University of Bucharest

No. 17 ~ 2013
Faculty of Business and Administration
- new series -
 Manager Journal is indexed in eBsCo, Ceeol, rePec and DoAJ interna-
Issues twice a year tional databases.

EDitoRs
Viorel CorNesCu , University of Bucharest, Romania
PAul MAriNesCu , University of Bucharest, Romania
assoCiatE EDitoRs EDitoRial aDvisoRy BoaRD
Cătălina BonCiu Ruth alas
University of Bucharest, Romania Estonian Bussines School, Estonia
ioN BuCur luCiAN - liViu AlBu
University of Bucharest, Romania Institute for Economic Forecasting, Romanian Academy
MAriN BurCeA AMos AVNy
University of Bucharest, Romania Omnidev International, Israel
ElEna DRuiCă maRiusz BEDnaREu
University of Bucharest, Romania Akademia Podlaska w Siedlcach, Poland
Romiţă iuCu JohN BriNkMAN
University of Bucharest, Romania Liverpool Hope University, United Kingdom
Răzvan PaPuC AMNoN CAsPi
University of Bucharest, Romania Bar Ilan University, Israel
magDalEna Platis măRioaRa ioRDan
University of Bucharest, Romania Institute for Economic Forecasting, Romanian Academy
Diana PoCiovăliştEanu Katsutoshi KuRoKawa
Constantin Brâncuşi University, Târgu-Jiu, Romania Okayama University Japan, Japan
GheorGhe PoPesCu viDosav majstoRoviCh
Academy of Economic Studies, Bucharest, Romania University of Belgrade, Serbia
ioN PoPA shiNJi NAruo
Academy of Economic Studies, Bucharest, Romania Japan International Cooperation Agency, Japan
MihAi roMAN myRvEtE Pantina
Academy of Economic Studies, Bucharest, Romania University of Prishtina, Kosovo
stElian stanCu masahiRo taguChi
Academy of Economic Studies, Bucharest, Romania Okayama University Japan, Japan
soRin-gEoRgE toma Bogustawa tEREsa stanCzEnsKa
University of Bucharest, Romania Akademia Podlaska w Siedlcach, Poland
DiNu VAsile angEl tEjaDa PonCE
Academy of Economic Studies, Bucharest, Romania Universidad de Castilla-La Mancha, Spain
maRian zulEan DaniEl tEoDoREsCu
University of Bucharest, Romania Emory University, Atlanta, USA

EDitoRial offiCE
ionuţ Constantin , University of Bucharest The next issue topic:
Manager no. 18 - Stakeholders and organizational
dynamics
miChaEl-gEoRgE Constantin , University of Bucharest
Faculty of Business and Administration
MANAGer JourNAl
RaluCa-BogDana DumitRaşCu , University of Bucharest May 2013
©
Cosmin-Cătălin oltEanu , University of Bucharest http://manager.faa.ro
[email protected]
 Table Of Contents 3

taBlE of ContEnts
~ Change and Leadership~

Editorial .......................................................................................................................... 5
RaDoslaw wolniaK
~ A typology of organizational cultures in terms of improvement of the quality
management..................................................................................................................................7
iKPEfan oChEi ailEmEn, stEPhEn ojEKa
~ Corporate Covernance As A Tool For Curbing Bank Distress In Nigeria Deposit
Money Bank: Empirical Evidence...........................................................................................22
ioana juliEta josan
~ Human Capital and Organizational Effectiveness.............................................................39
aKinyElE samuEl taiwo, oloRunlEKE Kola
~ Executing A Customer Relationship Management Programme In An Emerging
Market: An Empirical Approach.............................................................................................46
CAMeliA CoJoCAru, silViu CoJoCAru
~ Leadership and Innovation – the Catalyst of IT&C Industry. A Case Study of
BlackBerry Company.................................................................................................................55
valEntin mihai lEovEanu
~ Analysis of Leadership at The National Bank Of Romania..............................................62
vioRiCa Pauș
~ New Media and Leadership: Social Media and Open Organizational
Communication..........................................................................................................................73
Paul maRinEsCu, soRin-gEoRgE toma
~ Evolution Trends Of The Leadership In The Romanian Academic Environment........79
oGiJo yAMusA, DiCksoN Mukoro, sAMuel FABoyeDe
~ The Role Of Forensic Accountants In Fraud Detection And National Security
In Nigeria.....................................................................................................................................90
uwuigBE oluBuKunola Ranti
~ Determinants Of Dividend Policy: A Study Of Selected Listed Firms In Nigeria......107
BogDan Boghitoi
~ Conceptualizing in Special Sciences...................................................................................120
No. 17 ~ 2012
 Change and Leadership
4
anDREEa Eșanu
~ Hertzian Dynamic Models In Ludwig Wittgenstein’s Theory Of Logic.......................131
DRagoș – Cătălin aPostu
~ Non-Governmental Organization Leadership And Development. A Review
Of The Literature......................................................................................................................145
ChRistinE (mihaEsCu) DEmEtER, ana-ClauDia ȚaPaRDEl
~ Public And Private Leadership And Performance Management...................................162
RaluCa ioana vosloBan, moniCa vRaBiuta, Roxana ElEna alDEa
~ Confronting the Consequences of a Permanent Changing Environment....................168
eleoNorA GABrielA BABAN
~ Competitive Strategies In The Context Of Political Marketing......................................175
CoRnElia tuREaC, Dan Păuna
~ The Role Of Leadership Inside Organizations In The Context Of Globalization........180
CAMeliA CoJoCAru, silViu CoJoCAru
~ Operations Management And Leadership; A Case-Study Of Implementation
of Centralized Back Office Activities.....................................................................................188
ANA-MAriA GriGore
~ Lead from Within..................................................................................................................199
MANole DiANA AliNA
~ Leadership between skill and competency.......................................................................208
miRiam CostEa
~ Outside-the-box, but Inside-the-elevator: A Case of Leadership Myopia
Reaching Media........................................................................................................................215
rADu herMAN
~ A SWOT Analysis for Organizing a Summer School: Case Study for “Advanced
Summer School in Analyzing Market Data 2013“..............................................................225
alExanDRu luCian mihai
~ The Strategic Sport Marketing Planning Process ............................................................230
ANCA NeDelCu
~ Transformational Approach To School Leadership: Contribution To Continued
Improvement Of Education....................................................................................................237
orlANDo VoiCA, MAriAN VAsile
~ Leadership Evidences: Communication and the Organizational Change Success.....245
ioana iRina DumitREsCu
~ Welfare reform- Major challenge for the social management in Romania...................254
soRin gEoRgE toma, Paul maRinEsCu
~ Steve Jobs And Modern Leadership...................................................................................260
ionuȚ Constantin
~ Leadership in the inter-war period. Case Study: Nicolae Malaxa.................................270
GheorGhe JiNGA
~ Processes, Forms Of Sport Management System..............................................................276
BogDan ştEfan ionEsCu, CRistina PRiChiCi
~ Potential Beneficiaries Of Cloud Accounting Technology: Small Or
Large Companies?...................................................................................................................282
BogDan ştEfan ionEsCu, iuliana ionEsCu, lauRa tuDoRan
~ The economic impact of cloud computing technology on new business and
employment in Romania.........................................................................................................293
Cosmin Cătălin oltEanu
~ Influencing average internet consumer’s online behavior.
Fact. Fiction. Right. Wrong.....................................................................................................302

No. 17 ~ 2013
 Editorial 5

Change from desire to reality

When the leader proposes a change in the organizational level, he needs to know very well the internal
springs that motivates each employee involved in this change. Changing the behaviour of a group can lead
to decreases in performance for various periods of time. Learning management plays an essential role in suc-
cessful change supporting because it provides useful information to the accumulation process and encourages
the assumption of the difficult situations’ responsibilities. Insufficient preparation can induce individual or
group fears that influences the speed and quality. In preparing the change, it’s mandatory to use the concrete
situation’s right leadership. The type of organisation, the size, the moment of changing, the type of the lead-
er, the market reality, the quality of the people involved in the process ... here are some decisive elements that
contribute to the successful completion of the change. Building a high performance team to oversee the change
requires collaboration and constant communication. Given that power is the ability to influence the others,
it is important that the team leader to distribute power in the team which is dealing with change in rela-
tion to the competencies of each team member so that decisions are quickly valued. Inefficient management’s
decisions can lead to genuine organizational earthquakes resulting in loss of control of the organization.
When there is a big difference between a set of present events and a set of desired events, change is inevitable.
Starting from the observation that in many areas of the company there is a leadership crisis we decided to
create a Centre for Organizational Strategy and Leadership at the University of Bucharest (CSOL-UB). We
want it to become a true National School of Leadership for the economic, political, social, academic, cultural
domain. Based on the results of an assessment that we will make to the socio-economic environment, we will
determine the main directions of development of CSOL-UB.

Prof. Ph.D. Paul Marinescu

No. 17 ~ 2013
 Change and Leadership
7

A typology of organizational cultures in

terms of improvement of the quality
management

~ Ph. D. Radoslaw wolniak (Faculty of Organisation and Management, Silesian

Technical University, Poland)
E-mail: [email protected]

Abstract: There is in the paper, the analysis of research conducted by author’s carried out under the
Higher Education Grant. There is an original typology of organizational cultures in terms of improvement
of quality management. Organizational cultures were divided in their four types: the culture of pro-quality
(success), avoidance culture, culture of conservative (stiff) and the culture of enforced changes. The study
focuses especially on the culture of pro-quality, for which it had been a detailed characterization.
Key words: quality management, organizational culture, pro-quality culture, cultural di-
mensions

1.introduction or leadership. In this publication the results

of studies conducted within the framework
More and more frequently it is be-
of a research project devoted to the influ-
lieved that quality management improve-
ence of organisational culture on quality
ment is influenced not only by the so-called
management improvement have been pre-
„hard” management aspects, but also by the
sented. Taking into consideration the results
„soft” ones, such as organisational culture
of detailed analyses, an author’s typology of
No. 17 ~ 2013
 Change and Leadership
8
organisational culture based on two variables It has to do with whether people´s
– the attitude to uncertainty and status as- self-image is defined in terms of “I” or
cription – has been developed. This provided “We”. In Individualist societies peo-
a basis for distinguishing four types of organ- ple are supposed to look after them-
isational cultures, to which the investigated selves and their direct family only. In
organisations have been assigned. It has been Collectivist societies people belong to
determined which organisational culture and ‘in groups’ that take care of them in
why has the most pro-quality character. exchange for loyalty.
• Masculinity / Femininity - A high
2.typologies of cultural dimensions score (masculine) on this dimension
indicates that the society will be driv-
There is a number of studies conducted en by competition, achievement and
to isolate those factors that are most impor- success, with success being defined by
tant and the largest contribution to cultur- the winner / best in field – a value sys-
al diversity (Ailon 2008; Aniszewska 2007; tem that starts in school and continues
Aniszewska 2008; Boski 2009; Cameron and throughout organisational behaviour.
Quinn 2006; Glińska-Neweś 2007; Krzemień A low score (feminine) on the dimen-
and Wolniak 2004; Mikuła 1995; Schein 2004; sion means that the dominant values
Sikorski 2002; Sitko-Lutek 2004; Sułkowski in society are caring for others and
2002; Zbiegień-Maciąg 2005). Belong to the quality of life. A feminine society is
most well-known study by G. Hofstede one where quality of life is the sign
and study Ch. Hampden-Turner and of success and standing out from the
Trompenaars A. crowd is not admirable. The funda-
There are five Hofstete cultural di- mental issue here is what motivates
mensions (Chiang 2005; Hunt 1981; Jefferson people, wanting to be the best (mascu-
2002; Korman 1983; Kwek 2003; McSeeeney line) or liking what you do (feminine).
2003; Robinson 1983, Sorge 1983): • uncertainty avoidance - The dimen-
• Power distance - This dimension sion Uncertainty Avoidance has to
deals with the fact that all individuals do with the way that a society deals
in societies are not equal – it express- with the fact that the future can never
es the attitude of the culture towards be known: should we try to control
these inequalities amongst us. Power the future or just let it happen? This
distance is defined as the extent to ambiguity brings with it anxiety and
which the less powerful members of different cultures have learnt to deal
institutions and organisations within with this anxiety in different ways.
a country expect and accept that pow- The extent to which the members of a
er is distributed unequally. culture feel threatened by ambiguous
• individualism - The fundamental is- or unknown situations and have cre-
sue addressed by this dimension is ated beliefs and institutions that try
the degree of interdependence a so- to avoid these is reflected in the UAI
ciety maintains among its members. score.

No. 17 ~ 2013
 Change and Leadership
9
• long term orientation - The long community. This means that individ-
term orientation dimension is closely ual happiness, fulfilment and welfare
related to the teachings of Confucius prevails and people take their own
and can be interpreted as dealing with initiative and take care of themselves.
society’s search for virtue, the extent In a principally communitarian cul-
to which a society shows a pragmat- ture, people place the community
ic future-oriented perspective rather before the individual. Thus, it is the
than a conventional historical short- responsibility of the individual to act
term point of view. in ways which serve society. In doing
In 1998, management consultants so, individual needs are automatically
Trompenaars and Hampden-Turner pub- attended.
lished their “Seven Dimensions of Culture” • specific versus diffuse - The degree
model to help explain national cultural dif- to which responsibility is specifically
ferences in organisations and to show how assigned or is diffusely accepted. In a
managing these differences in a heteroge- specific culture, people first analyse
neous business environment is a major chal- the elements individually and then
lenge for international managers. In this put them together, the whole is the
conception there are seven cultural dimen- sum of its parts. People’s lives are di-
sions (Hampden-Turner and Trompenaars vided accordingly and, only a single
2002; Hampden-Turner and Trompenaars component can be entered at a time.
2003): Interactions between people are very
• universalism versus pluralism The well-defined. Specific individuals
degree of importance a culture as- concentrate on hard facts, standards
signs to either the law or to personal and contracts. A diffusely oriented
relationships. In a universalistic cul- culture starts with the whole and sees
ture, people share the belief that gen- individual elements from the perspec-
eral rules, codes, values and standards tive of the total. All elements are re-
take precedence over the needs and lated to one another. Relationships
claims of friends and other relation- between elements are more important
ships. In a pluralistic culture, people than individual elements.
see culture in terms of human friend- • affectivity versus neutrality - The
ship and intimate relationships. While degree to which individuals display
rules do exist in a pluralistic culture, their emotions. In an affective culture,
they merely codify how people relate people display their emotions and it
to one another. is not deemed necessary to hide feel-
• individualism versus communitari- ings. However, in a neutral culture,
anism - The degree to which people people are taught not to display their
see themselves function more as a feelings overtly. The degree to which
community or more as individuals. In feelings become manifested is there-
a principally individualistic culture, fore minimal. While emotions are felt,
people place the individual before the they are controlled.

No. 17 ~ 2013
 Change and Leadership
10
• inner directed versus outer direct- time sequentially and do things one at
ed - The degree to which individu- a time. In a synchronic time culture,
als believe the environment can be people do several things at once, be-
controlled versus believing that the lieving time is flexible and intangible.
environment controls them. In an in-
ner-directed culture, people have a 3.the characteristics of the conducted
mechanistic view of nature; nature is studied.
complex but can be controlled with
the right expertise. People believe The analysis in this paper were made
that humans can dominate nature, if during the reporting of the research project
in the field of sustainable development of
they make the effort. In an outer-di-
enterprises in Poland against the experience
rected culture, people have an organic
of selected countries of the European Union
view of nature. Mankind is viewed
2011/03/B/HS4/01790 PBU10/ROZ3/2012
as one of nature’s forces and should symbol at the university, funded by the
therefore live in harmony with the National Science Centre .In order to anal-
environment. People therefore adapt yse the influence of social aspects on the
themselves to external circumstances. improvement of quality management and
• achieved status versus ascribed sta- differences within this scope depending on
tus - the degree to which individuals the kind of an organization, a possibly and
must prove themselves to receive sta- wide choice of research tests have been de-
tus versus status simply given to them. cided on so as not to include only industrial
In a culture with achieved status, peo- enterprises but also service sector in different
ple derive their status from what they branches. Additionally, a wide spectrum of
research tests have been used so as to assure
have accomplished. Achieved status
a representative nature of research and pos-
must be proven time and time again
sibilities for their statistical analysis.
and status will be given accordingly.
The questionnaires were sent to 2500
In a culture with ascribed status, peo- companies. 700 of them were industrial com-
ple derive their status from birth, age, panies while 1800 were services ones. 1120
gender or wealth. Here status is not correctly filled -in questionnaires were ob-
based on achievement but it is accord- tained. The expert-like method was used in
ed on the basis of the person’s being. order to define variables used in these stud-
• sequential time versus synchronic ies. The characteristics of entire studies were
time - The degree to which individ- presented synthetically in Table 1. In the re-
uals do things one at a time versus search, the concept of improvement of qual-
several things at once. Cultures de- ity management is understood in a given
veloped their own response to time. publication as a set of problems, such as: a
systemic attitude to quality management, the
Time orientation has two aspects: the
use of different methods and techniques of
relative importance cultures assign
managing quality, creating innovative solu-
to the past, present and future, and
tions, market position of a company, its fi-
their approach to structuring time. In nancial status.
a sequential culture, people structure

No. 17 ~ 2013
 Change and Leadership
11
Table. 1. The characteristics of all studied companies

Variables Percentage
Number of
of
the criterion of division interval respondents
population
Industry 385 35%
tape of activity
Trade and services 725 65%
Industry (except for mining) 356 32%
Mining 29 3%
Trade 175 15%
Construction 74 7%
Transport and logistics 41 4%
Business sector
Financial Institutions 41 4%
Other commercial services 290 26%
Non-commercial services (educa- 45 4%
tion, health)
Administration 59 5%
Micro organizations 235 21%
Small organizations 268 24%
size
Medium size organizations 420 38%
Big organizations 187 17%
Source: Author’s own study.

The following variables were taken into which defines how many methods
account within a scope of the improvement and tools of quality management is
of quality management: used in a given organization),
• D1 – having a quality management • D9 – number of innovative ideas per
system being in accordance with stan- an employee,
dards of PN-EN ISO 9001, • D10 – rewarding employees for their
• D2 –attitude to the implementation of innovative ideas,
standardization in an organization, • D11 – pro-innovative attitude of a
• D3 – having trade quality manage- company,
ment systems, • D12 – market position of a company
• D4 – having environmental manage- in comparison with the best compa-
ment systems, nies in a given branch of business,
• D5 – having security management • D13 – change of market position in
systems, comparison with companies in recent
• D6 – use of team work , years,
• D7 – involvement in team work, • D14 – financial condition of a
• D8 –use of methods and tools of qual- company.
ity management systems (the variable

No. 17 ~ 2013
 Change and Leadership
12
The study also included variables dis- will be marked. In this way an eight-field ma-
cussed in the theory of cultural dimensions. trix is formed, which has been shown in Fig.
On the basis of factor analysis and proposed 1. On the basis of the matrix, the cultural fac-
his own typology consisting of five dimen- tors can be divided into four categories:
sions, which will be included in further ₋ optimal culture –exists in an organ-
analyses. isation in which key factors from
the point of view of quality manage-
4.typology of cultural dimensions ment improvement are present, while
harmful factors do not exist,
The discussed social aspect which has ₋ good culture – means that factors use-
a considerable influence on quality manage- ful for quality management improve-
ment improvement is pro-quality organisa- ment are present in an organisation,
tional culture. On the basis of the conducted whereas the useless ones do not exist,
investigations, the cultural factors have been ₋ bad culture – occurs in the event the
divided from the point of view of their influ- existence of cultural factors which are
ence on quality management into four cat- not useful from the point of view of
egories: key, useful, useless and harmful. In quality management improvement is
this case the results should be analysed by observed, while the useful factors are
using a cultural map constructed in a manner absent,
similar to that applied in the case of a leader- ₋ very bad culture – the culture of an
ship map. organisation is characterised by the
In this situation, the vertical axis will fact that it contains factors which are
contain the above listed categories of cultural harmful from the point of view of
factors division, while on the horizontal axis quality management improvement,
the existence or non-existence of a particular while key factors do not exist.
cultural factor in the examined organisations
Figure 1. Matrix of pro-quality culture factors

Source: Author’s own study.

