it difficult to foresee what will
happen and subsequently how to react. Moreover, it is out of the employee’s control whether he/she
is allowed to keep the job or not. Especially this last feature, namely lack of control, is interesting for
our reasoning linking job insecurity to organizational justice perceptions. Perceived control refers to
employees’ situational appraisal of their ability to control the job insecurity situation. Insecure
situations are stressful because they lead the employees to perceive a lack of control which then
determinates strain (Lazarus & Folkman, 1984). In fact, the notion of personal control, or the degree
to which employees feel in control of their environment, is central to the work stress literature: it is
84
considered to protect against a stressor. Furthermore, perceived control is conceptualized as “impact

factor” suggesting that it depends on how much people believe that outcomes are contingent upon,
rather than independent of, their behaviour. That is, to the extent that employees believe that their
behaviour influences the outcomes, they are likely to experience a high degree of perceived control.
As mentioned above, a similar concept of control is also encompassed in the definition of process
control related to procedural and interactional justice (Thibaut & Walker, 1975). Moreover, the ability
to control relevant aspects of the environment may alter the perceived fairness of organizational
procedures and perceived relational justice (Elovainio, Kivimäki, & Helkama, 2001). Then, perceived
justice relates to various organizational attitudes and behaviours. The feelings of personal control
imply more favourable evaluations of procedural and relational justice. Therefore, situational control
seems to be a relevant precondition for evaluating organizational procedures, and this evaluation is
strongly related to the quality of relationships between employees and management.
Consequently, job insecurity leads to a lack of control which in turn may be connected to negative
justice perceptions because the procedures are only considered fair when employees have the
control over the decision-making process. Therefore, on the basis of the literature, the following is
proposed:
Hypothesis 2: Job insecurity is negatively related to perceptions of procedural justice.
1.2. Breach of Psychological Contract, Procedural Injustice and Deviant Behaviours

Deviant behaviours are defined as discretionary and counterproductive behaviours that violate
organizational rules; thus endangering the well-being of the organization and its members (Robinson
& Bennett, 1995). Different labels have been used to define these actions: aggressive work
behaviours, organizational misbehaviours, antisocial work behaviours, counterproductive work
behaviours. Indeed, the growing interest of research for deviant behaviours has generated a variety of
definitions that is often overlapping and confusing (for a review, see Robinson & Greenberg, 1999).
Certainly, deviance has several manifestations and is expressed in different behaviours, like
workplace aggression, revenge, theft, retaliatory behaviour, and antisocial behaviour.
In an attempt to bring order, Robinson and Bennett (1995), through a multidimensional scaling study,
have devised a two-dimensional classification system for workplace deviance: one dimension reflects
the target of behaviour, directed toward the organization (organizational deviance) or against its
members (interpersonal deviance); the second dimension focuses on the severity of behaviour,
ranging from minor to serious deviant behaviour. Usually, organizational variables (e.g., psychological
contract breach) are more likely to influence deviance directed at harming organizations and
individual variables are more likely to explain interpersonal forms of deviance (Robinson & Bennett,
1995).
When individuals perceive a breach of the psychological contract, in efforts to restore equity in the
employment relationship, they can reduce or eliminate their extra-role or discretionary behaviours
once performed to the benefit of the organization. If that is not sufficient to restore the balance input-
output in the exchange relationship, the withholding of favourable actions may escalate to such things
as less effort on the job, working more slowly, taking longer breaks than permitted and coming in later
than allowed (i.e., organizational deviant behaviours). In this case, employees who perform deviant
behaviours are retaliating against the target held responsible for dissatisfying conditions, i.e. the
organization. They aim to compensate for an outcome that is perceived as being deserved but not
received and they harm the target as punitive measure. These types of behaviours can detract from
the effective work of an organization: they don’t support the broader social, organizational and
psychological environment that is necessary for organizational efficiency and effectiveness (Skarlicki
& Folger, 1997).
Consequently, in keeping with hypothesis 1 that relates job insecurity to breach of the psychological
contract, the following is proposed:
Hypothesis 3: Breach of the psychological contract mediates the relationship between job insecurity
and deviant behaviours (organization-directed).
On the other hand, also procedural injustice can be related to deviant behaviours. Through procedural
justice, organizations attempt to promote fair distribution of outcomes. If individuals consider that
85
formal procedures are fairly implemented, they will be more sure that their interests will be protected
by the organization. However, when procedures are perceived as unfair, individuals may care less
about their colleagues or organization and they may be more willing to exhibit negative behaviours
toward them. Indeed, among the reasons that lead to harmful behaviours, injustice is the most
common cause and the source of injustice influences the target and severity of deviant behaviours
(Dalal, 2005).
Therefore, in keeping with hypothesis 2 that relates job insecurity to organizational justice, the
following is proposed:
Hypothesis 4: Organizational justice (procedural and interactional) mediates the relationship between
job insecurity and organizational citizenship behaviours.
2. METHOD
2.1. Participants
The survey was conducted in three plants of the same company located in the North-East of Italy. All
employees involved (N = 322) were blue-collar workers, a category heavily affected in Italy by the
economic crisis.
The sample was composed of 87% men and 13% women. The mean age was included in the range
from 36 to 45 years (39%). With regard to tenure, 54% of the participants had been working in the
company for more than 10 years. The response rate was 78%.
2.2. Procedures
The proposal of the research was explained to the head of the organization. After having obtained the
agreement, questionnaires were administered in meetings organized during working hours on
voluntary participation. First, members of the research team have provided employees with informed
consent materials that explained the anonymous nature of the data collection and their rights as
research participants. Then, they were informed that only members of the research team could
access to the data. In addition, during the filling out the questionnaire, no supervisor was present.
2.3. Measures
- Job Insecurity: was measured using 4 items focusing on the worker’s perception and worry of
whether they would be able to keep their current job (De Witte, 2000). One example of the items used
is: “I am sure I can keep my job” (reverse coded). Participants were asked to express their own
agreement/disagreement with the items on a scale from 1 (= strongly disagree) to 5 (= strongly
agree). The Cronbach’s alpha of this scale was .81.
- Breach of the Psychological Contract: we used a global measure of perceived contract breach,
which assessed employees' perceptions of how well their psychological contracts had been fulfilled by
their organizations. The measure contained five items from the scale of Robinson and Morrison
(2000), with responses on a 1-5 scale ranging from “strongly disagree” to “strongly agree” (α = .85).
Sample items are as follows: “I have not received everything promised to me in exchange for my
contributions” and “Almost all the promises made by my employer during recruitment have been kept
thus far” (reverse scored).
- Procedural Justice: was measured with 4 items from Niehoff and Moorman (1993), assessing the
degree to which job decisions included mechanisms that ensured the gathering of accurate and
unbiased information, employee voice and an appeal process (e.g., “All job decisions are applied
consistently across all affected employees”). The response scale ranged from 1 (strongly disagree) to
5 (strongly agree). The scale reached a Cronbach alpha of .87.
- Deviant Behaviours (organization-directed): according to the distinction by Robinson and Bennett

(1995), we measured deviant behaviours organizationally-directed with five items originating from the
scale of Bennett and Robinson (2000). A sample item is “I took an additional or longer break than is
acceptable in this organization”. The scale ranged from 1 (never) to 5 (always). The Cronbach’s alpha
of this scale was .74.
86
2.4. Data Analysis

Testing was done in two steps: (a) testing of the measurement model and (b) testing the mediated-
effects hypotheses. Using AMOS 17 (Arbuckle, 2008), in the first step we related the observed
variables to the underlying constructs by means of Confirmatory Factor Analysis (CFA). The fit of the
measurement model was evaluated using various indices: 1- the Non-Normed Fit Index (NNFI); 2- the
Comparative Fit Index (CFI); 3- Root Mean Square Error of Approximation (RMSEA) with Confidence
Intervals (CI); 4- Standardized Root Mean Square Residual (SRMR).
The mediational hypotheses were tested using SPSS-macro of Preacher and Hayes (2008) for testing
specific indirect effects in multiple mediator models. This macro also allows to compare the strengths
of the two indirect effects in order to decide which theory should be given more credence (i.e.,
contrast test). Bootstrapping was used to construct two-side bias corrected confidence intervals so as
to evaluate mediation effects. As Hayes (2009) suggests, bootstrapping is one of the more valid and
powerful methods for testing intervening variable effects. He recommend bootstrapping especially
because it does not impose the assumption of normality of the sampling distribution. The statistical
significance of bootstrap estimated indirect effects was evaluated: 95% bootstrap confidence intervals
(5000 samples) for indirect effects were computed to evaluate whether they included zero.
3. RESULTS
The hypothesised measurement model with four latent variables (job insecurity, breach of the
psychological contract, procedural justice and deviant behaviours) provided a good fit to the data:
χ2(239) = 475.15; NNFI = .91; CFI = .93; RMSEA = .06 with C.I.= .07; .09; SRMR = .07. The loading of
the variables on their corresponding factor was satisfactory (ranging from .50 to .90).
Results of the test of the mediated-effects hypotheses are provided in Figure 1: we found that job
insecurity is positively related to psychological contract breach (β = .45) and negatively related to
procedural justice (β = -.32), in line with the hypotheses 1 and 2. Furthermore, psychological contract
breach mediates the relationship between job insecurity and deviant behaviours (specific indirect
effect = .07; C.I.= .09; .18), supporting hypothesis 3. In addition, also procedural justice is a mediator
of this relationship: specific indirect effect = .06; C.I. 05; 21, in line with hypothesis 4. Specifically, 68%
of the relationship between job insecurity and deviant behaviours was explained by these two
mediators.
Each mediators significantly accounted for the relationship but no one differed from the other: in fact,
the bootstrapping of the contrast test was not significant.
FIGURE 1. Model tested using SPSS-macro by Preacher and Hayes (2008), with standardized path
coefficients
Total effect (c path): .19
(a paths) Psychological (b paths)

Contract
Breach
.45 .15
Direct effect (c‘ path): .06 ns Deviant

Job Insecurity
Behaviours
- .32 Procedural - .18

Justice
4. DISCUSSION
The present article tested a model of the effects of job insecurity on organizational deviant
behaviours, a consequence poorly investigated in the job insecurity literature. We hypothesized that
the effects of job insecurity on this outcome would be mediated by psychological contract breach and
87
procedural injustice perceptions. The findings provide support for a mediation model where the two
hypothesized mediators fully mediate the relationship: both indirect effects had the same strength in
explaining the relationship. The results of the model indicate that the two mediators are important
antecedents of the counterproductive behaviour. In particular, psychological contract, rooted in the
social exchange perspective, considers relationships and behaviours generally characterized by the
exchange of tangible or intangible resources. In a job insecurity context, the exchange is perceived as
unbalanced, so employees may decide to retaliate against organization by engaging in deviant
behaviours. On the other hand, procedural justice, explained by the control model, suggests that work
procedures are evaluate as fair when they give the control over or into the decision-making process.
Insecure employees perceive to have a lack of control on the situation, because of unpredictability
and uncontrollability of their work position: therefore, this injustice perception may lead to deviant
behaviours in an attempt to regain control over the environment.
From a theoretical point of view, we found that the two theories are complementary to each other in
identifying different mechanisms that determine employees’ responses to job insecurity. As shown in
this study, psychological contract and justice control theories can be integrated to provide a
comprehensive framework to understand the complexity of employee’s behaviours under uncertain
conditions. The study provides empirical evidence that insecure employees can adjust their
counterproductive behaviours on evaluations of their employment relationship and on assessments of
their perceptions of fair treatment.
In practical terms, it is noteworthy to point out that in uncertain work situations the perceptions of
psychological contract and procedural justice become important in determining outcomes correlated
to job insecurity. This means that organizations need to be careful about what they promise and
regarding their treatment toward employees, especially during periods of uncertainty. For example,
even if promises about the psychological contract are made in good faith, managers may not be able
to fulfil them at a later point in time if conditions are uncertain. In order to reduce perceptions of
psychological contract breach and their negative correlates, organizations may consider to increase
the amount of contact and communication between organizational agents and employees (Robinson
& Morrison, 2000).
On the other hand, the results also suggest that managers should be particularly attentive to
employees’ perceptions of justice in the face of insecure situations. Organizations need to involve
workers in the decision making process, and need to develop activities to increase their sense of
perceived control. The greater the threat to job loss, the more important it is for managers to take
action that increases, maintains or restores employees’ justice perceptions by creating an
environment in which workers believe that their actions make a difference.
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Psychology, Münster, Germany, 2013
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Justice Moderates this Relationship”, Romanian Journal of Applied Psychology, 13 (2), 37-49,
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causes”, Research on Negotiations in Organizations, 6, 3-27, 1997.
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AUTHOR PROFILE:
Beatrice Piccoli received her Ph.D. from the University of Verona (Italy) and the Katholieke
Universiteit of Leuven (Belgium). Currently she is Post-doctoral Fellow in Work and Organizational
Psychology and Expert in Psychometrics at the University of Verona, Italy.
Massimo Bellotto is a Full Professor in Work and Organizational Psychology at the University of
Verona, Italy.
90
THE ROLE OF MANAGEMENT ACCOUNTANTS IN THE USE OF

ERP SYSTEMS IN LARGE COMPANIES
Bernhard Gärtner, Johannes Kepler University, Linz, AUSTRIA

Andrea Krichbaum, Johannes Kepler University, Linz, AUSTRIA
ABSTRACT
In the current literature there is a need for research on the link between the use of enterprise resource
planning (ERP) systems and management accounting. Some further studies report a strong
advancement for the role of management accountants through an ERP system implementation, but
the specific use of an ERP system and its effects on the role of management accountants therefore
have been largely neglected so far. This paper investigates the effects of the use of ERP systems on
the changing role of management accountants. For this research, a case study design in a large
international operating Austrian company was chosen. In reference to organizational role theory as
well as organizational development theory, the results of this study actually confirm a contribution of
the use of ERP systems to the changing role of management accountants (e.g. requirements, tasks,
and interactions with other departments or employees).
Keywords: Enterprise resource planning systems, ERP, management accounting, role of

management accountants, large companies
1. INTRODUCTION
Due to various changes in technologic and economic fields, in recent years more and more
companies have implemented Enterprise Resource Planning (ERP) systems in order to increase
effectiveness and efficiency of information supply (Granlund, 2001; Hunton, 2002; Umble et al., 2003;
Olsen and Sætre, 2007). Especially in international operating large companies, ERP systems are
widespread (Granlund and Malmi, 2002; Scapens and Jazayeri, 2003; Schlichter and
Kraemmergaard, 2010; Chen et al., 2012; Feldbauer-Durstmüller and Gärtner, 2013). With the
implementation of ERP systems (e.g. SAP, Oracle or Microsoft) a better decision support of the top
management should be ensured (Kemper and Baars, 2006; Seufert and Lehmann, 2006). Common
practice of management accounting has changed increasingly (e.g. in terms of analytic and strategic
tasks) and contemporary management accounting is deemed to be almost impossible without IT
systems (e.g. ERP systems) (Granlund and Mouritsen, 2003; Chow and van der Stede, 2006; Rom
and Rohde, 2006; Sayed, 2006; Granlund, 2011; Sánchez-Rodríguez and Spraakman, 2012).
Considering the relationship of ERP systems and management accounting, it can be inferred that
ERP systems also entail implications for the role of management accountants (Byrne and Pierce,
2007). In initial qualitative empirical studies on ERP systems and management accounting
respectively management accountants only have shown minimal changes in the role of management
accountants through an ERP system implementation (Hyvönen 2003; Scapens and Jazayeri, 2003;
Quattrone and Hopper, 2005; Hyvönen et al., 2009). Further studies report a strong advancement for
the role of management accountants through an ERP system implementation (Quattrone and Hopper,
2001; Doran and Walsh, 2004; Sayed, 2006). However, since 2000 several studies on the impact of
ERP systems on the role of management accountants have been carried out (Booth et al., 2000;
Quattrone and Hopper, 2001; Hyvönen, 2003; Scapens and Jazayeri, 2003; Doran and Walsh, 2004;
Quattrone and Hopper, 2005), and prevailing qualitative empirical studies postulate that the role of
management accountants underlies a change from "Scorekeeper" to "Business Partner," although no
clear statements can be made on the extent of change for management accountants (Goretzki et al.,
2013). Therefore, on the basis of a first-time qualitative empirical cross-sectional study in a large
Austrian company, this paper should examine the effects the use of an ERP system has on the role of
management accountants (e.g. requirements, tasks, and interactions with other departments).
Taking into account former research on ERP systems and management accounting, it has to be
mentioned that not all companies have efficiently used their ERP systems over a longer period yet, for
which reason the already published research largely focuses on the ERP system implementation
process (Lodh and Gaffikin, 2003; Scapens and Jazayeri, 2003; Umble et al., 2003; Santamaría-
Sánchez et al., 2010). The specific use of an ERP system and its effects on the role of management
accountants therefore have been largely neglected so far (Granlund and Malmi, 2002; Scapens and
91
Jazayeri, 2003; Schlichter and Kraemmergaard, 2010). On the one hand, this paper follows the
organizational role theory suggested by Katz and Kahn (1976), which assumes that the behavior of an
individual in a company has to be understood in terms of the interaction with other individuals, which
among other things depends on the expected, the transmitted, and the received role (Katz and Kahn,
1978). On the other hand, it is referenced on organizational development theory, as the organizational
development concerns the individual and the collective learning within an organization (Prange,
1999). Based on the existing research results, this contribution should provide new insights into the
role of management accountants in the use of an ERP system by answering the research questions
below:
Which changes arise from the use of an ERP system for

the role of management accountants in a large company?
Q1) Which changes arise for the requirements for management accountants?
Q2) Which changes arise for the tasks for management accountants?
Q3) Which changes arise for the interactions between management accountants and other
departments of the company?
The rest of the paper is structured as follows. In the next chapter the state-of-the-art of this research
field are presented. Thus, in Chapter 3 the reference theories are described. Based on the
methodological approach in Chapter 4, the results are presented in Chapter 5. In Chapter 6 the paper
concludes with a discussion and conclusion for future research and business practice.
2. STATE-OF-THE-ART
Previous results on the relationship between the role of management accountants and the use of an
ERP system have shown that not all companies have used their ERP system over a long period
efficiently, which is why published papers largely focus on the ERP system implementation process
(Lodh and Gaffikin, 2003; Scapens and Jazayeri, 2003; Umble et al., 2003; Santamaría-Sánchez et
al., 2010; Schlichter and Kraemmergaard, 2010). Further, it can be stated that published results on
the role of management accountants affected by an ERP system implementation and post-
implementation are controversial. On one hand, changes in the role of management accountants
through the use of an ERP system are considered as minimal (Hyvönen, 2003; Scapens and
Jazayeri, 2003; Quattrone and Hopper, 2005; Hyvönen et al., 2009) and on the other hand, contrary
studies show an extensive development in the role of management accountants (Quattrone and
Hopper, 2001; Doran and Walsh, 2004; Sayed, 2006).
Advantages for management accountants through the use of an ERP system, which almost all
previous studies identified, concern the automatization of the information supply process. That can be
supported effectively and efficiently by the use of an ERP system, whereby routine activities such as
the collection and transfer of data and information are taken over by other employees or the ERP
system itself (Booth et al., 2000; Quattrone and Hopper, 2001; Scapens and Jazayeri, 2003; Doran
and Walsh, 2004; Gärtner et al., 2014). Time exposure spent on certain tasks of management
accountants could therefore be reduced significantly and more time could be spent on intensive
analytic and strategic tasks (Granlund and Malmi, 2002; Scapens and Jazayeri, 2003; Doran and
Walsh, 2004; O' Mahony and Doran, 2008).
In some companies, as a result of the use of ERP systems, a redefinition of the tasks of management
accountants has been necessary. Several studies show that the need for IT skills has increased.
Management accountants had to expand their IT skills in order to exploit the benefits of the ERP
system (Sayed, 2006). Further, it was found that the use of modern and traditional management
accounting instruments (e.g. Activity Based Costing (ABC), Balanced Scorecard (BSC)) can be
intensified by working with an ERP system (Hyvönen, 2003; Doran and Walsh, 2004). For
management accountants, new challenges have emerged (such as the more intensive analysis of
data, the configuration of information design, the integration in software implementations and the
maintenance of ERP systems (Granlund, 2007).
Other developments evolved in regard to the organizational structure of companies, which may also
have effects on the role of management accountants. The work of Scarpens and Jazayeri (2003) on
the one hand shows a development away from decentralized toward centralized organizational
92
structures as a result of the use of ERP systems. However, looking at the control activities of
management accountants in particular, on the other hand it was found that these were centralized
before the use of an ERP system, but afterwards they have been decentralized and focused on
several business functions (Quattrone and Hopper, 2001).
In the light of the partially differing and conflicting research results, some studies attempted to explain
the divergent outcomes by identifying context factors (Knapp and Shin, 2001; Ifinedo, 2007). The
length of the use of an ERP system, for example, is of great importance. In this case, the longer an
ERP system is used by a company, the higher its effects on management accounting and the role of
management accountants. Therefore, in companies with longer experience in using ERP systems, the
role of management accountants changed towards a much more active and influential role (Booth et
al., 2000; Granlund and Malmi, 2002). Moreover, previous studies have shown that the extent of
changes also depends on the extent to which an ERP system is intertwined with certain management
accounting techniques (e.g. ABC, BSC) (Granlund and Malmi, 2002). With the intensity of use of an
ERP system respectively with the number of used ERP system modules the observed changes for
management accountants increase (Granlund and Malmi, 2002; Spathis, 2006). Another key factor is
the involvement of management accountants in the ERP system implementation process.
Management accountants, who are involved in this process, can also face greater chances and
changes (Hyvönen et al., 2009).
Following current literature, it can be stated that some qualitative empirical contributions on ERP
systems and their impact on the role of management accountants exist, but in the field of the use of
ERP systems and their effects on the role of management accountants, research is still nascent
(Granlund, 2007; Kallunki et al., 2011). So far conducted studies on ERP systems and the role of
management accountants has found little effects of the ERP systems on the role of management
accountants (e.g. reduction of routine activities, redefining of tasks (Gärtner et al., 2014)). Therefore,
by means of this paper, the effects of the use of an ERP system on the role of management
accountants in a large company should be investigated.
3. THEORATICAL BACKGROUND
To examine the research questions, this paper refers to organizational role theory suggested by Katz
and Kahn (1976) and organizational development theory (organizational learning). These theories
have been selected to derive hypotheses and to interpret the results in order to make the role of
management accountants more accurate.
The changed role of management accountants constitutes the central part of this paper. For this
reason, organizational role theory is defined as the essential theoretical framework. A role can be
understood as the sum of social assignments regarding the behavior, appearance, and characteristics
of an individual (Dahrendorf, 2006). A role thus describes associations that affect the behavior of an
individual to be assigned to specific tasks. It involves expectations of people who are associated with
this role. But not only the image that society assigns to a particular role, but also the interpretation of
an individual itself forms the role (Katz and Kahn, 1978; Wickman and Parker, 2007).
As illustrated in Figure 1, the role sender is affected by specific attributes of a person (e.g. setting,
values) as well as of interpersonal and organizational factors (e.g. size, organizational structure,
technology (Granlund and Malmi, 2002)) (Byrne and Pierce, 2007; Wickman and Parker, 2007).
Moreover, it is not possible to observe a role in isolation, but it always has to be understood in the
context of a social group because an individual can occupy multiple roles in a company (Katz and
Kahn, 1978).
93
FIGURE 1: THEORETICAL MODEL OF ORGANIZATIONAL ROLE BY KATZ AND KAHN (1978)
Viewed from a business perspective, organizational role theory is usually related to certain functions,
requirements, and tasks which an individual has to fulfil. To define a role within a company, besides
the variation of the role behavior the interaction with various other roles is essential (Hiebl, 2012).
Further, organizational development theory plays a significant role. Organization development