No. 17 ~ 2013
 Change and Leadership
13
Basing on the presented concept of cul- The pro-quality culture map can be
tural attributes division, it is possible to find used for analysis of both single companies
a direction of changes in the culture of an and the whole population; then cultural fac-
organisation which can make it more pro- tors dominating in the largest number of the
quality in character. To this end, harmful and investigated companies will be marked in
useless attributes should be reduced in the relevant fields of the matrix. Using the con-
process of quality improvement, while the cept presented in Fig. 3, a map of pro-quality
key and important cultural attributes should cultural factors for the whole examined pop-
be strengthened, Figure 2 presents suggested ulation has been presented
directions of cultural changes – the intensity
of activities to be taken has been marked with
the length of arrows.
Figure 2. Guidelines for pro-quality improvement culture

Source: Author’s own study.

The investigated leadership attributes ₋ every bad culture –CK3B – a negative

have been included in the previously de- attitude towards uncertainty.
scribed categories in the following way: On the basis of the cultural factors’ illus-
₋ optimal culture – CK1A – status tration in the form of a matrix it can be stated
achievement; that the culture of Polish firms does not favour
₋ good culture – none of the cultural at- quality management improvement. The dis-
tributes has been included in this category, crepancy between cultural factors that are im-
₋ bad culture – CK2B – a considerable portant for quality management improvement
aloofness from authority; CK4A – outside and their existence in the examined companies
control; CK5A – collectivism; is significant and concerns the following issues:
No. 17 ~ 2013
 Change and Leadership
14
₋ theinvestigated companies’ culture ₋ in the investigated companies only the
is characterised by excessive avoidance of attributes which are useless from the point of
uncertainty, which translates into restrained view of quality improvement are observed,
innovativeness and problems with imple- whereas useful attributes do not exist.
mentation of new solutions,
Figure 3. Map of pro-quality cultural factors

Source: Author’s own study.

Due to a high level of uncertainty avoid- The problems of the examined compa-
ance in Polish companies, having an adverse nies’ culture from the point of view of quality
influence on the application of new solutions, management improvement are related to ex-
the customer receives a worse product and is cessive collectivism, which constrains the in-
dissatisfied, which translates into a worse novativeness and creativity of employees. It
position on the market and lower profits. is worth noticing that excessive collectivism,
Companies characterised by high avoidance
as suggested by world research analysed in
of uncertainty cannot make use of chances
the third and fourth chapter, adversely affects
appearing in their environment, because they
the wealth of a country, which suggests that
cling to well-known patterns, even if this is
harmful for them and the changes might im- it restrains the economic activity. However,
prove the company’s condition. This is an on the other hand, excessive individualism
unfavourable phenomenon, especially now- exerts a negative influence on the implemen-
adays, in a period of big changes resulting tation of PN-EN-ISO 9001:2009 standard due
from a crisis on world markets, which might to the reluctance of individualistically-ori-
provide an opportunity for firms that are ented employees to observe the requirements
able to make a proper use of them. imposed by the standard.
No. 17 ~ 2013
 Change and Leadership
15
Another problem observed in the inves- place of living. He believed that the culture
tigated companies is also excessive aloofness of the country exerts a stronger influence on
from authority, which creates problems in us than the culture of the organisation we
free communication between employees and work for. The results of studies presented in
causes excessive hierarchization of an organ- this monograph confirm these observations.
isation. This also has a negative effect on in- Similarly to other investigations carried out
novativeness and leads to a reluctant attitude by Polish specialists, they indicate that spe-
to standardization on the part of employees, cific cultural attributes do not depend on the
who perceive it as an element of control im- above mentioned situational variables and
posed by the management and fail to notice remain characteristic of the majority of com-
its advantages. This is confirmed by the re- panies operating in Poland. Even a foreign
sults of world research, which suggests that capital share in the financing of a company
a considerable aloofness from authority has has little influence on cultural factors from
a harmful effect on innovation, certification the statistical point of view.
of quality management systems as well as The conducted studies indicate that two
on the country’s GDP. Also outside control, major cultural factors in the examined organ-
i.e. a situation in which conformist attitudes isations are: status achievement – status as-
and accommodation to the group prevail, cription and an attitude to uncertainty. These
adversely affects innovative / improving so- are key factors for quality management im-
lutions and contributes to the problems ex- provement and for this reason they were
perienced by Polish organisations in the area used in the studies into the proposed typol-
of quality. ogy of organisational cultures from the pro-
In the analysis of problems related to quality point of view. This typology has been
cultural factors from the point of view of sit- presented in the form of a matrix in which
uational factors (using a map of pro-quality the vertical axis contains the variable of sta-
cultural factors), no bigger differences were tus ascription and status achievement, and
noticed, irrespective of the branch, the size the horizontal one contains a negative as well
of companies, the sources of financing, the as positive attitude to uncertainty. From this
degree of organisational structure complex- point of view four types of organisational
ity etc. This confirms the results of investiga- cultures have been distinguished (Fig. 4)
tions conducted by specialists in this field in ₋ pro-quality culture (culture of suc-
other countries. They believe that in the case cess) – is characterized by a positive atti-
of the examined factors, the culture of a coun- tude to uncertainty and status achievement
try dominates the organisational culture. The orientation,
place of our birth has a very big influence ₋ culture of avoidance – occurs in a situ-
on our attitude to work, changes, authority ation when status achievement is accompa-
and to many other variables existing in every nied by a negative attitude to uncertainty,
organisation. ₋ culture of forced changes – a culture
On the basis of his research, G. Hofstede in the case of which a positive attitude to un-
labelled a culture as the programming of the certainty is accompanied by status ascription,
mind. According to him, our behaviour is to a ₋ conservative (rigid) culture – is char-
certain degree determined by cultural factors, acterised by a negative attitude to uncertain-
by the social environment in which we grow ty and a simultaneous status ascription.
up, family, school, group, workplace and the

No. 17 ~ 2013
 Change and Leadership
16
Figure.4. The typology of organizational culture in terms of improvement of quality management

Source: Author’s own study.

In the pro-quality culture, which can also The culture of forced changes is the one
be called a culture of success, the focus is on in which changes do take place, but they are
success, both personal and organisational. In usually top-down, forced by the manage-
such a culture the emerging changes and new ment instead of grass-roots initiatives of the
circumstances on the market are treated as a employees. In certain aspects of quality man-
chance which should be taken by an organ- agement, such a culture may be favourable –
isation to improve its competitive position. A for example PN-EN-ISO 9001:2009 standard
possibility of achieving a higher position in an implementation is frequently a decision tak-
organisation owing to good work, commitment en by the highest level management, which is
and good results triggers employees’ creativity next „imposed” on the employees. However,
and ingeniousness. This way the company be- this creates problems related to resistance
comes more flexible, prone to changes and in- against changes. If the employees do not ac-
novative, continuously improving its products cept this decision, and this is a frequent situa-
and processes. It is focused on customers and tion in the case of the forced changes culture,
fulfilment of their needs. Enterprises define they may be reluctant towards some of the
their targets in a measurable way and employ- management’s ideas. In extreme cases, such
ees’ promotion as well as bonuses depend on a culture may lead to strike and discrepan-
the fulfilment of these goals. Employees ac- cies between the needs of the management
count only for the fulfilment of organisational and employees. It can be favourable in cer-
goals, while other factors, such as formal di- tain circumstances, if changes are managed
plomas, age, sex etc. are not taken into consid- in a right way, but due to excessive status as-
eration in evaluation of their achievements. In cription this results in restrained creativity.
contemporary turbulent environments this is a Even an employee who achieves good results
model culture, which should be a goal to strive cannot be promoted over a certain position.
for by Polish companies. Such a culture is observed for example in

No. 17 ~ 2013
 Change and Leadership
17
family businesses and in companies with a the management. Its leaders strive to main-
foreign capital share. A company following tain the status quo and keep their positions,
the culture in question may effectively func- so each change is perceived as a threat. This
tion provided that the need for promotion is kind of companies frequently get rid of cre-
replaced by some other, for example finan- ative and success-oriented employees, as
cial incentives. they are seen as a menace to the rigid hierar-
The culture of avoidance is characteristic chy. Also the employees themselves, having
of organisations in which employees, despite understood that promotion does not depend
being assured of promotion and develop- on the achieved results, try to find a job in
ment possibilities, are not prone to make ex- organisations characterized by a more satis-
cessive changes in their environment and fying culture. Such a culture has an anti-qual-
undertaken activities. Rewards correspond ity character; it should not be applied by any
to the effort put in their achievement, the or- company striving to satisfy the customer,
ganisation establishes goals, but most of the achieve a high quality of products and suc-
employees’ effort is focused on a well-known cess on the market.
standard behaviour. Promotion is possible After defining the typology of culture
only in the event a person is characterised from the point of view of quality manage-
by conformism and adapts their behaviour ment improvement, it is worth considering
to the rules followed by the company. Such what is the culture of the examined organisa-
people are valued when they achieve good tions in the light of the presented typology.
results, whereas non-conformist persons try- Figure 5 presents the number of investigated
ing to make changes in the organisation may organisations classified as a particular type
be perceived as a threat. A company in which of culture on the basis of research. The pro-
such a culture of avoidance exists may oper- quality culture exists in 52 companies, 15
ate effectively on condition that it functions companies are characterised by the culture
on a stable market, where taking sudden and of forced changes, in 760 companies prevails
drastic changes is not necessary. Then its con- the culture of avoidance and in 283 – the con-
ventionality, accompanied by simultaneous servative culture.
motivating of employees to make a greater Table 2 contains a percentage share
effort ensures it success. On the other hand, of organisations representing a given organ-
in a turbulent environment companies man- isational culture in a system of division into
aged in such a way may have problems with branches. On the basis of collected data, it
adapting to quick changes. The discussed can be noticed that:
culture of avoidance is frequently observed ₋ the pro-quality culture occurs main-
in big companies, concerns etc. ly in industry, financial institutions,
In the case of the last type of culture – transport and communications as well
conservative (rigid) one, we deal with a com- as in some of the leading construction
bination of two aspects adversely influencing companies,
the improvement of quality management. ₋ the culture of avoidance is observed
An organisation is very reluctant to changes, chiefly in trade and building branch,
any new ideas are immediately blocked by ₋ the culture of forced changes occurs
No. 17 ~ 2013
 Change and Leadership
18
the least frequently of all the analysed the traditional culture,, going back to
cultures; it is present in the mining the time of centrally planned economy
branch and public administration, none of the examined public adminis-
₋ the worst culture from the point of tration institutions is characterised by the
view of quality management im- pro-quality culture, which leads to the con-
provement is most frequently ob- clusion that transition into a new model of
served in the mining branch; it is also public administration - focused on custom-
encountered in transport and commu- ers and their needs - has not really taken
nications, industry, administration, place; a reluctant attitude to changes is still
₋ the mining branch is characterised by observed in administration. Also, we fre-
the largest number of organisations quently deal with status ascription, exces-
following the rigid (conservative) cul- sive hierarchization, the blocking of dynamic
ture, which leads to the conclusion young employees’ promotion as well as oth-
that the mining industry restructur- er similar phenomena adversely influencing
ing, taking place over the last few the improvement of quality management.
years, has not enabled the companies Research suggests that the organisa-
in this branch to fully adjust to the tional culture of Polish companies is unfa-
market situation, as the research sug- vourable from the point of view of quality
gests that mining is still dominated by improvement. The existing cultural practices

Figure 5. The typology of organizational culture in terms of improvement of quality management -

the results for the surveyed companies

Source: Author’s own study.

No. 17 ~ 2013
 Change and Leadership
19

Industries

communications

Administration
Transport and

Other services
Commercial
institutions
Financial
Building
Industry

services
Mining

Trade
Pro-quality
5,06% 6,90% 4,57% 6,76% 4,88% 7,32% 3,79% 6,67% 0,00%
culture

Culture
of forced 1,40% 3,45% 0,57% 0,00% 0,00% 2,44% 1,38% 2,22% 3,39%
changes
Culture of
69,66% 48,28% 71,43% 71,62% 63,41% 65,85% 69,31% 62,22% 64,41%
avoidance
Conservative
23,88% 41,38% 23,43% 21,62% 31,71% 24,39% 25,52% 28,89% 32,20%
(rigid) culture
Source: Author’s own study.

(conservative culture and the culture of un- forced changes. Studies indicate that Polish
certainty avoidance) as well as the attitudes firms are most frequently characterised by
of employees have a negative influence on the culture of avoidance, while the pro-qual-
quality, which leads to problems with Polish ity culture is observed relatively seldom (less
products’ competitiveness on global markets, than 5% of the investigated companies).
where domestic companies have to compete This is an unfavourable phenomenon
with organisations from countries character- as the pro-quality culture is characterised by
ised by a more pro-quality culture. The domi- the strongest focus on improvement and suc-
nance of the culture of uncertainty avoidance cess. People learn easily, want to introduce
in the conditions of fast global changes is changes and new solutions, are flexible and
an alarming phenomenon. In this context it innovative. As indicated by research, Poland
seems advisable to devote another chapter to takes one of the last places in the field of in-
changes that organisations must make in or- novation. Such an outcome of our country
der to shape their culture in such a way that can to a certain degree result from the fact
it assumes a more pro-quality character. that Polish firms are dominated by the cul-
ture of avoidance or conservative culture,
5.summary characterised by a negative attitude to un-
certainty, which in consequence leads to re-
On the basis of the conducted stud- strained innovativeness and creativity. This
ies, different types of organisational cultures can only be changed by an attempt to change
have been defined as follows: a pro-quality the organisational cultures of Polish com-
(success) culture, the culture of avoidance, a panies. It is, however, a difficult, complex
conservative (rigid) culture and the culture of
No. 17 ~ 2013
 Change and Leadership
20
and time-consuming task, and its detailed impact on corporate responsibility strategies.
discussion goes beyond the scope of this In some cultures, these issues are easy to im-
publication. plement, while in others they may encounter
Questions discussed in the paper are significant obstacles. This issue will be fur-
also important from the point of view of cor- ther discussed in subsequent publications.
porate social responsibility. Cultural dimen-
sions and behaviour of employees have an

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Management Review” nr 4 2008, s. 885-904.
2. aniszewska g.: Kultura organizacyjna w zarządzaniu, PWE, Warszawa 2007.
3. aniszewska g.: Profil kultury organizacyjnej jako metoda diagnozy, „Przegląd Organizacji” nr 4 2007.
4. Boski P.: Kulturowe ramy zachowań społecznych. Podręcznik psychologii międzykulturowej, PWN, Warszawa
2009.
5. Cameron k. s., Quinn r. e.: Diagnosing and changing organizational culture: based on the competing value
framework, John Willey&Sons, San Francisco 2006.
6. Chiang F.: A critical examination of Hofstede’s thesis and its application to international reward management,
“The International Journal of Human Resource Management” nr 9 2005, s. 1545 –1563.
7. glińska-neweś A.: Kulturowe uwarunkowania zarządzania wiedzą w przedsiębiorstwie, Dom Organizatora,
Toruń 2007.
8. hampden-turner Ch., trompenaars a.: Siedem kultur kapitalizmu, Oficyna ekonomiczna, Kraków 2003,
s. 22-23.
9. hampden-turner Ch., trompenaars a.: Siedem wymiarów kultury, Oficyna Ekonomiczna, Kraków 2002,
s. 19-20.
10. hunt j. w.: Applying American behavioral science: Some cross-cultural problems, “Organizational Dynamics”
nr 31981, s. 55-62.
11. Jefferson A.: The myth of individualism--collectivism: A critical review; “The Journal of Social Psychology”
nr 8 2002, s. 452-464.
12. korman A. k.: Culture’s consequences: international differences in work-related values, “Journal of Occupa-
tional Behavior” nr 3 1983, s. 243.244.
13. Krzemień E., wolniak R.: Kulturowe uwarunkowania zarządzania jakością, w: Towaroznawstwo wobec inte-
gracji z Unia Europejską, por red. J. Żuchowskiego, Radom 2004.
14. Kwek D.: Decolonizing and re-presenting Culture’s Consequences: a postcolonial critique of cross-cultural stud-
ies in management, w: Prasad, A., “Postcolonial Theory and Organizational Analysis: A Critical Engage-
ment”, Palgrave Macmillan, New York, 2003, s. 20-35.
15. Mcsweeney B.: Hofstede’s model of national cultural differences and their consequences: a triumph of faith – a
failure of analysis, “Human Relations”, nr 1 2003, 2.89-118.
16. mikuła B., nasierowski w.: Szkic do kultury organizacyjnej w Polsce, „Humanizacja Pracy:, nr 4 1995, s.
5-9.

No. 17 ~ 2013
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17. robinson r. V.: Geert Hofstede: culture’s consequences, Work and Occupations 1983, s. 110-115.
18. schein e. Ch.: Organisational culture and leadership, John Willey & Sons, San Francisco 2004.
19. sikorski Cz.: Zachowania ludzi w organizacji, PWN, Warszawa 2002.
20. sitko-lutek a.: Kulturowe uwarunkowania doskonalenia menedżerów, Wydawnictwo UMCS, Lublin 2004.
21. sorge A.: Culture’s consequences, “Administrative Science Quarterly” nr 2 1983, s. 625-629.
22. sułkowski Ł.: Kulturowa zmienność organizacji, PWN, Warszawa 2002.
23. zbiegień-maciąg l.: Kultura w organizacji. Identyfikacja kultur znanych firm, PWN, Warszawa 2005.

No. 17 ~ 2013
 Change and Leadership
22

Corporate Covernance as a tool for Curb-

ing Bank Distress in nigeria Deposit money
Bank: Empirical Evidence

~ Ph. D. Senior Lecturer ikpefan ochei ailemen (Department of Banking & Fi-
nance, Covenant University, Ota, Ogun State)
E-mail: [email protected]
~ Ph. D. Lecturer stephen ojeka (Department of Accounting, Covenant University,
Ota)
E-mail: [email protected]

Abstract: The study objective is aimed at finding the relationship between corporate governance bank
distress in deposit money banks. The research design adopted in this paper is the case study method, in other
to have an intensive insight of the subject matter. Primary data was used specifically the survey technique.
The method that was used in the presentation of data in this study is the Statistical Package for Social Sci-
ences (SPSS) which contains all the necessary and important statistical technique for data analysis. For
testing the hypothesis, correlation analysis which measures the degree of relationship between variables was
used to analyze the result generated from the questionnaire. The evidence shows that corporate governance
has no significant improvement on the prevention of bank distress but has significantly improved the per-
formance of the Nigerian banking sector. We therefore recommend that banks should demonstrate strong
internal policies to identify and manage conflict of interest and zero tolerance posture against cases of un-
sound corporate governance practices.
Type of Paper: Case Study
Key words: Corporate Governance, Bank Distress, Code of Conduct, Pearson Correlation

No. 17 ~ 2013
 Change and Leadership
23
1. introduction corporate governance more formally as “the
manner in which organizations, particular-
The Organization of Economic
ly limited companies, are managed and the
Corporation and development (OECD) paper
nature of accountability of the managers to
defines corporate governance as involving
the owners”. In other words, corporate gov-
“a set of relationships between a company’s
ernance is not just a set of rules but also a
management, its board, its shareholders, and
structure of relationships geared towards
other stakeholders. Corporate governance
establishing good corporate practice and
also provides the structure through which
culture. The ultimate Business Dictionary
the objectives of the company are set, and
(2003) as cited in Sani (2010) defines corpo-
the means of attaining those objectives and
rate governance functionally as the manage-
monitoring performance are determined.
rial or directional control of an incorporated
Good corporate governance should provide
organization, which, when well practiced can
proper incentives for the board and manage-
reduce the risk of fraud, improve company
ment to pursue objectives that are in the in-
performance and leadership and demon-
terests of the company and shareholders and
strate social responsibility. Essentially, cor-
should facilitate effective monitoring, there-
porate governance is focused on controlling
by encouraging firms to use resources more
the activities of those in whose custody the
efficiently”. Corporate governance in recent
resources of an organization are entrusted
years assumed considerable significance as a
with a view to protecting the interest of the
veritable tool for ensuring corporate surviv-
resource owners.
al since business confidence usually suffers
Wise and Mahboob Ali (2009) opined
each time a corporate entity collapses. Most
that “corporate governance indicates the
of the business failures in recent past are at-
policies and procedures applied by firms to
tributed to failure in corporate governance
practices. For instance, the collapse of banks attain certain sets of objectives, corporate
in Nigeria in the early 1990’s and onwards missions and visions with regard to stock-
was as a result of inadequate corporate gov- holders, employees, customers, suppliers and
ernance practices such as insider-related different regulatory agencies and the com-
credit abuses and poor risk appreciation and munity at large”. Effective corporate gover-
internal control system failure. nance practices are essential to achieving and
Corporate governance refers to the or- maintaining public trust and confidence in
ganizational framework for decision making the banking system, which are critical to the
and action taking within a corporate entity. functioning of the banking sector and econ-
In this regard, it can also be defined as the omy as a whole. Poor corporate governance
structure of relationships within an entity
may contribute to bank failures, which can
for making decisions and implementations.
pose significant public costs and consequenc-
Simply put, it refers to how an organization
es due to inability of a bank to manage its as-
is run, that is, how the resources of an or-
sets and liabilities, including deposits, lost of
ganization are employed in pursuant of the
set missions and goals of the organization. confidence and in turn trigger a bank run or
Hussey (1999) as cited in Ivior (2008) defines liquidity crisis.

No. 17 ~ 2013
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24
Oyediran (2003) as cited in Babalola in Sani (2010) defines distress as a situation
(2010) posits that corporate governance is of complete loss of shareholder funds. To
the way and manner in which the affairs of evolve a working definition of distress, it is
companies are conducted by those charged desirable to synthesize those factors that will
with that duty. In Nigeria, the governance the unhealthy as well as state some broad set
of a limited liability company is the respon- obligation and aspiration of a typical finan-
sibility of its board of directors. Corporate cial institution. A financial institution is de-
governance is characterized by transparency, scribed as unhealthy, if it is unable to meet
accountability, probity and the protection of its obligation to owners and the economy oc-
stakeholders’ rights. Corporate governance casioned by severe financial, operational and
refers to the manner in which the power of a managerial weaknesses (Ologun, 1994). To
corporation is exercised in the management Elebuta (1999), distress occurs when a fairly
of its total portfolio of economic and socio reasonable proportion of banks in the bank-
resources with the aim of increasing share- ing sector are unable to meet their obligation
holders’ value and safeguarding the interest to customers, owners and the economy, as a
of other stakeholders in the content of its cor- result of weakness in the financial, operation-
porate mission. al and managerial capabilities which renders
The above definitions are summarized them either illiquid or insolvent.
into one by the Report of the Committee on The Nigerian banking sector witnessed
Corporate Governance of Public Companies dramatic growth post –consolidation. Banks
in Nigeria (2003) as cited in Sani (2010) which began to grow in size and numbers and even
sees corporate governance as “the system by diversified across the shores of the country
which companies in Nigeria are directed, and with branches and subsidiaries. However,
managers are held accountable for the per- neither the industry nor the regulators were
formance of the organization.” This further sufficiently prepared to sustain and monitor
emphasizes the fact that the concept of cor- the sector’s explosive growth. Prevailing sen-
porate governance is principally on the struc- timents and economic orthodoxy all encour-
ture of relationship within an organization aged this rapid growth, creating a blind spot
which is directed at best practice in the over- to risks building up in the system. Prior to the
all interest of the organization and its own- crisis, the sentiment in the industry was that
ers/stakeholders with the sole aim of curbing the banking sector was sound and growth
distress in the Nigeria banking system. should be encouraged. The international
In ordinary parlance, distress connotes monetary fund (IMF) endorsed the strength
being in danger or difficulty and in need of of the banking system to support this growth.
help. A bank is distressed when it is techni- However, this sentiment proved misplaced.
cally insolvent implying that the bank’s lia- Among the many interdependent factors that
bilities exceed the assets. The terms distress led to creation of an extremely fragile finan-
connotes “unhealthy situation” or a state cial system is failure in corporate governance
of inability or weakness, which prevents at banks. Consolidation created bigger banks
the achievement of set goals and aspiration but failed to overcome the fundamental
(Ologun, 1994). Benston et al, (1986) as cited weaknesses in corporate governance in many

No. 17 ~ 2013
 Change and Leadership
25
of these banks. with corporate governance. A review of the
The problem in the Nigerian banking prevailing situation in the Nigerian bank-
industry pre-post consolidation has been ing industry shows that most banks are yet
that of risk management arising from accu- to embrace practices that will ensure good
mulation of huge non-performing accounts. corporate governance in their institutions.
This is as result of non-application of the five Good governance practices results in higher
‘C’ of lending – Character, Capacity, Capital, firm’s market value, lower cost of funds and
Condition and Collateral. The banking in- higher profitability (Black, Jang & Kin, 2006
dustry experienced misuse of shareholders & Claessens, 2006).
funds, governance malpractice, unchecked According to Chiejina (2009), “the ex-
at consolidation. For instance, a large part of ecutive of banks had abandoned the key
the sector enriched themselves at the expense elements of good corporate principles of
of many depositors and investors. Corporate honesty, trust, and integrity, openness, per-
governance in many banks failed because formance orientation, responsibility and
boards ignored governance practices to the accountability, mutual respect and commit-
extent executive management obtained for ment to the organization for selfish reasons”.
themselves un-secured loans at the expense The core banking practices have been traded
of the depositors and they did not have the off and the most beneficial are the CEOs and
boldness to enforce good governance. In their loyalist. Eight chief executives and ex-
addition, the audit process at all banks ap- ecutive directors of some Nigerian banks
peared not to have taken fully into account were dismissed between August and October
the rapid deterioration of the economy and 2009 due to issues related to poor corporate
hence the need for aggressive provisioning governance practices. This was the outcome
against risk and assets. of audit investigations embarked upon by
As banks grew in size and complexity, the Central Bank of Nigeria to determine the
bank boards often did not fulfill their func- soundness of Nigerian banks. Hence, this pa-
tion and were lulled into a sense of well-be- per is poised to examine the role of corporate
ing by the apparent year-over-year growth in
governance practice in relation to bank dis-
assets and profits. In hindsight, boards and
tress in Nigerian deposit money banks (for-
executive management in some major bank
merly known as commercial banks). It is also
were not equipped to run their institutions.
aimed at finding the relationship between
The bank chairman/CEO often had an over-
bearing influence on the board, and some good governance and better performance of
boards lacked independence; directors often banks. Based on the objectives and focus of
fail to make meaningful contributions to safe this study the hypotheses formulated were:
guard the growth and development of the H1: There is no significant relationship
bank and had weak ethical standards: the between good corporate governance and pre-
board committees were also often ineffective vention of bank distress
or dormant. Chief executive officers (CEO’s) H2: There is a significant relationship
lend money to themselves for stock price ma- between practice of good corporate gover-
nipulation and other activities in variance nance and better performance of banks.

No. 17 ~ 2013
 Change and Leadership
26
It is pertinent to note that the under- and Securities Act 1999.The Securities and
standing of corporate governance will in- Exchange Commission Act (SECA) 1988 (and
crease growth rate, increase efficiency of its accompanying Rules and Regulations, the
their activities and minimize risks, improve Code of Conduct for Directors of licensed
standard of lending, strengthen their reputa- Banks and Financial Institutions (approved
tion and raise the level of investors and cli- by the Bankers’ Committee in 2003) and
ents trust and attract strategic investors. The Code of Corporate Governance for Banks in
remainder of this paper proceeds as follows. Nigeria Post Consolidation issued by CBN
In section two a review of relevant literature in 2006. Compliance with the provisions of
in the area of corporate governance and dis- these codes is compulsory.
tress is examined. In section three, an expla- The impetus for the development of
nation of the methodology is provided. The corporate governance system in Nigeria also
empirical evidence of this paper is discussed came through the activities of the Nigeria
in section four. Lastly, the paper ends conclu- Securities and Exchange Commission (SEC).
sion and recommendation. In 2001, the SEC set up the Atedo Peterside
committee to identify weaknesses in the
2. review of related literature current corporate governance practices in
Nigeria with respect to public companies and
Iyang (2009) conclude in his findings make recommendations on the necessary
on nurturing corporate governance system: changes therein. A Code of Best Practices
emerging trends in Nigeria, concluded that for Public companies in Nigeria was adopt-
major challenges which require urgent atten- ed (SEC, 2003).The code is voluntary and is
tion to enhance the effectiveness of the system designed to entrench good business prac-
were noted “making voluntary codes manda- tices and standards for boards and directors,
tory; developing more effective mechanisms CEOs, auditors, etc., of listed companies, in-
for monitoring compliance and enforcement; cluding banks.
developing strong internal control mecha- A major development in the history of
nisms to checkmate the boards oversight re- corporate governance in Nigeria is the recent
sponsibility; crafting strategies to enhance intervention by the Central Bank of Nigeria
shareholders activism and the extension of (CBN).The incessant collapse experienced
the codes to state-owned enterprises with in the banking sector due to poor corporate
more cases of corporate abuses”. The SEC governance and the recent bank consolida-
Code of Best Practice for Public Companies tion exercise forced the CBN to issue new
in Nigeria is voluntary and is designed to corporate governance guidelines to all banks
entrench good business practices and stan- operating in the country in Febraury 2006.
dards for all listed companies, including Known as Central Bank of Nigeria Code for
banks. The mandatory corporate governance Corporate Governance for Banks in Nigeria
provisions relating to banks are contained Post Consolidation (CBN, 2006), the code
in the Companies and Allied Matters Act seeks to address the issues of poor corporate
(CAMA) 1990, the Banks and other Financial governance and create a sound banking sys-
Institutions Act (BOFIA) 1999, the investments tem in Nigeria. The code introduced more

No. 17 ~ 2013
 Change and Leadership
27
stringent requirements in the area of indus- shareholders and help him to enforce his
try transparency, equity ownership, crite- rights.
ria for the appointment of directors, board Shah and Haq (2007) undertook an em-
structure and composition, accounting and pirical study and found that:
auditing, risk management and financial re- “in the cement sector of Pakistan, corporate
porting. The new code according to CBN was governance structure variables such as percentage
developed to complement existing codes in block holding by individual and family members,
the country, and compliance to it is manda- board size and firm size have a positive impact on
tory for all banks firm performance. They concluded that the firm’s
Earlier studies by Okike (1994, 1995, performance is adversely affected if the CEO also
1998 and 1999) specifically investigated the acts as chairperson of the board of directors; the
accounting and audit-reporting environment percentage of blocking holdings by financial in-
in Nigeria, as important elements of corpo- stitutions has a negative relationship with perfor-
rate governance. Okike (2007), posited that mance; the size of the firm has a positive impact on
the role of the Corporate Affairs Commission firm performance and the expected leverage is an
(CAC) has remained perfunctory and ineffec- adverse signal for firm performance”
tive as some companies and even auditors are Before the consolidation exercise of
known to have flouted company legislation 2006, the Nigerian banks were very weak
without being punished. In their review of with poor corporate governance, and this af-
corporate governance in Africa, Okeahalam fected customers’ confidence in banking op-
and Akinboade’s (2003) conclude that “the erations. The consolidation exercise helped
adoption of corporate governance principles to reduce the total numbers of deposit money
by African countries will be a giant step to- banks from 89 to 25 and to 19 in 2012 (exclud-
wards creating safeguards against corruption ing the three nationalized banks - Enterprise,
and mismanagement, promote transparency keystone and mainstream banks) through
in economic life and attracting more domes- mergers and acquisitions and consolidations.
tic and foreign investment”. Ogbechie and This development posed serious challeng-
Koufopoulos (2007) evaluated corporate gov- es which the CBN has acknowledged in its
ernance issues in public quoted companies in Code of Corporate Governance (CBN, 2006).
Nigeria. The findings of the study show that “These challenges include technical incom-
Nigeria public companies have embraced the petence of board management; Boardroom squab-
principles of good governance but at differ- bles among directors; Squabbles among staff and
ent stages of adoption of various issues that management; very few banks have a robust risk
contribute to good governance. Oyejide and management system; malpractices and sharp
Soyibo (2010) suggest that for Nigeria to reap practices; insider abuses; rendering false returns
the benefits of effective corporate governance and concealment of information from examiners;
there is need to strengthen the enforcement ineffectiveness of board/statutory committees and
mechanism of the regulatory institutions. inadequate operational and financial controls”.
The role of the Courts are important in this All existing banks in the country are re-
regards. The judicial system must have the quired by the code to adopt and enforce well
capacity to restore the confidence of the articulated codes of ethics and conduct for

No. 17 ~ 2013
 Change and Leadership
28
directors, management and staff and to ren- of demand for corporate governance in state-
der periodic report (Templars, 2006). The key owned enterprises (Ahmed, 2007).
highlights of the Codes of corporate gover- The corporate governance framework
nance of SEC and CBN include: also depends on the legal, regulatory, and in-
Separating the roles of the CEO and board stitutional environment. In addition factors
Chairman; prescription of non-executive and such as business ethics and corporate aware-
executive directors on the board; Improving the ness of the environmental and societal inter-
quality and performance of board membership; est of the communities in which a company
Introducing merit as criteria to hold top man- operates will also have an impact on its repu-
agement position; introducing transparency, due tation and its long term success.
process and disclosure requirements; transparen- key element of a sound corporate gov-
cy on financial and non-financial reporting; pro- ernance framework in a bank
tection of shareholder rights and privileges; and Hennie and Sonja (2009) expressly state
defining the composition, role and duties of the the main elements of corporate governance
audit committee, etc (Wilson,2006). in a bank to include the following:
However deliberate accounting fraud • A well articulated corporate strategy
is serious problem of corporate governance against which the overall success and
in the country. Cases of “inaccurate report- the contributions of individuals can
ing and non-compliance with regulatory re- be measured;
quirement” (Ibru,2008) and “the prevailing • Setting and enforcing clear assign-
incidences of false and misleading financial ment of responsibilities, decision
reporting” (Al-faki,2007) by some corporate making authority, and accountabili-
organizations lead to corporate failures. We ties appropriate for banks selected
have different shareholders associations reg- risk profile;
istered with Corporate Affairs Commission • Strong financial risk management
(CAC). Etukudo (2000) argued that the share- function (independent of business
holder associations serve the interest of the lines), adequate internal control sys-
investing public as shareholders who have tems (including internal and external
the opportunity to contribute to the formu- audit functions), and functional pro-
lation of broad corporate policies, there- cess design with the necessary checks
by enhancing management accountability. and balances;
However, for effective performance of this • Adequate corporate values, codes of
body, corporate governance institutions need conduct, and other standards of ap-
to strengthen shareholders activism as a pre- propriate behavior and effective sys-
requisite for effective corporate governance tem used to ensure compliance. This
and accountability in Nigeria. In Nigeria, includes special monitoring of the
there is the general weakness of public insti- bank’s risk exposure where conflict
tutions, high level of corruption, poor mana- of interests is expected to appear (ex-
gerial capacity and total absence of market ample relationship with affiliated
discipline for transparency and accountabil- parties).
ity, which combine to create a seeming lack • Financial and managerial incentives

No. 17 ~ 2013
 Change and Leadership
29
to act in an appropriate manner of- led to their failures. A further revelation
fered to the board, management, and showed that many owners and directors
employees, including compensation, abused or misused their privileged positions
promotion, and penalties (compen- or breached their fiduciary duties by engag-
sation should be consistent with the ing in self serving activities. The abuses in-
banks objectives, performance and cluded granting of unsecured credit facilities
ethical values). to owners, directors and related companies
• Transparency and appropriate infor- which in some cases were in excess of their
mation flows internally to the public. banks statutory lending limits in violation of
the provisions of the law.
According to CBN (2006), “No one per- Sanusi (2010) contends that the prima-
son should combine the post of Chairman/ ry responsibility of keeping individual bank
Chief Executive Officer of any bank”. No two sound lies with each banks owner, managers,
members of the same extended family should and the board of directors. Together, they
occupy the position of Chairman and that of must establish a framework of internal con-
Chief Executive Officer or Executive Director trols and practices to govern the operations
of a bank at the same time. The office of the of the bank and ensure that it functions in a
Chief Executive should be held by a differ- safe and sound manner. Poor internal gover-
ent person other than the chairman. This is nance has been identified as a major factor
because such step could lead to the problem in virtually all known instances of banking
of moral hazard and thereby threatening the unsoundness. One basic requirement is that
financial sector stability. Effective corporate persons who control and manage the busi-
governance is all about board’s performance. ness of banking must be men of integrity,
The task of growing a corporate entity is the above board, trustworthy and must possess
work of board of directors. For a board to appropriate skills and experience.
function effectively, it should be composed Sanusi (2010), posits that disclosure and
of members who are independent, skilled, transparency are key pillars of a corporate
knowledgeable, experienced and of diverse governance frame work, because they pro-
perspectives. In Nigeria there has been a vide all the stakeholders with the informa-
high profile case of corporate failure which is tion necessary to judge whether or not their
traceable to weak and ineffective boards. In interest are being served. He sees transpar-
some cases, the board appear were dormant ency and disclosure as an important adjunct
being satisfied with having business cards to the supervisory process as they facili-
that identify them as board members. Critical tate banking sector market discipline. For
reviews of the nation’s banking system over transparency to be meaningful, information
the years have shown that one of the prob- should be accessible, timely, relevant and
lems confronting the sector had been that of qualitative. According to Anameje (2007) as
poor corporate governance. From the clos- cited in Babalola(2010), transparency and
ing reports of banks liquidated between 1994 disclosure of information are key attributes
and 2003, there were evidences that clearly of good corporate governance which banks
established that poor corporate governance must cultivate with new zeal so as to provide