refers to individual and collective learning within an organization. During the last few decades,
companies have frequently had to learn to deal with various changes, such as increasing globalization
or the flood of information (Kemper and Baars, 2006). Organizational development thus concerns the
continuous learning and ongoing development of an organization (Prange, 1999).
According to Katz and Kahn (1978), a clear link between organizational role theory and organizational
development theory can be seen. With its individuals, a company constitutes a social system wherein
a relationship between the role behavior and the organizational structure exists. If a company is
regarded as a (social) system, the assumption can be made that it (like other systems) can renew or
change over time. To these changes (such as the implementation or application of an ERP system) a
company has to respond appropriately in order to remain sustainably competitive (Katz and Kahn,
1978; Jack and Kholeif, 2008). Management accounting processes therefore can be considered as an
essential component of organizational development. They help to solve problems by illuminating new
ways of improving processes and by sharing information with other departments (Shields and Young,
1993). In addition, several sets of rolls (e.g. "bean counters," "Business Partners") are usually
assigned simultaneously to the position of management accountants in companies (Lambert and
Sponem, 2012; Goretzki et al., 2013). Assuming that a company changes or develops with its
individuals over time, with regard to the changing role of management accountants a clear link
between organizational role theory and organizational development theory is given (Katz and Kahn,
1978; Prange, 1999).
To answer the research questions of this paper, the organizational role theory by Katz and Kahn
(1978) as well as organizational development theory serve as frameworks for the relationship
between the use of an ERP system and the potential role change of management accountants. Since
the organizational structure of a company is changed by an ERP system implementation or
application and the organizational structure in turn affects the role of the sender, the framework of
organizational role theory combined with organizational development theory can be regarded as
appropriate.
4 RESEARCH METHODOLOGY
The research questions of this paper are answered on the basis of a set of qualitative empirical
interviews. The aim of this study on the one hand is to provide a recent case study on the use of an
94
ERP system and the changing role of management accountants in a company. By means of this
paper, further evidence on ERP systems and management accounting research should be given. On
the other hand, the findings of the study are compared with previously conducted studies. Thereby
implications for future research and recommendations for business practice are intended.
The data of this paper were collected with the aid of a qualitative empirical research method that is
particularly suited for the chosen object through its fall orientation. Thus, the different perspectives
within a company can be pointed out (in this case two management accountants, a chief information
officer (CIO) and a chief financial officer (CFO)) (Ernst, 2010). As research methodology, a case study
design was chosen where a single case is considered (in this study a large internationally operating
Austrian company) with an open and interpretive method in more detail (Mayring, 2010). The aim is a
comprehensive description of the case with problem-centered interviews (the interviews were
conducted in German and translated into English) as a method of data collection (Yin, 2009). By
means of the case study, two management accountants, the CIO and the CFO of the selected
company, commented on the changing role of management accountants through the use of an ERP
system in an open discussion. The two management accountants, the CIO and the CFO were asked
once, and hence the interviews represent a snapshot and only statements about the relationships
between variables, but not over time, can be obtained (Kromrey, 2009). Since the role of
management accountants is not only composed of their own interpretation but also from of the
expectations of other individuals, the role is not only considered within the profession but also by
other employees (CIOs and CFOs) of the selected company. The data analysis of the transcribed
interviews will be carried out by the general inductive approach (Thomas, 2006). Subsequently, the
results are compared with previous studies to derive implications for scientific research and business
practice.
To carry out the qualitative empirical study, first a suitable company had to be found which was willing
to participate in the investigation. Therefore, the company should meet multiple criteria. Firstly, the
investigated company had to be a large one. Secondly, the observed company should have been
making effective use of an ERP system for a period of more than five years. This duration is of
particular importance for this paper, as other studies already found that the longer an ERP system is
used in a company, the greater its effects on management accounting and on the role of management
accountants (Booth et al., 2000; Granlund and Malmi, 2002). Thus, changes in the company may be
perceived that would not have been noticeable at an earlier time.
As a suitable company, Company X (due to data protection regulations, both the company and the
individuals interviewed are anonymous) could be gained. Company X is an international operating
company based in Austria with over 1,000 employees worldwide. The ERP system (SAP) in place has
been used since the year 2003. This study seeks to determine whether and to what extent the role of
management accountants has changed through the use of the ERP system (SAP). The research
refers to the role of management accountants, their requirements, their tasks, and their changes in
interaction with other employees or departments of the company. In Company X, four employees
agreed to give information about their experiences concerning the role change of management
accountants. Therefore, in the selected company two management accountants (Head of
management accounting and one management accountant), the CIO, and the CFO were interviewed.
5. RESEARCH RESULTS
5.1 General Research Results

Prior to the ERP system implementation, Company X worked with several stand-alone solutions,
which were connected via interfaces. The management accounting worked with a production planning
and control (PPC) system, which was customized to the needs of the company. In 2002, the
implementation of SAP began, although it started officially in 2003.
There were several objectives that the company wanted to meet with the system change. According
to the statements of the interviewees, two objectives were of particular importance. On the one hand,
the desire for a central system, which facilitates an overview of the entire company, was mentioned.
On the other hand, an important inducement was to eliminate the risk (e.g. the dependence on a few
experts within the company), which resulted from the stand-alone solutions. By using standard
software such as SAP, expertise from a few people should be scattered and ensured.
95
"The fundamental goal was to bring out the risk. In a large group own developments bring
extremely high dependence on individuals and when they leave the company, you usually have
a massive problem. [...] Operating with an in-house development is practically impossible [...]
and that actually was the great creed e.g. away from an in-house development toward a
standard system." (management accountant IB)
"In-house development always means, on the one hand [the system] is adjusted to the
company very well and on the other hand there is a certain dependence, a certain risk, that
rests on two or three employees." (CIO)
Other key objectives that should be achieved by the system change are, for example, an increased
efficiency through a higher degree of automatization, a reduction of staff costs, and a standardization
of processes, based on a uniform database. To meet these objectives, in Company X the
organizational structure and the ERP system were matched. On the one hand, this implicated a
massive organizational restructuring of the company and on the other hand, SAP partially was
adapted for the needs of the company.
"In non-strategic processes we adapted our processes to the system and in important
strategic fields we [...] adapted the system." (management accountant IB)
"[...] we tried to remain at the standard. If you remain at the standard, you have to adapt the
organization now and then, [...] but also vice versa. Fortunately, SAP can be customized very
extensively and we have, of course, extensively adapted SAP to the organization." (CIO)
The two interviewed management accountants mentioned that the number of required management
accountants could not be reduced through the use of the ERP system in Company X. There was the
assumption that fewer management accountants are automatically required with the use of the ERP
system. However, in Company X this has not been the case since the company has grown
simultaneously with the use of the ERP system.
"[...] the expectation that much fewer management accountants are necessary put us under
pressure." (management accountant IA)
"[...] the number of management accountants increased although SAP has been
implemented, but in a way, substantially more output [...] of information has been produced.
[...] This simply creates more effort, [...] especially management accounting is extremely
demanded there and it does not help to reduce staff." (management accountant IB)
The interviewees also gave information about potential factors that may affect the extent of changes
due to the use of an ERP system in a company. As well as the two management accountants, the
CIO and the CFO agreed that the openness and the willingness to change constitute crucial factors. If
changes are enforced but are boycotted, there is the risk of failure.
"As the department heads we personally had to sign the finished paper for the blueprint in
terms of what we stand for and [...] only then was it implemented and without that it does not
work. So if anyone boycotts, then this is a problem." (management accountant IA)
Thus openness and willingness to change in Company X were of particular importance. However, the
commitment of the staff and the involvement of the management accountants in the implementation
process are of similar importance.
"[The integration into the ERP system implementation process] of course is extremely
important, and indeed for all departments, not just for management accounting. [...] This must
include a very solid participation of the departments, [...] otherwise that does not work."
(management accountant IA)
"[...] and it also depends on the commitment of the staff. Do they want to change something?
Is the willingness there?" (CFO)
96
Although not directly pointed out, through the interviews another factor became clear, which is the
temporal aspect. Many changes, such as the changing operational and strategical tasks of
management accountants, have become visible only after a longer period.
All in all, the following general theses on the use of Company X’s ERP system in the context of the
management accountant role can be established:
Thesis 1
For the efficient use of an ERP system, on the one hand the ERP system has to be adapted
to the organizational structure (e.g. via customizing), and on the other hand the organizational
structure has to be adapted to the ERP system.
Thesis 2
The use of an ERP system does not necessarily result in a reduction of management
accounting jobs.
Thesis 3
Companies that integrate management accountant in the ERP system implementation
process are more successful in the ERP system implementation than companies that do not.
5.2 Changed Requirements for Management Accountants

With the use of an ERP system, an enhanced process understanding is frequently required from
management accountants. Besides, the interviewees emphasized that the employees in general and
management accountants in particular get a more comprehensive overview of the company through
the use of SAP.
"[...] people [have] a better understanding of the processes of other departments [...] and also
in management accounting a lot of understanding has emerged. How do [other departments]
actually work and what is important for which ones?" (management accountant IA)
"[...] there also has to be reinforced process know-how and an understanding of the
processes. Then the know-how is built up in the enrolment, but without process know-how [...]
management accountants just would not understand how the numbers come about or even if
mistakes occur, where do they happen?" (CIO)
Management accountants have undertaken IT tasks or employees of the IT department have been
integrated into management accounting. This required management accountants to expand their IT
skills in order to work best with the new ERP system. Thus, the interviewees in Company X observed
a significantly increased demand for IT skills. Considering the increased complexity and the greater
need for IT skills in Company X, academics are recruited who are able to think company-wide.
"[The ERP system] also requires [...] employees with more competencies, with more [...] IT
skills. It also needs employees who can think comprehensively.” (management accountant IA)
In sum, regarding the technical requirements for management accountants, the following hypotheses
can be postulated:
Thesis 4
The use of an ERP system requires a far-reaching process know-how of management
accountants.
Thesis 5
The use of an ERP system requires far-reaching IT skills of management accountants.
Thesis 6
Through the use of an ERP system academics are recruited more often.
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5.3 Changed tasks of Management Accountants

Although process know-how could be facilitated with the implementation of the ERP system, the
system change also brought a loss of system know-how since many years of used and even self-
developed stand-alone solutions were replaced by SAP. Besides, additional issues such as the
underestimated effort for the further development of SAP were induced by the system change.
Moreover, the definition and the transfer of master data represented a major challenge for the
company and for the management accountants.
"[...] the master data usually have an impact on everything, they have an impact on
production, management accounting, financial accounting and, for example, everyone
depends on the one that does a good job and that often is underestimated." (management
accountant IB)
With the integrated ERP system and the comprehensive data access, the transparency within the
company could be increased significantly. The interviewed management accountants of Company X
also frequently mentioned the reduction of interfaces. Due to the fact that data are entered by the key
users of the different departments and the interfaces are reduced, the adjustment effort for the
management accountants and the resulting sources of error could be reduced to a minimum. This led
to higher data quality and safety as well as to a reduced time effort for data preparation and
maintenance.
Despite several dangers and difficulties in the use of the ERP system, it becomes clear that the
positive outcomes (such as gained information, improved efficiency, and increased automatization)
predominate. Especially the management accountants of Company X could benefit from the ERP
system. For example, there was a change concerning the tasks of management accountants. The
administrative and operative tasks decreased, by which more time for analytic and strategic tasks
remained for the management accountants. However, in Company X this change did not take place
immediately, but it took some time before these advantages could be exploited.
"[...] administrative matters have become less, e.g. in the old system, only management
accountants with special knowledge of functions could have a look at a cost center. [...] With
the introduction of SAP this is not necessary anymore. Each cost center manager, each
project manager can see his cost center or project directly in SAP. [...] This allows
management accountants to use a lot more analytical potential." (management accountant
IA)
"[...] through the integrated system there is usually much more access to detailed data than
before. [...] and that on the one hand allows great opportunities for analysis and on the other
hand little time effort for data maintenance." (management accountant IB)
"[A change in the tasks of the management accountants has not ensued] from the beginnings.
[First] after the implementation [...] it has had an effect on the management function." (CFO)
In Company X the reporting task of the management accountants did not change a lot. Although for
the top management there is the possibility to obtain the required information from the ERP system
directly, in Company X this happens rarely.
"[...] Usually the management is not willing to enter an operational system itself. This basically
is the presentation work of the management accountants." (management accountant IB)
"[...] it is not the case that the management itself retrieves the data from the [ERP] system
[...], but primarily it gets the data from the management accounting." (CIO)
"And this effect is that people retrieve the information themselves, that are to some extent, a
sort of exceptional cases. [...] Unless the relevant know-how is not there, it happens that false
reports are made. [...] Ad-hoc analyses are always prone to error if their contents are not
understood correctly." (CFO)
Moreover, the interviewees mentioned the high costs of the ERP system application and
configuration. Additionally, a considerable challenge for the company headquarters was pointed out.
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For the central management accountants in particular, new challenges arose through the enlarged
areas of responsibility. The tasks of the central management accountants have become more
comprehensive and complex with the use of SAP. As a consequence, management accounting is
centrally organized now.
"[...] Management accountants, who have carried out local activities so far, gradually have
taken over consolidated management accounting tasks, e.g. the companies that were
acquired, then partly had minimal or no management accounting." (management accountant
IA)
"Previously, the management accountants rather have been concerned with the headquarters
[...], now, we have management accountants that are responsible for single business areas or
subsidiaries and, in the course of that, with the ERP system implementation and further
implementations in the individual offices, now the scope [...] has become much larger." (CIO)
Concerning the changed tasks of management accountants through the use of the ERP system, the
following assumptions can be made:
Thesis 7
For management accountants, the transfer of master data from the old system to the new
ERP system is of particular importance.
Thesis 8
For management accountants, the improvement of the ERP system represents an essential
task.
Thesis 9
Concerning the reporting task of management accountants through the use of the ERP
system, no significant changes occur since the top management is not willing to retrieve data
itself from an ERP system.
Thesis 10
Currently, management accountants are increasingly entrusted with strategic and analytic
tasks as a result of the use of ERP systems, because tasks (such as data collection) are
largely carried out autonomously by the ERP system. This reflects an aspect of the role
change of management accountants: The management accountants not only have to ensure
the data preparation of the reporting, but are also responsible for their interpretation and
communication.
Thesis 11
Due to the use of an ERP system, enlarged and new challenges emerge (e.g. taking over
management accounting tasks of subsidiaries) for the central management accountants.
5.4 Changed Interactions with Company Members

With the use of SAP, routine activities of management accountants partially have been taken over by
other departments or employees. After ERP system implementation, the financial accounting, for
instance, could do its bookings autonomously, which previously have been a concern of the
management accounting. The same applies to the sale, since now sale analyses can be assessed on
their own. Additionally, management accountants have been relieved since the individual key users
are responsible for the master data maintenance.
"[...] other departments have taken a lot of this master data maintenance, thus for
management accounting actually almost nothing of master data maintenance is left."
(management accountant IB)
Although other departments of the company have taken over certain management accounting tasks
and therefore have relieved the management accountants, with the use of the ERP system the
management accountants also have taken over tasks from other departments or subsidiaries. Local
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management accountants partially have been reduced and no longer fulfil local tasks, but tasks that
relate to the entire company.
"[...] yes, this has become quite intense that management accountants think more outside the
box, from the headquarters toward the subsidiaries. [...] Thus, there is a better understanding
of the processes, [...] certainly there have been changes." (CFO)
Considering the changes for the management accountants in the interaction with the other
departments of the company in more detail, changes definitely took place. With the use of SAP, the
management accountants increasingly have been involved in business processes and projects and
due to the cross-functional use of the ERP system, the collaboration with the IT department and the
accounting in particular has been intensified. Interdepartmental teams have been introduced, whereby
the management accountants are always integrated.
"Today, there is a strategical master data team, today, there is an operational master data
team, [...] BI teams who take care of the issues and within the single teams there are not only
members from one department now, but from several. The collaboration between single
departments has changed massively in terms of a much stronger binding between the
individual departments. [The collaboration has] become much more intense because the
management accountant [...] has much more contact within the company, and that on the one
hand locally and on the other hand also across, e.g. with other subsidiaries of Company X."
(CIO)
The involvement of the management accountants in decision processes has remained almost
unchanged despite the use of SAP. The management accountants still are equally strong involved in
decision processes, e.g. the collaboration between the management and the management
accountants has not changed. In this context, certainly, it should be mentioned that the role of the
management accountants of Company X in decision processes already has been essential before the
ERP system implementation. Management accountant IA explains how he sees this:
"[...] anyway, the role and the understanding of the management accountants have not
changed." (management accountant IA)
"[...] well, from the view of the management accounting with regard to the management
nothing has fundamentally changed. In [...] decision making something has [...] changed at
data preparation, but not fundamentally." (CFO)
Among the changes in the interaction of the management accountants with other employees or
departments of the company through the use of an ERP system, based on the case study analysis,
the following theses can be generated:
100
Thesis 12
With the use of an ERP system, ordinary tasks of management accountants partially are
taken over by other departments or employees of a company. Simultaneously, some tasks of
other departments or subsidiaries are transferred to management accountants as a result of
the use of an ERP system. Through these interactions with other departments or employees
of a company and the mutual taking over of different tasks, another aspect of the role change
of management accountants is expressed.
Thesis 13
Through the use of an ERP system, management accountants are more strongly integrated
into projects.
Thesis 14
The use of an ERP system promotes the collaboration of management accountants with the
IT department.
Thesis 15
The use of an ERP system promotes the collaboration of management accountants with the
accounting department.
Thesis 16
The involvement of management accountants in decision processes is nearly the same as
with the use of an ERP system.
6. DISCUSSION AND CONCLUSION
To determine how the role of management accountants has changed through the use of an ERP
system in Company X, this paper referred to organizational role theory and organizational
development theory.
From a business perspective, the role is considered in context of certain functions, requirements, and
tasks that have to be fulfilled by an individual (Hiebl, 2012). According to organizational role theory
and organizational development theory, this paper defines the role of management accountants in the
context of the use of an ERP system by the attributed tasks, the placed requirements and the
collaboration with other departments and employees of a company.
To answer the research question of the changed requirements for management accountants through
the use of an ERP system, the following results can be stated. According to the interviewees from
Company X, the requirements for management accountants have changed significantly.
Due to the increased complexity of the entire organization through the use of the ERP system, an
increased level of process understanding is necessary.
This not only concerns the headquarters in Austria, but the whole company. The requirements have
also increased in terms of the training and the experience with SAP. Management accountants
require advanced IT-skills and a greater understanding of IT as a consequence of the use of an ERP
system.
This finding, for example, confirms the results of Scapens and Jazayeri (2003) as well as those of
Sangster, Leech and Grabski (2009), who also claim more IT and managerial skills of management
accountants (e.g. customizing of ERP systems) (also cf. Caglio, 2003; Sayed, 2006; Sánchez-
Rodríguez and Spraakman, 2012).
101
Induced by the additional required IT and business process understanding, results show that
Company X plans to employ more academics in the future. Deriving from the illustrated requirements
for the role of management accountants and considering organizational role theory as well as
organizational development theory, it can be concluded that the changed requirements contribute to a
shift in the role of management accountants in Company X.
With regard to the changed tasks of management accountants, it can be stated that the tasks of
management accountants have changed significantly through the use of an ERP system. Although
the management accountants were relieved as a consequence of the decentralization of tasks (such
as data collection (Granlund and Malmi, 2002; Scapens and Jazayeri, 2003; Gärtner et al., 2014),
through the centralized organization of the management accounting the range of tasks has increased
in Company X.
In terms of organizational development (theory), management accountants in Company X did not take
over an additional subsidiary, but rather their responsibility expanded to several subsidiaries. In
addition, Company X has grown simultaneously with the use of SAP, which is why management
accountants have to take care of even more subsidiaries due to the integrated ERP system.
According to that, less local and more group-wide management accounting tasks are performed.
On the basis of this qualitative empirical study, it also can be stated that through an ERP system use,
management accountants will take over other and further tasks (e.g. customizing and developing an
ERP system as well as transferring master data).
The results are consistent with other studies, for example that of Chen et al. (2012), who also found a
change in management accounting tasks (also cf. Rodney, 2009; Teittinen et al., 2013).
Further, the findings of this study show a greater involvement in strategic work and more time
expenditure for analytic activities, which result from the time gained through the acquired tasks by an
ERP system (e.g. data collection).
These results also confirm earlier qualitative empirical findings, e.g. by Granlund and Malmi (2002) as
well as by Scapens and Jazayeri (2003), who found a decrease in time spent in management
accounting tasks (e.g. data collection) and more time for analysis through the use of an ERP system.
Concerning the tasks of the management accountants, it can be summed up that the role of the
management accountants also has evolved.
The further results of this paper examine the changes in the interaction of management accountants
with other departments or employees of the company. If the collaboration with other departments or
employees is regarded on the basis of organizational role theory, two developments could be
detected. On the one hand, the CFO and the two management accountants pointed out that the
interaction between them has not changed, because the involvement of management accountants in
decision processes remained unaffectedly high.
On the other hand, the collaboration with other departments and employees has intensified (e.g.
closer collaboration with the IT department and accounting). According to this qualitative empirical
study, management accountants now are more involved in projects and processes and are part of
several interdepartmental teams.
This finding partially confirms previous research, e.g. by Jack and Kholeif (2008) or Grabski, Leech
and Sangster (2009), who also argue in terms of the involvement of management accountants in
company-wide projects such as ERP system implementation projects.
Thus, taking into account the interaction with other departments or employees, a change in the role of
management accountants could be found, which indeed is not particularly strong and requires future
validation.
From the research results of this study, several recommendations for business practice can be
derived. Although previous studies have shown that the need for management accountants
102
decreases with the use of ERP systems (Poston and Grabski, 2001; Rikhardsson and
Kraemmergaard, 2006), in Company X the number of management accountants increased.
For business practice, it can be concluded that a reduction of management accountants due to the
use of an ERP system is possible, because, for example, many routine activities (such as data
collection and analysis) can be taken over by an ERP system or by other departments (Gärtner et al.,
2014).
As far as the company does not grow simultaneously with the ERP system implementation and
application, management accountants should be prepared for an employee reduction. However, if
employees object to company growth (as was the case in Company X), a reduction of employees is
not appropriate. The implementation and application of an ERP system thus does not necessarily lead
to a reduced need for management accountants.
Another recommendation for business practice is aimed at the communication of possible changes.
Previous work already has shown that the acceptance of employees is an important success factor for
an ERP system implementation (Aladwani, 2001; Carton et al., 2008; Grabski et al., 2011).
Based on the conducted case study in Company X, openness and the willingness to change are
crucial. A boycotted system change can lead to difficulties or even to a failure of an ERP system
implementation and application.
For business practice therefore it is of particular importance to promote the employee acceptance for
an ERP system. Assuming that the existing organizational structure of a company is not equally
described by a new ERP system, the implementation and the application of an ERP system
necessarily leads to changes for the employees. As an example, the centralization of the
organizational structure and the associated greater responsibilities for management accountants
could be mentioned.
Another essential finding for business practice that can be inferred is that management accountants
need to expand their skills constantly and keep them up to date (Azan and Bollecker, 2011). In
particular, IT skills are emphasized.
According to the results of this case study, companies should be prepared to train their management
accounting employees constantly since the IT skills of management accountants also can have a
critical impact on company success.
The results of this study on the changing role of management accountants through the use of ERP
systems also provide relevant findings for future research. The conducted qualitative empirical
research of this paper sheds light on the effects of the use of an ERP system on the role of
management accountants in a large Austrian company.
Nevertheless, ERP systems are also becoming increasingly important in SMEs (Buonanno et al.,
2005; Grabski et al., 2011), wherefore future research is also needed for this company size. Besides,
in this paper only employees of one large company were interviewed.
Since the results of this work only relate to a specific company, they cannot be generalized and there
is still a great need for research in large companies.
Accordingly, it would be useful to investigate the reasons (e.g. contextual factors) for possible
variance in more detail (Schlichter and Kraemmergaard, 2010). In addition, previous work and the
conducted qualitative empirical study in Company X also shows that the configuration of ERP systems
is country and culture dependent (Williams and Seaman, 2002; Santamaría-Sánchez et al., 2010).
Future work therefore may also investigate the role of management accountants in companies of
other countries and compare the results with the already existing research.
Like any research, this paper has some limitations resulting from the chosen research method. In this
qualitative empirical research, only four people of a higher hierarchic level were interviewed. As a
consequence, the results partly refer to the subjective assessments of the interviewees (King and
Bruner, 2000).
103
Accordingly, for future research it would be conceivable to interview employees from various
hierarchical levels to increase the objectivity of the results. Of particular importance is the time aspect,
which has a significant effect on the changing role of management accountants through the use of an
ERP system.
Since the role of management accountants was of particular interest in this paper, a cross-sectional
study was conducted.
However, on the one hand the organizational development theory implies that the role of
management accountants will change with the development of ERP systems in the future. On the
other hand, research shows that certain changes (e.g. the tasks of management accountants) only
occur over time. For this reason, a longitudinal study could provide more insight into the changing role
of management accountants.
Further, the results of this qualitative empirical study cannot be generalized as the results of the
observed case are primarily relevant for the particular company (Salzmann et al., 2005).
Therefore, in the future a verification and generalization of the findings of the qualitative empirical
studies should be attempted by quantitative empirical research methods (e.g. surveys).
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AUTHOR PROFILES
Dr. Bernhard Gärtner earned his Ph.D. at the Johannes Kepler University (JKU) of Linz, Austria, in
2014. Currently he is Research Assistant at the Institute for Management Control & Consulting at the
JKU Linz.
Andrea Krichbaum is an undergraduate student at the Institute for Management Control &
Consulting at the Johannes Kepler University (JKU) of Linz, Austria.
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EMOTIONAL INTELLIGENCE AND LIFE SATISFACTION:

AN EMPIRICAL STUDY ON ITALIAN NURSES
Annamaria Di Fabio, Department of Education and Psychology, University of Florence, Italy

Letizia Palazzeschi, Department of Education and Psychology, University of Florence, Italy
ABSTRACT
The aim of this study was to take a more in-depth look at the role of emotional intelligence (both self-
reported and ability-based) and personality traits in life satisfaction, verifying the existence of
incremental validity of the emotional intelligence dimensions over personality variables. Three
hundred and twenty-six Italian nurses were given the Satisfaction With Life Scale (SWLS), the Big
Five Questionnaire (BFQ), the Bar-On Emotional Quotient Inventory (Bar-On EQ-i) and the Mayer
Salovey Caruso Emotional Intelligence Test (MSCEIT). The results highlight the influence exercised
by personality and emotional intelligence on life satisfaction, underlining the role of emotional
intelligence.
Keywords: life satisfaction; self-reported emotional intelligence; ability-based emotional intelligence;

organizational health psychology; nurses.
1. INTRODUCTION
The theme of well-being is particularly significant not only in the health psychology (Ryan & Deci,
2001) but also in the specific field of the organizational health psychology (Quick, Quick, Nelson, &
Hurrell, 1997; Hurrell, Nelson, & Simmons, 1998). According to a positive psychology perspective
(Seligman & Csikszentmihalyi, 2002) and a preventive perspective highlighted by the most recent
prevention guidelines of the 17th Division of the American Psychological Association (Hage et al.,
2007) the importance of improving the resources of individuals is particularly underlined.
Regarding the definition of well-being in the literature it is possible to distinguish three different
constructs: subjective well-being (SWB), psychological well-being (PWB), objective well-being (OWB)
(Andrews & Withey, 1976; Diener, 1984). The subjective well-being can be defined as “a broad
category of phenomena that includes people’s emotional responses, domain satisfactions, and global
judgments of life satisfaction [...] a general area of scientific interest rather than a single specific
construct” (Diener, Suh, Lucas, & Smith, 1999, p. 277). The psychological well-being concerns the
ability to obtain good results, grow and develop as a person and become able to build significant
relationships with others (Hird, 2003). The objective well-being refers to objective indicators through
which identify common standards to compare different individuals among them (Campbell, 1976).
Since the 1950s, studies on well-being focused in particular on the subjective well-being leading to
the identification of three separate components in it (Andrews & Withey, 1976): Positive Affect, is
linked to pleasant experiences and evokes positive emotions; Negative Affect, which refers to
experiences less enjoyable due to negative emotions; Life Satisfaction. Specifically life satisfaction
can be defined as a broad cognitive judgment about one’s own life: this component doesn’t regard the
emotional aspects but it refers to the cognitive aspects of judgment (Diener, Emmons, Larsen, &
Griffin, 1985). It particularly represents the average result of satisfaction, considering every aspect of
one’s own individual life (Andrews & Withey, 1976). An analysis of the literature showed an interest in
the study of individual variables related to life satisfaction. A traditionally investigated aspect is the
role of personality traits. With regard to the relationship between life satisfaction and personality traits,
neuroticism presented a negative link with life satisfaction, while a positive correlation emerged
between extraversion and life satisfaction (Diener, 1984; Diener et al., 1985; Gannon & Ranzijn,
2005).
The current literature showed an increasing attention given to the role played by emotions in relation
to life satisfaction, particularly through consideration of the emotional intelligence construct. In fact in
recent years several studies showed that emotional intelligence was linked to life satisfaction (Austin,
Saklofske, & Egan, 2005; Di Fabio & Ghizzani, 2007; Palmer, Donaldson, & Stough, 2002). Analysing
more in details the emotional intelligence construct, in the litterature according to the classification by
Stough, Saklofske and Parker (2009) we can fundamentally distinguish two principal models: ability-
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based models (Mayer & Salovey, 1997) and trait (self-reported) emotional intelligence models (Bar-
On, 1997; Petrides & Furnham, 2001). The first kind of models refers to emotional intelligence abilities
(Mayer, Salovey, & Caruso, 2000) whereas the second kind of models refers to self-reported
perception of emotional intelligence (Bar-On, 1997; Petrides & Furnham, 2001).The growing interest
in the emotional intelligence construct (Di Fabio & Blustein, 2010; Di Fabio & Kenny, 2012; Di Fabio &
Palazzeschi, 2008b, 2009a, 2009b; Di Fabio, Palazzeschi, Asulin-Peretz, & Gati, 2013; Di Fabio,
Palazzeschi, & Bar-On, 2012; Di Fabio & Saklofske, 2014a, 2014b; also in the organizational context
(Zeidner, Matthews, & Roberts, 2004; Di Fabio & Palazzeschi, 2008a, 2012a) is due, in addition, to
the attempt to identify if introduction of this promising variable provides an explanation for a
percentage of incremental variance with respect to personality traits, considering that while
personality traits are substantially stable (Costa & McCrae, 1985), the literature indicates that
emotional intelligence is a variable that can be improved (Di Fabio & Kenny, 2011).
In light of the theoretical framework mentioned above, the purpose of the present study was to take
an in-depth look at the role that personality traits and emotional intelligence play in relation to life
satisfaction in Italian nurses. The choose of studying a population of professional nurses who played
an essential role in the management of patient care in hospitals is due to the fact that the dwindling
number of nurses has become a serious problem in Italy and other countries in the world: so the
retention and the well-being of nurses is an important challenge for health care organizations
(Demerouti, Bakker, Nachreiner, & Schaufeli, 2010). Specifically, it is hypothesized that:
H1. Emotional intelligence, both self-reported and ability-based, will add a percentage of incremental
variance with respect to the variance explained by personality traits in relation to life satisfaction.
H2. Self-reported emotional intelligence will add a greater incremental variance than ability-based
emotional intelligence, beyond that accounted for by personality traits in relation to life satisfaction.
2. METHOD
2.1 Participants
In total, 326 nurses at the two main hospitals in Florence participated in the study. Regarding gender,
121 of the participants were men (37.12%) and 205 were women (62.88%). Regarding length of
service, 185 of the nurses had served up to 14 years (56.75%) and 141 had served 15 years or longer
(43.25%).
2.2 Measures
Life satisfaction. The Italian version (Di Fabio & Palazzeschi, 2012b) of the Satisfaction With Life
Scale (SWLS, Diener et al., 1985) was used to evaluate life satisfaction. The instrument is composed
of 5 items with response options in a 7-point Likert scale format ranging from 1 = strongly disagree to
5 = strongly agree). The alpha coefficient of the scale is .88.
Personality traits. The Big Five Questionnaire (BFQ, Caprara, Barbaranelli, & Borgogni, 1993) was
administered to assess personality traits. The BFQ is composed of 132 items, and the response
options are based on a 5-point Likert scale ranging from absolutely false (1) to absolutely true (5). It
assesses five fundamental personality dimensions: Extraversion, Agreeableness, Conscientiousness,
Emotional Stability, Openness. Regarding internal consistency reliability of the BFQ, Cronbach’s
alpha coefficient is .81 for Extraversion, .73 for Agreeableness, .81 for Conscientiousness, .90 for
Emotional Stability, .75 for Openness.
Self-reported Emotional Intelligence. The Italian version (Franco & Tappatà, 2009) of the 133-item
Bar-On Emotional Intelligence Inventory (Bar-On-EQ-I, Bar-On, 1997) was used to assess self-
reported emotional intelligence. Item response options on a 5-point Likert scale range from 1 (not at
all true of me) to 5 (absolutely true for me) The questionnaire provides a total score (EQ total), and
scores for five separate dimensions: Intrapersonal, Interpersonal, Adaptability, General Mood.
Cronbach alphas for the Italian version were .91 for the Intrapersonal, .84 for the Interpersonal, .81 for
the Adaptability, .87 for Stress Management, .83 for General Mood, .95 for the QE total.
Ability-based Emotional Intelligence. The Italian version (D’Amico & Curci, 2010) of the Mayer
Salovey Caruso Emotional Intelligence Test (MSCEIT; Mayer, Salovey, & Caruso, 2002) was used to
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evaluate ability-based emotional intelligence. The 141-item measure provides a total score and four
branch or dimension scores: Perceiving Emotions (PE), Facilitating Thought (FT), Understanding
Emotions (UE), Managing Emotions (ME). Split half reliabilities for the subscale scores on the Italian
version were .90 for PE, .77 for FT, .75 for UE, and .72 for ME.
2.3 Procedures and data analyses

The instruments were administered to groups of 10-15 participants in the hospital by specialized staff
with due adherence to the requirements of privacy. Descriptive statistics, Pearson’s r correlation and
hierarchical regressions were performed.
3. RESULTS
The results of the hierarchical regression effected, using satisfaction with life as a dependent variable
and as independent variables, at the first step, personality traits and, at the second step, alternatively,
the Bar-On-EQ-I Total Score, the Bar-On-EQ-I dimensions, the MSCEIT Total Score, and the
MSCEIT dimensions, are reported in Table 1. At the first step, personality accounts for the 15%
variance in life satisfaction. At the second step, the Bar-On-EQ-I Total Score accounts for the 14%
greater variance (F = 14.74, p < .001); Bar-On-EQ-I dimensions account for the 19% greater variance
(F = 12.25, p < .001); the MSCEIT Total Score accounts for the 6% greater variance (F = 9.58, p <
.001); MSCEIT dimensions account for the 12% greater variance (F = 8.97, p < .001).
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Table 1 – Hierarchical regression. Dependent variable: life satisfaction. Independent variables: personality traits, Bar-On EQ-i Total Score and Bar-On
EQ-i dimensions, MSCEIT Total Score and MSCEIT dimensions.
Step 1 Step 2 Step 2 Step 2 Step 2

β p β p β p β p β p
Step 1
Energy .26 .001 .21 .001 .21 .001 .28 .001 .24 .001
Agreeableness -.02 .745 .03 .667 .03 .694 .00 .999 .04 .550
Conscientiousness -.02 .762 .00 .956 .01 .877 -.06 .400 -.04 .529
Emotional Stability .27 .001 .17 .006 .16 .008 .27 .001 .25 .001
Openness -.02 .837 -.02 .803 -.01 .921 -.05 .466 -.06 .372
Step 2
Bar-On Total Score .39 .001
2
R .15 .001 .29 .001
∆R2 .14 .001
Step 2
Bar-On Intrapersonal .42 .001
Bar-On Interpersonal -.07 .325
Bar-On Stress management .01 .883
Bar-On Adaptability .09 .200
Bar-On General mood .11 .177
R2 .15 .001 .34 .001
∆R2 .19 .001
Step 2
MSCEIT Total Score .25 .001
R2 .15 .001 .21 .001
∆R2 .06 .001
Step 2
Perceiving Emotions .11 .098
Facilitating Thought -.01 .935
Understanding Emotions -.13 .057
Managing Emotions .33 .001
R2 .15 .001 .27 .001
∆R2 .12 .001
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4. DISCUSSION
The purpose of the present study was to take an in-depth look at the role of personality traits and
emotional intelligence, both self-reported and ability based, in relation to life satisfaction in Italian
nurses. The first hypothesis of the present study was confirmed.
In fact in line with the literature (Gannon & Ranzijn, 2005), the results of this study showed the
existence of incremental validity of the emotional intelligence dimensions with respect to personality
variables in relation to life satisfaction. Emotional intelligence, both self-reported and ability-based,
therefore seemed to play a significant role in explaining life satisfaction.
The results of the present study also confirmed the second hypothesis as self-reported emotional
intelligence added a greater percentage of incremental variance in comparison to ability-based
emotional intelligence beyond that accounted for by personality traits in relation to life satisfaction. It is
interesting, at this point, to reflect on the existence of specific contributions in terms of self-reported vs
ability-based emotional intelligence (Stough et al., 2009).
As for other variables such as career decision (Di Fabio & Saklofske, 2014a) and individual resources
(Di Fabio & Saklofske, 2014a) for life satisfaction is trait emotional intelligence to have a greater role
with respect to ability-based emotional intelligence.
Furthermore it was especially the perception of emotional competencies compared to the possession
of emotional intelligence skills that played a major role in the subjective perception of being satisfied
with one’s life.
Thus, with regard to life satisfaction, this study showed the greater importance of the individual’s
perception of emotional competences with respect to the possessed emotional intelligence skills,
underlining the significance of the individual self-evaluation process in life satisfaction.
Despite the results obtained in this study, it is necessary to point out the limitation related to the
characteristics of the participants. The research participants were not representative of the various
Italian regions.
They were also not representative of the different professional groups in the health sector because
only nurses participated in this study – health personnel such as physicians, technical workers,
administrative workers, social workers were not included.
Future research should confirm the results of this study on a more representative group in terms of
different geographical areas in Italy and in terms of diverse national context. It would also be
interesting to replicate the research with other professional groups engaged in hospital work and with
different workers in other occupations.
These future studies could highlight the links between emotional intelligence and life satisfaction in
different organizational contexts. It is also important that future research will investigate the
relationship of personality traits and emotional intelligence (both self-reported and ability-based) also
in relation to psychological well-being and objective well-being.
Notwithstanding the above-mentioned limitation, the results of the present study provide a more in-
depth look at the relationship between life satisfaction and emotional intelligence both self-reported
and ability-based. If these results will be further confirmed, it could be possible to define operative
scenarios in terms of prevention (Hage et al., 2007).
Since emotional intelligence is a variable which can be increased through specific training (Di Fabio &
Kenny, 2011), it could be underlined the importance of improving both emotional intelligence
awareness and emotional intelligence competences of workers to promote greater life satisfaction in
organizational health contexts.
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AUTHOR PROFILES:
Prof. Annamaria Di Fabio, Ph.D., Professor of Psychology of guidance and career counseling and
Organizational Psychology at the University of Florence, where she is responsible for the Research
and Intervention Laboratory of Psychology for Vocational Guidance and Career Counseling
(LabOProCCareer).
Dr. Letizia Palazzeschi, Ph.D., Research fellow, Department of Education and Psychology,
University of Florence, collaborates with the Research and Intervention Laboratory of Psychology for
Vocational Guidance and Career Counseling (LabOProCCareer).
116
ASSESSING THE IMPACT OF THE ONLINE LEARNING PORTAL ON STUDENT PERFORMANCE

IN A BUSINESS/MARKETING COURSE
Con Korkofingas, Macquarie University, Sydney Australia

Joseph Macri, Macquarie University, Sydney Australia
ABSTRACT
This paper investigates whether a statistically significant relationship exists between student
interaction with the course website and student’s overall performance in the course. This is important
since universities around the world have invested heavily in online education assuming online
education practices benefit student learning outcomes. Using the online tracking system in
Blackboard, the time spent by each student on a range of specific online assessment activities in the
course is measured. These measures are then used along with student characteristics to predict the
final student mark in the course. The evidence suggests time spent on online activities is generally
associated with higher assessment performance.
Keywords: Academic Achievement, Online Learning, Student Learning Outcomes, Student Online
Participation, Web- based software, Teaching Online.
1. INTRODUCTION
The rapid improvement in internet technology has witnessed a significant increase in the use of web
facilitated technology in worldwide university education. As a result, this increased use has radically
transformed pedagogical practices and learning and teaching policies across many universities world-
wide (Eastmond and Ziegahn, 1995; Romiszowski, 1997; Calafiore and Damianov, 2011). It has
generally been argued that web facilitated tools (eg. online testing, discussion boards, emails, i-
lectures, virtual chat, among others), encourage students to actively participate in learning activities
that improve their performance (Karayan and Crowe, 1997; Hardaker and Smith, 2000).
Empirical evidence for the notion that web facilitated tools improve student performance have
generally been of two types; comparing on-line and traditional course delivery modes (Farinella 2007 ;
Palloff and Pratt, 1999, 2001; Rafaeli and Ravid 1997; Vengroff and Bourbeau 2006 and analysis of
how variations in online participation measures impact on variations in student performance within a
given course Calafiore and Damianov 2011; Chan, Chow and Cheung 2004; Damianov et al. 2009;
Michael and Miethe 1989; Zaiane & Luo 2001). The latter studies typically examine how overall
student grades in a course are impacted by a single measures of online participation such as time
spent on the course website. There are no studies to our knowledge to have examined
simultaneously the different impacts of online participation components on overall student
performance using multivariate analysis.
The rest of the paper is organized as follows. Section 2 provides a brief literature review. Section 3
outlines the methodology and dataset used. Section 4 discusses the analysis results and the
implications. Section 5 provides some concluding comments, limitations and avenues for future
research.
There has been a great deal of interest and research undertaken on the benefits and costs of online
education and its impact on student learning; in general, these studies have focused on the
characteristics of specific online tools such as online messages or discussion boards and assessed
the contribution to student learning or development of learning communities (see for example, Palloff
and Pratt, 1999, 2001; Davidson-Sivers, Muilenburg and Tanner, 2001; Hara, Bonk, & Angeli, 2000;
McKlin, Harmon, Evans, and Jones, 2001; Weisskirch and Milburn, 2003; Davies and Graff, 2005;
Picciano, 2002; Nachmias and Segev, 2003; Zaiane, 2001; Russell, 1999). The above studies,
overall, support the notion that specific online tools can improve and develop student learning.
117
Most of the studies which examine the effectiveness of online tools as enhancements to traditional
teaching focus on some measure of online participation or engagement and relate this to measures of
student performance. These studies vary not only in the participation measure used in the study (time
spent online, discussion messages read or written, online files downloaded or online sessions) but
also on the method of data collection. Several studies have relied upon surveys in which students
self-report the amount of time spent online on study (see for example, Michael and Miethe,1989;
Williams and Clark, 2004, among others).The major drawback of these types of studies is the
questionable validity of the self-reported measures and the completeness of the data.
Other researchers have tried to overcome the deficiency of self-reporting data by utilizing computer
logs of course related online activities (see for example, Peled & Rashty, 1999; Rafaeli & Ravid, 1997;
Zaiane & Luo, 2001). Rafaeli and Ravid (1997) examined the correlations between student
achievement and course-related computer usage behavior measures finding that students’ online
participation was able to predict 20% of the variance in the students’ grade. Vengroff and Bourbeau
(2006) found students that used Blackboard consistently in two psychology courses performed better
on exams than students who used it less frequently, while controlling for grade point average (GPA).
Damianov et al. (2009), using a multinomial logistic model and a range of control variables (eg. GPA,
Gender, Age, Major etc.), found a significant positive relationship between time spent online and
grades for a large business course in South Texas, particularly for students who obtained grades
between F, D, C and B. In a recent study, Calafiore and Damianov (2011) found for data from online
courses offered in Economics at a large public university in south Texas both GPA and actual time
spent online were associated with higher grades.
For most of the above studies, researchers utilized a single online participation variable. However, it is
unlikely that a single variable will adequately capture online participation and it is also unlikely that
each of these components will have identical impacts on student performance. A particular study
which sought to overcome the previous issue was Chan, Chow and Cheung (2004). They constructed
a “student participation index” that included web log data on the number of pages viewed, forum
questions read and posted, chat sessions participated in and submitted finding higher indexes
associated with higher grades. However, use of an index includes arbitrary component weights which
likely unduly impact on results.
Overall, the above evidence from the literature seems to suggest online tools and online participation
enhances student learning outcomes. However, almost all of the studies (apart from Chan, Chow and
Cheung (2004) and Rafaeli and Ravid (1997)) focus on a single participation measure and examine
the impact on student performance. In contrast to the two above studies, we seek to investigate the
research question of the impact of disparate online components on student performance by using a
multivariate analysis technique (regression).
If there are variable effects of different online participation components on student performance
measures this has important implications for instructors, educators and course website designers. If
certain online participation components (eg. discussion boards, forums) are found to have a
significant impact on student performance outcomes while others (eg. i-lectures, virtual chat) do not,
then the instructor can divert resources in course delivery or course web development from the latter
to the former.
3. DATA AND METHODOLOGY

rd
We obtained data for this study from a 3 year level course in Business Forecasting (taken as part of
Marketing and Business majors) at a major Australian university in 2010. In addition to normal
lectures and tutorials that were conducted on a weekly basis, a suite of materials were made available
online via Blackboard. This material included lecture slides, tutorial documents and other
supplementary materials, such as self-testing question banks (with answers), additional forecasting
data examples, forecasting notes and a discussion board facility, where students would discuss in
great detail issues on data management, forecasting techniques and a range of other academic
content.
The dependent variable in this study was overall final student performance (final numerical grade)
composed of two equally weighted assessment components; non examination (class tests,
assignments) and final examination both worth 50%. The independent variables were derived from
118
two sources: (i) Blackboard and (ii) the university student data system. The student activity in various
online components was measured by the student tracking facility of Blackboard. The log of online
activity was collected immediately after the completion of the final assessment task in week 13.
Relevant student characteristics, such as, Grade Point Average (GPA), gender and country of origin
(domestic/international) were obtained from the university data system.
The initial sample size, after accounting for a small number of observations with missing values, was
273 students. However, this was reduced to 249 when observations containing outliers for various
independent variables were omitted.
The final sample had the following characteristics: the average final mark was 62 (minimum 21,
maximum 85), 55% were male, 60% were Australian domestic students (40% international students)
with an average GPA of 2.34 (max limit GPA = 4). These group characteristics are approximately
rd
consistent with typical 3 year courses in business and economics at this university. The dependent
and independent variables are described as follows:
(a) Dependent Variables:
Fin_Grade – Final grade in the course (Mark/100)
(b) Independent Variables:
i. Sessions: Number of log-on sessions (excluding self-test sessions);

ii. Total_Time: Total time in minutes spent on activities related to course content (excluding
discussion board or online self-testing questions);
iii. AvgTime_Session: Total online time divided by the number of unique sessions
iv. Disc_Mess: Number of discussion board messages read;
v. Self_test: Number of completed online self-test question sessions.
vi. Files: Number of files students accessed related to course content and supplementary
materials
vii. GPA: Student Grade Point Average (GPA; maximum attainable is = 4)
viii. Gender – Male = 1, Female = 0
ix. Country_Origin – Domestic student = 1, International student = 0
Given the quantitative nature of the dependent variable and the independent variables an OLS
regression was performed. Estimation was undertaken using SPSS version 21.0.
4. RESULTS
Initial descriptive analysis was undertaken on all variables to ascertain distribution plots and to help
identify outlying values at extremes of each independent variable which may bias regression
estimates. Any observations containing extreme values were eliminated.
Correlation analysis was then undertaken to assess the strength of association between the
independent variables. The variables Sessions, Total_Time, Self_Test and GPA had reasonably
strong correlations with the dependent variable while among the independent variables Sessions,
Total_Time and Files, as would be expected exhibited reasonable strength of association. None of the
other independent variable correlations indicated any potential collinearity problems for estimation.
The initial regression model attempted included all of the indicated (in section 3) independent
variables. It was clear however from the estimation results (and some further exploratory regressions)
that inclusion of all of Sessions, Total_Time and Files led to multicollinearity.
Logically it is expected that these three variables would be similar indicators (as suggested by the
correlation analysis) of student’s online participation (outside of self-tests and discussion messages).
It was decided to only use Total_Time as the relevant usage indicator in future regression estimation
to facilitate easier comparison with previous literature. Although AveTime_Session was included for
other reasons, it also allows for the impact of Sessions and Total_Time to be assessed while reducing
the impact of multicollinearity. The final regression estimates appear below in Table 1.
119
TABLE 1: FINAL REGRESSION RESULTS – Dep Variable (Fin_Grade %)

B Std. Error t Significance
(Constant) 33.779 2.021 16.712 0
GPA 10.74 0.846 12.695 0
Gender 2.021 0.893 2.262 0.025*
Country_Origin 0.132 0.961 0.137 0.891
Total_Time 0.002 0.001 2.692 0.008*
AveTime_Session -0.096 0.041 -2.361 0.019*
Self_Test 0.434 0.153 2.843 0.005*
Disc_Mess -0.0004 0.0002 -1.988 0.048*
2
N = 249, R = 0.55, St. Error of Estimate = 6.925, F = 49.361 (p=value ~ 0.000) ,* significant at
5%
2
Overall, the model is significant (F-statistic) with reasonable R for a cross-sectional regression.
Diagnostic tests for heteroscedastic errors were negative and further residual tests for non-
randomness were all negative. All of the variables apart from Country_Origin are significant at 5% as
indicated in the final column. The student characteristic variables of GPA and Gender are significant
with the positive coefficient on gender indicating males have a 2 mark higher final grade on average
than females. One extra unit of GPA leads to an increase in final grade of about 11 marks. The online
usage variables are all significant with positive signs on Total_Time and Self_Test suggesting the
more time spent online and the more self test assessments attempted the higher the final grade, all
else equal.
The coefficients on these respective variables (0,002, 4,34) suggest it would take on average an extra
500 minutes of online time to increase the final grade by one mark while the same increase in grade
can be achieved by doing approximately another two self tests. The signs on the other two online
usage variables (AveTime_Session, Disc_Mess are negative which at first glance appears counter-
intuitive. However, AveTime_Session (in conjunction with Total_Time) gives an indication on how the
total time spent online was allocated across sessions. Lower values of AveTime_Session indicate a
more consistent pattern of online usage spread across many sessions while higher values might
suggest more of a “cramming” pattern of online usage. Thus the negative sign might indicate the
same online time crammed into fewer sessions leads to lower grades. The negative sign on
Disc_Mess is more problematic and suggests the more messages read on the discussion board the
lower the final grade. This may reflect possible unreliable information in student based discussion
forums or over-reliance on discussion boards to provide solutions to problems and exercises.
5. CONCLUSIONS
The above results have substantial implications for developers of online facilities assisting face-to-
face learning. Self-testing assessments (provided in this case online) appear to improve student
performance and learning outcomes. Online provision of these self tests provides instant marking and
feedback for the student which can assist learning outcomes. The results seem consistent with
previous literature findings that self testing assessments are important in enhancing student
performance and learning.
The amount of time spent online by the student has an impact on student performance. The evidence
seems to support previous literature findings that the amount of time spent online on course websites
does have an impact on student performance and learning. Further, there is evidence that the
marginal impact of the amount of time spent online is moderated by the number of sessions over
which the time is spread This suggests developers encourage a more consistent pattern of online
usage rather than students cramming towards the end of the semester approaching the final
examination period.
The negative significant coefficient on Disc_Mess suggests that reading of discussion messages may
have a detrimental impact on student performance (and by implication learning outcomes). This may
reflect the possible poor quality of the discussion messages (mostly student and not instructor
generated messages). Alternatively, increased discussion board activity may detract from other online
120
activities (content, self-testing). Further, a more sensitive or fundamental measure of discussion board
activity may be required, as a portion of communication in discussion boards is typically only
peripheral to course content (organizing group activity, routine enquiries etc)..
The limitations of this study are the specific nature of the course (quantitative), measurement of the
key variables (final grade as a proxy for “learning”, time spent online as a proxy for online interaction,
message quantity not quality etc.) and potential differences for different student cohorts. Although we
filtered out messages that did not have course related content it may be worthwhile in future studies
to score the relevance of message content to better estimate the impact of reading discussion
messages on learning.
At present, the authors are collecting data from a much wider range of courses that are both
quantitative and qualitative in nature. The data from these courses will be analysed to determine if the
findings in the above study have been replicated across different types of courses. In addition,
separate analyses which focus on the potential impact of student cohort bases such as gender,
country of origin will be undertaken.
However, despite the above limitations this study is an initial and important step in assessing the
usefulness of online tools (used in addition to face-to-face mode of material delivery) in improving
student learning outcomes given that universities all around the world are investing an enormous
amount of resources in online learning.
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AUTHOR PROFILES:
Dr. Con Korkofingas teaches Marketing and Customer Relationship Management in the Department
of Marketing and Management at Macquarie University, Sydney. His PhD used expected utility to
model the impact of product experiences on customer satisfaction and consumer choices.
Dr. Joseph Macri teaches International Trade and Industry Economics in the Department of
Economics at Macquarie University in Sydney. His PhD examined the impacts of and differences
between external rankings of Australian University economics departments.
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SUPPORTING CRITICAL THINKING THROUGH ANCHORED ASYNCHRONOUS

ONLINE DISCUSSIONS
Nimer Alrushiedat, California State University, Fullerton, California, USA
ABSTRACT
We present results from an exploratory study on the effectiveness of anchored and standard
asynchronous online discussions on the critical thinking of the students. In our study, two groups of
students used standard asynchronous online discussions and anchored asynchronous online
discussions. Based on Garrison’s et al. (2001) evaluation criteria for critical thinking, we conducted a
content analysis of the comments made by the students. We found statistically significant differences
in the number of off-topic comments and for the integration category.
Keywords: Anchored Online Discussions, Persuasive Technology, Computer-Mediated-

Communication, Critical Thinking
1. INTRODUCTION
For students to improve their course performance, they must increase and focus their efforts, make
changes in their behavior, and raise their level of engagement. One way to aid them in their efforts is
to provide them with additional means of knowledge sharing that extends beyond the walls of the
classroom.
Using online discussions as a form of computer-mediated-communications (CMCs) provides students

with an additional mechanism for communicating with each other.
Students can form online discussions around various themes and subjects. In general, it seems that
online discussion forums in course management systems were developed with a focus on producing
technology more than a means to benefit users from collaborative processing of information (Van der
Pol et al., 2006).
To this end, we conducted a pilot study by implemented anchored discussions. We observed that
students participated actively, enjoyed their participation, and had an overall positive experience. We
decided to extend the study and examine student’s critical thinking process with the understanding
that collaborative interaction can enhance learning and critical thinking (Gokhale, 1995).
Littleton and Hakkinen (1999) suggested that collaborative knowledge construction can take place in
these online forums. Online discussions allow for interactive dialogues and knowledge construction
(Laurillard, 1999). Our intent is to make improvements in the students’ preparation for their classes.
Faculty may use online discussions to generate positive and persuasive effects. Persuasion is an
integral part of teaching and cannot be separated from it. Persuasion is a form of social influence
(Cialdini, 2001; Kelman, 1958). Oinas-Kukkonen and Harjumaa (2008) categorized CMCs as a type
of persuasive technology for their support of social interactions and role playing.
If a technology is implemented as a means to support interactions, dialogues, and influences among

users, it can be considered a persuasive technology (Fogg, 2002) as in the online discussions (ODs).
Anchored asynchronous online discussions (AAODs) can offer students a simple and effortless
interface to participate in discussions (Alrushiedat & Olfman, 2013a).
A simple and easy to use interface can potentially reduce frustration and anxiety, increase motivation
and engagement (Alrushiedat & Olfman, 2013a & 2013b).
The critical thinking process has been a key objective in higher education (Fahy, 2005; Roblyer &
Schwier, 2003; Strother 2002; Garrison et al., 2001; and Collison et al., 2000). Our aim is to develop a
deeper sense of understanding to determine how online discussions can best be used to aid learning
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through sustained and critical discussions. Abbot et al. (1996) suggested students rarely realize how
information and knowledge are applied, and they often view information as facts to memorize and
mechanically reproduce.
Students in online discussions generally participate to build on their own experiences. They draw
from their own knowledge, familiarity with topics, and share their understandings in the discussions
(Markel, 2001).
There is substantial agreement among faculty that important outcomes in undergraduate education
are knowledge acquisition, application, and integration (Warren & Rada, 1999). Students get to
emphasize, discuss, rationalize their points of view, and point to their agreements and disagreement
(Nicol & Boyle, 2003).
To be more effective at teaching, Kassop (2003) recommended having students write more regularly.
In an open ended fashion, asynchronous online discussions allow introvert students to “speak up”
often with enriched posts.
Brush et al., (2002) found that online discussions allowed the less vocal students to contribute equally
as they tend to be more reserved with face-to-face (F2F) interactions.
In the ODs, students jointly attempt to negotiate and conceptualize their understanding. Based on
their different interpretation (Anderson et al., 1996), they try to clarify and improve their sense of
understanding of the various concepts.
We expect the students in their interactions to act as both “benefit seekers” and “benefit-promisers”
(Rank, 1976). We perceive the application of online discussions (ODs) to have pedagogical benefits
that may be rewarding to both faculty and students.
With ODs, instructors can provide students with the additional means of knowledge sharing,
deliberations and debates, intellectual exchanges, and potentially learning. Van der Pol (2007)
stated, “anchored discussion has shown to be a versatile tool with many possible uses that concern
the discussion of online material.
Tversky and Kahneman (1974) found that anchoring explained several well-documented decision-
making biases. When an anchor is formed, it directs the focus as a bias towards the anchor thereby
forming the basis of the discussion thread.
Improved understanding of the processes that takes place during their use (Slater, 1997), can help
embrace a greater prospect at extending class discussions beyond the classroom walls.
With suitable process revisions, anchored asynchronous online discussions can be an exciting mean
of providing distributed education and potentially a viable option that complement classroom face-to-
face education (Brush et al., 2002).
With this in mind, we decided to explore the effects of anchored asynchronous online discussions
(AAODs) on critical thinking exhibited through knowledge sharing and exchanges of ideas. Moreover,
it was found that using AAODS can reduce the cognitive load of the students, thereby providing the
students with more mental capacity to process thoughts and tasks (Eryilmaz et al., 2009; Eryilmaz et
al., 2013).
3. RESEARCH QUESTION
Can AAODs be successfully used to improve the quality of online discussions in terms of the critical
thinking criteria? If we can answer this question, we can have a deeper understanding of the
cognitive processing to aid us in the design and development of a more effective and persuasive
discussion artifacts. We stand to gain more insights about how ODs can be better utilized.
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4. RESEARCH METHODOLOGY
Two groups of students used two different types of asynchronous online discussions. Group 1 (G1)
used standard online discussions, while group 2 (G2) used anchored online discussions.
The students were 3rd year university students majoring in business at a state university in the United
States of America. Our research design was planned and conducted based on random assignment of
the tools. Internal Review Board (IRB) approval was obtained.
The course was an introductory to business statistics. Additional controls were implemented to
ensure that the groups shared the same characteristics, environment, instructions, preparation, and
articles. Prior to conducting the study, a questionnaire was given to the two groups that would be
using two different online discussions.
We looked at class level, age, gender, their previous experience with online discussions, and their
feelings toward participation to ensure that there are no differences among the groups. A series of t-
tests were conducted and no significant differences were found among the groups.
The instructor’s role was to act as a facilitator and provide equal amounts of guidance and support to
the groups, so that none of groups would be advantaged over the other.
The difference between the two online discussions was the anchoring feature, which allowed for any
number of words, sentences, or paragraphs from an article or a case to be selected and highlighted.
The anchor is made by clicking and dragging the cursor over the text (word, sentence, or paragraph)
of interest.
We examined the discussion based on the critical thinking process phases (Garrison et al., 2001):
1) triggering events,
2) exploration,
3) integration, and
4) resolution. We also recorded the level of participation for the two online discussion tools.
In addressing the critical thinking and cognitive processes differences between the two online
discussions, we conducted a content analysis according to Garrison’s et al. (2001) evaluation criteria
for critical thinking. We hypothesize that:
H1a: There is a significant difference in the proportion of unrelated posts.
H1b: There is a significant difference in the proportion of triggering events.
H1c: There is a significant difference in the proportion of exploration.
H1d: There is a significant difference in the proportion of integration.
H1e: There is a significant difference in the proportion of resolution.
Further, since anchored discussions tend to be more sustained than newsgroups (Guzdial, 1997) for
example, we feel that if we can understand and provide further explanation for the underlying thinking
processes and contributions of participants, then we might gain valuable insights that would aid us in
improving designs of online discussion artifacts.
We conducted a content analysis, which was coded and analyze by two raters. The data was
categorized according to the critical thinking phases of Garrison et al. (2001):
• Triggering Event: starts the course of action, which can be a problem or a dilemma (Fahy,
2005) such as: i) recognizing the problem, “presenting background information that culminate
in a question,” ii) sense of Puzzlement, either through asking questions, or posts that leads to
a new path.
125
• Exploration: “ participants alternate from reflection to discourse” while they try to develop their
understanding as they: i) diverge within the online community through “unsubstantiated
contradiction of previous ideas,” ii) diverge within a single message, many different ideas in a
single message, iii) exchange information, personal interpretation, narrative, that are “not
used to support a conclusion,” iv) suggest for consideration, when the message explicitly
suggests exploration, v) brainstorming when the message “adds to established points but
does not systematically defend/justify/develop addition,” vi) leaps to conclusion without any
support.
• Integration: meanings are weaved and constructed from ideas in previous phases and are
well connected and reasoned that might have: i) convergence among group members, such
as “I agree, becauseS” or may “build on” or provide additional and germane information, ii)
converge within a single message, “justify, develop, defend,” and hypothesize, iii) connect
ideas from various sources, iv) create solutions.
• Resolution: tests solutions, defend solutions, or provide a “vicarious application to real world.”
Unrelated: are posts that have no relation to the topic of discussion.
5. DISCUSSION OF FINDINGS
G1 used the standard discussion board, while group 3 (G2) used the anchored discussion board. G2
consisted of 42 students, 22 females and 20 males, the average age was 22.61 years. G1 posted a
total of 136 messages; the average number of posts was 3.32 messages per student, with a standard
deviation of 2.44 messages. G2 posted a total of 211 messages.
The average number of posts was 5.02 messages per student with a standard deviation of 2.65
messages.
When we compared the level of participation for the two groups, we found a statistical difference (p <
.0025); this was based on the number of posts for each group, see Table 1. This finding provided
support for our first hypothesis H1.
Online Sample Mean Age Gender Mean No. of Std. Dev.

Discussion Size of Students Comments No. of
(Years) Male Female (per student) Comments
G1: 42 22.61 20 22 3.32** 2.44
Standard
G2: 41 22.44 22 19 5.02** 2.65

Anchored
**significantly different P < .0025

Table 1. Demographics of subjects and overall number of comments made
When we compared the proportions of the posts based on content analysis and the operationalized
critical thinking categories (Garrison et al., 2001), we found statistical differences for the unrelated
posts category (p < 0.001) and for the integration category (p < .001).
We were able to obtain support for the hypotheses H3a & H3d. For hypotheses H3b, H3c, and H3e
the differences were not statistically significant and these three hypotheses were not supported, see
Table 2.
126
Standard Anchored
Critical Thinking Categories Significant
(Garrison et al., 2001) Proportion Proportion Difference
n1 = 136 n2 = 211
Not Cognitive: Unrelated & 21.32% 2.37% Yes**

External Reference
Triggering Events 6.99% 6.16% No
Exploration 58.82% 59.24% No
Integration 11.76% 28.91% Yes**
Resolution 0.74% 4.30% No
** Significant at p < 0.001

Table 2. Critical Thinking Categories (Garrison et al., 2001)
To increase the reliability of the inter-rater analyses, we obtained two measures, Cohen’s Kappa and
the coefficient of reliability (CR). Cohen’s Kappa is a statistical measure used to for inter-rater
agreement when dealing with categorizing data qualitatively, while CR is a simple coefficient that is
also used to ensure consistent and dependability of judgment for classifying qualitative data, as in a
content analysis.
Cohen’s Kappa = 0.96 and CR = 0.9779 for the standard discussion tool. For the anchored
discussion, Cohen’s Kappa = 0.95 and CR = 0.9621, see Table 3. Both reliability measures indicate a
“very good” inter-rater reliability.
Online Cohen's Coefficient of

Discussion Kappa Reliability: CR
Standard 0.96 0.9779

Anchored 0.95 0.9621
Table 3. Content Analysis Inter-rater Reliability Measures
Most students who used the online discussions agreed that they improved their learning after using
the online discussions. They were given a questionnaire and asked to rate if the discussions helped
them learn.
This was do based on a 5-point Likert scale (1: Strongly Disagree, 2: Disagree, 3: Neither Agree or
Disagree, 4: Agree, 5: Strongly Agree), the students who used the anchored discussion (G3) had a
higher rate of agreement; the mean for this group was 4.02 and a standard deviation of 0.68 (between
Agree and Strongly Agree), while G2 students had a mean of 3.57 and a standard deviation of 0.88
(between Agree and Neutral).
The perception of learning was significantly higher for G3 (P=0.005) than for G2, see Table 5. This
finding lends support to our last hypothesis H4 that students’ perception of learning is significantly
higher when using the anchored discussion versus the standard discussion.
6. CONCLUSION
Online discussions are playing an important and supplementary role for classroom teaching beyond
the walls of the classroom. The findings allow us to conclude that AAODs can be valuable
pedagogically for students and their success.
Their persuasive effect contributed to the two student roles as “benefit-promisers” and “benefit
seekers” (Rank, 1976). As “benefit-promisers” students extended their efforts to post messages and
replies. As “benefit seekers” students sought better quality discussion aided by their critical thinking
processes.
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We found that AAODS were more topic focused, with fewer unrelated posts. Students’ posts were
better integrated. As AAODs can help engage students in deeper and more meaningful discussions,
they can potentially help improve learning and success (Alrushiedat & Olfman, 2014).
In this day and age, many students find it easier to communicate via typing text versus having to
vocalize their inputs in a face-to-face (F2F) setting.
A future research direction would be to study the theoretical models that can explain these findings
further. For example, studying the effects on cognition based on the cognitive fit theory may explain
the different mental representations towards obtaining desired learning outcomes for education.
Limitation of research: It should be interpreted and accepted with caution. First and foremost, a bias
may have existed with the raters while holding positive views for discussion boards.
Second, the subject is an introductory course in quantitative business analysis; the discussions may
not yield similar results for other courses.
Third, the instructor role was to merely facilitate the discussion, a more active participation of the
instructor in the discussion may yield different results.
7. ACKNOWLEDGEMENT
The author wishes to thank Professor Jakko van der Pol from Utricht University-The Netherlands for
given his permission to use his anchoring tool, Dr. Lorne Olfman and Dr. Terry Ryan from Claremont
Graduate University, and Dr. Evren Eryilmaz for his help with the classification and categorization of
the data.
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AUTHOR PROFILE
Dr. Nimer Alrushiedat is a faculty member in the Department of Information Systems and Decision
Sciences, Mihaylo College of Business and Economics at California State University, Fullerton. He
holds a Ph.D. in Information Systems and Technology from Claremont Graduate University (CGU),
Claremont, USA. He is a member of the Social Learning Software Lab ([SL]²) at CGU. His research
interests focus on IT and improved learning, information and knowledge sharing, collaboration, and
social learning.
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UNDERSTANDING UNIQUE CONSUMER BEHAVIOR: INSIGHTS FROM SOCIAL PSYCHOLOGY
Anja Franck, TU Dresden, Germany

Stefan Wünschmann, TU Dresden, Germany
ABSTRACT
Due to the growing wealth in increasingly urbanized societies more and more consumers have the
financial capability and sense the social need to individualize their lifestyle, behavior, and
possessions. Therefore, companies strive to offer customized products, use exclusive distribution
channels and promise a unique brand image. While unique consumer behavior has been addressed
by social-psychological research since the 1970s the findings have not been sufficiently integrated
into business and marketing approaches so far. This paper surveys relevant theories on the
phenomenon of unique behavior. Conformity research provides evidence that unique behavior can
have both, a private and public function. Following social identity theory, uniqueness in social groups
also contributes to establish an individual identity. Notably, it is expected that people, who focus on
extending self-esteem, drive to be unique in social and private life (self-esteem hypotheses). Finally,
uniqueness theory and optimal distinctiveness theory attribute unique behavior to an individual's need
for uniqueness which can be measured and used in consumer research. To sum it up, understanding
unique consumer behavior is a vital topic for business and marketing research.
Keywords: Unique Consumer Behavior, (Consumer’) Need for Uniqueness, Optimal Distinctiveness
Theory, Conformity Research, Social Identity Theory, Self-Categorization Theory, Self-Esteem
Hypotheses
1. INTRODUCTION
To demonstrate one's uniqueness consumers not only rely on specific characteristics, skills, or
behavior, but they also use consumption goods and other property. James (1980) already recognized
that personality is defined by more than only abilities or characteristics, namely everything that a
person associates with the possessive pronoun “mine/his/her” matters (‘material self’, e.g. body, mind,
but also clothing and other material objects). The economist Veblen (1934) and the sociologist
Simmel (1957) came to similar conclusions, the former for luxury goods, and the latter for clothing.
Brock’s (1968) ‘commodity theory’ shows the importance of unique possessions, by pointing out an
inverse relationship between the perceived value of goods and their scarcity. The attractiveness of
rareness was also studied by psychologists (e.g. ‘limited edition’, Cialdini, 1985). As substantial
empirical evidence shows, people prefer to buy products that strengthen their perceived uniqueness
(e.g. Lynn/Harris, 1997a; Richins, 1994; Celsi et al., 1993; Belk, 1988; McCracken, 1986).
In modern markets, goods and services are often perceived interchangeable in terms of quality and
functionality. Taking this into account, it is not surprising that companies try to make their products
seem unique. Among unconventional advertisement campaigns or exclusive distribution channels,
companies focus on new product strategies like mass customization. Research in that domain is
plentiful, since Snyder (1992) applied the uniqueness theory to consumer behavior. This effort led to
different conceptualizations of the tendency to look for domain-specific uniqueness, namely: Self-
Attributed Need for Uniqueness (Lynn/Harris, 1997a), Desire for Unique Consumer Products
(Lynn/Harris, 1997b), Consumers Need for Uniqueness (Tepper et al., 2001), Need for Unique
Costumer Treatments (Weiherl, 2011). Based on these findings research dealt with variables, which
affect unique consumer behavior (e.g. Tepper/Hoyle, 1996; Withney et al., 1994; Schlenker/Weigold,
1990) and consequences of customers need for uniqueness (e.g. Simonson/Nowlis, 2000; Vignoles et
al., 2002; Burns/Warren, 1995).
To our knowledge, there is no paper systematically summarizing and reviewing the current state of
the art in unique consumer behavior research. This article aims at filling this gap and providing a first
overview by presenting different socio-psychological theories and assessing how they contribute to
understanding unique consumer behavior. Section 2 presents how conformity research can be used
to explain possible kinds of unique behavior. The following section summarizes theories of ‘group’
behavior and demonstrates to what extend uniqueness is a prerequisite in developing an identity.
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Motivational theories are presented in section 4; they help to provide reasons why humans indeed
crave uniqueness. Finally, section 5 concludes the findings.
2. CURRENT STATE OF CONFORMITY RESEARCH
Using the findings of conformity research to explain consumers’ uniqueness theoretically, may appear
paradox at first glance. Conform behavior appears to be the opposite of uniqueness. Nevertheless,
conformity research also implies the phenomenon of anticonformity and can thereby help to show
how uniqueness manifests itself in behavior.
Nail (1986, p. 190) differentiates between three types of conformity research:

• Mathematical approaches: Some researchers developed formulas to explain the extent of
conformity with the help of different situation and individual variables. For instance according to the
social impact theory by Latané/Wolf (1981, p. 438), the following variables increase the possibility
of people reacting to social influences: increasing importance of the peer group to the individual;
increasing closeness, both spatially and temporally; and an increasing number of members of the
group.
• Descriptive approaches: Willis/Levine (1976), Allen (1965), Crutchfield (1962), and others have
attempted to operationally define conformity and delineate it from other possible reactions to social
influence. It was their primary goal to describe conformity as precisely as possible.
• Explicative approaches: This body of research examines the psychological processes that occur
due to social influence. They aim to explain why people behave more or less conform (e.g.
Brehm/Brehm, 1981; Levine, 1980; Moscovici, 1980; Raven, 1965; Deutsch/Gerard, 1955;
Festinger, 1954 and 1950).
Descriptive models provide insight into reactions to social influence. Here, the so-called ‘one-trail
models’ show possible reactions towards attempts of influence:
• Some researchers define conformity solely via the criterion of congruence. According to this,
people conform when their personal views coincide with the norm after being exposed to social
influence (among others Allport, 1934).
• Other researchers address the question of whether a person’s views change under social
influence. Conformity occurs when one adapts her opinions to those of others, and independence
describes the situation when they hold fast to her own views. Anticonformity on the other hand
occurs when people change their opinions to make them go against the direction of the social
influence (the ‘boomerang effect’). Willis (1965b) brings these approaches together in a two-
dimensional model that differentiates between conformity (“opinion changes in accordance with the
norm”) and congruence (“opinion is already in accordance with the norm prior to social influence”).
• In addition, Festinger (1953) differentiates between public and private opinion. Here initial
incongruity is assumed, a person’s opinion is different from the group’s opinion prior to its
influence. Compliance then occurs if the person only publicly agrees with the group opinion, while
at the same time internally sticking to her original position (this is also known as ‘expedient
conformity’). Conversion (also known as ‘true conformity’ or ‘internalization’) occurs, however,
when both the privately as well as the publically expressed views change. With anticompliance, the
person publicly distinguishes herself from others. These concepts were summarized in another
two-dimensional concept by Allen (1965).
• Nail (1986, p. 200ff.) developed a three-dimensional concept that additionally differentiates
between initial agreement and differences of opinion. However, if the personal opinion contradicts
the view of the social group prior to being influenced, Allen’s model (1965) continues to be valid.
Furthermore, there are four kinds of possible reactions when the own opinion is in accordance with
the group’s opinion: congruence, paradoxical compliance, paradoxical anticompliance, and
anticonversion.
• MacDonald et al. (2004) finally introduced a further dimension into the one-trail model. This so-
called four-dimensional ‘social response context model’ also includes whether a person’s opinion
is privately and/or publicly contrary to the view of the group prior to social influence.
Unique behavior is shown when a person behaves in a nonconforming manner after being exposed to
social influence. However, one-time nonconforming behavior can in fact be due to a specific situation.
By contrast, continued nonconformity may indicate true unique behavior. An element of multiple trail
models is therefore the question of whether characteristic reaction patterns can be identified following
several attempts to socially influence a person.
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The isosceles triangular model by Willis (1965a) is a classical approach that defines every vertex
using two possible reactions: the reaction to initial congruence, and the reaction to initial
incongruence. Willis (1965a) uses the expression pure conformity when a person regularly adjusts her
point of view to match the group opinion (assuming they were not the same before), or sticks with her
opinion when it is the same as the group's from the start. A pure anticonformity occurs when a person
changes her opinion to make it stand in contrast to the group’s opinion. Pure independence is the
case when all attempts to influence the individual have no impact.
In the diamond model, Willis (1965a) and Willis/Levine (1976) expand the dimension of
“independence vs. dependence” to include a fourth reaction possibility: self-anticonformity. In this
case, the person continually behaves incongruently to her initial opinion. This means that her
orientation is towards her own self, not the group. This kind of behavior is the opposite of the
‘independence’ reaction, better described as self-conformity.
The literature on descriptive models for conformity allows the conclusion that the findings on
anticonformity are of particular interest in explaining unique behavior. Nonetheless, conformity
research has mostly addressed conformity, with hardly ever taking a closer look at anticonformity
(Nail, 1986, p. 191). However, it is in fact possible to derive an anticonformity concept from these
descriptive models, in combining the strengths of the one-trail models (the difference between the
privately and publicly expressed views) with those of the multiple trail models (observing reaction
patterns; see figure 1). Anticonversion represents anticonformity in its purest form. Since both, public
and private views are changed to counter the group opinion. While a person only unofficially opposes
the group via compliance, anticompliance results in private approval while the individual publicly
behaves in a nonconforming manner.
Conversion
public + + +
private + + +
public + - -
private + - -
Compliance Anticompliance
public + + + Conformity public + + -

private + + - public private private + + +
public + - - private public public + - +

Anticonformity
private + - + private + - -
public + + -
private + + -
public + - +
private + - +
Key:
Group‘s opinion + - +
Person‘s opinion (before vs. after)

FIGURE 1: CONFORMITY VS. ANTICONFORMITY
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The descriptive models do not help to explain what motivates conformity and anticonformity.
Explicative approaches attempt to close this research gap. According to them, conformity can be
attributed to either an informational or a normative influence (Deutsch/Gerard, 1955):
• Informational influence is present when a person orientates herself by her social surroundings in
order to act appropriately. This kind of social influence mostly has conversion (inner and external
acceptance) as its result. Conversion is more probable when the situation is ambiguous, i.e. when
hardly any objective standards are available (Brehm/Mann, 1975; Sherif, 1935).
• Normative influence is the case when a person succumbs to the perceived group pressure in order
to be socially accepted. Here, it can be expected that conformity manifests itself publicly
(compliance). This is even more so the case – as in Asch’s (1951) experiment – if it is dealt with an
ambiguous situation where the group’s opinion is different from the person's own views (e.g.
Nemeth/Markowski, 1972).
A person can also react in an anticonforming manner to both of these forms of social influence. For
instance, a person can observe the consumption habits of other individuals to determine how to
distinguish herself from them. Uniqueness also demonstrates who resists a normative influence and
privately and/or publicly opposes the group opinion.
Non-conforming behavior has been explained so far using the theory of psychological reactance
(Snyder/Wicklund, 1976; Brehm, 1966, p. 108ff.): In cases where people, who value freedom of
choice and opinion highly, feel influenced, they attempt to restore that freedom that has been
threatened or lost. According to Brehm/Brehm (1981), reactance is based on an effectiveness motive:
They assume that people generally believe they are able to control their environment. When this
freedom is limited, it motivates them to win back the control over their action (self-efficacy). It would
therefore hardly matter whether the individual resists an influence attempt publicly or privately. In this
case, all three kinds of anticonformity (compliance, anticompliance, anticonversion) would be possible
outcomes. Heilman/Garner (1975) describe reactance as the desire for a person to be presented in a
favorable light, or at least in one corresponding to their self-image (impression management): People
are less concerned with restoring their threatened freedom of opinion and/or action. Instead, they
want to demonstrate their autonomy to the person who is trying to influence them, as a way of not
appearing inferior. For this purpose public anticonformity is a sufficient mean.
When a person shows private anticonformity alone (compliance), she maintains at least a unique self
(see figure 2). After all, in this case she does not publicly express her differing view. If she however
opposes the group opinion privately and publicly (anticonversion), she stands by her convictions and
beliefs. To her, the content of the group’s opinion is wrong, which is why this person consciously
decides against it. In the case of anticompliance, she acts only publicly in a non-conforming manner.
In this case, uniqueness is a consequence of impression management.
Public Anticonformity
Yes No
Anticonversion Compliance
Yes
Private ⇒ Uniqueness based on belief ⇒ Unique self
Anti-
conformity Anticompliance Conversion
No ⇒ Uniqueness as
impression management ⇒ No uniqueness
Figure 2: ANTICONFORMITY AND UNIQUE BEHAVIOR
3. UNIQUENESS AS THE FOUNDATION OF A MEANINGFUL IDENTITY
3.1 Social Identity Theory

Until the 1990s research was focused on the personal self-concept. Here the focus is on
characteristics which a person perceives to be unique about herself in contrast to others
(Brewer/Gardner, 1996, p. 83). However, personal characteristics alone do not sufficiently explain
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how a person behaves and, evaluates herself and her surroundings. Therefore, cross-cultural studies
have shifted their focus to social aspects of the self (e.g. Markus/Kitayama, 1991; Triandis et al.,
1988), formulating the following hypothesis: The feeling of belonging to a group is not only important
for the development of social structures (i.e. group formation), but it also determines, how a person
perceives herself (i.e. identity formation; Singelis, 1994; Brewer, 1991).
Tajfel/Turner (1979) examined this issue with their social identity theory. They assume that the self-
concept includes on the hand aspects that delineate one person from another and thereby define the
personal identity. On the other hand it also includes social characteristics that are shared by others
and build up the social identity. This provides information, to which groups we belong or want to
belong (Mummendey/Otten, 2002, p. 100). According to that a person compares her own group with
others in order to define her social identity and positively delineating herself from other groups
(positive distinctiveness between the ‘ingroup’ and the ‘outgroup’).
Brewer (1991, p. 476ff.) visualizes the possible elements of the self as a shell model: The different
forms of social identity are ordered as concentric circles around the personal self. In different
situations, the focus can be on different levels of the self (situational self-concept). In most cases,
identity involves more than just the personal self. Here, the so-called inclusiveness increases the
greater the distance is from the personal identity, because more and more people and/or groups are
perceived as similar. The different identities stand in relation to one another: Every new circle serves
as a basis for comparing the respective subordinate identity with others and distinguishing it from
them.
Aron et al. (1991) and Smith/Henry (1996) provide evidence that social identity influences behavior in
certain situations. For instance, people are more likely to become active in social movements when
they perceive their group as discriminated. In addition, social identity becomes behaviorally effective
with many people when they have to decide between opportunistic goals and benefits for the groups.
In this case, people sacrifice their personal interests for what is best for the group (Caporael et al.,
1989).
Unique characteristics are a necessary requirement for the development of a social identity. After all,
a group only exists by being separate from other groups. Its members feel like they belong to a group
because it differs from the social surroundings (Hogg, 2001, p. 186). Social identity develops from the
unique characteristics of the ‘ingroup’ (see figure 3). For groups, this means that they are in
competition for a positive identity (Tajfel/Turner, 1979).
„Me“ „Others“ „Us“
What makes me What makes us

different from others? different from others?
= Personal identity = Social identity
Figure 3: TWO POSSIBLE SOURCES OF IDENTITY
3.2 Self-Categorization Theory

In the self-categorization theory, Turner et al. (1987) describes how social identity emerges: People
divide their social environment into categories (‘ingroup’ and ‘outgroup’). The categories are context-
dependent, multi-dimensional sets of characteristics (typical attitudes, feelings, and behaviors) with
the help of which members of one category characterize and differentiate themselves from other
groups. They are formed according to the meta-contrast principle (Hogg, 2001, p. 187): Within a
certain context, people are more likely to be classified into the same category, the less they differ and
the easier it is to distinguish them from other categories (Mummendey/Otten, 2002, p. 105). The
categories therefore highlight the differences between groups while neglecting those within the group.
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In a certain situation, we categorize ourselves and others into one or more categories
(‘categorization’). Social identity is ultimately derived from which category a person feels they belong
to or don’t belong to. Information on category-forming characteristics is obtained through social
comparisons. They allow people to orientate themselves in their social surroundings and define their
own position within them. If needed, categorization can be modified, which occurs through social
learning: An identity stabilizes when it shows itself to be successful when special situational key
stimuli occur. Under similar contextual circumstances, we will categorize the social environment in this
manner. However, if we recognize that the selected category does not sufficiently fit reality, we will
change it. This makes it a dynamic process.
Whether an identity is important to behavior, i.e. salient, depends on how important the respective
category is for the person (Reed, 2004, p. 286f.). If identity plays a major role for the personality, it will
more frequently impact attitudes, decisions, and behavior. Along with this person-related feature of
self-significance, situational key stimuli are able to activate a social identity (Haugtvedt et al., 1992). A
category here becomes salient that:
• is most effective in explaining similarities and differences among people in the context,
• best displays the social meaning of the context (e.g. social norms),
• and best fulfills self-evaluation and self-enhancement motives (Hogg, 2001, p. 188).
According to the self-categorization theory, unique characteristics are essential for the categorization
of the social environment. After all, the meta-contrast principle is only applicable when we are able to
create homogenous categories that are different from others due to unique characteristics. As
opposed to the theory of social identity, negative traits also contribute to identity in the case where
clearly positive traits are not available.
Social identity theory also shows that unique traits are necessary for people to find an own identity.
This is why Codol (1981, p. 114f.) sees unique characteristics not only as possible elements of human
identity; they are also necessary for building a meaningful identity. We can only describe what we are
when we know what we are not. Defining something always means separating it from other
definitions. Certain unique traits are therefore a requirement for contributing content to the self
(Vignoles et al., 2000, p. 340). Important here are not only the unmistakable traits of a person, but
those of the group as well (Vignoles et al., 2000, p. 341).
4. MOTIVATION OF UNIQUE BEHAVIOR
4.1 Increasing Self-Esteem

According to the theory of social identity, people strive for a positive social identity; however the
theory does not imply a rationale for this. According to Hogg (2001, p. 187), the need for self-esteem
drives people to look for unique characteristics in the attempt to build a positive social identity. This
self-esteem hypothesis has often been the focus of empirical investigations:
• Self-esteem as independent variable: If the sense of a person’s self-esteem is threatened, it will
motivate her to separate the own group from others, i.e. strengthen the social identity. The cause
of this is the need for self-esteem.
• Self-esteem as dependent variable of behavior between groups: Are people successful in
positively separating their group from others, it increases the social identity and their feeling of self-
esteem.
Rubin/Hewstone (1998, p. 41ff.) compared the empirical findings on both assumptions as part of a
review. Researchers investigated the first hypothesis in 35 experiments. Self-esteem as an
independent variable was confirmed in seven instances (20%). Therefore there is only scattered
evidence that self-esteem is an autonomous motivator. The second assumption was tested in 31
experiments, and was proven 18 times (58%). When looking at this, the sense of self-esteem can
apparently be seen as a result of group behavior.
In addition, the authors of the review distinguished the studies according to different types of self-
esteem (see figure 4). Self-esteem was mostly investigated as global, person-related and stable over
time. The first assumption was proven particularly often in terms of a situational conceptualized self-
esteem. People who have a continual low sense of self probably lack the confidence to separate
themselves or their group from others. Also, the specific feeling of self-esteem that is related to a
specialized area of life (e.g. the profession) appears to impact behavior more greatly than the global
136
feeling. Although only a few investigations have focused on social self-esteem (as it relates to social,
not personal, identity), it too plays a more significant role for behavior between groups than the
person-related dimension. The second hypothesis with self-esteem as a dependent variable was
confirmed for the social and situational variants in a large amount of studies. People apparently use
social characteristics more frequently than personal ones to improve their feeling of self-esteem in
certain situations.
Type of Self-esteem Group behavior Group behavior Self-esteem

self-esteem Studies Confirmed Percentage Studies Confirmed Percentage
All studies 35 7 20.0 31 18 58.1
Global 23 1 4.3 26 15 57.7
Specific 12 6 50.0 5 3 60.0
Personal 26 4 15.4 26 14 53.8
Social 9 3 33.3 5 4 80.0
Trait 26 4 15.4 15 6 40.0
State 9 3 33.3 16 12 75.0
Figure 4: REVIEW OF SELF-ESTEEM HYPOTHESIS STUDIES
(c.f. Rubin/Hewstone 1998, p. 57).
Hence Rubin/Hewstone (1998, p. 57) formulated a new, two-part self-esteem hypothesis: (1) low
(specific, social, situational) feelings of self-esteem motivate people to separate the own group from
others. (2) Is the own group positively and successfully separated from others, social identity is
strengthened and therefore the (specific, situational) sense of self-esteem is increased (see figure 5).
Although the two parts of the hypothesis would be methodically tested independently, there is no real
difference between them in terms of content. The second effect is ultimately a necessary condition for
the first. After all, an individual experiences unique social characteristics as appropriate for fulfilling
the self-esteem motive when he or she knows or hopes that this identity contributes to self-esteem.
So as a result, the assumption of an autonomous self-worth motive can in fact effectively expand the
statements on the theory of social identity.
(1) Self-esteem as a motive (2) Self-esteem as a benefit
Low Positive Positive High

self-esteem separation identity self-esteem
from social
(social,
surroundings
specific, situational) (between groups) (social) (social, situational)
Theory of Social Identity

Figure 5: TWO-PART SELF-ESTEEM HYPOTHESIS
However, the correlation between social identity and self-esteem remains inconsistent. According to
the self-esteem hypothesis, how strongly we identify with a group depends on whether we consider
the category to be positive (Abrams/Hogg, 1988). However, the causality between group evaluation
and identification remains unclarified: If we identify our-selves with those groups that we find
attractive, it can as a result contribute to our self-esteem, or we evaluate a group systematically better
when we have already identified ourselves with it (‘ingroup evaluation biases via appropriate social
comparisons see Brewer 1991, p. 477).
In addition, some people identify themselves with groups that have a lower status or a negative
image, thus ignoring possible damage to their image or a loss of self-worth (see Crocker/Major 1989).
Therefore, unique characteristics also have to satisfy another need; otherwise this kind of behavior
would be inexplicable.
137
4.2 Need for Uniqueness

Taking findings from earlier research on social deviation (e.g. Katz 1972, Wilkins 1965),
Snyder/Fromkin (1980; 1977) address the question of whether people nurture the desire to be at least
slightly different from others. In doing this, they were reacting to criticism by Allen (1975) and
Deutsch/Krauss (1965), about this deficiency in the conformity literature. Although classic studies had
also proven anticonform behavior (i.e. Sherif/Hovland, 1961; Asch, 1951), only few publications took
an explicit look at anticonformity. This can likely be attributed to the fact that the negative terminology
of ‘abnormality’ and ‘deviation’ has been used in the literature to describe nonconforming behavior,
interpreting anticonformity as wrong, and a deviation from the norm.
In their effort to remove this negative connotation, Snyder/Fromkin (1977, p. 518) redefine the need
for uniqueness, which they understand as the desire for unique characteristics: “A positive striving for
differentness relative to other people”. For this, they present a so-called ‘uniqueness identity
dimension,’ which is a cognitive continuum upon which people evaluate their similarities to other
people (Snyder, 1992, p. 10).
The perceived similarity is accepted depending on how distinct it is. Thereby very small as well as
very large similarities are less accepted (Snyder, 1992, p. 12; see figure 6). However, experimental
investigations of this are comparatively rare. Snyder (1992) explains this inverted U-function and the
role of the need for uniqueness as follows:
• The social surroundings and the (Western) society reward people who moderately differ from
others (extrinsic motivation).
• People feel good when they perceive themselves as sufficiently distinguishable from the masses
(intrinsic motivation).
Acceptance Emotional Reaction Behavioral Reaction

High Positive Strong In order to not
be like others
Neutral None
In order to
Low Negative Strong be like others
low moderate high low moderate high low moderate high
Similarity to other people
Figure 6: REACTION TO INTERPERSONAL SIMILARITY
Snyder (1992, p. 12) derives a similar emotional reaction progression from the acceptance curve:
People feel bad when they see themselves as interchangeable with or extremely dissimilar to others.
Moderate similarity on the other hand creates positive emotions (see figure 4). Fromkin (1972),
Ganster et al. (1977) and Snyder/Endelman (1979) were able to prove this effect.
The behavioral reaction in turn should correspond to a parabolic function: Whoever sees others as
moderately similar sees no need to act. Whoever strongly differs from the social surroundings takes
steps to differ less. Contrarily, people actively try to socially define themselves when they perceive
themselves as too interchangeable with others.
Proof of this is found e.g. with Fromkin (1968) who applies Guilford’s (1950) ‘unusual use test.’ Here,
test subjects are asked to think up unusual uses for everyday objects. Test subjects who were told
that they were very similar to others provided more answers than the control group. The influence on
138
self-evaluation and the desire for certain products has also been proven on several occasions (e.g.
Smith, 1975; Snyder/Batson, 1974; Duval, 1972; Weir, 1971; Fromkin, 1970).
While the left side of the function (between low and moderate similarity) corresponds to the
statements of the theories on interpersonal attraction (the interpersonal attraction paradigm, Byrne,
1971), the right side of the function lacks an explicit theoretical basis. This gap was closed by
Snyder/Fromkin (1977, p. 519).
According to the ‘theory of uniqueness,’ people do in fact sometimes conform to others. However,
they don’t want to be similar to a high degree. With this in mind, a situational analysis of conformity
deviations is needed. In addition to situational influences, the researchers also believe that different
people are motivated to varying degrees under similar circumstances to feel unique.
This assumes dispositional (i.e. personality-anchored) differences that emerge out of the inter-
individually varying need for uniqueness. The U-shaped/parabolic function (see figure 6) can therefore
shift horizontally: With a strong need for uniqueness, the curve shifts e.g. to the left. Here, even a low
amount of similarity appears inacceptable, causing negative emotions, which leads to a search for
unique characteristics (Snyder/Fromkin, 1977).
How strongly the need for uniqueness expresses itself in a person’s behavior is closely connected to
how unique a person perceives him or herself (Burns/Brady, 2001, p. 489). This impression is the
result of social comparison processes (Festinger, 1954): When individuals compare themselves with
peers and/or peer groups, they recognize how similar and/or dissimilar they are to others.
This perceived current uniqueness is then compared with the ideal standard (similar to the ‘optimum
stimulation level theory’). The more strongly the current level falls short of the ideal level, the greater
the effect of the need for uniqueness on the behavior (Burns/Brady, 2001, p. 487).
4.3 Need for Differentiation

Brewer’s (1991 and 1993) optimal distinctiveness theory poses the question of why people identify
with a group and when they are happy with a social identity. Brewer (1991, p. 477) derives social
identity from the realm between two independent needs: the need for social affirmation and belonging,
and the need for uniqueness and individuation.
People need both. These needs can be optimally satisfied when people strive for a ‘middle ground’ of
similarity between the self and the social surroundings.
Every condition along the continuum activates the two needs of ‘need for assimilation’ and ‘need for
differentiation’ to varying degrees (Brewer, 1991, p. 478). The more the identity advances towards the
extreme points, the unhappier the person becomes: people do not feel good when they are socially
excluded (Frable et al., 1990) or perceive themselves as interchangeable (Fromkin, 1970). Brewer
(1991) speaks of optimal distinctiveness when both needs are in balance. The theory is based on the
following assumptions (Brewer 1991, p. 478):
• People identify most strongly with those social groups that solve the conflict between both motives,
i.e. those that socially affirm their members while at the same time giving them the feeling that they
are sufficiently different from their social surrounding.
• Optimal distinctiveness is initially independent of how the person evaluates a group. What matters
at first is the level of similarity. It’s possible that we assume a neutral or even negative identity to
separate ourselves. As opposed to what the theory of social identity predicts, people do not
exclusively strive to select a well-intentioned social self. But if there is a similarly suitable positive
category available, a (healthy) person will prefer this alternative to a negative one.
• Optimal distinctiveness also depends on the situation. While a person desires more individuality
within one context, he or she can strive for social proximity in another (intra-individual differences).
• Optimal distinctiveness is also a function of the relative strength of both needs. The theory admits
inter-individual differences. After all, regardless of cultural norms, individual socialization, and
experiences, different people can desire different amounts of inclusion within identical situations.
139
A self-categorization on the level of optimal distinctiveness is only temporally stable; people would
otherwise search for another identity. In the case of being too dissimilar, people can join a larger
group, and separate themselves from its identity if depersonalization becomes too strong. According
to Vignoles et al. (2000, p. 347; 2002, p. 762) three different strategies are available for satisfying the
need for distinctiveness:
• Being different: People have characteristics that others don’t (abilities, opinions, traits, physical
appearance). These particular features can also serve as the basis for membership in a group.
Individuals either categorize themselves using these kinds of features as similar to a (small) group,
or they are even the explicit requirement to join the group (Oakes et al., 1987)
• Social position: We define ourselves via our particular position, role, or social status within groups
and relationships (e.g. ‘brother ofS’, ‘teacher ofS’, ‘team leader’).
• Separation: Measures that separate an individual from others are also useful. This includes
physical (e.g. putting a fence around a house), and symbolic (e.g. clothing style, a uniform) forms
of separation. Political, religious, and other groups (e.g. Kibbutz) deliberately elect extreme forms
of separation.
5. CONCLUSION
Descriptive approaches in conformity research describe how a person can react towards social
influence. By behaving contrary to its peer group, they can demonstrate uniqueness. This anticonform
behavior can manifest itself publicly or privately.
A comparison of ‘one-trail models’ to ‘multi-trail models’ provides evidence that especially repeated
anticonform behavior leads to uniqueness. Explicative approaches focus on explaining why people
behave conform or anticonform.
Is a person just behaving anticonform in public she likely wants to make a unique impression on
others (impression-management). Private disagreement indicates the need to have a unique self.
Anticonform behavior in public as well as in private finally can be explained by unique behavior
resulting from (deep) conviction.
According to the social identity theory, humans adopt different social identities besides their personal
ones. The common assumption, that uniqueness is necessary to differentiate one group from another,
is shared by the self-categorization theory.
In the social identity theory, unique characteristics are prerequisite for a meaningful identity. While
researchers supporting that theory only account for positive unique characteristics, consistent with
self-categorization theory negative characteristics also help in creating an identity. Self-categorization
theory is furthermore able to explain which (personal or social) identity will be salient.
Unique behavior can be attributed to different human needs: The need for uniqueness or for
differentiation is considered a major reason by uniqueness theory, as well as by optimal
distinctiveness theory. Following both theories, this search for differentiation is not depending on how
the group will be assessed (Brewer, 1991, p.478).
Brewer and others (1993) point out, that individuals tend to stick to group minorities when their
distinctiveness is threatened, regardless of a possible lower social status. Since group size is
influencing perceived uniqueness negatively, minorities are more likely to be attributed positively by its
members than majority groups and are therefore able to bind members more easily (Mullen et al.,
1990).
Other scholars address the need to preserve or increase an individual's self-esteem as reason for
unique behavior. This motive can only be satisfied by identifying with groups that are considered to
have a certain social status. Consequently minorities are solely perceived in a positive way, if their
social status ranks high enough (Ng/Cram, 1988).
140
If a small group is not socially well respected, their members face a conflict between a positive social
identity optimal distinctiveness. This fact is leading to the conclusion, that the need for uniqueness as
well as the self-esteem motive are an important factor of human behavior (Vignoles et al., 2000,
S. 346).
If a need for uniqueness is responsible for unique consumer behavior, one can distinguish between
high and low levels of this desire. Thus, companies should use this predisposition for segmentation of
consumers and defining target groups.
However, a meaningful and workable measurement is essential. Lynn/Harris (1997b) and Tepper Tian
et al. (2001) suggested first versions of a uniqueness-scale in a consumer behavior context.
Since no evidence for an effect of general consumer’s need for uniqueness on consumer behavior in
all industries is provided, a uniqueness-scale is required that not only considers the domain
“consumption” but also the product category.
People possibly satisfy their need for uniqueness by wearing unconventional clothes though drive a
car from a popular brand because of higher financial risk. In addition, measurements of consumer’s
need for uniqueness do not consider social psychology theories so far.
For instance, previous research neglects the finding that a person behaves only private in a
nonconforming manner. Furthermore, besides individual characteristics unique attributes of the
persons’ social group are able to satisfy need for uniqueness as well.
141
Importance for
Theory Central Statement
Unique Behavior
Descriptive Approaches of Foundational reaction Anticonforming behavior
Conformity Research possibilities to social as an expression of
(including Willis 1965b; influence: Conformity and anti- uniqueness
Crutchfield 1963) conformity
Public and private
anticonformity
Explicative Approaches of Conforming behavior to act Anticonforming behavior to