No. 17 ~ 2013
 Change and Leadership
30
stakeholders with the necessary information and the management including other stake-
to judge whether their interest are being tak- holders, failed woefully due to inadequate
en care of. Sanusi (2003) opines that lack of enforcement capacity.
transparency undermines the ethics of good
corporate governance and the prospect for Challenges and Failures of Corporate
effective contingency plan for managing sys- Governance in Nigeria
temic distress. The challenges and failure of corporate
There are various laws put together to governance in Nigeria stems from the cul-
regulate the practice of a particular trade or ture of corruption and lack of institutional
profession in order to protect investors and capacity to implement the codes of conduct
ensure a stable business environment and to governing corporate governance. Company
prevent distress, which in this case concerns executives enjoy an atmosphere of lack of
the banking industry. They are CBN act check and balances in the system to engage
(1991), Bank and Other Financial Institution in gross misconducts since investors are not
Act (BOFIA) 1991 as amended, Investment included in the governing structure. Policy
and Securities Act (ISA) 1999, The Nigerian and procedures required to ensure efficient
Deposit Insurance Corporations Act (NDIC) internal controls are disregarded, and total
1988 as amended and other laws. However lack of thorough selection process (of CEO
the basic laws governing all companies oper- and board members – round pegs in square
ating in Nigeria is the Companies and Allied holes) remain a challenge in Nigeria. The
Matters Act (CAMA) 1990. The act makes it businesses cum shareholders’ interests are
mandatory that all companies operating in secondary to the self-interest of board mem-
Nigeria must be registered either as a private bers and the management. Limited oppor-
company or as a public company limited by tunities for institutional investors, and near
shares. The provisions of the CAMA also re- zero interest in corporate social investments
quire that the financial statements of each to demonstrate companies’ sense of belong-
company should conform to the accounting ingness as evidenced in environmental pol-
standards. Specific standards for reporting lutions, are clear indications of failure of
consolidated accounts regarding all or any corporate governance. Lack of managerial
of the subsidiaries of the company must be training and capacity development among
specified and applied as detailed by Unegbu Nigerian executives to manage business risks
(2003). has resulted in huge agency costs, and share-
In Nigeria, the insider’s trading, massive holders have had to shoulder several avoid-
and prevalent frauds, mandatory retirement able agency costs since the board of directors
of CEOs of banks, due to corrupt practices usually failed as a monitoring device to mini-
and inefficient rubber-stamped board, have mize agency problems.
combined to signal the absence of or fail- The recent collapse of The Nigerian
ure of existing corporate governance struc- Stock Exchange market is a pointer to a
ture. The Company and Allied Matters Act system devoid of controls and accountabil-
(CAMA) enacted to regulate and balance the ity, which resulted in lack of shareholders’
relationship among the board, shareholders interest and confidence in the operating

No. 17 ~ 2013
 Change and Leadership
31
environment. Some Nigerian companies re- system in place. With the huge amount of
located their operations to more stable and funds that will be available to them and the
vibrant neighboring countries like Ghana significantly increased legal lending limits,
and South Africa. Failure of corporate gover- banks will be financing more long term mega
nance in Nigeria has also been traced to lack projects in the real sectors of the economy as
of effective yardsticks to evaluate board and opposed to the existing working capital/trade
management processes and performance, financing. Given the expected significant in-
since the board sub-committees required to crease in the level of operation, the banks will
be fully independence, especially the audit be facing various kinds of risks which, if not
and remuneration committees, are compro- well managed, will result in significant loss-
mised. The auditors/the audit committee of es. The management of risks in a transparent
the board have been singled out as instru- and ethical way will thus present some issues
ment of fraudulent practices given their bordering on corporate governance.
readiness to cover-up corrupt practices for resurgence of high level malpractices:
executives in a desperate bid for kick-back, to boost income as a result of intense compe-
and, to retain the audit engagement(s) of tition and lack of enough viable projects, mal-
big clients (Habeeb, 2010). According to the practices may resurface post consolidation.
code of corporate governance issued by CBN Such sharp practices could include round
(2006), the following are challenges that are tripping of forex, excessive customer charg-
faced by consolidated banks in respect to the es, falsification of records etc, and adoption
adherence to the code. of unethical methods to poach customers.
The corporate failures which charac-
technical incompetence of board and terized 2000 to 2002 when institutions like
management: in view of the greatly en- Enron and WorldCom collapsed brought cor-
hanced resources of the consolidated entities, porate governance issues to the front burner.
board members may lack the requisite skills Arunma (2010) stated thus that “corporate
and competences to effectively redefine, re- failures no doubt drew the world’s atten-
strategize, restructure, expand and or refocus tion to the fact that good corporate gover-
the enlarged entities in the areas of change of nance was extremely important to corporate
corporate entities new business acquisitions, performance and survival; indeed there is a
branch consolidation, expansion and product nexus between good corporate governance
development. and the preservation of shareholders value,
relationship among directors: board- safeguarding investors’ assets and promot-
room squabbles could be an issue due to dif- ing financial stability particularly, when gov-
ferent business cultures and high ownership ernance of financial institutions is concerned.
concentration especially in banks that were Indeed good corporate governance has be-
formerly “one-man” entities. The dominance come an important index for institutional in-
of a “key man” could also emerge with the vestors’ participation in business enterprises
attendant problems. and financial markets”.
increased level of risks: currently, very
few banks have a robust risk management

No. 17 ~ 2013
 Change and Leadership
32
3 Methodology relevant information from conveniently se-
lected respondents within Lagos metropolis
Participants and Procedures: The sam-
who showed interest in the subject matter.
ple of study consisted of 120 respondents
The questionnaire consisted of 20 questions
who were mainly bank employees amongst
in statement forms describing issues opera-
who are professional experts and invest-
tionalised in the concept of corporate gov-
ment analysts, shareholders and customers
ernance and bank distress as it relates to
among others. The choice of respondents
Nigerian banking industry. Responses were
was based on their knowledge and experi-
measured using Likert five point-scale of;
ence in the industry. Ninety respondents
strongly agree to strongly disagree. The re-
finally participated in the study, which rep-
search work was designed in such a way that
resented 75% response rare. Among the re-
data was generated from the questionnaires
spondents,46(51.1%) represents male and
were personally administered to the staffs of
44(48.9%) represents female. Majority of the
the respective banks.
respondent are in the middle age which is be-
This study employed the Stratified
tween 31 to 40 years (58%) have been work-
Sampling technique. In stratified sampling,
ing with the organization for more than 5
the population is categorized into groups
years and 32% have been working between
that are distinctly different from each other
5-10years.Majority of the respondent have
on relevant variables. Each group is called
First degree (57%), while those with Masters
stratum (plural strata). In applying stratified
Degree are 20% and only 23% with diploma
sampling, we categorized the population and
qualification.
stratified using bank capital. Each group is
research instruments: The research de-
called stratum (plural strata). In this study,
sign adopted in this study is the case study
the elements in a particular stratum are the
method, in other to have an intensive insight
same with respect to the relevant param-
of the subject matter. Primary data used is
eter (bank capital). The banks are grouped
the survey technique. This was supplement-
into stratum and were selected using simple
ed with data from secondary sources of infor-
random sampling supported by judgment
mation. The research was carried out in the
sampling (non-probability) methods. These
Nigeria banking industry based on a sam-
banks were selected using judgmental sam-
ple of four deposit money banks (formerly
pling technique in order to have a represen-
called commercial banks) in Nigeria. Out of
tation of the population. Four sample banks
the One hundred (120) questionnaires that
were selected and are made up of two old
were administered on the 4 deposit money
generation banks and two new generation
banks, (30 questionnaire each for the 4 dif-
banks. New generation banks came on board
ferent banks) only 90 questionnaires were
in Nigeria from 1989 because of the innova-
retrieved. The research work was designed
tions they introduced. The sample size of
in such a way that data was generated from
this research work constitutes four Nigeria
the questionnaires personally administered
banks. They include Eko bank, Access bank
to the staffs of the respective banks with a
(new) United Bank of Africa and First bank
high response rate of 75%. The structured
of Nigeria (old).
questionnaire was administered to obtain
No. 17 ~ 2013
 Change and Leadership
33
Krejcie & Morgan (1970) in Amadii determining whether or not two sets of obser-
(2005) agrees with the sample as they pro- vation co-vary and as such help to determine
posed the population proportion of 0.05 as whether there is any correlation between
adequate to provide the maximum sample good corporate governance and distress in
size required for generalization. To the best the Nigerian banking sector. Theoretically,
of the researcher’s judgment, the banks make two sets of data or observations are said to
a good representation of the banking indus- be correlated if there is evidence to believe
try in Nigeria. The expert opinion was sought that there is a positive or negative associa-
for in order to validate the content and the tion in their magnitude and direction. The
structure of the questionnaire during the numerical method which entails using the
pilot study. The method that was used in coefficient of correlation and Karl Pearson’s
the presentation of data in this study is the Product Moment Correlation is used because
Statistical Package for Social Sciences (SPSS) it is a measure of linear relationship between
which contains all the necessary and impor- two variables X and Y.
tant statistical technique for data analysis.
For testing the hypothesis, correlation anal- 4. Discussion of results
ysis which measures the degree of relation-
ship between variables was used to analyze hypothesis one
the result generated from the questionnaire. H0: There is no significant relationship
Correlation analysis is a technique used to between good corporate governance and pre-
assess the extent to which two sets of obser- vention of bank distress
vations or series of data regarding a particu- H1: There is significant relationship be-
lar problem or situation can be regarded as tween corporate governance and the preven-
positively or negatively related to each other tion of bank distress.
by association. Correlation analysis helps in

Table 4-1: Pearson’s correlation between corporate governance and bank distress correlations

Corporate Prevention of Bank

Governance distress
Pearson Correlation 1 .087
Corporate
Sig. (2-tailed) .417
Governance
N 90 90
Pearson Correlation .087 1
Prevention of Bank
Sig. (2-tailed) .417
distress
N 90 90
Source: SPSS print out (March 2011)

No. 17 ~ 2013
 Change and Leadership
34
Coefficient of determination Decision
The coefficient of determination is given The outcome of the Pearson correlation
by the formula; (r=0.087, significance 0.417). It is with this
C.O.D= r2 x 100 regard that the null hypothesis will be ac-
= (0.087)2 x 100 cepted. This simply implies that corporate
=0.7569 x 100 governance has no significant improvement
=75.69%
on the prevention of bank distress.
Where r= Pearson correlation 0.417
hypothesis two
Correlation is not significant at 42% because
H0: There is no significant relationship
it is above 10%
interpretation between practice of good corporate gover-
The relationship between corporate nance and better performance of banks
governance and prevention of bank distress H1: there is a significant relationship be-
does not have a significant correlation and tween practice of good corporate governance
the correlation coefficient derived from the and better performance of banks.
analysis showed significance= 0.417 which
exceeds significance level of 10%.

Table 4-2: Pearson’s correlation between corporate governance and bank performance correlations

Corporate Prevention of Bank

Governance distress
Pearson Correlation 1 .087
Corporate
Sig. (2-tailed) .417
Governance
N 90 90
Pearson Correlation .087 1
Prevention of Bank
Sig. (2-tailed) .417
distress
N 90 90
** Correlation is significant at the 0.01 level (2-tailed).
Source: SPSS print out (March 2011)

interpretation and bank performance at the level of signifi-

The correlation coefficient is .304 and cance at 1%.Therefore we reject the null hy-
the level of significance is 1% pothesis (H0) and accept the alternative (H1).
The coefficient is .304 x 100= 30.4 since This simply implies that corporate gover-
0.20≤ r ≤0.50 = moderate relationship, there is nance has significantly improved the perfor-
a moderate relationship between corporate mance of the Nigerian banking sector.
governance and bank performance and it is
significant at 1% level of significance. 5. Conclusions And
Decision recommendations
From the table above, there is a positive
relationship between corporate governance In particular, we know that bank dis-
tress in Nigeria and other economies have
No. 17 ~ 2013
 Change and Leadership
35
been caused in part, by excessive exposure significant improvement on the prevention
concentration, directed lending, lending to of bank distress; banks should be able to
connected parties and poor credit policy. To demonstrate that rigorous internal policies
a large extent, such basic risk management were in place and that procedures existed for
failures reflect a break down in corporate identifying and managing conflicts of inter-
governance. They reflect poor management est to avoid its adverse consequences on their
of conflict of interest, inadequate under- customers and other stakeholders. Insider
standing in the board room of key banking abuse, conflict of interest and widespread
risks and poor oversight by boards of the manipulations are at the heart of a nation’s
mechanism for managing their banks, such financial sector crisis, this crisis connived at
as risk management system and internal au- or orchestrated by management and board,
dit arrangement. In some cases a lack of truly should be captured by internal and external
independent directors on the boards of banks auditors and regulators so as not to reach se-
was also a significant factor in weakening the rious proportions.
effectiveness of boards. And these problems (2) The study shows that corporate gov-
are compounded by poor quality financial ernance has significantly improved the per-
disclosures and ineffective external audit. formance of the Nigerian banking sector.
Adherence to corporate governance is the Therefore, in addressing the role of corpo-
foundation for effective risk management. rate governance in curbing distress the cen-
It is evident that sound corporate gover- tral bank should review the fit and proper
nance is essential to the wellbeing of a bank person’s regime in other to ensure that only
and stakeholders, particularly its sharehold- credible persons of impeccable financial, per-
ers and creditors. Practice of corporate gov- sonal and professional character are allowed
ernance is not just a vital factor at the level as major shareholders, directors and manag-
of Individual Corporation; it is also a critical ers of banks. The central bank should also
ingredient in curbing distress in banks, pro- strengthen its on-site and off- site supervision
moting and maintaining a sound financial functions in recognition of the need for an ef-
system and stability which in turn ensures fective supervision of the banking sector.
a robust economy. To this end, the federal (3) To ensure that there is a clear divi-
government through the regulatory author- sion between the chief executive officer and
ity (i.e. central bank of Nigeria and security the managing directors, the Central Bank of
and exchange commission) has taken keen Nigeria should enforce and continue to en-
interest in reviewing and emphasizing the sure compliance to the 10 years term limit for
adherence to the year 2011 revised code of banks chiefs. Persons occupying these posi-
corporate governance in other to curb future tions should be properly approved by the
bank distress in Nigeria. apex body i.e. central bank of Nigeria and
Recommendations such persons must be knowledgeable in busi-
Based on the theoretical and empirical ness and financial matters with requisite ex-
findings in this study the following recom- perience in the banking field.
mendations are therefore made: (4) The banks should establish commit-
(1) Since corporate governance has no tees /departments within their banks so as to

No. 17 ~ 2013
 Change and Leadership
36
oversee the management of risk and credit. be at a very heart of corporate governance.
This is also to forestall any potential risk and (6) The central bank and relevant pro-
prevent the bank from any imminent or fu- fessional body such as Chartered Institute
ture distress. of Bankers of Nigeria (CIBN) should ensure
(5) Regulatory authorities and other that bank workers do not hold vital posi-
stakeholders in the Nigerian financial sector tion in the banks but rather bankers who are
need to adopt a zero tolerance posture against proven competent after the completion of the
cases of unsound corporate governance prac- relevant professional courses should be giv-
tices. This will ensure that the banks are well en full backing to operate.
run and administered. Identifying, prevent-
ing and managing conflict of interest should

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No. 17 ~ 2013
 Change and Leadership
39

human Capital and organizational

effectiveness

~ Ph. D. Candidate ioana Julieta Josan (National Institute of Economic Research”Costin

C. Kiritescu”, Romania); Teaching Assistant (University of Bucharest, Romania)
E-mail: [email protected]

Abstract: The new organizational changes caused by social, economic and politic reforms led to a
shift in the strategic management of the companies. The growing need for professionals, who know how to
generate profits, is growing and increase confidence of partners and clients, find new ideas and adapt to a
dynamic market. Therefore, internally, we need an efficient management of human resources to find and
retain the most suitable and efficient people which will increase productivity and face the increased acting
globally competition. Currently, companies that succeed are the ones that integrate in their business strat-
egy, an important component of development and valuation human capital.
The paper aims to analyze and highlight the importance of human capital in the new organizational
strategies, focused on achieving a high level of competitiveness, innovation and excellence.
Key words: human capital, leadership, effectiveness, productivity
JEL Classification: J24, O15

No. 17 ~ 2013
 Change and Leadership
40
introduction 1.leadership and human capital
management
The changes are causing concerns be-
cause of the risk of losing control that occurs An important role for an organiza-
in any environment: individual, organiza- tion, in elaboration and implementation the
tional, national and global. Minimizing the strategy of human capital, is to identify the
risk of any changes in strategy and manage- skills needed both in present and in future.
ment consists of people involved in this pro- To achieve this requirement there is a need
cess of change. for leaders who have a clear vision of the or-
The globalization process changed sig- ganization’s future. Organization’s leaders
nificantly the way in which businesses runs must value knowledge and experience with-
and accelerates dissemination of Know-how in the company so that the organization per
and innovation. From this perspective orga- ensemble and each of its members can learn
nizations need to become more competitive. more effectively. It is not enough for employ-
The education, training and change are inter- ees to simply understand the strategic in-
related. In this context, investment in human tent, but also the leaders have to succeed in
capital becomes a crucial factor to increase implementation and achievement of positive
productivity both at the organizational lev- results. This requires a careful assessment of
el and macroeconomic level. Human capital necessary skills, existing competences, the
may determine both the added value created lack of skills assessment to which organiza-
in the economy through direct participation tions must respond by creating development
in the production process, and growth rate of plans and learning strategies tailored to their
added value by its innovative capacity. These organization. “Leadership involves collective
occurred changes in the modern economy action in order to bring significant changes,
and the major role that important theorists enhancing the competence and motivation
had in this field have led to a new economy of all those involved, i.e. the action of more
based on knowledge, in which education than one individual influence the process1 .”
plays a significant role. The role of education Leadership should be seen as a process that
in economics is not a very new concept, its encompasses all levels of organizational hi-
roots date back more than six decades ago, erarchy, each level having a corresponsive
but in present the education role is more im- role in general strategy of organization. For
portant than ever. In present education is each level it is identified a specific type of
recognized as a fundamental part in provid- leadership:
ing human capital to the economy, and also - For the superior hierarchic level the
recognizes the need for education to transmit pattern is the strategic leadership;
the skills and aptitudes towards flexibility. - For specific middle hierarchical level
This marks the entry in the new economy the pattern is team leadership;
or knowledge society, in which competitive- - To the bottom of the hierarchy the pat-
ness depends on skills and human capital tern is the technical leadership.
possessed. 1 Popa, Ion, General Management, http://www.
bibliotecadigitala.ase.ro/biblioteca/carte2.asp? id
= 471 & idb =
No. 17 ~ 2013
 Change and Leadership
41
The objectives within each hierarchical is justified by the fact that the lack of values
level are different, and on the other hand, aim and norms of joint action will lead to ineffi-
to achieve a common organizational climate ciencies and will affect the competitiveness
as performance and efficiency. In the strate- of any organization. Currently, in addition
gic leadership objectives are included: cre- to economic changes, the absence or ineffec-
ating strategic thinking, understanding and tiveness of managerial leadership may be an
sharing common values and organizational explanation for many of the companies that
vision. The objectives for the team leadership lose a large part of the customer’s portfo-
are closer to the specific development of hu- lio and profit. Also, within these organiza-
man capital through skills training and spe- tions, employees feel ignored and unvalued
cific interpersonal team skills. Besides, the in terms of skills they possess. The absence
above two types, technical leadership helps of values and common vision on a long term
developing human capital as its objectives in- break the ability of managers to increase la-
clude developing and highlighting the tech- bor productivity and competitiveness of its
nical and professional skills of employees by employees. From the general perspective,
finding the most suitable organizational con- leadership is a series of roles that a leader has
texts that lead to performance of employees in the organization. These roles are shown in
and not to the erosion of human capital. The the figure below.
need for leadership at all hierarchical levels