Conformity Research properly or to be socially present self as unique, or for a
(including Asch 1965; Sherif accepted unique self
1935)
Social Identity Theory The self-concept is made up of Uniqueness as a
(Tajfel/Turner 1979) personal and social identity characteristic of people and
Striving for positive social groups
identity via positive Uniqueness as the foundation
differentiation of a meaningful identity
Self-Categorization Theory Categorization of the social Salient identity is important

(Turner 1987) world according to the meta- for behavior
contrast principle Unique identity as a result of
Salient identity dependent on negative characteristics or
self-significance and situation- behavior
based key stimuli
Self-Esteem Hypothesis People foster a need for self- Unique behavior to obtain
(including Hogg 2001) esteem and/or increase self-esteem
Uniqueness Theory Need for uniqueness

(Snyder/Fromkin 1977) determines the reaction to
perceived similarity to other
people (personal self).
Unique behavior to satisfy the
need for uniqueness
Optimal Distinctiveness Need for similarity and
Theory (Brewer 1991) differentiation determines the
reaction to perceived similarity
to other groups (social self).
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146
CREATIVE SELF-EFFICACY, HARDINESS AND RESISTANCE TO CHANGE
Gaetano Andrea Mancini, University of Florence, Italy
ABSTRACT
This work aims to investigate the role of several personal characteristics related to resistance to
change. We investigated the constructs of creative self-efficacy, hardiness and coping. 80 housing
association workers participated (54 males and 26 females). At the time of administration 41
participants worked daily, 21 occasionally and 18 were laid off.
The results affirm that creative individuals show less resistance to change. It also appears that hardy
individuals are better able to move in an unstable environment showing a greater capacity to adapt.
Keywords: Creative self-efficacy, hardiness, resistance to change, stress.
1. INTRODUCTION
In the history of organizational development change is seen as a central factor in the survival of
companies. The pace of change has been increased by the steady increase of the challenges to
which the companies have to face, such as competition, financial market instability, mergers up to the
current global economic crisis.
In a situation of close relationship and interdependence between markets and in a general context
that changes faster and faster, modern organizations are inevitably involved in processes of change.
So, like a living organism, to survive and succeed must be able to adapt.
But organizational change requires proper preparation as impacts on professional and personal lives
of employees, creating fear, uncertainty and ambiguity due to the transition from the "known" to
"unknown" (Cunningham et al., 2002; Smith, 2005).
The reactions of workers to the organizational changes are considered crucial in influencing the
success of the change itself (Coch and French, 1948; Piderit , 2000). Analyze and understand the
reactions of workers to change can lead to avoid resistance and at the same time increasing the well-
being of the workers themselves (Bordia et al., 2004; Fugate et al., 2002).
The research on the psychological processes involved in organizational changes have had strong
interest just in the last decade. Until the 90s the research were characterized by a macro-
organizational approach (Judge et al., 1999).
Subsequently, the literature can be clearly divided into two clusters: first one finalized to analyze the
behavior of workers about resistance to change (RTC) (Piderit, 2000; Oreg, 2003) and the second
one focused on openness to change (Miller and Chen, 1994; Wanberg and Banas, 2000). There are
also two types of change that are hypothesized (Piccardo and Colombo, 2007): incremental and
radical. The first, less frequent and less painfull, is reflected in a normal organizational evolution, while
the second is more intense and critical.
2.1 Resistance to change
Brake that blocks the leader (and organizations) efforts to promote change (Coch and French, 1948;
Kotter, 1995) or obstacle to overcome (Bryant , 2006): resistance to change is closely linked to
climate change.
Oreg (2003) describes it as an individual tripartite disposition: cognitive, affective and behavioral.
These three components would not be independent from each other but remain distinct and each one
147
covers a specific aspect of the resistance. Individuals with high RTC values will be less likely to
accept change, and if the change were to be imposed, they will be more likely to experience negative
emotions (anxiety, anger and fear).
Then (Oreg, 2006) examined the consequences of the RTC in terms of output working. The affective
dimension seems to be correlated negatively with satisfaction, the cognitive dimension is associated
with a lower commitment and the behavioral is associated with a higher intention to leave.
2.2 Creativity and creative self-efficacy
The literature shows how the creativity of workers can substantially contribute to organizational
innovation, efficiency and survival of the organization (Amabile, 1996; Nonaka, 1991).
When workers show creativity in the work they produce new, potentially useful, ideas about products,
practices, services and organizational procedures. The creation and development of creative ideas
allows the organization to adapt to changing market conditions, and then respond to the opportunities
to grow and compete (Nonaka, 1991). The understanding of the dynamics, processes and
characteristics of creativity in organizational contexts then becomes a central element and a strategic
lever for growth and success.
Creative self-efficay (CSE) concerns beliefs about themselves as effective in creatively problem
solving and act creatively (Tierney and Farmer, 2002). High levels of creative self-efficacy seem to be
a necessary condition for a creative productivity and the discovery of new knowledge, as this
construct influences the motivation and skills needed in the undertake specific behaviors. Studies on
the construct of creative self-efficacy also show that is linked to contextual variables and leadership
(Redmond et al., 1993) and a mediator of the relationship between demands for problem solving and
the creative performance of employees, especially when the workers were intrinsically motivated in
the required task (Zhou et al., 2011).
2.3 Hardiness
Developed by Kobasa (1979) in order to explain individual differences in the experiences and
stressful life situations, hardiness is conceptualized as a dimension of personality that develops early
in life and is quite stable over time. At high levels of hardiness, the greater the protection against
psychological and physical symptoms caused by stressful events or particular situations of life.
Hardiness is defined by the presence of three inter-related attitudes: commitment, control and a sense
of challenge (Maddi 2002). This construct may explain why some people resist and adapt facing the
difficulties while others succumb: a sense of control and commitment can make a more positive
assessment of stressors and help activate specific coping strategies by increasing the recovery of
environmental resources (Maddi , 2002).
3. METHOD
3.1 Participants
The questionnaires were administered to 80 housing association workers (54 males and 26 females).
At the time of administration 41 participants worked daily, 21 occasionally and 18 were laid off.
3.2 Measures
For creative self-efficacy has been used the Italian version of the scale of Tierney and Farmer
(Zappala and Massei, 2011). The instrument is composed of 4 items on a 6-point Likert scale.
Hardiness was assessed with the Dispositional Resilience Scale (DRS-15) in the Italian version of
Picardi et al. (2012), with 15 items on a 4-point Likert scale.
Finally, resistance to change has been analyzed with the Italian version of the Oreg scale (Bobbio et
al., 2008) with 15 items on a 7-point Likert scale. In addition to the total score were analyzed 4
dimensions of "cognitive rigidity", "routine seeking", "short-term focus" and "emotional reaction".
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3.3 Research hyphotesis
The aim of this work is to investigate how the subjects that are perceived creative and with different
levels of hardiness may show a different resistance to change. Specifically, it is assumed that:
a) subjects who perceive themselves as more creative show less resistance to change, particularly
with regard to the "cognitive rigidity";
b) hardy subjects show less resistance to change, in particular as regards the "routine seeking" and
the "short-term focus".
4. RESULTS
The first hypothesis (Table 1) is partially confirmed:

CSE and RTC are negatively correlated (r = -.273 ). The higher levels of creative self-efficacy
decrease the resistance to change and vice versa but there isn't a significant correlation between
CSE and cognitive rigidity. On the other hand there is a significant correlation between CSE and
routine seeking (r = -.277) and between CSE and short-term focus (r = -.240).
The CSE seems therefore more related to the behavioral and emotional dimensions rather than
cognitive. This can be explained by the fact that routine seeking covers aspects related to the
preference of a stable routine of life, with no unexpected changes, which is actually incompatible with
those most predisposed to new experiences.
And it is true that creative people are more tolerant of ambiguity and less oriented to the immediate
benefits: so they can better manage difficult situations for better results later.
TABLE 1. CORRELATIONS BETWEEN CSE AND RTC
Cognitive Routine Short-term Emotional

RTC
rigidity seeking focus reaction
CSE -.273* -.084 -.277* -.240* -.215
*p < .05
Table 2 shows the correlations between hardiness and RTC (r = -.552), confirming the second
hypothesis. As hypothesized, the higher levels of hardiness levels decrease resistance to change of
workers. These results are consistent with the literature where it is found that resilience is linked to
work commitment and supportive behaviors in relation to changes. In addition, resilient workers show
greater levels of openness to organizational change (Wenberg and Banas, 2000).
We also observed significant correlations between hardiness and routine seeking (r = -.466) and
between hardiness and short-term focus (r = - .472).
TABLE 2. CORRELATIONS BETWEEN HARDINESS AND RTC
Cognitive Routine Short-term Emotional

RTC
rigidity seeking focus reaction
HARDINESS -.552** -.292** -.466** -.472** -.462**
**p < .001
5. DISCUSSION AND MANAGERIALS IMPLICATIONS
The initial assumption of this research is that the individual resistance to change is a crucial aspect for
the success of its implementation (Szabla, 2007) and that a greater understanding of the individual
antecedents (in this case, CSE and hardiness) may provide a better management of change itself.
Linking RTC and CSE we can observe that creative individuals have a greater openness to change.
Already Oreg (2003) had shown that "tolerance for ambiguity", "openness to experience" and
"sensation seeking" were negatively correlated with the RTC. Piccardo and Colombo (2007) argue
that individuals tend to respond to new stimuli generally with old, reassuring, habits. The creative
149
subjects seem to be able to go beyond the established patterns moving towards the search for new
ideas and managing the emotional experience related to the uncertainty.
CSE may have a central role in situations of organizational change and creativity becomes a different
way to use the mind, a proactive way to address the work that contributes to the change.
As regards hardiness, it is clear that hardy individuals are more able to move in changing contexts
and uncertain showing the best adaptive capacity.
This helps us to understand the study by Kobasa (1982) because a strong sense of personal mastery,
confidence in their ability to handle adversity and the ability to cope with situations that require
adaptation and flexibility appear to be central features of resistance to change. The resilient subjects
know then find meanings in unplanned circumstances where it is not possible to move in a rational
way.
The hardiness seems to refer to a strong adaptive capacity which is reflected in the dimension of
control, commitment and challenge. "Control" concerns beliefs about the events of our life that we
perceived as results of their actions and attitudes. This may be due to the relationship with the
cognitive dimension of the RTC that is characterized by high rigidity.
"Commitment" refers to the evaluation of one's life, one's own self and one's relationships: this may
be due to the behavioral dimension of RTC which is characterized by a stable routine of life. Finally,
"challenge" connotes a tendency to see change as something inevitable, but also a rewarding part of
life. This refers to the affective dimension of RTC which is characterized by the experience of anxiety
and concern.
In summary, the hardy personality seems to be able to move better in a context (such as the current
work context) that requires flexibility, adaptation and management of emotions related to what is new
and unknown.
The organizational change is strongly tied to aspects of emotional and stressful experiences. The
resistance that workers demonstrate against the change is emerging as an aspect that managers
must carefully consider when making their decision.
The results of the present study therefore allow the study of certain personal characteristics related to
the RTC with possible practical implications.
During the selections, or during career development might be useful to focus on hardiness and CSE
especially because both are variables that can be increased (Mathisen and Bronnick, 2009). Every
organization is composed by people who live inside and each worker carries specific ability to detect
and exploit. The intent of this paper is to provide a contribution to the definition of a new profile of
worker: open to change, flexible and able to adapt to constant and unforeseen organizational
changes. Indeed, today more than ever, organizations need employees who do not passively
changes.
6. LIMITATIONS AND FUTURE DEVELOPMENTS
The present study is not free from limitations, however the may be considered resources for future
studies.
Age and seniority, for example, could be analyzed in relation to the RTC. Working within the same
company for many years could develop a more cognitive and behavioral rigidity related to well-
established and reassuring patterns.
Moreover, in the present study were not taken into account the influence of situational variables (time
pressure to complete a job) and organizational variables (internal communication, involvement,
organizational climate and leadership styles).
Finally, to better investigate CSE would be interesting to evaluate in highly creative and frequently in
change organizational contexts, as fashion, design, advertising.
150
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ACKNOWLEDGEMENT:
The authors would like to thank dr. Francesco Andrei for the help in data collection.
AUTHOR PROFILE:
Dr. Gaetano Andrea Mancini earned his Ph.D. in Work and Organizations Psychology at the
University of Florence, Italy, in 2009. He is is one of the founders of LaBOr, a research lab at
Department of Science of Education and Psychology, University of Florence, where he currently
teaches Marketing & Advertising Psychology.
152
HUMAN CAPITAL DISCLOSURE: A DETERMINANT OF FIRM GROWTH AND FINANCIAL

PERFORMANCE. EMPIRICAL EVIDENCE FROM EUROPEAN LISTED COMPANIES
Silvio Bianchi Martini, University of Pisa

Antonio Corvino, University of Foggia
1
Federica Doni , University of Milano-Bicocca
Alessandra Rigolini, University of Pisa
ABSTRACT
The contribution of Human Resources to an organization success has been largely acknowledged by
the academic and the professional world. The term of Human Capital is taken to include multiple
items, such as the employees’ knowledge, abilities, skills and experiences, which are not properly
represented in traditional economic-financial reporting. Despite its key role in creating enterprise
value, Human Capital does not appear in the company’s Annual Reports. In response to this gap, the
goals of this study are: 1) the analysis of how Human Capital Disclosure features in corporate reports,
making a distinction between information disclosed in mandatory reports and information disclosed in
voluntary ones; 2) the investigation of the relationship between HC disclosure and specific corporate
fields, such as firm growth and financial performance. A Content Analysis is performed on the basis of
71 items inherent to the Human Capital framework on mandatory and voluntary reports drawn up by
80 European listed companies, combined with some bivariate and multivariate statistical analyses.
The findings show that Human Capital mandatory disclosure is positively related to firm growth and
financial performance.
Keywords: Human Capital, disclosure, content analysis, firm growth, Europe, financial performance
1. INTRODUCTION
Since the Seventies, Human Capital (henceforth HC) has been extensively studied as it was
considered to be one of the key factors of a company’s success. In the early Nineties, the stream of
research in Human Resource Accounting (HRA) found Human Capital to be one of the three
components of Intellectual Capital, alongside Relational Capital and Structural Capital (Meritum,
2002, p. 63). Such stream of research saw a proliferation of studies and empirical investigations about
different ways of estimating and treating the actual contribution made by human resources to the firm
value creation. Despite its key role in creating firm value (ICAEW, 2000), Human Capital (HC) does
not appear in the companies’ Annual Reports. This has been confirmed in both professional and
academic debates and has encouraged research into HRA (Flamholtz et al., 2004). In particular,
researchers have identified the most important information gap: a lack, or a low level of HC disclosure
reduce the value relevance of a company’s Annual Reports (Leuz & Verrecchia, 2000; Healy &
Palepu, 2001; Boedker et al., 2004; An et al., 2011;). Therefore, scholars have tried to estimate and
quantify the actual level of HC disclosure (henceforth HCD) and, more generally, of Intellectual Capital
disclosure, by investigating not only the mandatory reports but also the voluntary ones (Thorbiorsen &
Mouritsen, 2003; Pedrini, 2007; Striukova et al., 2008; Rimmell et al., 2012;). However, such studies
have often been focused on all three components of Intellectual Capital, without clearly explaining
how HCD actually contributes to the improvement of firm growth and firm financial performance.
In response to this gap, we intend to:

1. look at how HCD features in corporate reports, making a distinction between
information disclosed in mandatory and voluntary reports;
2. understand how each country of the European sample may be more or less sensitive
to HC issues;
3. look into the influence of specific environmental factors (i.e. typology of legal system);
4. examine the relationship between HCD and some corporate performance indicators;
1
Corresponding author, Department of Business Administration, Management, Finance & Law, University of Milano-Bicocca,
Milan, Italy. Federica can be contacted at: federica.doni@unimib.it.
153
We carried out a cross-country study (France, Germany, Italy and UK), through a sample of 80
European listed companies. From the methodological standpoint, a content analysis (henceforth CA)
is performed on the basis of 71 items inherent to HC framework on mandatory and voluntary reports.
Then, the CA results are used in some bivariate and multivariate statistical analyses in order to
explore the following research question, i.e. whether, and to what extent, HCD can be considered a
determinant of firm growth and financial performance.
The rest of the paper is organized as follows. Section 2 presents literature review on the HCD;
Section 3 explains the research hypotheses; methodology and research design are described in
Section 4; Section 5 is dedicated to analyze the results; and finally Section 6 reports the discussions
and conclusions of the research.
2. LITERATURE OVERVIEW
Academics and practitioners acknowledged a crucial role of Human Resources for competitive
advantage and firm growth and success (Stewart, 1997; Grant, 1996; Edivinsoon & Malone, 1997;
Lev, 2001; Kaplan & Norton, 2003; Hatch & Dyer, 2004; Strandskov, 2006; Stegmann, 2009,
Campbell et al., 2012)
The most important studies aimed to find ways to represent and treat human resources as part of
financial accounting. So, HC should have been regarded as an asset, recordable in the Balance
Sheet (Hermanson, 1964; Flamholtz, 1999); in addition, a HC evaluation would have been relevant for
internal purposes too, in terms of decision-making processes. Nevertheless, HC assessment would
be problematic and difficult to settle, and it could be defined as “a stumbling block” (Scarpello &
Theeke, 1989).
To offer an alternative option to assess human resources, in the Nineties some scholars began to
perceived the need to overcome such problem and concentrated the attention on ‘how to’ rather than
‘how much’ human resources may contribute to the firm value creation (Roslender & Dyson, 1992).
Financial accounting seems to be unfitting to provide a realistic representation of HC and, generally,
of the other two components of intellectual capital (Roslender, 1997; Roslender & Fincham, 2001).
Nevertheless, such stream of research has been recently revived as an alternative “liability approach”,
to give Financial Accounting a new role in the HC representation and measurement (Theeke, 2006).
However, since the last Nineties, there has been a general inclination to propose alternative forms of
reporting instead of traditional financial accounting. There has been a proliferation of tools to evaluate,
represent and manage intellectual capital and, with it, HC too (Kaplan & Norton, 1992; Sveiby, 1997).
An interesting stream of research regards a narrative-based approach, where HC information is
disclosed in a dedicated report within the Intellectual Capital Statement (DATI, 2000, 2002).
Moreover, practitioners highlighted the need to upgrade the mandatory HC disclosure in a narrative
form in the Annual Reports. In this regard, regulatory initiatives were taken in the UK (ICAEW, 2000;
DTI, 2005; ASB, 2006), in Italy (mandatory disclosure in Director’s Report, 2008; IRDCEC, 2013) and
in the rest of Europe (CESR, 2005; ESMA, 2014).
Based on the mandatory disclosure upgrading mentioned above, European companies, and in
particular the listed ones, started to increase their HCD, in order to improve transparency in financial
markets, refine their credibility with stakeholders, and to benefit from an enhanced corporate identity
and reputation (van der Meer-Kooistra & Zijlstra, 2001; Toms, 2002).
In the same way, in 2009, IASB proposed, a voluntary disclosure form as a part of the Management
Commentary (IFRS Practice Statement Management Commentary A framework for presentation.
December 2010). The principles underlying in the management commentary are:
• the provision of management view of the firm performance, position and progress;
• the integration of information presented in the financial statements.
The role played by this document is crucial in filling the information gap existing in the financial
statement.
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The five disclosure profiles suggested by the IASB Board are the following:
1) the nature of the business;
2) the management objectives and its strategies for pursuing them;
3) the firm most significant resources, risks and relationships;
4) the results of operations and prospects;
5) the key performance indicators (henceforth KPIs) adopted by the management.
Probably one of the most meaningful taxonomy available to describe HCD has been proposed by
2
WICI . In the Relationship Section of WICI website, it shows several items such as Corporate
Overview, Business Landscape, Corporate Strategy, Resource Processes, Performance, Description
of Business, Management’s Discussion and Analysis, Corporate Reporting Framework with KPI, KPI
by category, DVFA – ESG (Environmental, Social and Governance) Reporting, Isolated Concept. An
increasingly analytical level of detail is available within the section Corporate Reporting Framework of
WICI website, within which are proposed some specific KPIs (see Table 1).
Table 1: Performance – Operating – People Indicators (selection from WICI original table available at
http://www.wici-global.com/taxonomy)
STANDARD LABEL LABEL