Figure 1. Leader’s role in the organization

Source: Author

No. 17 ~ 2013
 Change and Leadership
42
In terms of effectiveness, leadership is 2.organizational effectiveness
the ability of a person to:
Organizational effectiveness is a new
- Create and develop a vision;
concept that has attracted the attention of spe-
- Establish guidelines operations;
cialists once with the transition to a new orga-
- Realize the vision with team members;
nizational context characterized by change,
- Track project’s processes;
competitiveness and high performance. The
- Achieve the desired results through
literature provides various definitions of the
the organization, control and provide prob-
concept, of which we have chosen to high-
lem solving solutions as they arise.
light some of the most appropriate of this
Therefore, it is necessary for organiza-
paper approach. Thus, ”organizational effec-
tions to find a competent leader to plan and
tiveness is defined as the extent to which an
organize workflow so that his subordinates
organization, by the use of certain resources,
could maximize the performance. An effec-
fulfils its objectives without depleting its re-
tive human capital strategy helps put in place
sources and without placing undue strain on
the right leaders to source, develop and di-
its members and/or society2” . Another point
rect the right workforce talent. According to
of view indicates that ”effectiveness evalu-
Smith1 “a human capital strategy supports
ates the performance of business units’ efforts
an enterprise in meeting today’s urgent needs
with respect to strategic goals, and serves as a
while also helping it become agile enough to
critical component in the management plan-
reposition itself for ongoing market competi-
ning and control processes” (Griffin, 1987).
tiveness and growth.
Also, effectiveness ”plays an important role
Today, the human capital held by em-
in accelerating organizational development3„
ployees in a company are those resources
. It is ”the net satisfaction of all constituents
that can contribute to competitiveness and
in the process of gathering and transforming
high productivity as long as the manage-
inputs into output in an efficient manner4”.
ment and the leadership in the organization
Scholars and practitioners draw at-
will know how to train and capitalize the re-
tention to the difference between efficiency
sources by putting them in a favorable inter-
and effectiveness. They are not synonyms
nal contexts of the organization. I prefer to
their meaning is different, it may be possible
call them “internal favorable contexts” be-
cause it cannot be limited only to provide the 2
Thibodeaux, Mary and Favilla Edward, Organi-
most suitable job, but may include: learning zational effectiveness and commitment through
- to share common values and norms; a cus- strategic management, 1996, Industrial Manage-
tomization of HR strategy to develop human ment &Data Systems, vol96, No 5, pp 21-25
3
resources; motivation and efficient training Bulent, Aydin and Adnan Ceylan, The role of
to cope with changes requested by the job or organizational culture on effectiveness, Ekonomi-
the organization. ka A Management, 2009, http://custom.kbbarko.
1
Smith, David; Silverstone, Yaarit and Lajtha cz/e%2Bm/03_2009/03_aydin_ceylan.pdf
Adrian, Human capital strategy as a business 4
Grawhich, Matthew and Barber, L.K., Are you fo-
differentiator, Accenture, 2010,http://www.ac- cusing both Employees and Organizational Out-
centure.com/us-en/outlook/Pages/outlook-onli- comes. Organizational Health Initiative at Saint
ne-2010-human-capital-strategy.aspx Louis University , Missouri, S.U.A., 2009
No. 17 ~ 2013
 Change and Leadership
43
that organization present high efficiency but and mental skills and affect human produc-
couldn’t gain their objectives. Sometimes ef- tivity by reducing time lost due to illness.
ficiency doesn’t result to success. Thus, fre- At the specific level, the Enterprise de-
quently, organizational effectiveness is seen cision of investment is linked to the compa-
as the “ability of the organization, in either ny interest in increasing the quality of work.
relative or absolute terms, to exploit its en- The company is acting for it in the following
vironment in the acquisition of scarce and areas:
valued resources5” . The indicators of effec- a) Increase the general level of educa-
tiveness summarized by Price6 include the tion and training of human resources;
accomplishments of goals such as high pro- b) Ensuring a high level of health;
ductivity, morale, conformity, adaption, and c) Promote an effective system to moti-
institutionalization. To achieve the perfor- vate employees.
mance of these factors it is needed to develop The Human capital investments involve
a leadership style based on progress, innova- an initial cost tuition and training course
tion and an approach to respond to the needs fees, forgone earnings while at school and
of the employees. reduced wages and productivity during the
2.1. The relationship between human capital training period) which the individual or firm
– effictiveness - leadership hopes to gain a return in the future. In oth-
Generally, investing in human capital, er words, only employees possessing value
namely in education, health and training and uniqueness are qualified as human capi-
aims to develop professional and scientific tal. The qualities of employees with core
training of available human resources, but skills are the fountain source for a company
also adapt human resources to structural eco- to raise competence and profits. The studies
nomic changes imposed by technological and provide evidence that training generates sub-
scientific progress on efficiency criteria. Also, stantial gains for employers and organiza-
higher education capital implies a higher tion. Innovation and IT not only cause firms
value of the workforce due to increased pro- to invest more in trainings but are also highly
ductivity, implying a higher payment if it is dependent on education, skills and training
sold (salary reflects, in general, the marginal in generating profit from these investments.
productivity of labor, which increases with Firm’s Investment in Human capital has
education level, as demonstrates the human positive effect on:
capital theory). Another important compo- - Productivity. The impact on produc-
nent is the health care of the workers who de- tivity of training undertaken with a previous
velop human capital by improving physical worker’s initial productivity by 9.5 percent.
Previous on-the-job training has more long-
5
Yuchtman, Ephraim and Stanley Seashore, A lasting benefits and increases current pro-
System Resource Approach to Organizational ductivity by 16 percent.
Effectiveness, American Sociological Review, Vol. - Profitability. The productivity in-
32, 1967, 891-903 crease is over twice the size of the wage
6
Price, James, Organizational Effectiveness: An increase caused by training. On-the-job
Inventory of Propositions, Homewood 111, Irwin firm-provides training sometimes generates
Publishing House, 1968
No. 17 ~ 2013
 Change and Leadership
44
considerable third-party externalities when directions—talent, leadership, culture and
trainees do not stay with the employer who organization. The human capital strategy
trained them. can be seen as a crucial element in the triad
- Long term competitiveness. More of business strategy - human capital strategy
highly-educated and more highly skilled – human resources strategy. According with
workers have been found not only to be able Smith and all7 : the business strategy gives
to adapt more rapidly and efficiently to new the directions, scopes, objectives and compet-
tasks and technologies, but also to be direct itive distinction, while the human strategy
source of innovation. defines the talent, skills, leadership, culture
The aim of the human capital strategy is and organization to fulfill the business strat-
to turn human resources into a more tangible egy. The implementation of these two strat-
asset, and to plan and to match up the em- egies is closely related to human resources
ployees in the organization to the firm‘s stra- strategy that identifies and articulates the
tegic needs. An efficient and adapted strategy imperatives of human resources organiza-
can also help the organization to attract and tion and relies on the capabilities required to
hire top talent by applying recruiting prac- align human capital strategy. For this strate-
tices toward specific individuals, based on gic triad to be effective, the leaders need to
the organizational real needs and the human support the vision, talent and management
capital owned by the individuals. Moreover, skills in order to create and develop strate-
it can increase engagement and job satisfac- gies, making opportunities in the internal
tion, thus reducing attrition and lowering and external environment, in the current re-
turnover costs. ality of the organization.

Conclusions 7
Smith, David; Silverstone, Yaarit and Lajtha
Adrian, Human capital strategy as a business
A program to create and implement
differentiator, Accenture, 2010,http://www.ac-
a human capital strategy involves various
centure.com/us-en/outlook/Pages/outlook-onli-
stages of work across four primary work ne-2010-human-capital-strategy.aspx

reFereNCes:
1. Adair, John, Liderul inspiraţional: Cum să motivăm, să încurajăm şi să avem succes, Bucureşti, Meteor Press
Publishing House, 2003
2. Becker, gary, Capitalul uman. O analiză teoretică și empirică cu referire special la educație București, All Pub-
lishing House, 1997
3. Bulent, Aydin and Adnan Ceylan, The role of organizational culture on effectiveness, Ekonomika A Manage-
ment, 2009, http://custom.kbbarko.cz/e%2Bm/03_2009/03_aydin_ceylan.pdf
4. Cardon, Alain, Coaching şi leadership în procesele de tranziţie, Bucureşti, Codecs Publishing House, 2006
5. friedlander, frank and hal Pickle, Components of Effectiveness in Small Organizations, Administrative
Science Quarterly, Vol. 13, 1968, 289-304

No. 17 ~ 2013
 Change and Leadership
45
6. Grawhich, Matthew and Barber, l.k., Are you focusing both Employees and Organizational Outcomes. Or-
ganizational Health Initiative at Saint Louis University , Missouri, S.U.A., 2009
7. năstase, marian, Lideri, leadership şi organizaţia bazată pe cunoştinţe, Bucureşti, ASE Publishing House,
2007
8. Popa, ion, Management General, București, http://www.biblioteca-digitala.ase.ro/biblioteca/carte2.
asp?id=471&idb=
9. Price, James, Organizational Effectiveness: An Inventory of Propositions, Homewood 111, Irwin Publishing
House, 1968
10. schein, edgar, Organizational Culture and Leadership. 1st ed. San Francisco, Jossey-Bass Publishers, 1992
11. smith, David; silverstone, yaarit and lajtha adrian, Human capital strategy as a business differentiator,
Accenture, 2010, http://www.accenture.com/us-en/outlook/Pages/outlook-online-2010-human-capital-
strategy.aspx
12. suciu, Christina, Investiţia în educaţie, București, Economică Publishing House, 2000
13. thibodeaux, mary and favilla Edward, Organizational effectiveness and commitment through strategic man-
agement, 1996, Industrial Management &Data Systems, vol96, No 5, pp 21-25
14. yuchtman, ephraim and stanley seashore, A System Resource Approach to Organizational Effectiveness,
American Sociological Review, Vol. 32, 1967, 891-903

No. 17 ~ 2013
 Change and Leadership
46

Executing a Customer Relationship man-

agement Programme in an Emerging market:
An empirical Approach

~ Ph. D. akinyele samuel taiwo (School of Business, Covenant University, Nigeria)

E-mail: [email protected]
~ Ph. D. olorunleke, Kola (Dept. of Business Administration,Adekunle University,
Akungba)
E-mail: [email protected]

Abstract: Retail financial services in all markets, including emerging markets, are undergoing major
transaction, driven by change, deregulation and customer sophistication. Customer service and specifically
relationship management in particular, are crucial to attaining a sustainable competitive advantage in the
marketplace. The execution of a one- to- one programme within an emerging economy is the focus of this
paper, specifically in the financial services environment. The steps in the execution of customer relation-
ship management (CRM) as proposed by Peppers, Rogers and Dorf (1999b) are examined and the effect on
customer service in an emerging market is investigated. The findings indicates that there are positive as-
sociations with these steps and customer service.
Key words: Retail, Financial services, Emerging markets, Customer service, Competitive ad-
vantage, Customer relationship management.

introduction have become increasingly important world

wide due to these changes in expectations
Changes in customer expectations can
from customers as well as changes in the na-
be identified throughout the world. Customer
ture of markets. Changes have been noted
relationship management (CRM) strategies
across the world, but opportunities present
No. 17 ~ 2013
 Change and Leadership
47
themselves in Nigeria and other develop- retention rate by 5 percent ( Peck, Payne,
ing countries for CRM strategies. Customer Christopher and Clark,2004).
relationship management (CRM) is a mana- Profitability: customer profitability re-
gerial philosophy that seeks to build long flects the financial performance of customers
term relationships with customers. CRM can with respect to all the costs associated woth
be defined as “ the development and main- a transaction ( Gordon, 1998).Profitability in
tenance of mutually beneficial long term the case of CRM is determined in the light of
relationships with strategically significant the lifetime value of the customer to the or-
customers”( Buttle, 2000). Under certain cir- ganization, taking account the income and
cumstances it may result in the termination expenses associated with each customer
of relationships( Du Plessis and Strydom, and their respective transactions over time
2001). It can also be noted that the relation- (Gordon, 1998). In attempting to understand
ship is developed with strategically signifi- the implementation of CRM programmes ,it
cant customers, and hence it is necessary for must be borne in mind that economies differ
the organization to determine the nature of in terms of their level of development. Two
the significance. Traditionally this would be economic criteria can be used in this econom-
done by determining the value of the cus- ic analysis; population size and per capita
tomer to the organization, but other criteria income have been incorporated into the cal-
that can be used include whether a customer culation of per capita GNP and per capita
serves as a benchmark for other customers or GDP(Hough, Neuland and Bothma, 2003).
whether the customer inspires change in the This analysis makes it possible to catego-
supplier ( Buttle, 20002). rize economies as being developed, develop-
The implementation of CRM is regarded ing and less developed (Hough et al, 2003).
as desirable by organizations due to the ben- Developing economies ( such as USA and
efits that accrue from these strategies among Japan) are characterized by political stability,
their customers, such as greater loyalty and highly- educated and literate populations,
resulting profits. The focus of a CRM strat- high levels of innovation and entrepreneur-
egy is the acquisition, retention and overall ship as well as high levels of both industrial
customer profitability of the specific group of and information technology. Less- developed
customers. Acquisition of customers: this re- economies ( such as Bulgaria, Bangladesh
fers to the need of organization to find new and Ethiopia ) have political instability (
customers for their products. This means they sometimes political anarchy), government
are required to developed strategies to attract inefficiency, low standards of living and low
potential customers to purchase the product. levels of economic wealth. An emerging mar-
The cost of attracting a new customer is esti- ket ( or developing economy ) is defined as
mated to be five times the cost of keeping a markets that are in the process of evolving to
current customer happy ( Kotler, 1997). becoming developed ( i.e higher income ) (
Retention of customers : organizations Hough et al, 2003). It is into this category that
also need to focus on existing customers in South Africa can be placed.
order to ensure that profitability by between Developing economies have the follow-
20% and 125% if they boost their customer ing characteristics :

No. 17 ~ 2013
 Change and Leadership
48
- Improving educational standards, lit- Organizations that can implement CRM
eracy, and work skills levels successfully are those that have a great deal
- Relatively efficient technology of information concerning the customer and
systems where there are differentiated needs among
- Relative political stability and a the customers (Kotler, 2002). Financial ser-
movement towards market based economies vices meet the criteria for the implementa-
- Rapidly expanding financial servic- tion of CRM as indicated by Kotler. Financial
es( Hough et al, 2003). institutions have a great deal of information
The characteristics of developing econ- concerning their customers and their needs
omies as listed above form part of the imper- differ. This means that banks offer differ-
atives for the implementation of CRM. CRM ent products to different customers. Some
includes the use of technology in the building customers require a mortgage bond in addi-
of databases and the use thereof to develop tion to their current account and credit card,
and improve the relationship with the vari- while for other customers, vehicle financing
ous markets ,including the final consumer. In is more important. The financial circum-
order to exploit this technology, skills among stances of customers differ, resulting in dif-
staff are required . Organizations within de- ferent packages being offered to customers.
veloping markets have customer informa- It is also possible for financial institutions to
tion in databases, though many do not have tailor their packages thereby making them
the advanced technology or skills to exploit customer specific.
the information that is stored ( Brunjec and
Roderick, 2002). This indicates that CRM can implementing a CrM strategy
be used within developing markets, though
organizations will still be required to manage The success of any strategy is deter-
its implementation with care. mined by the success with which it is imple-
The answer to this question has to be mented. This is also true in the case of CRM
no. The reason for this is that not all orga- strategies. Implementing CRM require that
nizations have customer information, which the organization and the associated busi-
makes the implementation of CRM impossi- ness processes be in place in order to facili-
ble. Examples of these products include mass tate its success ( Brunjec and Roderick, 2002).
product (Gordon, 1998). Further, businesses The risk in implementing any CRM strategy
where their is a high customer churn( where is that the organization is not ready to do so
customers remove their patronage) or where and relying on technology to implement the
there is a low customer life time value(CLV) strategy ( Brunjec and Roderick, 2002).
which impacts on the profitability of the or-
ganization are not suitable to the implemen- the Role of Customer service in
tation of CRM ( Kotler, 2003). These are true, CrM strategy
irrespective of the nature of the economic de-
In order to implement CRM strategy,
velopment within markets. It can thus be said
a key dimension is the question of customer
that CRM is appropriate for certain organiza-
service and the way in which it is perceived
tions in emerging markets .
by the recipient of the service. Customer
No. 17 ~ 2013
 Change and Leadership
49
service can be defined as a task, other than require the development of a database or
pro-active selling, that involves interactions the continued maintenance of a database in
with the customers in person, by telecommu- order to ensure that the data stays as recent
nication, or by mail. It is designed, performed as possible. Having this information enables
and communicated with two goals in mind : the organization to determine those custom-
operational efficiency and customer satisfac- ers that have been with the organization for
tion (Loverlock,1991 ). The quality of custom- along period and those that have recently
er service is determined and evaluated by the started using the products and services of the
customer, and this affects the desirability of a organization.
relationship with the organization. Customer The hypothesis regarding this aspect is
service creates the moments of truth with the formulated as follows :
customer, and these service encounters need H1: Identifying new and existing cli-
to be managed by the organization (Payne, ents increases the level of customer service.
Christopher, Clark and Peck, 2001 ). Service Step 2: The differentiation of service
encounters and CRM are thus associated. The differentiation of service implies
that different customers receive a different
the steps in the implementation of level of service and a different product from
CrM strategy the organization, depending on the value
to the organization and their specific needs.
Successful implementation requires This requires the organization to identify
specific actions on the part of the organiza- the top ( or most significant) customers and
tion. The implementation of a CRM strategy adapt service accordingly. Identification of
as proposed by Peppers, Rogers and Dorf these top customers takes place using sales
(1999) comprises four steps, namely the iden- figures or by calculating the CLV associated
tification of customers, the differentiation of with each customer. As the organization is
service, interaction with customers and the aware of the value of their customers, service
differentiation among customers. levels can be adjusted accordingly.
Step 1 : The identification of customers The hypothesis regarding this aspect is
The identification of customers enables formulated as follows :
the organizations to select those customers H2: Differentiation between the services
that they regard as being strategically signifi- offered to new and existing clients increases
cant and who they believe can contribute to the level of customer service.
the success of the organization. These cus- Step 3: Interaction with customers
tomers have unique needs and due to their This step refers to the importance of in-
value to the organization, will have prod- teracting with the customer in relationship
ucts developed to meet these needs. It must building efforts through a variety of commu-
be possible to identify these customers and nication tools and technologies. This is neces-
so obtain as much detail as possible. This in- sary as the relationship can only develop and
volves collecting as much data as possible in be sustained if there is communication with
order to obtain as clear a picture as possible the customers regarding their needs, percep-
of the customer and their profile. This may tions and desires. This involves developing

No. 17 ~ 2013
 Change and Leadership
50
methods of communication proactively Methodology
with customers regarding the organization’s
The survey was conducted among cli-
products and attempting to initiate dialogue
ents in a leading commercial bank in Nigeria.
with customers. Use can be made of technol-
The primary research objective was to de-
ogy, but this is not essential (Brunjec and
termine how the implementing of a CRM
Roderick, 2002).The customers with whom
programme could optimize the relationship
communication takes place are not necessar-
between a leading bank and its clients, and
ily all the customers, but only those that the
thereby to gain competitive advantage in the
organization regards as being strategically
market place. Hypotheses linked to each step
significant. This interaction with the organi-
were formulated. The research instrument
zation increases the expectations of the cus-
used was developed by the researchers and
tomers regarding the service received as well
measured both the expectations and per-
as the quality of the relationship.
The hypothesis regarding this aspect is ceptions of the customers of the bank’s ac-
formulated as follows : tions. Statements were developed to reflect
H3: The level of customer service is in- the steps in the CRM model, and hypotheses
creased if there is an active interaction with were formulated to reflect the associations
potential and existing clients. between these steps and the customer service
Step 4: Customization of products, ser- offered by the institution.
vices and communication The instrument was pre-tested where
Customization is carried out by the or- after a number of changes were made to the
ganization in order to ensure that customer original questionnaire. The main body of the
needs are met. It requires that the organiza- questionnaire included 35 positive individ-
tion adapts its product, service or communi- ual statements reflecting customer service,
cation in such as way have something unique identification, differentiation, interaction
for each customer. Communication can be and customization. Use was made of a five-
customized to address the specific needs point Likert scale. Structured questionnaires,
and profile the customer, and organization with 35 statements to measure the respon-
also makes use of personalization as part of dent’s perceptions and expectations, were
this process. Products can be customized as sent out of 52 branches and to the call centre.
to the specific desires that the customer has A total of 950 questionnaires were distrib-
of the organization. In the case of the finan- uted among the branches, and 50 question-
cial services, it refers to the product package naires were distributed to the call centre.
that is offered to the customer. The purpose The respondents were selected randomly
of customization is to increase customer sat- and personal face- to – face interviews were
isfaction, and the loyalty that is exhibited by conducted.
customers. The statistical treatment of the study in-
The hypothesis regarding this aspect is cluded the determination of the association
formulated as follows : between the steps in the CRM model and the
H4: The level of customer service is in- customer service offered by the organization.
creased if customized service is offered ac- Use was made of Pearson’s Coefficient to de-
cording to each individual client’s needs. termine the level of association between the
No. 17 ~ 2013
 Change and Leadership
51
steps in the implementation process as dis- level. The lower the P-value, the stronger the
cussed earlier (Peppers, Rogers and Dorf, evidence against the null hypothesis, hence
1999) and customer service. The level of asso- the acceptance of the alternative hypothesis
ciation as measured by Pearson’s Coefficient (Diamantopoulos and Schlegelmilch, 1997 ).
falls between – 1.0 and + 1.0, which indi- results and Discussion
cates the strength and direction of associa-
tion between the two variables. The Rules of H1: Identifying new and existing clients
Thumb proposed by Burns and Bush ( in Van increases the level of customer service
Heerden,2001) suggests that “ moderate” Statistical null hypothesis :
ends at ±0.60, and “ strong “ starts at ± 0.61. H0: r=0
It is also necessary to determine a score ( P- Statistical alternative hypothesis :
value) to evaluate the probability that the cor- Ha: r≠ 0
relation (r) falls within a desired significance

Variable one (independent

Variable two( dependent variable ) Pearson value( r ) P - value
variable)
Identification Customer service 0.5792 0.00

With a Pearson value ( r) of 0.5792 , the association is seen in the p- value of 0.00 ob-
correlation is moderately positive at the r tained and depicted above.
value of 0.5792 is less than 0.6. The associa- H2: Differentiating between the services
tion between the identification of new and offered to new and existing clients increases
existing clients and customer service is sta- the level of customer service
tistically significant because of the p- value Statistical null hypothesis : H0 : r = 0
of 0.00, indicating the acceptance of the al- Statistical alternative hypothesis :
ternative hypothesis. The strength of this H0 : r ≠ 0

Variable one (independent

Variable two( dependent variable ) Pearson value( r) P - value
variable)
Differentiation Customer service 0.5952 0.00

With a Pearson value ( r) of 0.5952, p- value of 0.00 obtained and depicted above.
the correlation is moderately positive as the H3 : The level of customer service is in-
r value of 0.5952 is less than 0.6 . The asso- creasing if there is an active interaction with
ciation between differentiation and custom- potential and existing clients.
er service is statistically significant because Statistical null hypothesis : H0: r= 0
of the p- value of 0.00, resulting in the ac- Statistical alternative hypothesis :
ceptance of the alternative hypothesis. The H0 : r ≠ 0
strength of this association is seen in the
No. 17 ~ 2013
 Change and Leadership
52

Variable one (independent

Variable two( dependent variable ) Pearson value( r) P - value
variable)
Interaction Customer service 0.598 0.00

With a Pearson value ( r) of 0.598 , the obtained and depicted above.

correlation is moderately positive as the r H4: The level of customer service is in-
value of 0.598 is less than 0.6. The association creased if customized service is offered ac-
between interaction and customer service cording to each individual client’s needs
is statistically significant because of the p – Statistical null hypothesis: Ho : r = 0
value of 0.00, resulting in the acceptance of Statistical alternative hypothesis :
the alternative hypothesis. This association is Ho: ≠ 0
also a strong one due to the p- value of 0.00

Variable one (independent

Variable two( dependent variable ) Pearson value( r) P - value
variable)
Customized service Customer service 0.5912 0.00

With a Pearson value (r) of 0.5912, the do not differ from the way in which it would
correlation is moderately positive as the r be implemented among customers in other
value of 0.9512 is less than 0.6. The associa- economies. This requires organization in de-
tion between customized service and custom- veloping environments to pay attention to
er service is statistically significant because of the issues of customer needs and differentia-
the p- value of 0.00, resulting in the accep- tion in order to building long term customer
tance of the alternative hypothesis. This also relationships.
shows a positive relationship between these Limitations of the study include the fact
two factors, and the strength of the relation- that this was an exploratory study that has
ship is seen in the p- value obtained. been conducted within the Nigerian context,
and specifically the financial service sector.
Conclusion and Managerial The degree to which the finding can be gen-
implications eralized is also limited to scope . Further, the
question of the existence of the halo effect in
The issue of CRM and customer ser- the findings can be raised. The halo effect re-
vice is vital in the developing environment fers to the bias that is introduced by carry-
as customer expectations increase. This is ing over a general impression from one area
especially the case in developing countries to another ( Cooper and Emory, 1995). This
where changes in customer expectations are means that the responses received in one area
linked to increasing educational standards relating to customer service are carried over
and literacy. This study has indicated that into other areas in investigation. It is how-
the implementation of a one to one market- ever proposed that future research could
ing of financial services in emerging markets be conducted to determine whether these

No. 17 ~ 2013
 Change and Leadership
53
findings are consistent with other financial which can improve the service for customers.
institutions in Nigeria and whether similar - Training with respect to customer
findings would be obtained, in another in- service and improvement in the service levels
dustry, such as the insurance industry. offered by staff. This is a key area in the devel-
The managerial implications of these opment of long term customer relationships.
findings include a commitment to the imple- - In any implementation, it is necessary
mentation of CRM within the organization to identify, differentiate and then interact
as well as a commitment to the provision of with customers in order to provide custom-
excellent customer service in order to affect ized service. This requires that management
the relationship building and the implemen- have the ability to identify customers who
tation of CRM. This places great emphasis on are important to the organization and then be
improving the customer service of personnel able to ensure that their needs are different.
in order to ensure that the objectives of the Thus will enable them to communicate more
CRM strategy are attained. Specific actions appropriately with the customer.
that can be considered by management in- - Continuous interaction with the cus-
clude : tomers are necessary in order continue with
- Customer service levels are critical relationship building activities over the long
in establishing and developing relationships. term. This may require new methods and
Management need to examine existing pro- techniques in communication such as the use
cesses and methods in which service is of- of emails, short message service (SMS) and
fered, and where necessary make changes other technical communication devices.

reFereNCes:
1. Brunjec, B. and Roderick, R. ( 2002). Customer relationship management : Why it does and does not work in
South Africa. Paper presented at the 2002 IMM Marketing Educators’ Conference,South Africa, Septem-
ber 2002
2. Buttle, F.(2002). The scope of customer relationship management. Available from : http://www.crm-forum.
com(assessed 29 July, 2002).
3. Diamantopoulos, A. and schlegelmilch, B.(1997). Taking the fear out of data analysis: A step- by- step ap-
proach. London: The Dryden Press.
4. Cooper, D.R. and Emory, C.w. (1995).Business Research Methods. 5th edition. Chicago: Irwin.
5. Du Plessis, P.j. , jooste,C.j. and strydom, j.w.(2001). Applied strategic marketing. Sandown: Heinemann.
6. Gordon, i.(1998). Relationship marketing: New strategies, techniques and techniologies to win customers you
want and keep them forever. John Wiley and Sons: Cabada.
7. hough, j., neuland, E.w. and Bothma, n.(2003). Global business environments and strategies, 2nd edition.
Oxford: Oxford University Press.
8. kotler, P.,(1997). Marketing management: Analysis, planning, implementation, and control. New Jersey: Pren-
tice Hall International.

No. 17 ~ 2013
 Change and Leadership
54
9. lovelock, C.(1991). Services marketing. New York: Prentice Hall International Editions.
10. Payne, a., Christopher,m., Clark, m. and Peck, h.(2001). Relationship marketing for competitive advantage.
Oxford: Butterworth-Heinemann.
11. Peppers, D., rogers, M. and Dorf, B.(1999b). Is your company ready for one- to-one marketing ? Harvard
Business Review, Jan- Feb.
12. Peck, h., Payne, a. , Christopher, m. and Clark, m. (2004). Relationship marketing- strategy and implemen-
tation. Burlington: Butterworth Heinemann.
13. Van heerden, C.h.(20010) Factors affecting decision making in South Africa Sport Sponsorships. Unpub-
lished D com thesis. University of Pretoria, South Africa

No. 17 ~ 2013
 Change and Leadership
55

leadership and innovation – the Catalyst of

it&C industry. a Case study of BlackBerry
Company

~ Ph.D. Camelia Cojocaru (Faculty of Business and Administration, University of

Bucharest, Romania)
E-mail: [email protected]
~ Ph.D. silviu Cojocaru (Faculty of Business and Administration, University of
Bucharest, Romania)
E-mail: [email protected]

Abstract: IT&C companies need to adapt themselves to an environment featuring a high level of
competition. Innovation stays as the main vector of the domain, while the renewal rate of new technologies
grows in speed (there are cases where new technologies emerge and replace the older ones in months). With
this series of research we aim to analyse several local or global companies within the IT&C field, as well as
the importance of leadership for their development. This first article will focus on leadership within a com-
pany called Research In Motion – RIM (currently named BlackBerry) and on the main problems that have
arisen within the company after the organisation was left without support from the leaders that created its
worldwide brand.
Key words: information technology, productivity, leadership, management, operational im-
provements
Jel Classification: J24 - Human Capital; Skills; Occupational Choice

1. introduction no organization involved in innovation

may exist without leadership. The correla-
IT&C is a very dynamic domain, where
tion between management and leadership
innovation processes play an extremely im-
is vital for organizations. As the main func-
portant role. Seen as the Father of Leadership,
tion of the management is to organize and
John Kotter (Kotter, 2009) stipulates that

No. 17 ~ 2013
 Change and Leadership
56
plan operational processes within organiza- While not intending to further mud-
tions, for certain categories of companies the dy the waters, I have provided a sampling
management process is enough for achiev- of leadership definitions collected over the
ing planned results. For example, should years to provide the interested observer a
we choose to pick a vertical line of activi- brief glimpse at the variety. They include:
ties within FMCG (Fast Moving Consumer “Leadership is a function of knowing
Goods) – e.g. meat processing – we could see yourself, having a vision that is well com-
that things stayed unchanged there since the municated, building trust among colleagues,
introduction of freeze generating technology. and taking effective action to realize your
The management plays an overwhelming own leadership potential.” Warren Bennis
role inside such a range of domains, while the “…leadership is a complex phenom-
leadership stays as a less important feature. enon that touches on many other important
Generally speaking, IT&C is completely organizational, social and personal processes.
different, as new technologies emerge with a It depends on a process of influence, whereby
speed that in best situations is measured by people are inspired to work towards group
years and in worst by months. Under such goals, not through coercion, but through per-
sonal motivation.” (Bolden, 2004, p. 5)
circumstances, the innovation capability be-
“Leadership over human beings is exer-
comes of high value for IT&C organizations.
cised when persons with certain motives and
One may see the management role as homeo-
purposes mobilize, in competition or conflict
static (Kotter, 2009 – page 94), being mainly
with others, institutional, political, psycho-
involved with keeping an organization with- logical, and other resources so as to arouse,
in reasonable limits. When we talk of change engage, and satisfy the motives of followers.”
and launching new technologies and prod- (Burns, 1978, p. 18)
ucts at high pace, leadership becomes the or- “Leadership is the lifting of a man’s vi-
ganizational development engine. sion to higher sights, the raising of a man’s
performance to a higher standard, the build-
2. literature review ing of a man’s personality beyond its normal
limitations.” Peter Drucker
Nearly 40 years ago, Stogdill (1974) “The process of influencing people by
noted “there are almost as many different providing purpose, direction, and motiva-
definitions of leadership as there are persons tion, while operating to accomplish the mis-
who have attempted to define the concept” sion and improve the organization.” (FM
(p. 7). This should probably be expected of a 6-22, 2006, p. Glossary-3)
popular topic with a long history of interest. “Leadership should be defined in terms
Much of the diversity is driven by the theo- of the ability to build and maintain a group
retical underpinning / approach / lens the that performs well relative to its competi-
tion.” (Hogan & Kaiser, 2005, p. 172)
definer uses when crafting a new definition.
“Leadership is the art of mobilizing
Unfortunately, at times, this lack of defini-
others to want to struggle for shared aspira-
tional clarity has led to significant confusion
tions.” (Kouzes & Posner, 1995, p. 30).
by those interested in the topic.
No. 17 ~ 2013
 Change and Leadership
57
“Leadership is a process whereby an in- 3. leadership in it&C industry
dividual influences a group of individuals to
Considering how “young” IT&C in-
achieve a common goal.” (Northouse, 2010,
dustry is, most companies had leadership
p. 3)
and vision as their core assets. Microsoft has
“Leadership is an influence relationship
been built around the “a computer for every-
among leaders and collaborators who intend
one” key concept, with Bill Gates as the un-
real changes that reflect their mutual purpos-
challenged leader for almost three decades.
es.” (Rost, 1997, p. 11)
Steve Jobs has been the development engine
“Leadership is defined as the initiation
of Apple, both at the time of the company’s
and maintenance of structure in expectation
foundation laying and after 1996, following
and interaction.” (Stogdill, 1974, p.411).
the acquisition of NeXT Company and the
“Leadership is a process of interaction
reinstatement of Steve Jobs as Apple’s CEO.
between persons who are participating in
IBM is another example of a company where
goal oriented group activities.” (Stodill &
several leaders and visionaries contributed
Shartle, 1948, p. 287)
to the constant development of the company
“…(a) influencing individuals to con-
and to radical shifts in strategy (e.g. when
tribute to group goals and (b) coordinat-
IBM decided to give up manufacturing per-
ing the pursuit of those goals.” (Van Vugt,
sonal computers and sold that division to
Hogan, & Kaiser, 2008, pp. 182-183)
Lenovo, a Chinese company). Google and
“…a process of motivating people to
Facebook are yet other examples where lead-
work together collaboratively to accomplish
ership and vision of their founders play a de-
great things.” (Vroom & Jago, 2007, p. 18)
cisive role for the company’s development
“Leadership is the process of influenc-
with time.
ing others to understand and agree about
Leaders and their capability of main-
what needs to be done and how to do it, and
taining a high rate of innovation and de-
the process of facilitating individual and col-
velopment within their companies are
lective efforts to accomplish shared objec-
extremely important. Within the information
tives.” (Yukl, 2010, p. 8)
technology field, the technologic framework
“Leadership is viewed as a process
is dominated by change. The Internet com-
that includes influencing the task objectives
pletely changed the way all economic and
and strategies of a group or organization,
social processes are performed, while social
influencing people in the organization to
networks today change the Internet. A few
implement the strategies and achieve the ob-
years ago we could speak of unprecedented
jectives, influencing group maintenance and
rates of growth for the PCs and laptops mar-
identification, and influencing the culture of
ket, while today, with the global expansion of
the organization.” (Yukl & Van Fleet, 1990, p.
tablets and smartphones, that market with-
149)
stands a steep decline.
“Leadership inevitably requires using
As such, leadership plays a crucial role
power to influence the thoughts and actions
for organizational development. The key for
of other people.” (Zaleznik, 1977, p. 67)
success rests with the continuous emergence
of new leaders that are able to take over the
No. 17 ~ 2013
 Change and Leadership
58
vision related to the development of the Microsoft CEO, after taking over from Bill
company. Gates).

4. the importance of communication 5. Research in motion (Rim) – history

and alignment of a leadership failure?

Communicating the message and align- Although the IT history is rich in lead-
ing people behind it are highly valuable for ers (dubbed as founders) that fuelled com-
leadership processes performed within any panies since their beginnings, there are
company (Kotter, 2009). No leadership pro- exceptions. With the IT, involvement of the
cess may be performed without employ- leaders needs to be continuous, no matter
ees understanding the need for change and they are the founders or leaders taking over
the need for new products or services. Even from founders).
more, employees have to align themselves Research in Motion, or RIM, is well
to a leader’s vision by their own free will. known by means of its BlackBerry range of
Things are completely different with the smartphones. The company was founded
management process, as managers go for bo- in 1984, in Canada. The awareness of the
nuses or penalties for employees achieving BlackBerry brand led to the company chang-
certain tasks or not. Leaders don’t use such ing its name, beginning January 30th 2013,
means, as they have the ability to convince from RIM to BlackBerry.
employees for transforming a certain vision RIM founders were Mike Lazaradis and
into reality. Jim Balsillie. They both took joint CEO posi-
Under such circumstances, the message tions within the company until January 22,
sent by the leader and the communication 2012. BlackBerry was an innovative company
process with the members of the organiza- that understood before other market players
tion become key factors. As an example, ev- the smartphone concept and its importance
ery year, by the beginning of July, when a for the future development of the telecom
new fiscal year begins for the company (a fis- market. During 1995, RIM attracted supple-
cal year may be different from a normal year mentary financial resources from an invest-
for American companies), Microsoft orga- ment fund - Working Ventures Canadian
nizes a global meeting with top and middle Fund Inc. It used the USD five million to de-
management executives from all the compa- velop its first smart products.
ny’s branches. The meeting takes place on an Four years later, RIM launched the
American stadium and gathers an audience BlackBerry 850, a product that was not a
of more than 40,000 Microsoft employees. phone, but a beeper. However, the product
The aim of the meeting is sending out the was innovative, as it allowed both receiving
vision for the development of the company and sending messages. At the same time, the
and the leadership messages. The main ele- device had a QWERTY keyboard (and the
ment of the conference rests with the opening way keys were situated led to the “baptising”
session, when a message is sent by a keynote process of the company – see figure 1).
speaker, usually Steve Ballmer (currently the

No. 17 ~ 2013
 Change and Leadership
59
an urgent answer reached the mobile phone
inbox. Last, but not least, the phone had a
very advanced operating system – BlackBerry
OS – for those times.
Mike Lazaridis și Jim Balsillie were the
two leaders with a definitive role in putting
the development vision regarding the com-
pany into reality. Results came not too long
after that, with the company registering 226
per cent increase in revenues by the end of
2005 compared to 2004. (The company’s turn-
over for 2004 was USD 595 million, while the
Figure 1 – BlackBerry 850 – the first product of the
turnover for 2005 reached USD 1.35 billion)
company. Laying keys under the shape of a berry led to
– see Table 1.
the new name of the company.