People demographics, Analysis of the diversity of the organization's employee base e.g. statistics
diversity and skills statistics regarding nationalities, gender ratios (across the organization, at senior levels
and in recent recruitment), education levels, unionised/non-unionised, full-
time/part-time, by grade, by age, by length of service, levels of skills shortages
(headcount as % of forecast needs).
Employee satisfaction Statistics related to the organization fulfilling employee needs and meeting
statistics expectations regarding compensation, benefits, training and development, work-
life balance, e.g. employee feedback results, absence rates.
People recruitment Analysis of the organization's ability to identify, attract and select potential
statistics employees and the costs of doing so e.g. number of applicants per position, %
accepting offers/starting employment, internal vs. external filling of positions,
return on investment in recruitment, cost per hire (advertising, recruitment,
selection, relocation), acquisition of other organizations to secure employee
talent.
A critical step into the development of new models of business reporting has been represented by the
recent introduction of Integrated Reporting (henceforth IR) (International Integrated Reporting Council
IIRC,; 2013). IR emphasizes the role of non-financial information, in the perspective of standing out
the companies’ ability to create a sustainability value (Eccles & Krzus, 2009). IIRC formulated a new
concept of capital, which includes financial, manufactured, intellectual, human, social and relationship,
and natural capitals. HC is categorized and described as follows: “People competencies, capabilities
and experiences and their motivation to innovate, including their alignment with and support for an
organization’s governance framework, risk management approach and ethical values; ability to
understand, develop and implement an organization’s strategy; loyalties and motivations for improving
processes, goods and services, including their ability to lead, manage and collaborate”. (IIRC, 2013,
p. 12, available at www.theiirc.org).
In some previous studies HC is identified with the employees’ skills, abilities and attitudes (Garcia-
Meca, 2006), and some scholars argue that, it must be part of the organisational capital (Edvinsson
and Malone, 1997; Stewart, 1998). Moreover, Bontis maintains that: “(S) human capital is the
collection of intangible resources that are embedded in the members of the organization. These
resources can be of three main types: competencies (including skills and knowhow), attitude
(motivation, leadership qualities of the top management) and intellectual agility (the ability of
2
The WICI (World Intellectual Capital Initiative) is a world business reporting network and it was formed November 7, 2007. On
October 16, 2008 WICI released its first version of a comprehensive information framework and XBRL taxonomy to help
companies to better communicate with their investors and other stakeholders about business strategy and performance. The
work on the reporting framework and taxonomy was carried out by the WICI Framework Task Force. It has published the
guidelines included in the file wici_taxonomy_framework-v1_0.zip which contains the scheme of taxonomy, the list of the all
element/concepts, the layout of presentation and the definition of relations between the elements. For more details see the
website http://www.wici-global.com/aboutwici_global.
155
organizational members to be ‘quick on their intellectual feet’: innovation and entrepreneurship, the
ability and cross-fertilise, ecc.).” (Bontis et al. 1999, p. 397).
HCD, as a component of Intellectual Capital Disclosure within a company Annual Reports, has been
investigated by several studies through Content Analysis (henceforth CA). They aimed at measuring
the quantity and quality of Intellectual Capital disclosure in different samples, but mostly focused on a
single country (Guthrie & Petty, 2000; Brennan, 2001; Bontis, 2003; Bozzolan et al., 2003; April et al.,
2003; Goh & Lin, 2004; Abeysekera & Guthrie, 2005; Abdolmohammadi, 2005; Li et al., 2008; Rimmel
et al., 2012), or through a comparative analysis between different countries (Bozzolan et al., 2006;
Vergauwen & van Alem, 2005; Vandermaele et al., 2005; Guthrie et al., 2007).
The findings of studies into the non-financial information value relevant, particularly about HC, are
also quite interesting for our empirical analysis. Information is defined as value relevant if it has a
predicted association with equity market values (Barth et al., 2001). Therefore, this stream of research
looks at the link existing between information and equity market values (Ball & Brown, 1968; Barth et
al., 2001). Many studies have shown that HCD should be increased to avoid the adverse effects of
asymmetric information and agency costs, giving their effects on the investor perceptions and
investment choices (Lev & Zarowin, 1999; Acland, 1976; Lev, 2001; Gamerschlag & Moller, 2011;
Wyatt, 2008). Therefore, HCD value relevance means that such information is reflected by a company
share price (Vafaei et al. 2011). Investors believe that HC is an important organisational resource,
even if it has been shown that an upgrade in HR disclosure not has an immediate impact on financial
markets, except in the medium-long term (Marr et al., 2004; Gamerschlag & Möller, 2011;
Gamerschlag, 2013). Furthermore, previous studies suggested that there is a positive relationship
between HCD and share prices. In the same way, other scholars argued that similar positive
relationship might exist between HCD and financial performance in the long term (Gamerschlag,
2013).
3. RESEARCH HYPOTHESES
Drawing on the existing literature review and on the previous research question, we intend to test the
following hypotheses. In more detail, for each field investigated, i.e. firm growth and financial
performance, we pinpointed a specific panel of hypotheses to glean the effects produced by both the
mandatory and voluntary HCD. In each panel afore-mentioned, we also took into account the impact
of the legal environment, as we carried out an European cross-country analysis between the following
countries: France, Germany, Italy and UK.
Referring to the firm growth, we mean to analyse the hypotheses reported below:
HP1: HC mandatory disclosure is positively associated to the market capitalization

HP2: HC voluntary disclosure is positively associated to the market capitalization
HP3: Common law system is positively associated to the market capitalization
HP4: HC mandatory disclosure is positively related to the Ebitda growth.
HP5: HC voluntary disclosure is positively related to the Ebitda growth.
HP6: Common law system is positively related to the Ebitda growth.
Furthermore, relatively to the financial performance, we commit to explore the following hypotheses:
HP7: HC mandatory disclosure is positively related to the Capital Expenditure

HP8: HC voluntary disclosure is positively related to the Capital Expenditure.
HP9: Common law system is positively related to the Capital Expenditure.
HP10: HC mandatory disclosure is positively related to the Net Operating Cash Flow.
HP11: HC voluntary disclosure is positively related to the Net Operating Cash Flow.
HP12: Common law system is positively related to the Net Operating Cash Flow.
4. METHODOLOGY/RESEARCH DESIGN
CA is the methodological approach adopted in our study (Krippendorff, 1980; Weber, 1990;
Krippendorff & Bock, 2009). It is defined as “a systematic interpretation of textual, visual, or audible
matter, such as newspaper editorials, television news, advertisements, public speeches, and other
verbal and non verbal units of analysis” (Hayes & Krippendorff, 2007). CA is particularly used in
156
textual analysis and it represents a valid instrument to analyse the “narrative” part of economic-
financial reports, i.e. the Notes and Management Commentary in IFRS-compliant statements or the
Management Discussion & Analysis (MD&A) in US-GAAP-compliant statements. CA can be used also
for other types of reports, which are voluntarily drawn up by listed groups, such as sustainability
reports or other reports providing non-financial information.
The great opportunity provided by CA is the option to analyse and to classify a text into lexical or
semantic categories based on a set of conceptual framework, which measures specific lexical items in
terms of quantity and quality (“kind, magnitude and frequency of data”).
CA is especially used to measure external disclosure (Beattie, McInnes, & Fearnley, 2004; Beattie, &
Thomson, 2007), thanks to the building of a disclosure-scoring system (Robb, Single, & Zarzeski,
2001; Vanstraelen, Zarzeski, & Robb, 2003). In particular, a wide scope of application is the
measurement of Intellectual Capital disclosure, with a specific focus on the intangible assets (April et
al., 2003; Bozzolan et al. 2003; Guthrie, Petty, Yongvanich, & Ricceri, 2004; Abeysekera, 2006;
Beattie, Thomson, 2007; De Silva et al., 2014). The greatest problem concerns the identification of
the suitable framework, i.e. the number and type of lexical units that need to be monitored within the
narrative part of a report. For instance, with the aim to analyse Intellectual Capital disclosure, prior
studies have used different, and more or less detailed, levels of disclosure, from a minimum of 22-24
items up to over 100 items, that have been classified in the following three categories: Structural
Capital, Relational Capital and Human Capital (Guthrie & Petty, 2000; Brennan, 2001; Abeysekera &
Guthrie, 2005).
However, CA may cause serious problems and has often been harshly criticised. The main problems
concern the following selection:
• the units for the textual analysis (word, sentence, groups of sentences, number of
pages);
• the documents to be analysed;
• the tipology of search (i.e. manual or statistic-software);
• the disclosure rating (i.e. by dummies or frequency counts).
However, a relevant criticality regards the achievement of a satisfying degree of “reliability”, which
should be tested by specific checks (Milne & Adler, 1999; Krippendorff, 2004; Krippendorff & Bock,
2009). Anyway, CA is still widely used in disclosure studies (Dumay & Cai, 2014; Guthrie, 2013;
2014).
In our work, CA has been carried out by a software, in order to gain reliable, replicable and highly
objective results. This choice can also avoid the occurrence of mistakes, as a consequence of human
subjectivity in codification process.
The empirical research will be carried out in two steps: the first one will be useful for recording the HC
information, disclosed by European listed companies included in our sample. In the academic debate
the adoption of CA is increasing, as it allows to measure non-financial information disclosure and, at
the same time, it can provide interesting inputs to statistical regression studies to investigate non-
financial disclosures determinants (Kang & Gray, 2011). Consequently, the second step will be
focused on the formulation of twelve research hypotheses. In order to investigate our research
question, i.e. whether and to what extent, HCD (i.e. mandatory and voluntary) influences specific
fields of the European listed companies, included in our sample, namely the firm growth and the
financial performance, we will carry out some bivariate and multivariate statistical analyses. In more
detail, with regard to the bivariate analyses, we will use either some non-parametric tests (i.e. Kruskal-
Wallis and Mann-Whitney) or Spearman correlations. Instead, referring to the multivariate analyses,
we will run four Ordinary Least Squares (henceforth OLS) regression models.
In the research design, thanks to the existing literature review, we selected some variables in order to
test the aforementioned hypotheses. In particular, with the view to achieve the aim of this empirical
study, we picked out two dependent variables able to capture the firm growth. To be more specific,
they are: the market capitalization and the Ebitda growth. On the basis of earlier empirical analyses
(Rajan & Zingales, 1998; Zheng & Stangeland, 2007), these variables are adopted for measuring
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respectively the size and the firm attitude to manage efficiently the resources employed in the core
business. We attributed the following codes: Mkt_Capitalization and Ebitda_Growth.
Referring to the financial performance, we chose the capital expenditures (henceforth Capex) and the
net operating cash flow. Drawing on the previous studies (Kaplan 1989; Weir et al., 2002; Haniffa &
Hudaib, 2006; Boesso & Michelon, 2010), these dependent variables can be considered as suitable
proxies. We labeled them through the codes: Capex and Net_Operating_CF.
Instead, the key independent variables are the HC mandatory disclosure and the HC voluntary one.
They come to light from the CA analysis. We named them through the following codes: HC_Mand and
HC_Volunt. Another key independent variable is the country, as we undertake to carry out a
comparison between some European State Members, i.e. between Italy, France, Germany and UK.
To this end, we considered a categorical variable, named Country, that takes the following values: 1
for Italy, 2 for France, 3 for Germany and 4 for the UK. With the aim to uncover some HC disclosure
differences between these countries, we used Kruskal-Wallis non-parametric tests (Gottfried, 1987,
pp. 645-647). From methodological point of view, we opted for the foregoing tests, as a result of the
sample size. The comparison between the variables Country and HC_Volunt gave no statistical
significance differences (chi-square = 2.822; p-value = 0.420). On the contrary, the comparison
between the variables Country and HC_Mand provided a strong statistical significance differences
(chi-square = 19.140; p-value = 0.000). So, as suggested in previous study (La Porta et al., 1999), it
was necessary to examine in depth to which European State Members were ascribable those
differences. In this regard, we adopted the post-hoc tests through the Mann-Whitney ones. Table 2
shows a strong magnitude of the effect between the civil law system (especially in France) and the
common law system (i.e. in the UK). In order to capture this difference, we pinpointed the dummy
variable, named: Common_Law. It takes the value of 1 whether the country is featured by a common
law system and zero otherwise.
Table 2 – Post-Hoc – Mann-Whitney Tests.

z-score Magnitude of the effect
Italy vs France -3.795* Strong, │0.67│
Italy vs Germany -0.283 --------
Italy vs UK -0.767 --------
France vs Germany -3.755 Strong, │0.64│
France vs UK -3.002 Strong, │0.53│
Germany vs UK 0.097 --------
Significant level: * p<0.008
In the perspective to bolster the cross-country analysis, we picked out the variable named
Regulatory_Quality from the World Governance Indicators (WGI) dataset that is edited and updated
by the World Bank Group. It is one of the six dimensions of governance recorded for 215 economies.
For each indicator, the data collection process covers the period from 1996 to 2012. To be more
specific, Regulatory_Quality represents an appropriate measure to “reflect perceptions of the ability of
the government to formulate and implement sound policies and regulations that permit and promote
private sector development” (World Bank Group, 2013). So, with reference to our empirical study, we
can investigate, whether and to what extent, the attitude of National Government in incorporating an
European Union Directive affects firm growth and financial performance. In terms of governance
performance, this variable ranges from -2.5 (weak) to 2.5 (strong).
In order to look at the impact of the firm context conditions, we considered a “control variable”. In
particular, consistently with previous studies, we chose the Total Assets (Sherer, 1980; Kasznik et al.,
1995). This variable is calculated through its (natural) logarithm and is labeled as Ln_Total_Assets.
Selection of the sample

Given that the aim of the research is to assess the European reporting practices on the HCD, the
sample has been selected taking into account the countries with higher Gross Domestic Product, i.e.,
Germany, France, the UK and Italy. Our empirical study analyzes the listed companies on the basis of
their market capitalization. The relevant data are obtained from Datastream. For each country, the
sample includes the 20 largest companies, in terms of market capitalization. The sample does not
include companies operating in the financial industry, such as banks, insurances and real estate
firms. The financial industry remains “under-researched” in literature and according to Nobes (Kvaal &
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Nobes, 2010) this is justifiable because of different legislation on certain accounting items that are
specific for this industry. The choice of the largest companies, in terms of market capitalization, was
based on their greater influence on equity markets (Cairns et al. 2011), primarily focused on the
needs of the global investor community. In addition, previous studies on corporate disclosure found
that the level of disclosure is positively related to the firm size, as large-sized companies have more
financial resources. In this way, they can incur the higher costs for upgrading their voluntary
disclosure practices. In particular, some studies give evidences that such factor can be considered the
most influential (Holland & Foo, 2003).
Data collection
In our study, CA corpus is centered on the following documents:
1) Annual Report;
2) Additional reports.
The annual corporate report has been found to be one of the most important tools for communication
between the company and the capital markets (Abdolmohammadi, 2005; Abeysekera, 2006; Guthrie
et al., 2004); moreover, based on the results of interviews with British HRs and Finance Directors, it
has been viewed as “the most effective written communication for disclosing HC externally” (Beattie &
Smith, 2010, p. 280), although annual report disclosures include a single component of an
organization public communications (Aerts & Cormier, 2009). Previous CA studies point out that the
exclusive examination of the annual report could underestimate the impact of social disclosures.
Furthermore, the exclusive focus on this kind of reports may produce irrelevant or misleading results
(Unerman, 2000). So, this study adopts annual reports, sustainability report and other additional
reports, which are useful to convey non-financial information (Coetzee & van Staden, 2011).
In other words, we take into account the following reports:
1) Mandatory reports: Annual Report;

2) Voluntary reports: Society and Environment Report, Human Rights Internal Guide,
Corporate Social Responsibility Report, Code of Business Conduct and Ethics, etc.
Each company website was searched through the Google™ search engine (http://www.google.com).
Moreover, mandatory and voluntary reports of the sample were downloaded from the company
website. For each company, a PDF version of reports was downloaded and thereafter was converted
in TXT version for the purpose of the CA carried out by software TaLTac2. The results of the CA were
then tabulated in spreadsheet format using the Excel package. The extent of quantity of HC items and
benchmark assessment of the companies’ HCD were captured in tables for analysis.
The initial sample pruned to an overall number of 73, for the following reasons:
1) in the automatic process based on TaLTac software, for one case, company reports
failed to provide any results in terms of CA;
2) for the other 6 companies of the sample, financial information for the year 2013 are
not available in the FactSet database.
Calculation methods are described in Table 3.
Table 3: Variables and methods of calculation
VARIABLE CATEGORIES BY FACTSET CALCULATION

MARKET CAPITALIZATION Size Metrics Returns market value using closing
price
EBITDA GROWTH Growth Rates Returns the one-year growth for
EBITDA using local currency
CAPEX Cash Flow Returns total capital expenditures
NET OPERATING CASH FLOW Cash Flow The net cash from operating activities
for the period and also includes income
from extraordinary items and other
operating expenses
Source: FactSet Research Systems Inc. 2014
159
CA covered reports for the 2011 financial year, which can be considered relevant, as it followed the
issuance of the IFRS Practice Statement Management Commentary that dates back to 2010. In more
details, companies that drawn up IFRS-based statements have the option to upgrade their narrative
3
reporting in several areas, including Human Capital .
In the bivariate and multivariate analyses, the dependent variables refer to the 2013 financial year,
whilst the independent ones encompasses the 2011 financial year.
Therefore, there is a lag of two years between the independent and dependent variables, as we
intend to examine in depth the influence exerted by HCD not only on firm growth but also on financial
performance, in the next two years to 2011 (i.e. relatively to the two-year period 2012-2013).
The HC Disclosure Index

CA was based on the search for individual items consisting of 1 word or groups from 2 up to 3 words.
This analysis searched for both the singular and the plural in the texts of such documents. In the past,
several studies have used different, and more or less detailed, items for the three Intellectual Capital
categories. Especially for HC, the number of items ranged from approximately 5/6 up to 60/70 items.
Table 4: IC Disclosure Index: an overview (please note this list is not exhaustive)
Author/s Title of paper Journal /Year

Guthrie & Parker Corporate social disclosure Advances in Public Interest
practice: A comparative Accounting, Vol. 3, 1990, pp. 159-
international analysis. 175,
Gray et al. Corporate social and environmental Accounting, Auditing &
reporting: a review of the literature Accountability Journal, Vol. 8, No.
and a longitudinal study of UK 2, 1995, pp. 47-77
disclosure
Sveiby The New Organizational Wealth, 1996, 1997, 2001, 2003
Managing & Measuring Knowledge
based Assets, 5th ed., Barrett-
Koehler, San Francisco, 1997; The
intangible asset s monitor, Journal
of Human Resource Costing and
Accounting, Vol. 2, No. 1, pp. 73-
97.
Brooking Intellectual capital, core assets for International Thomson Business
the third millennium enterprise. Press, London 1996
Subbarao & Zeghal Human resources information Journal of Human Resource
disclosure in Annual Reports: an Costing and Accounting, Autumn,
international comparison Vol. 2, No. 2, 1997, pp. 53-73,
Harvey & Lusch Balancing the intellectual capital European Management Journal,
books: intangible liabilities Vol. 17, No.1, February, 1999, pp.
85-92,
Guthrie, Petty, Ferrier, and Wells There is no accounting for OECD Symposium on Measuring
intellectual capital in Australia: A and Reporting of Intellectual
review of annual reporting practices Capital, Amsterdam, June 9-11,
and the internal measurement of 1999
intangibles.
Guthrie & Petty Intellectual capital: Australian Journal of Intellectual Capital, Vol.
annual reporting practices 1, No. 3, September, 2000, pp.
241-251,
Brennan Reporting intellectual capital in Accounting, Auditing &
annual reports: evidence from Accountability Journal, Vol. 14,
Ireland No.4, 2001, pp. 423-436,
Ollson Annual Reporting Practices: Journal of Human Resource
Information about Human Costing and Accounting, Spring,
Resources in Corporate Annual Vol. 6, No. 1, 2001, pp. 39-52,
Reports in Major Swedish
3
“Management commentary should set out the critical financial and non-financial resources available to the entity and how
those resources are used in meeting management’s stated objectives for the entity. [S] Analysis of the adequacy of the entity’s
capital structure, financial arrangements (whether or not recognized in the statement of financial position), liquidity and cash
flows, and human and intellectual capital resources, as well as plans to address any surplus resources or identified and
expected inadequacies, are examples of disclosures that can provide useful information”. (IASB, 2010, p. 13).
160
Companies
April et al. IC measurement and reporting: Journal of Intellectual Capital Vol.
establishing a practice in SA mining 4 No. 2, 2003 pp. 165-180
Bontis et al. Disclosure of information on Accounting, Auditing &
intellectual capital in Danish IPO Accountability Journal, Vol. 18,
prospectuses No. 6, 2003, pp. 713-732.
Bozzolan et al. Italian annual intellectual capital Journal of Intellectual Capital, Vol.
disclosure, an empirical analysis 4, No. 4, 2003, pp. 543–548, 2003
Ordonez de Pablo Intellectual capital reports in India: Journal of Intellectual Capital, Vol.
lessons from a case study. 6 No. 1, 2003 pp. 141-9,
Guthrie et al. Using content analysis as a Journal of Intellectual Capital, vol.
research method to inquire into 5, No. 2, 2004, pp. 282-293,
intellectual capital reporting
Goh & Lim Disclosing intellectual capital in Journal of Intellectual Capital, Vol.
company annual reports. Evidence 5, No. 3, 2004, pp. 500-510,
from Malaysia
Abeysekera & Guthrie An empirical investigation of annual Critical Perspectives on
reporting trends of intellectual Accounting, Vol. 16, No. 3, 2005
capital in Sri Lanka pp. 151-163,
Abdolmohammadi Intellectual capital disclosure and Journal of Intellectual capital, Vol.
market capitalization 6, No. 3, 2005, pp. 397-416, 2005
White, Lee &Tower Drivers of voluntary intellectual Journal of Intellectual Capital,
capital disclosure in listed vol.8, no.3, 2007, pp. 517-537
biotechnology companies’
Vandamaele et al. Intellectual capital disclosure in the Journal of Intellectual Capital, Vol.
Netherlands, Sweden and the UK 6, 2005pp. 417-426,
Vergauwen and Alem Annual report IC disclosures in the Journal of Intellectual Capital, Vol.
Netherlands, France and Germany 6, No. 1, 2005, pp. 89-104.
Petty and Cuganesan Voluntary disclosure of intellectual Australian Accounting Review, Vol.
capital by Honk Kong companies: 15, no. 36, 2005, pp. 40-50
Examining size, industry, and
growth effects over time
Oliveira, Rodrigues & Craig Firm-specific determinants of Journal of Human Resource
intangibles reporting: evidence from Costing & Accounting, Vol.10,
the Portuguese stock market No.1, pp. 11-33, 2006
Abeysekera Intellectual capital reporting Journal of Intellectual Capital, Vol.
between a developing and 8, No. 2, 2007, pp. 329-345.
developed nation
Beattie & Thomson Lifting the lid on the use of content Accounting Forum, Vol. 31, 2007
analysis to investigate intellectual pp. 129-163,
capital disclosures
Oliveras, Gowthorpe, Reporting intellectual capital in Corporate Communications: An
Kasperskaya, & Perramon Spain International Journal, Vol.13, No.2,
2008, pp. 168-181.
Abeysekera Intellectual capital disclosure Journal of Intellectual Capital, Vol.
trends: Singapore and Sri Lanka 9, No. 4, pp. 723-737, 2008
Whiting & Miller Voluntary disclosure of intellectual Journal of Human Resource
capital in New Zealand annual Costing & Accounting, vol.12, no.1,
reports and the “hidden value” 2008, pp. 26-50.
Sonnier et al. Intellectual capital disclosure by Journal of Accounting &
traditional US companies: a organizational Change, Vol. 4, No.
longitudinal assessment 1, 2008, pp. 67-80
Bruggen et al. Determinants of intellectual capital Management Decision Vol. 47,
disclosure: evidence from Australia Issue 2, 2009, pp. 233-245
Yi & Davey Intellectual capital disclosure in Journal of Intellectual Capital vol.
Chinese (mainland) Companies 11, no. 3, 2010, pp. 326-347,
Chander and Mehra Disclosure of Intangible Assets in The IUP Journal of Accounting
Indian Drugs and Pharmaceutical Research & Audit Practices, Vol.
Industry IX, No. 4, 2010, pp. 7-23
Yi et al. The Effects of Industry Type, Australasian Accounting Business
Company Size and Performance on & Finance Journal, Sep2011, Vol.
Chinese Companies’ IC Disclosure: 5, Issue 3, p. 107-116.
A Research Note
Majdalany, Manassian, & Nekhili Voluntary Intellectual Capital Proceedings of the International
Disclosure Patterns: Empirical Conference on Intellectual Capital,
161
Evidence From the United Arab Knowledge Management &

Emirates Organizational Learning, 2011, pp.
750-761,
Lal Bhasin Disclosure of Intellectual Capital in Modern Economy, vol. 2, 2011, pp.
Annual Reports: An Empirical 455-467,.
Study of the Indian IT Corporations
Nicoleta et al. The importance of intellectual International Journal of Business
capital within Romanian listed Research, Vol. 11, No. 1, 2011,
entities pp. 212-216
Branswijck & Everaert Intellectual Capital Disclosure
Commitment: A Mith or Reality? Journal of Intellectual Capital, Vol.
13, No.2, 2013 pp. 39-56.
th
Guthrie & Abhayawansa Quality of intellectual capital Paper presented at the 36 Annual
information in analyst reports: Congress European Accounting
Australian evidence Association, Paris, May 2013
Gamerschlag Value relevance of human capital Journal of Intellectual Capital, Vol.
information 14, No. 2, 2013, pp. 325-345
Source: Own elaboration on the basis of literature overview
A review of previous studies into Intellectual Capital, and mostly of the frameworks described by
different studies that used word-based CA, led us to find 71 items associated with HC, classified into
three categories: qualification/competence, motivation/commitment and personnel/management team,
(Gamerschlag, 2013), as noted below.
Table 5: Human Capital: items and categories
ITEMS CATEGORIES
Attitude/s
Capability/ies
Communicative ability/ies
Competence/s
Computer literacy
Creativity
Development
Education
Educational qualification/s
Employee attitude/s
Employee expertise/s
Employee flexibility
Employee knowledge
Expert networks
Expert teams QUALIFICATION/COMPETENCE (42)
Further personal training
Further professional training
Innovation
Innovative capacity/ies
Juristic competence
Know-how employees
Learning capacity
Personal ability/ies
Personal experience/s
Professional experience/s
Reflect experiences
Reflect previuos experiences
Skill and capabilities
Skill employees and capabilities
162
Social competence
Staff employee profile
Staff profile
Structural knowledge
Taking responsibility
Teamwork capacity
Training & (and) development
Up-to-date competence
Vocational qualification/s
Work experience/s
Working environment
Work-related competence/ies
Work-related knowledge
Absence
Adaptability
Commitment/s
Employee commitment/s
Employee entrepreneurship
Employee productivity
Employee satisfaction
Employee value/s
MOTIVATION/COMMITMENT (16)
Entepreneurial spirit
Friendliness
Identification
Loyalty to organisation
Motivation/s
Perceptions
Sensitivity
Staff turnover
Tolerance for ambiguity