5.1. innovation and leadership 5.2. lack of leadership and decline

Operating within the area of mobility, BlackBerry failed to support continu-

where technologies change fast, BlackBerry ous leadership efforts when new competi-
succeeded in launching an innovative solu- tors emerged on the smart phones market.
tion. By 2000, BlackBerry launched the first By 2007, Apple launched its first iPhone, a
smart mobile phone – BlackBerry 957 – with device
Push email facility and integration functions Nicknamed as “the BlackBerry killer”
with an enterprise e-mail solution (Microsoft by the media. Google came next with its
Exchange Server). Android operating system, thus allowing
Such an innovation was related not only other manufacturers of devices like HTC, LG
to the phone itself, but mainly to an end-to- or Samsung to very aggressively emerge on
end software solution that allowed e-mail the smartphone market, although they lacked
management. BlackBerry Enterprise Server R&D within their software departments.
allowed messages received in the e-mail How did BlackBerry leaders respond
server to be managed and filtered. Phone us- to all these? They failed to find a balance be-
ers were not receiving all their messages on tween their personal and the company inter-
their devices, but only messages they con- ests (Forbes, 2012). Jim Balsillie wanted to
sidered to be important. By the year 2000 keep alive a NHL (National Hockey League)
nobody was talking of 3G or other advanced hockey team. During 2007 and 2009, he made
data connections, and receiving daily hun- several attempts to buy First League teams in
dreds of messages into the Inbox and repli- US, but all his attempts finally failed.
cating these on the mobile phone represented Mike Lazaridis got involved in build-
a technological impossibility of the time (con- ing a “monumental” mansion for himself
sidering the speed of the mobile connections (Forbes, 2012), with the building process tak-
to the Internet). BlackBerry Enterprise Server ing more than six years.
set complex rules for filtering messages. Lacking leadership and vision, the com-
According to those rules, only most relevant pany went into decline on a smartphone mar-
messages for the client or those demanding ket that was registering significant rates of
growth.
No. 17 ~ 2013
 Change and Leadership
60

Operating Active
Net Income ($
Fiscal Year Sales ($ millions) Income ($ BlackBerry
millions)
millions) Subscribers
2002 294 (58) (28)
2003 307 -64 -149 534,000
2004 595 78 52 1,069,000
2005 1,350 386 206 2,510,000
2006 2,066 617 375 4,900,000
2007 3,037 807 632 8,000,000
2008 6,009 1,731 1,294 14,000,000
2009 11,065 2,722 1,893 25,000,000
2010 14,953 3,507 2,457 41,000,000
2011 19,907 4,739 3,444 70,000,000
2012 18,508 1,164 2,199 77,000,000
2013 11,073 -628 -317 76,000,000

Table 1 – Financial Results BlackBerry 2002 -2013 (Wikipedia and BlackBerry company website)

Conclusions generation of smartphones due to the lack of

involvement from founding leaders into the
For IT&C companies, the leadership development processes of the company.
process has to be continuous. The vision and Within the IT&C world, leadership
communicating vision to employees, the im- is more difficult than in other areas, as it is
plementation process of new technologies mainly achieved through the founders of the
and adapting the organization to it – these company. Coupled with the failure of pass-
are only few of the development demands ing over the key to younger generations of
for a company that operates within one of the leaders, the “founders grow older” process
most dynamic economic sectors. may lead to leadership severe failures, as was
An IT&C company without a leader re- the BlackBerry case.
sembles a ship without an operational rud-
der. BlackBerry missed the launch of the new

reFereNCes:
1. Bolden, r. (July, 2004). What is leadership? (Research Report 1). Exeter, United Kingdom: Leadership
South West.
2. Burns, J.M. (1978). Leadership. New York: Harper & Row.
3. FM 6-22 (2006, October). Army leadership: Competent, confident, and agile. Washington, DC: Department of
the Army.
4. hogan, R., & Kaiser, R.B. (2005). What we know about leadership. Review of General Psychology, 9, 169-
180.

No. 17 ~ 2013
 Change and Leadership
61
5. jackson Eric, The Seven Habits of Spectacularly Unsuccessful CEOs Hall of Shame, Forbes (2012).
6. kotter, John (2009) Forța Schimbării, Editura Publica
7. Kouzes, j.m. & Posner, B.z. (1995). The Leadership Challenge. San Francisco: Jossey-Bass.
8. Northouse, P.G. (2010). Leadership: Theory and practice (5th ed). Thousand Oaks, CA: SAGE Publications.
9. rost, J.C. (1997). Moving from individual to relationship: A postindustrial paradigm of leadership. Journal of
Leadership & Organizational Studies, 4,3-16.
10. stogdill, r.M. (1974). Handbook of leadership: A survey of theory and research. New York: The Free Press.
11. stogdill, R.m., & shartle, C.l. (1948). Methods for determining patterns of leadership behavior in relation to
organization structure and objectives.Journal of Applied Psychology, 32, 286-291.
12. van vugt, m., hogan, R., & Kaiser, R.B. (2008). Leadership, followership, and evolution: Some lessons from
the past. American Psychologist, 63,182-196.
13. vroom, v.h., & jago, a.g. (2007). The role of situation in leadership.American Psychologist, 62, 17-24.
14. yukl, g. (2010). Leadership in organizations (7th ed). Upper Saddle River, NJ: Prentice Hall.
15. yukl, g. & van fleet, D.D. (1990). Theory and research on leadership in organizations. In M.D. Dunnette
& L.M. Hough (Eds.), Handbook of industrial & organizational psychology, Second Edition, Volume 3, Palo
Alto, CA: Consulting Psychologists Press.
16. zaleznik, a. (1977, May-June). Managers and leaders: Are they different?Harvard Business Review, 55(3),
67-78.

No. 17 ~ 2013
 Change and Leadership
62

Analysis of leadership
at the national Bank of Romania

~Ph.D. Valentin Mihai leoveanu (University of Bucharest, Faculty of Administra-

tion and Business)
E:mail: [email protected]

Abstract: Leadership could be seen as a process to achieve company’s goals through company’s peo-
ple. In any company and also in banks and central banks, leadership could register notable performance as a
result of harmonization between formal and informal organization of the company. Maintaining a dynamic
and optimal balance for ensuring the simultaneous attainment of individual aspirations of employees and
company objectives should be a goal and a permanent preoccupation of the management team. Nowadays,
leadership of the central banks have to face a multitude of issues that concern accountability and credibil-
ity of monetary authorities. In this regard, one of the essential characteristics that determine and influence
leadership of a central bank was to ensure that the degree of central bank independence from the political
authorities of the country concerned. Before and during the international financial crisis, NBR has faced
some important and difficult periods, watershed might say, in terms of the proper functioning of his leader-
ship. These include: adopting the strategy of monetary policy based on inflation targeting, the speculative
attack on the currency in the period 17 October to 5 November 2008 and the liquidity crisis of Romanian
banks with foreign capital.
Key words: central bank functions, formal and informal organization, decision taking, infla-
tion targeting strategy, speculative attack on currency
Jel classification: E52, E58, G20, M10, N20, O20

No. 17 ~ 2013
 Change and Leadership
63
1. introduction an organization” and “process of social influ-
ence in which one person can enlist the aid
This article aims to highlight the im-
and support of others in the accomplishment
portance of leadership at the level of cen-
of a common task” (Hill; 2013).
tral banks, the impact it has style and how
In any company and also in banks, lead-
to involve people in the process of ensur-
ership could register notable performance
ing the functionality of the central bank.
as a result of harmonization between formal
Understanding correlations and influences
and informal organization of the company.
that the central bank has in the entire bank-
Maintaining a dynamic and optimal balance
ing system and the national economy is the
for ensuring the simultaneous attainment
starting point in analyzing how the type of
of individual aspirations of employees and
leadership adopted and applied at the level
company objectives should be a goal and a
of national monetary authorities influence
permanent preoccupation of the manage-
the thinking and action.
ment team. It can be said, in this context, the
Regulation of NBR was in the period
informal structure must be strong enough to
1991-1998 the Law no.34/1991, beginning to
support formal organization but at the same
1998, the Law no. 101/1998 and finally starting
time, must also be flexible enough not to
with 2004 the Law No.312 of 28 June which
dominate or disrupt the normal functioning
fulfills the Statute of the NBR. Consistent
of the system.
with the Statute, the central bank has in a le-
By informal organization one can un-
gal plan greater independence, both in the
derstand all groups and spontaneous human
context of the new Conditions; Romanian
relations established between employees of
banking system and the theoretical approach
the same institution, aiming to satisfy their
of the role of the monetary authority, which
personal interests, while formal organization
currently exist in the world.
can be defined as the design / development
The importance of this study is reflected
/ updating of the organizational structure of
by approaching and discussing some impor-
the company, which is represented through
tant problems, arose after the financial crisis,
all positions and departments, how they are
in terms of the proper functioning of the cen-
formed and grouped, and the links that are
tral bank leadership. These include: adopt-
established between them in order to achieve
ing the strategy of monetary policy based
objectives.
on inflation targeting, the speculative attack
In pursuing the objective of harmoniz-
on the currency in the period 17 October to
ing the formal and informal organization of
5 November 2008 and the liquidity crisis of
a company, leadership will need to focus on
Romanian banks with foreign capital.
the following aspects:
a) find malfunctions such as: failure in
2. leadership in Central Banks fulfillment of duties, lack of interest, wast-
ing time, low accountability against the tasks
Leadership could be seen as a process to
received, resistance to change, interpersonal
achieve company’s goals through company’s
or group conflicts. All these are likely to im-
people. The literature defines leadership as
pede the normal functioning of the internal
“The action of leading a group of people or

No. 17 ~ 2013
 Change and Leadership
64
mechanisms and the causes derived exclu- The choice of a particular decision is in-
sively from informal organization of people fluenced by:
involved. - Conclusions drawn from detailed anal-
b) identify and analyze information ysis of the premises problem to be solved;
through: preliminary documentation to de- - The existence of alternative conditions
termine correct the problem, highlighting the very possibility of a decision;
significant symptoms, identify deficiencies - Evaluation of alternatives by criteria of
and their root-causes. efficiency;
c) set objectives and measures to influ- - The possibility of establishing the best
ence informal organization. Selecting the decision in a period required.
way to influence informal organization will Decision taking require from manag-
consider the focus on minimal resources to ers intelligence, knowledge and experience
achieve maximum results and comprise: ac- in the field, and that is showed in the qual-
ceptance and understanding informal struc- ity and efficiency of decision. Given that fact,
ture, the personal interests of the group, any the manager has a specific purpose in mind
informal structure adversity reactions to the when taking a decision and the effort is justi-
measures taken to influence, quick integra- fied only to the extent that decision ensures
tion of personal interests and the interests positive prospects for that purpose.
of the group, avoiding unnecessary threats In any company and especially in bank-
through formal organization. ing, decisions are made at all hierarchical
There is a strong correlation between levels. The importance of these decisions and
adjacent objectives and measures and, there- the degree of difficulty related to a particular
fore, it is necessary that both the require- decision option can be appreciated according
ments and the conditions specified consider a to following criteria:
consistent set of criteria that we always have - The period of time involved by the
in the manager carefully. decision;
Leadership is essentially based on deci- - Flexibility of actions which is devel-
sion taking. Taking decision materialize an oped based on the decision taken;
idea, intention or project in order to respond - Certainty of achieving goals;
to a specific problem and is a form of social - Human impact and quality of resourc-
validation of an action by putting in motion es in this area to execute the decision in opti-
the human, material and financial resources. mal conditions during the established period
Decisions implementing in practice is the of time.
most relevant qualifying criteria for the as- In the banking system, the central bank
sessment of leadership. has a major role. By the functions performed,
Efficiency in taking a decision is a by multilateral ties with other banks and,
choice between several different alternatives through them, with the economy, the central
(variants) followed by the action. The deci- bank is a hub of the banking system.
sion is related to the forecasting function of There could be accepted some impor-
the manager, although it is present in other tant functions (minimum functions) of a cen-
functions provided by members of the man- tral bank today that are categorized in five
agement team. areas (Collyns; 1983):
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65
a) currency issue and foreign exchange Nowadays, leadership of the cen-
reserve management; tral banks have to face the following issues
b) banker to the government; (Mendzela; 2003):
c) banker to commercial banks; • “organizational structures that do
d) regulation of the financial system; not support current functions well;
e) monetary and credit policy. • overload at the top through insuffi-
There are, no doubt, many more cient or ineffective delegation;
functions as it is showed by the Bank for • difficulty in attracting and retaining
International Settlement that has published a talented people;
complete list of approximately twenty sepa- • a struggle to get creative outputs
rate functions for a central bank. from policy functions;
Taken into consideration leadership • proliferating “internal support” de-
in central banks the words of an important partments with growing resource levels;
central banker could offer a genuine picture: • above-market remuneration paid to
“Central bankers are conservative people. long-serving staff of limited future value;
They take great care in implementing policy; • a lack of cost information and diffi-
they speak precisely; they explain changes culties in controlling costs.”
completely; and they study the environment After international financial crisis, trust
trying to pinpoint where the next disaster in central banks has declined and the reac-
looms. Good monetary policy is marked by tion of central banks to the crisis is generally
its predictability, but when the world chang- judged as unsatisfactory by the general pub-
es, policymakers change with it. If a crisis hits lic. The loss of credibility in central banks is
and the tools at hand are not up to the job, preponderantly striking in Europe (see Panel
then central bank officials can and will im- A and B in Table 1).
provise.” (Cecchetti; 2008).

Table 1.Replies to the question: “Do you feel the Central Bank has responded appropriately to the challenges of the
economic downturn?

UK (BoE) Euro area (ECB) US (Fed)

Yes 28 19 23
No 34 43 41
Not sure 38 38 36
Net Balance -6 -24 -18
Note: Euro area (ECB) population weighted based on data from panel B.
Panel B

UK (BoE) Euro area (ECB) US (Fed)

Yes 28 19 23
No 34 43 41
Not sure 38 38 36
Net Balance -6 -24 -18
Source: Harrisinteractive, 2008

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The loss of trust in central banks have Romanian Parliament for a period of 5 years.
wider implications on its independence that To ensure the effectiveness of decision-
had broad public support. In this respect, the making in the NBR are 4 operational struc-
loss of credibility in the policy conducted by tures responsible for exercising the main
the European Central Bank (ECB) could be a functions of a central bank:
cause of big concerns because “a monetary • Monetary Policy Committee
union whose central institution does not • Supervisory Committee
have the trust of its citizens is bound to run • Reserve Management Committee
into political problems sooner or later” (Gros, • Audit Committee.
Roth; 2009). Monetary Policy Committee established
as a permanent structure in an advisory and
3. national Bank of Romania and decision-making consists of nine members
leadership issues and is led by central bank governor. The
main tasks is to establish strategic coordinate
The National Bank of Romania is man- monetary policy operational framework of its
aged by a Board of Directors that is composed characteristics, objectives and guidelines on
of nine members appointed by Parliament different time horizons, and measures to im-
nominates the executive management for a prove and increase the effectiveness of mon-
period of 5 years, with possibility of renew- etary policy and its operational framework,
al. Board members can not be MPs and can including in terms of harmonization with the
not do, according to law, of justice or public requirements of the European Central Bank.
administration. Permanent executive struc- The Supervisory Committee is a per-
ture consists of the National Bank governor manent structure and decisional deliberative
and three deputy governors, one of whom nature. It is composed of 10 members and
is the first deputy governor. The other five is led by central bank governor. The duties
members are not employees of the Central and powers aimed at monitoring and evalu-
Bank. Chairman of the Board of Directors ation activities of the operation of credit in-
of National Bank of Romania is the NBR stitutions in terms of asset quality, financial
Governor Mugur Isărescu. NBR Governor is performance and their classification in the
accountable to Parliament for regulating the regulated prudential indicators, and ensur-
monetary policy and banking supervision ing regulatory base, according to specific
and monitoring. laws and international practices in the field.
The Board of Directors is the body with Reserve Management Committee is a
the right decision regarding monetary poli- permanent structure, composed of 11 mem-
cies and exchange rate, licensing, regulation bers and is led by central bank governor.
and prudential supervision of credit institu- Its main functions are to fulfill the strate-
tions, oversight of payment systems, the inter- gic guidelines adopted by the Board in the
nal organization of the bank. Board Decides management of international reserves. The
also that the attributions of executive struc- Committee shall establish a list of entities
tures and NBR staff. NBR Board of Directors with which business trading in the securi-
consists of nine members appointed by the ties of issuers for investment and the assets

No. 17 ~ 2013
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67
accepted for investment; make proposals on Banks expect from the National Bank a
the implementation and use of financial in- sound intervention on the money market in
struments (including derivatives); analyzes order to ensure liquidity and stability of the
the markets and proposing strategy for the banking system and also the implementation
future. of monetary policy that favors the develop-
The Audit Committee examines and ment of their activities and increases bank
proposes strategic directions and policy NBR profitability.
internal control, risk management, internal International organizations expect from
and external audit. It consists of 5 members the central bank to be a guarantor of the
of the Board of Directors who are not part of country’s financial and economic stability, a
the executive management of the bank. guarantee of fulfillment of payment obliga-
In his capacity as monetary authority tions of the Romanian state.
of Romania, National Bank is considering One of the essential characteristics that
conducting monetary policy, financial sta- determine and influence leadership of a cen-
bility, nationwide banking supervision and tral bank was to ensure that the degree of
ensuring the smooth operation of payment central bank independence from the political
systems. Following this task, there are many authorities of the country concerned.
different levels of expectations in the econo- The activity of central banks and the
my and society, namely population, compa- conduct of monetary policy is guided by
nies, banks, government and international certain department, whose constituents
organizations. are members appointed by various criteria.
The population expects the central bank Thus, depending on whether the election of
to guarantee deposits at banks in monetary the governor and board members depend on
values as large as a result of bank regula- the relationship between political power, one
tions that adopt to ensure the maintenance of can determine the degree of independence of
a general price level as low as possible and the central bank.
have easier access to loans from banks. As many models used to quantify the
The companies expect the central bank degree of independence of the Central Bank,
to facilitate quick access to bank lending on such a pattern is the one that developed le-
the basis of costs and bank charges as low gal evidence of the independence and it is
and diversification that banks can offer com- realized by Grili, Masciandaro and Tabellini,
panies especially in terms of financing the named GMT (in 1991), the authors making
activities, all based on measures monetary distinction between political and economic
policy and rules set. independence of the central bank.
The government expects a strong part- The GMT model is based on some po-
nership of the Central Bank regarding the litical independence criteria:
management of macroeconomic policies be- 1) The appointment of the governor by
cause monetary policy is the prerogative of the Government or Parliament;
the central monetary authority and facilitat- 2) The mandate of not less than 5 years;
ing the financing needs of the state money 3) The appointment of board members
through loans. by the Government or Parliament;