Remuneration & (and) incentive schemes
Recruitment
Personell
Equality
Management team/s
MD/Management Director PERSONNEL/MANAGEMENT TEAM (13)
Human assets
Human resource/s
Human value/s
Executives and directors
Employee/s
CEO/ Chief Executive Officer
Source: Own elaboration
5. RESULTS
CA analysis is carried out in two steps:

1. identification of the items in the Vocabulary and in the corpus, through semantic tagging;
2. extraction of the information by using the Regular Expression (RE).
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4
The lexical/textual analysis of the corpus of data has been carried out through the TaLTaC2 software
(Bolasco, 2010). The semantic tagging recognizes the simple and complex forms of the 71 items
listed in Table 5 and records them in the Vocabulary. The application of the RE allows the
identification of items in the corpus that had been previously recorded in the Vocabulary. Thanks to
this operation, a text variable can be generated by the occurrences of the different items that are
calculated in each report, drawn up by the sample of the listed companies. Data were collected for
individual HC items and, later, calculated to show the level of disclosure, according to the three
categories about mentioned.
With the aim to our empirical analysis, the results of the disclosure level revealed quite useful for the
quantitative determination of the following independent variables: HC_Mand and HC_Volunt, as
described earlier.
Table 6 shows the upshots stemming from the use of some descriptive statistics (i.e. min, max, mean
and standard deviation). They allow us to identify some distribution key features of each variable
included in our empirical analysis.
Table 6 – Descriptive Statistics

N Min Max Mean Std Deviation
HC_Mand 64 50 1,936 507.91 365.120
HC_Volunt 67 11 2,419 450.09 411.922
Common_Law 73 0 1 0.21 0.407
Regulatory_Quality 73 0.710 1.66 1.2586 0.371
Ln_Total_Assets 73 3.354 12.690 10.315 1.555
Mkt_Capitalization 73 21.130 118,331.060 34,353.316 30,975.892
Ebitda_Growth 71 -68.356 80.876 -1.295 18.629
Net_Operating_CF 73 -2,132.000 21,473.000 4,206.315 4,463.495
Capex 73 0.300 22,400.00 3,260.336 4,528.731
Given the sample size, we opted for the Spearman correlations. In this regard, table 7 highlights the
correlation coefficients between the independent variables comprised in our sample. This bivariate
analysis enables us to detect possible multicollinearity problems in the afterwards multivariate one. As
expected, there is a significant relationship between the variables: Regulatory_Quality and
Common_Law (correlation coefficient = 0.724 for p<0.001). Hence, it is necessary to control this
correlation by means of a specific test (i.e. Variance Inflation Factors, VIFs).
Table 7 – Matrix Spearman Correlations.

HC_Mand HC_Volunt Common_Law Regulatory_Quality Ln_Total_Assets
Correlation
HC_Mand 1.000 0.282* -0.093 -0.070 0.464***
Coefficient
N 64 61 64 64 64
Correlation *
HC_Volunt 0.282 1.000 -0.159 -0.091 0.338**
Coefficient
N 61 67 67 67 67
Correlation
Common_Law -0.093 -0.159 1.000 0.724*** -0.114
Coefficient
N 64 67 73 73 73
Correlation
Regulatory_Quality -0.070 -0.091 0.724*** 1.000 0.107
Coefficient
N 64 67 73 73 73
Correlation
Ln_Total_Assets 0.464*** 0.338** -0.114 0.107 1.000
Coefficient
N 64 67 73 73 73
Significant level (two tailed): ^ p<0.1; * p<0.05; ** p<0.01; *** p<0.001.
4
Tal.TaC2 is an italian acronym for “Trattamento automatico Lessicale e Testuale per l’analisi del Contenuto di un Corpus
(Automatic processing for Lexical and Textual Analysis of the Content of a Corpus”. It has been developed following a research
carried out at the University of Rome “La Sapienza” (Bolasco et al. 2002; www.taltac.it).
164
The OLS regression model, named Model 1 and reported in Table 8, is statistically significant, as the
5
F-statistic p-value is fully below of 0.001. R-squared is equals to 0.5270 .
Table 8 – OLS regression analysis results, Model 1
Dependent Variable: Coefficient Robust t-Statistic Prob.

Mkt_Capitalization Std. Error
HC_Mand 0.205 8.525 2.039 0.0463*

HC_Volunt -0.150 8.779 -1.286 0.2037
Common_Law 0.260 8,906.086 2.219 0.0306*
Regulatory_Quality 0.190 7,178.019 2.217 0.0308*
Ln_Total_Assets 0.619 1,971.521 6.252 0.0000***
R-squared 0.5270
F-statistic 12.2562
Prob(F-statistic) 0.0000***
Significant level: ^ p<0.1; * p<0.05; ** p<0.01; *** p<0.001;
Multicollinearity tests are passing. Notwithstanding, in the bivariate analysis, we spotted a
positive relationship between the variables: Regulatory_Quality and Common_Law (correlation
coefficient = 0.724 for p<0.001), it is important to point out that there are not relevant multicollinearity
problems, as the Variance Inflation Factors (henceforth VIFs) never overshoot the threshold of 2. In
this regard, it must be noted that the critical threshold amounts to 10 (Gujarati, 2004).
Table 9 – Robustness Tests – Multicollinearity, Model 1.
VIFs
HC_Mand 1.111
HC_Volunt 1.237
Common_Law 1.793
Regulatory_Quality 1.794
Ln_Total_Assets 1.413
Heteroskedasticity and Serial Correlations tests are passing too. In particular, in order to tackle the
heteroskedasticity problems, for the following OLS regression models, we always used the statistical
software EViews, to compute either the White’s heteroskedasticity-corrected standard errors or the
White and Breush-Pagan_Godfrey tests. Thanks to this software, we also calculated the Breusch-
Godfrey Serial Correlation Lagrange Multiplier (henceforth LM) test (Greene, 2000) to check the
presence of uncorrelated and independent errors, that is an important assumption in the OLS
regression models (Judge G. et al., 1985, pp. 315-318; Studenmund A.H., 2001, pp. 313-318). It is
necessary to stand the test above mentioned, as in our dataset there is a lag of two years (as noted
earlier), between the independent and dependent variables. Table 10 displays that this assumption is
not violated, as the Prob. F-statistic values are always over than 0.05.
Table 10 – Robustness Tests – Heteroskedasticity, Serial Correlations, Model 1.
F-statistic Prob. F-statistic
White Test 1.259 0.2631

Breusch-Pagan-Godfrey Test 1.739 0.1410
Breusch- Godfrey Serial Correlation LM Test 0.506 0.6060
After having looked at the results deriving from the robustness tests, it should be highlighted that the
HC mandatory disclosure has a positive influence on market capitalization (Beta = 0.205, for p<0.05).
5
The coefficients reported in the following OLS regression models are standardized (Beta). The standardization derives from
the adoption of the this formula: Beta Unstardized * (Standard Deviation (X) / Standard Deviation (Y)).
165
On the contrary, the HC voluntary disclosure does not exert any influence (Beta = -0.150, for p>0.05).
Hence, HP1 and HP3 are confirmed, whilst HP2 is not supported. Moreover, in the countries featured
by a common law system emerge a positive relationship with the market capitalization (Beta = 0.260
for p<0.05). Similarly, the variable named Regulatory_quality positively affects the firm growth (Beta =
0.190 for p<0.05). Thus, in the European countries investigated that record higher governance
performance, the listed companies can reap greater advantages, in terms of market capitalization.
Table 11 reports the OLS regression model, named Model 2, in which the dependent variable is a
proxy of the firm growth, i.e. Ebitda_Growth. From the statistical point of view, it deduces that Prob.
(F-statistic) is below 0.01, so that the model is reliable. In addition, R-squared amounts to 0.3054.
Dependent Variable: Ebitda_Growth Std. Coefficient Robust Std. Error t-Statistic Prob.
HC_Mand 0.225 0.006 2.009 0.0496*

HC_Volunt 0.109 0.004 1.131 0.2629
Common_Law 0.165 5.780 1.307 0.1969
Regulatory_Quality 0.082 8.927 0.461 0.6468
Ln_Total_Assets -0.487 1.874 -3.111 0.0030**
R-squared 0.3054
F-statistic 4.7475
Prob. (F-statistic) 0.0011**
There is no huge multicollinearity problems, as the values recorded by the VIFs are equal or less than
2. Given that the critical threshold is 10, as noted in the previous OLS regression model, also in the
Model 2 the positive association between the variables: Regulatory_Quality and Common_Law does
not imply relevant multicollinearity problems.
VIFs
HC_Mand 1.849
HC_Volunt 1.066
Common_Law 2.028
In terms of heteroskedasticity and serial correlations problems, likewise of the Model 1, the upshots
illustrated in the Table 13 show that there is no any violations of OLS regression assumptions, as the
values inherent to Prob. F-statistic always overcome the threshold of 0.05.
White Test 0.515 0.9348

So, Model 2 can be considered reasonable fit to point out that the HC mandatory disclosure affects
the firm growth. In more detail, it exhibits a statistically significant coefficient (Beta=0.225 for p<0.05).
Conversely, the HC voluntary disclosure does not record a statistically significant coefficient
(Beta=0.109 for p>0.05). Still, in this model, there is no any statistical difference between the common
and civil law systems (Beta=0.165 for p>0.05). Hence, HP4 is in line with our results, whilst HP5 and
HP6 are rejected.
166
In the following OLS regression models, i.e. Model 3 and Model 4, we intend to analyze the financial
performance field. To this end, in the Model 3, the dependent variable is the Capex. In particular, F-
statistic is fully below the threshold of 0.001, whilst R-squared is equals to 0.4452.
Dependent Variable: Capex Coefficient Robust Std. Error t-Statistic Prob.
HC_Mand 0.259 1.591 2.023 0.0479*

HC_Volunt 0.078 1.062 0.807 0.4230
Common_Law 0.223 1,498.114 1.659 0.1028
Regulatory_Quality 0.021 1,020.687 0.251 0.8026
Ln_Total_Assets 0.530 470.540 3.280 0.0018**
R-squared 0.4452
F-statistic 8.8259
In the same way of the foregoing models, there are not considerable multicollinearity problems, as the
value of the VIFs are never more 2. Also in this model, the positive association between the variables:
Regulatory_Quality and Common_Law, ensuing from the bivariate analysis, does not cause a
substantial criticality.
VIFs
HC_Mand 1.085
HC_Volunt 1.768
Common_Law 1.886
With reference to the heteroskedasticity and serial correlations problems, similarly to the
aforementioned models, Table 16 reports the absence of violation of OLS regression assumptions.
Indeed, the values of Prob. F-statistic are always over than 0.05.
White Test 1.270 0.2552

Thus, in the Model 3, HP7 is fully supported, as the HC mandatory disclosure is positively related to
the financial performance, measured by the Capex (Beta = 0.259 for p<0.05). In contrast, HP8 and
HP9 are not in line with our results, as there is not a statistical significance (respectively: Beta = 0.078
for p>0.05; Beta = 0.223 for p>0.05).
In the same vein to the previous models, also the Model 4 can be considered able to explore the
latest hypotheses formulated in our research design, i.e. HP10, HP11 and HP12. Indeed, F-statistic is
fully below of 0.001, whilst R-squared amounts to 0.5401 (see Table 17).
167
Dependent Variable:
Net_Operating_CF Coefficient Robust Std. Error t-Statistic Prob.
HC_Mand 0.212 1.387 1.872 0.0666^

HC_Volunt 0.026 1.159 0.241 0.8104
Common_Law 0.310 1,390.911 2.447 0.0176*
Regulatory_Quality 0.052 1,068.616 0.584 0.5619
Ln_Total_Assets 0.642 445.487 4.140 0.0001***
R-squared 0.5401
F-statistic 12.9179
VIFs value are passing, as they are always less than 2 (see table 18), albeit the safeguard threshold
is 10. So, in this multivariate analysis, the multicollinearity problems are not considerable although, in
the foregoing bivariate one, we detected a strong positive correlation between the variables:
Regulatory_Quality and Common_Law.
VIFs
HC_Mand 1.128
HC_Volunt 1.501
Common_Law 1.971
Table 19 shows that the values of Prob. F-statistic are always more than 0.05. Thus, Model 4 does
not record heteroskedasticity and serial correlations problems. Consequently, there is no any violation
of OLS regression assumptions.
White Test 0.853 0.6325

After having focused the attention on robustness tests, it should be pointed out that HC mandatory
disclosure positively influences the financial performance (Beta = 0.212 for p<0.10). On the contrary,
HC voluntary disclosure is not positively related to the net operating cash flow (Beta = 0.026 for
p>0.05). Moreover, the Model 4 suggests that common law system positively affects the financial
performance (Beta = 0.310 for p<0.05). Therefore, HP10 and HP12 are confirmed, whilst HP11 is
rejected.
6. DISCUSSIONS AND CONCLUSIONS
One of the major flaws in annual reports is the lack of information about HC. It is one of the most
relevant value drivers in evaluating business performance. Investments in human resources are
extremely rewarding from a strategic point of view.
The aim of the present study is to investigate whether, and to what extent, HCD can be considered a
determinant of firm growth and financial performance. The link between HCD and specific firm’s
feature or performance indicators is important because one of the main goals of the external reporting
168
is to disclose the firm value creation. Especially for listed companies, such aspect helps to improve
disclosure, in order to support capital markets participants in making sound decisions. Literature about
HCD, and generally about Intellectual Capital Disclosure, looked at different fields (i.e. financial
accounting, management accounting, management practices, the firm’s resource based-view, etc.),
but they usually shared a common aim: to solve the problem of the information gap inherent to
corporate reporting.
Therefore, the awareness of the value relevance of information about Human Resources makes this
kind of information essential to fill such gap. However, initiatives in terms of regulation or drawing up
standard conceptual frameworks or guidelines, have not yet been conceived in any Europe-wide
guideline shared by the most important regulation boards, such as International Accounting Standard
Board (IASB), European Financial Reporting Advisory Group (EFRAG) and European Securities and
Markets Authority (ESMA).
Several studies have tried to measure HCD extent, but most of them were focused on Intellectual
Capital Disclosure, mainly in order to compare the different components of Intellectual Capital.
Furthermore, in many studies has emerged that the HC component has had the least impact in terms
of information, compared with Relational Capital or Structural Capital (Guthrie & Petty, 2000;
Bozzolan et al., 2003). In prior empirical researchers, the samples were selected on the basis of the
company industry, emphasizing the intangible-intensive business, such as pharmaceutical,
biotechnological, and so on.
Referring to the country selection, there is a growing interest in the emerging countries, such as
Egypt, India, Myanmar, China, Romania, Poland, Sri Lanka, etc. (Seleim et al., 2004; Abeysekera, &
Guthrie, 2005; Kang & Gray, 2011; Nicoleta et al., 2011; Haji & Ghazali, 2012; Jindal & Kumar, 2012),
rather than on cross-country studies on geographical areas that apply the same corporate reporting
regulations, such as Europe. The effects of the “country” variable on HCD are often neglected by the
literature, which places more emphasis on voluntary reporting than on mandatory one.
So, the contribution of this study to previous HCD literature may be summed up as follows:
1) HC mandatory disclosure has a statistically significant influence on firm growth, and on

financial performance, in the next two years to 2011. Given that earlier empirical studies
(Firer & Williams, 2003; Chen et al., 2005; Clarke et al., 2011; Whiting & Woodcock,
2011, Matidinos et al., 2011), have recognized great importance to economics
performance – in terms of ROI and ROA – we found that HC mandatory disclosure has a
positive influence on firm growth, and financial performance in terms of Market
Capitalization, EBITDA Growth, Capex and Net Operating cash Flow;
2) Common law system exerts a positive influence on firm growth (measured by market
capitalization) and on financial performance (measured by Net Operating Cash Flow).
Our results – in line with the previous studies – confirm the relevance of HC mandatory disclosure
(Branswijck & Everaert, 2012). Therefore, it is important to emphasise the key role played by the
legislator – European and national – in order to increase the “horizon” of mandatory disclosure,
including useful information inherent to firm growth and financial performance, provided that it does
not compromise the flexibility and timeliness of the regulation procedures.
Narrative reporting and alternative performance indicators for mandatory reporting have aroused a
new interest. The crucial point of the recent initiatives, i.e. in the Integrated Reporting, consists of the
satisfaction of the informative stakeholders need, also in terms of company resources, risks,
intangibles, and so on. Results about the prevalent role played by HC mandatory disclosure provide
further evidence of the fact that mandatory disclosure needs to be boosted, instead of opting for the
issuance of guidelines on voluntary disclosure.
Although, the main caveat of our study is the sample size, our empirical evidence allow us to
envisage future research avenues. Indeed, it could be interesting to investigate other countries, i.e.
more than four; to extend the time space, in order to consider a largest time series, i.e. more than two
years and, lastly, to observe no listed companies, with the aim to build a comparable control sample,
in order to identify possible differences between listed and no listed companies.
169
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AUTHORS PROFILE:
Silvio BIANCHI MARTINI is Full professor in Business Administration at University of Pisa, since
November 2002. He is a member of the Italian Society of Accounting History and of the Italian
Business Administration Academy (AIDEA). His prevailing scientific interests, with participation to
projects of research and publications, are focused on the following fields: Strategic management;
Corporate Finance and financial risks; Firm value; Historical studies on business administration; Small
firm excellence; Transfer price policies; Corporate Governance.
Antonio CORVINO, is an Assistant Professor in Business Administration at the University of Foggia

(Italy) where he currently teaches corporate strategy. He received a PhD in Business Administration
from University of Bari and a Master in Internal Auditing from University of Pisa. In his research
academic, he investigates the corporate strategy and the entrepreneurship fields.
Federica DONI, PhD is an Assistant Professor in Business Administration at the Department of

Business Administration, Management, Finance & Law, University of Milano-Bicocca. She teaches
Financial Accounting and Business Administration. Her main research interests are: Intangibles and
Intellectual Capital, International Accounting, Performance Measurement Models, Integrated
Reporting, Corporate Governance and Accounting History. She is author and co-author of several
articles and books on above mentioned research areas. She attends as a speaker at many
international conferences, such as EIASM workshops and the annual EAA congress. She
collaborates with some research teams, such as the Network for the Italian Business Reporting
(NIBR), AIAF working group Mission Intangibles and SIDREA academic group on business valuation.
Ordinary member of the “European Accounting Association” (EAA).
Milano Bicocca University, Department of Business Administration, Management, Finance & Law, Via
Bicocca degli Arcimboldi, 8, Milan, 20126, Italy Phone: 0039 02 64483182 (office) 0039 0264483165
(office fax); 0039 3487309841 (mobile). E-mail: federica.doni@unimib.it
Alessandra RIGOLINI received a PhD in Business Administration from the University of Pisa (Italy).
She was visiting PhD at CASS Business School in London. Her mainly research interests are the
corporate governance and the entrepreneurship.
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E.J.M.

Volume 14, Number 2, 2014 ISSN: 1555-4015

EJM, Volume 14, Number 2, 2014 ISSN: 1555-4015

Dr. Marius Dan Gavriletea Dr. Cheick Wagué, Dean

Special Number for Thematic:

"Human Resources, Human Capital And

European Journal of Management

Dr. David Ward, European School of Economics, Milan, Italy

European Journal of Management Volume 14, Number 2, 2014 ISSN: 1555-4015

A Welcome Note from the Managing Editors:

Dr. Marius Gavriletea

TABLE OF CONTENTS European Journal of Management

STAKEHOLDER SALIENCE, GOAL SYSTEM, AND FAMILY BUSINESS: 7

Silvia Payer-Langthaler, Johannes Kepler University, Linz, AUSTRIA

A TEST OF MEDIATING EFFECT OF ORGANIZATIONAL COMMITMENT IN THE 37

COSTING ALLOCATION AND DIFFERENT IMPLICATIONS IN A SMALL CLOTHING 51

Margit Malmmose, Aarhus University

MANAGING ORGANIZATIONAL INNOVATION THROUGH HUMAN RESOURCES, 63

Riccardo Sartori, University of Verona, Verona, Italy

WORK VALUES AND AGING WORKFORCE. A PERSPECTIVE ON VALUE 71

Piermatteo Ardolino, University of Verona, Italy

UNIVERSITIES AS SOURCES OF BUSINESS: 77

Serena Cubico, University of Verona, Italy

THREAT OF LOSING THE JOB AND DEVIANT BEHAVIOURS AS CONSEQUENCE: 83

Beatrice Piccoli, University of Verona, Verona, Italy

THE ROLE OF MANAGEMENT ACCOUNTANTS IN THE USE OF 91

Bernhard Gärtner, Johannes Kepler University, Linz, AUSTRIA

EMOTIONAL INTELLIGENCE AND LIFE SATISFACTION: 109

Annamaria Di Fabio, Department of Education and Psychology, University of Florence, Italy

ASSESSING THE IMPACT OF THE ONLINE LEARNING PORTAL ON STUDENT 117

Con Korkofingas, Macquarie University, Sydney Australia

SUPPORTING CRITICAL THINKING THROUGH ANCHORED ASYNCHRONOUS 123

Nimer Alrushiedat, California State University, Fullerton, California, USA

UNDERSTANDING UNIQUE CONSUMER BEHAVIOR: 131

Anja Franck, TU Dresden, Germany

CREATIVE SELF-EFFICACY, HARDINESS AND RESISTANCE TO CHANGE 147

Gaetano Andrea Mancini, University of Florence, Italy

HUMAN CAPITAL DISCLOSURE: A DETERMINANT OF FIRM GROWTH AND FINANCIAL 153

Silvio Bianchi Martini, University of Pisa

STAKEHOLDER SALIENCE, GOAL SYSTEM, AND FAMILY BUSINESS:

Silvia Payer-Langthaler, Johannes Kepler University, Linz, AUSTRIA

Keywords: stakeholder theory, salience, family business, goal system

2. THEORETICAL BACKGROUND AND DEVELOPMENT OF HYPOTHESES

3. METHODOLOGY: SAMPLING PROCEDURES, MEASURES, AND STATISTICAL TESTS

Thus, we consider a stakeholder as “definitive” (stakeholders exhibiting simultaneously power,

4. RESULTS AND IMPLICATIONS

FB vs. NFB Family influence (SFI) within FB

FB vs. NFB Family influence (SFI)

5. DISCUSSION AND CONCLUSIONS

Freeman, R.E., Strategic management: A stakeholder approach, Pitman, Boston, 1984.

Hauswald, H. and Hack, A., "Impact of Family Control/Influence on Stakeholders' Perceptions of

Suchman, M.C., "Managing Legitimacy: Strategic and Institutional Approaches", Academy of

Venkatraman, N. and Ramanujam, V., "Measurement of Business Performance in Strategy Research:

RETIREMENT PLANNING AND RESOURCES

2. CONSEQUENCES OF RESOURCE ACQUISITION

Retirement Adjustment and Well-Being

3. CONSEQUENCES OF PLANNING BEHAVIOUR

Retirement Adjustment and Well-Being

This conceptualisation of preparation is limited because it assumes an informed decision making

Confidence in retirement preparation.

Participation in Bridge Employment.

4. ANTECEDENTS OF PLANNING BEHAVIOUR AND RESOURCE ACQUISITION

5. THE CURRENT STUDY