No. 17 ~ 2013
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68
4) Board members tenure is 5 years; (Mosoianu; 2012).
5) There is no government members in NBR has to audit the annual financial
BM; statements, like many companies, with the
6) Credit policy and foreign exchange is help of audit companies selected through
exclusively the authority of the Central Bank; auction and paid even by NBR. Usually, they
7) The Central Bank pursues price sta- are happy to find that these statements are
bility, which is an objective set out in the prepared “according to regulations”. And
statute; the Court of Auditors controls only commer-
8) Existence of legal provisions to sup- cial operations of the central bank or the pur-
port the bank’s position in the event of con- chases of goods and services. A number of the
flict with the government. world’s central banks publish their minutes
Concerning this particular point of of monetary policy meetings with a certain
view, worldwide, central banks raise their delay, ranging from several weeks to several
insubordination against politicians not to be months. The most notorious example of this
confronted with more demanding obliga- is the Fed, the Czech National Bank and also
tions of reporting and transparency to the the National Bank of England, Sweden and
public. National Bank of Romania do not Mexico.
published the minutes of its board meetings
and, consequently, the public knows nothing 4. Difficult times for leadership in
about the actual making monetary policy de- national Bank of Romania
cisions. The general public do not know what
is discussed at these meetings, what are the Before and during the international fi-
votes of each of the members the NBR Board nancial crisis, NBR has faced some important
and how they argue their vote, nor their and difficult problems, watershed might say,
views on how consistent are the decisions in terms of the proper functioning of its lead-
taken. NBR, like many other central banks ership. These include: adopting the strategy
maintain an opacity of decision-taking that of monetary policy based on inflation target-
is driven monetary policy as the most impor- ing, the speculative attack on the currency in
tant operations in which it is implemented, in the period 17 October to 5 November 2008
particular: how to establish key interest rate and the liquidity crisis of Romanian banks
and reserve binding (RMO), and the opera- with foreign capital.
tions of government securities. a) Setting inflation targeting strategy
In general, central bank officials justify Monetary policy strategy of National
their excessive secrecy in that transparency Bank of Romania is inflation targeting, a
would prevent, in some cases, the effective strategy adopted in August 2005, after a
transmission of monetary policy in the bank- training process, concerning a functional
ing system and financial markets, while in testing framework for economic analysis and
others (such as emergency loans to banks in decision specific for direct inflation target-
crisis liquidity) would be likely to cause bank ing. This type of monetary policy strategy
panics and retreats, massive deposits from imposes from the NBR leadership a comple-
credit institutions “disclosed” so vulnerable tion of other requirements and criteria that

No. 17 ~ 2013
 Change and Leadership
69
determines the effectiveness of this strategy: - Setting targets as mid-points with-
i. lowering the annual inflation rate be- in an interval of variation (+ / -1 percentage
low 10 percent; point) in order to anchor inflation expecta-
ii. gaining credibility for the central tions effectively;
bank decisions and actions; - Announcement of annual inflation
iii. strengthening the independence de targets for a longer time horizon (initially 2
jure (by entry into force on 30 July 2004 of the years), which emphasizes the necessary me-
new Statute of the NBR) and de facto; dium-term perspective of monetary policy;
iv. restriction of fiscal dominance, fiscal - Continue practicing a managed float
consolidation and improving coordination exchange rate;
between fiscal and monetary policy; - Ex ante definition of a narrow set
v. ensure flexible exchange rate and of circumstances (“exceptional circum-
reduce the vulnerability of the economy to stances”), independent of monetary policy,
changes in this variable; which makes the central bank responsible for
vi. recovery and strengthening the achieving the inflation target;
banking system and the relative growth of - Setting the inflation target by
bank intermediation; the central bank in consultation with the
vii. raising transparency and account- government.
ability of the central bank and the scope and Similar experience of other central
intensity of communication with the public banks in the region that implements mon-
and financial markets, including issues relat- etary policy in the context of inflation tar-
ed to the new monetary policy strategy and geting strategy, the evolution of nature and
the preparation of its adoption; values set by the central bank inflation tar-
viii. shaping clearer macroeconomic gets so far are characterized by two distinct
behaviors and mechanisms of the economy phases (NBR; 2012):
needed to identify and increase the effective- • step downward inflation targets set
ness of monetary transmission channels. on a time horizon of two years annual fig-
NBR leadership approaches for creat- ures for December (2005-2012), covering its
ing organizational and technical framework major argument with the need to strengthen
necessary for the implementation of the new the disinflation and achieving sustainable an-
monetary policy strategy lasted 16 months nual rate of inflation in the medium term;
and received technical assistance from the • Stage a flat multi-annual inflation tar-
International Monetary Fund and the Czech gets, consistent with the definition of price
National Bank (NBR; 2005). stability in the medium term in the Romanian
Inflation targeting strategy adopted by economy (from 2013) is an interim period de-
BNR is characterized by: signed to ensure the move to continue the in-
- Expressing the inflation target in flation target in the long run - consistent with
terms of headline inflation (consumer price the definition of price stability adopted by
index), given the public’s awareness and fa- the ECB.
miliarity of the need to ensure transparency b) Speculative attack on the national
and credibility of monetary policy decisions; currency Leu

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70
In the period October 17 to November by the so-called Bank Coordination Initiative
5, 2008 there was an increase of the average in Vienna on 31 March 2009, which IMF initi-
interest rate on the interbank money market, ated as a dialogue between the government
well above the monetary policy interest rate, and foreign banks operating in Romania,
which led analysts NBR to say that there was dialogue whose goal was to prevent closing
a speculative attack on Leu. This attack has refinancing credit lines from parent banks to
altered the flows of liquidity of commercial their Romanian branches (Leoveanu; 2013-1).
banks, thereby raising interest rates. This quick response of international authori-
According Adviser to the Governor ties (International Monetary Fund, World
of central bank monetary policy Lucian Bank and European Union through European
Croitoru (Croitoru; 2012), a speculative at- Central Bank) to help Romania was crucial
tack on the domestic currency can be defined in stopping the departure of foreign capital.
by a large subsequent increasing of three in- Banks had to intake during this period about
dicators - exchange rate, currency and net 1.5 billion euro to their equity to be able to
sales of foreign currency and interbank inter- meet the criteria of solvency and liquidity
est rate - recorded in a short period time. regulations imposed by the National Bank of
The literature recommends as response Romania and by international financial orga-
to the speculative attacks on national curren- nizations (Leoveanu; 2013-2).
cy the increase of the monetary policy inter-
est rate. In October 2008, the National Bank 5. Conclusions
of Romania has successfully countered the at-
tack on the national currency Leu, extracting Definitely involved with the monetary
liquidity from the money market by selling issuance, in the process of lending and credit
foreign currency and not by increasing the and currency control of the economy, in the
monetary policy interest rate. This response currency exchange policy and other impor-
was an example of unconventional monetary tant operations in terms of credit, the central
policy measure and the motivation for the bank acquires paramount importance for the
central bank leadership to take that kind of economy, especially in terms of leadership
response to this attack was that of maintain- and management specific to it.
ing financial stability and central bank cred- In this regard, effective decision-tak-
ibility and reputation. ing is provided by competent decisions.
Top-managers should not and can not by
c) Liquidity crisis of Romanian banks themselves ensure decision-making and
with foreign capital decision-making competence because they
distribute the hierarchical levels through del-
As international financial crisis had egation and decentralization decisions.
struck Romanian financial system and econo- This raises a number of issues to be con-
my, the National Bank of Romania had to en- sidered, such as:
sure money market liquidity. This objective - Crumbled compartments and multi-
was achieved through punctual intervention plying the number of management positions;
of the central bank on the money market and - Diluting responsibility for work

No. 17 ~ 2013
 Change and Leadership
71
assigned personnel; - The quality of a product produced in
- Independence of staff and inability ex- the group, compared to that of a product pro-
aggerated its effective coordination; duced by an “ace” in the field varies accord-
- Delaying the decision making and ing to the skills of group members and the
implementation; information available to them, plus the de-
- The deterioration of work between gree of efficiency in the collective labor
bosses and executives; - When a group of people is asked to
- Impaired administrative inertia tasks, solve a problem, the leader must think about
delays and long delays, reduced professional their potential and their desire to solve the
competence, training muddled thinking and problem.
compromise decisions. New concepts must be applied to de-
Leadership of the central bank will have velop the leaders and the managers of central
to take into account the following: banks, such as: considering a central bank as
- Creative ideas emanate from individu- an evolving business instead of a bureaucrat-
als who know and think about solving their ic institution; encouraging innovative leaders
problem for projects that are not mission-critical and
- If subordinates participate in the de- aiming to build leadership, management and
velopment of a decision, they show greater technical skills thinking on people and their
commitment to meeting them, so it will work capabilities (Mendzela; 2003).
more on outcome

reFereNCes:
1. Banca Națională a României, (2005) Preparations and Prerequisites for the Introduction of Inflation Targeting
in Romania, prezentare, martie 2005
2. Cecchetti, st.; (2008) Monetary Policy and the Financial Crisis of 2007-2008, Centre for Economic Policy
Research, Policy Insight no. 21, April 2008, Available at http://www.cepr.org/pubs/PolicyInsights/Poli-
cyInsight21.pdf
3. Collyns, C.; (1983) Alternatives to the Central Bank in the Developing World; Washington, DC: International
Monetary Fund
4. Croitoru, l.; (2012) Politica monetară: ipostaze neconvenționale, Ed. Curtea Veche, București
5. grilli, v., D. masciandaro, and g. tabellini, (1991) Political and Monetary Institutions and Public Financial
Policies in the Industrial Countries, Economic Policy, Vol. 13
6. gros, D., Roth, f.; (2009) The crisis and citizens’ trust in central banks, Available at http://www.voxeu.org/
article/crisis-and-citizens-trust-central-banks
7. hill, J.; (2013) The Definition of Leadership, Available at http://www.whatisleadership.org/the-definition-
of-leadership/
8. mendzela, j.; (2003) Leadership and Management in central bank (Part 2), Central Banking Publications,
Article for February 2003 Journal 22/03/03
9. Law no. 312/2004, “Statutul Băncii Naționale a României”, BNR, București, 2004

No. 17 ~ 2013
 Change and Leadership
72
10. moșoianu, a. ; (2012) Banca Nationala este independenta. Dar fata de cine?, Available at http://www.finan-
tistii.ro/bnr/banca-nationala-este-independenta-dar-fata-de-cine-74338
11. leoveanu, v., sandu, m.; (2013) The Influence of Monetary Policy on Bank Lending in Romania, The Inter-
national Conference on Administration and Business (ICEA-FAA 2013), Editura Cartea Studențească,
ISSN, Faculty of Business and Administration, University of Bucharest, Bucharest, Romania
12. Pascu Nedelcu, M., leoveanu V., (2013) The Influence of Monetary Policy on Foreign Direct Investment in
Romania, The 20th International Economic Conference (IECS 2013), Faculty of Economic Science, „Lucian
Blaga” University, Sibiu, Romania
13. www.bnro.ro

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73

New Media and leadership: social Media

and open organizational Communication

~ Ph.D. Associate Professor viorica Pauș (Faculty of Journalism and Mass Communi-
cation, University of Bucharest)
E:mail: [email protected]

Abstract: This paper aims to identify and analyze the extent to which new media have penetrated
the Romanian organizations’ internal communication and have influenced the leadership. We intend also to
consider how social media becomes a tool for organizational communication and contributes to the creation
of a new kind of leadership associated with open communication. We start from the premise that new me-
dia and social media can contribute to the leader’s mission to create around him a vision and makes others
to share this vision. In terms of open communication, the external image of organization reflects, in part,
leadership practices within the organization. It is about the exercise of the shared collective leadership (Don
Tapscott, 1996) that should strengthen the organization position.
Key words: Leadership, new media, social media, open communication, shared information
Jel Classification: O15

leadership and management: defini- and influence are synonymous (Tellier, 1999,
tions and theories p.126). In this perspective, we start from the
principle that in any group - regardless of
The term ‘leadership’ is used refer-
structure or number - individuals interact
ring to inter- or intra-group communication.
in pursuit of a common goal, whether it is
Strictly speaking, its meaning is to influence
inside or outside group, referring to public
communication. Fundamentally, leadership
No. 17 ~ 2013
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74
or private interests, shaped or diffused. The From the multitude of definitions, as
leadership designated as “the ability of a a common element appears the processual
leader, driving a framework to determine a character of leadership and the fact that it
group of people to work with it in achieving involves a group over which the manager
a goal based on their strong involvement” exercises a formal influence or an informal
(Nicolescu, Verboncu, 1999, p.516). The same leader exerts an informal influence, in both
authors designate leadership as the interface cases this influence is transmitted through a
between the leader and his followers’ staff form of communication, in order to influence
as “interpersonal influence that a manager the achievement of group goals or achieving
exerts on subordinates in the establishment goals.
and in particular the achievement of the ob- Tellier believes that leadership occurs
jectives” (Nicolescu, Verboncu, 1999, p.514). whenever we are dealing with a process of
From here results the idea that “leader- communication between two or more people
ship is based on team spirit, which is the re- - transmitter and receiver - between which
sult of integrating four processes: build trust there is a circulation of meanings. The signi-
between those involved; establishing a clear fications movement between these two poles
mission and goals that join individuals; con- affects the counterparts in some way by these
duct participatory decision-making process- significations, for long or short term. Some
es; strong individual and group motivation influences are deliberately pursued by the
to help achieve common goals” (Cornescu, transmitter in the short term and the receiv-
Mihailescu, Stanciu, 2003, p.221). er cannot be aware of this influence. We talk
A definition that takes into account ex- here about advertising, political and media
plicitly the communication process belongs influences (Tellier, 1999, pp.127-128).
to the authors R. Tannenbaum, J. Weschler, Also in this category we placed the mes-
F. Massarik (Leadership and Organization, sages sent through social media influence.
1961), cited by Mielu Zlate: “Leadership is in- Leadership reflects the human dimension
terpersonal influence exercised in a defined of the manager, the side that allows it to in-
and directed situation, through the commu- fluence, to determine which group leads to
nication process, to achieve a defined goal or work together to achieve the objectives of the
goals” (apud Zlate, 2004, p.23). organization.
In terms of effectiveness, leadership in- The studies from the 60s, among which
volves a person’s ability to create a vision, to those of Kurt Lewin from the National
establish guidelines for actions, to unite the Training Laboratories recommends partici-
individuals for achieving the vision, to real- patory perspective control. During this peri-
ize the vision with team members, to track od the term leadership is used in place of the
the project in its processuality, to achieve re- commander. Thus, the manager must lead
sults through organization, control and prob- not only as a commander, but he has to in-
lem solving and teamwork seen as a sum of fluence subordinates and to consent to be in-
complementary forces which identity is giv- fluenced by them so as to create a consensus
en by the following and achieving a shared that can be translated into actions.
vision. The 70s showed that in the modern

No. 17 ~ 2013
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75
economy wins one who has the best human by a number of factors, from personal qual-
resources in fighting competition. At that ities to the organization’s situation and po-
time the situational and evolutionary theo- sition in the external environment. The first
ries of leadership had appeared. They took category of factors related to personal char-
account of the context and relationship be- acteristics that make leadership to manifest
tween superior - subordinate. In this context, itself both in the formal and informal lead-
the leadership is a key factor in striving for ers. We are talking about the innate qualities
excellence and self-improvement. Manager such as intelligence, flexibility of thinking,
cannot meet these challenges. He must be a personal attraction, the understanding, open-
leader with a clear vision that you can com- ness to others, etc. Those who possess these
municate to others. This must be an effective qualities are considered charismatic person,
communication through which to impose the who attract others to achieve common goals,
ideas at the same time. “In this perspective, to inspire confidence and dynamism. Many
leaders are people who do what it takes to experts feel that the exercise of leadership de-
implement the vision, exerting influence on pends largely on the ability of leaders to use
others. On the other hand, managers are peo- different types of power to influence the be-
ple who do things right” (Hellriegel, Slocum, havior of subordinates (Zorleţan et alii, 1995;
Woodman, 2001, p. 296). Stăncioiu&Militaru, 1998; Cornescu et alii,
Organizations began to move towards a 2003). In the last two decades, new technolo-
new type of leader, charismatic, transforma- gies have provided and continue to provide
tional, open to change and to interpersonal tools for the exercise more complex and di-
communication. To update this vision, the versified power and influence. From the site
leader must have a sense of organization, re- which became mandatory card of any organi-
spect, use and take care of his subordinate zation that wants to be on the market to use
staff. It will promote a set of transparent val- of social networking that evolution was rapid
ues and be able to convey to others. One of and with major consequences on the evolu-
the most important qualities is his ability to tion of leadership.
perform change management, which is in- The modern notion of leadership cannot
creasingly important in terms of the com- ignore the functioning of formal and infor-
plexity of the modern world where everyone mal groups and interaction inter- and intra-
is striving to remain competitive. The man- group. Once a group begins to communicate
agement through the leadership has to face – one by one, transmitters and receivers – the
competition to keep costs as low as possi- influences occur gradually changing mean-
ble, to increase product quality, to improve ings and behaviors that will affect the whole
customer service, and to impose faster the group and activity. Once a group begins to
products into the market. Company image is communicate, it lives an experience which
transmitted over public relations services to means sharing of influence, so the leadership.
diversify their communication techniques in- C. Rusu, R. Mathis and P. Nica discuss
side and outside the organization. about a “neo-manager” who “promotes pro-
Leadership as a process of influence, fessional competition, providing resources,
but also managerial process, is determined ideas and motivations. He asks questions

No. 17 ~ 2013
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76
that determine employees to seek solutions media as tools for management and internal
and take responsibility in decision mak- communication. Of the total of 54 question-
ing” (1997, p.432-433). The main quality of naires, 8 respondents were from state insti-
this new type of leader will be the orienta- tutions (schools, public television, hospitals,
tion towards excellence. The hierarchy is less media agencies, research institutes, etc.). The
stratified and the leadership is focused on remaining 46 respondents are from the pri-
communication and feedback. Charlene Li, vate business organizations, such as private
in Open Leadership: How Social Technology television, commercial banks, etc. The re-
Can Transform How You Lead (2010), talks spondents were questioned online or face to
about “openness, transparency and authen- face.
ticity” as the fundamental precepts of lead- From the questionnaire responses, cou-
ership. In this work, Charlene Li provides pled with our observations and the results of
resources for leaders willing to use social previous studies made by my students from
media while maintaining control over the the Master of Corporate Communications,
management of the organization. As the au- we can draw some important conclusions:
thor said, the opening relies more on rigor •The use of new media as a means of
and effort than on the control. Using social communication within the organization and
media, leaders transform their organizations as a means of transmitting leadership increas-
so that they become more efficient and more es the group’s sphere of influence which wid-
powerful, while being profitable in an open ens and becomes heterogeneous and do not
market economy. It ensures communication comply with hierarchical levels and statutes.
and social media connectivity and leads to a •Also the use of new media increases
shared communication (culture of sharing). transparency of management decisions.
The Romanian organizations do not general- •The new media increases top manag-
ly apply these principles and practice based ers’ leadership. Top manager gains through
on management control. social media greater visibility which can be
‘tangible’: what he thinks, how he expresses
social Media and open himself, that attitude he shows, that opinion
organizational Communication in he has, etc.
romania •In contrast at the level of middle man-
agement, there is no such a problem: his mes-
In this article we aimed to research the sage is addressed to a small group, which
extent to which managers of Romanian com- interacts and communicates directly.
panies use communication opportunities of- •Social media, through free access of
fered by new media and social media and persons in the group, flattens hierarchical
what consequences appear on leadership structures and creates a personalized relation-
style practices. The exploratory research is ship between management and employees.
still in progress. In the first stage of the re- •Under these conditions, the type
search, we applied a questionnaire in which recommended is that transformational
we identified the leaders of Romanian orga- leadership.
nizations who use the new media and social •Leadership that uses the new media is

No. 17 ~ 2013
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77
a collective leadership. However, it should companies have managers and leadership
not replace control as management function. and are not concerned with the transmission
•Leadership becomes fragile by open- of the vision and mission of the organization
ing in new media and exposure to critical they lead.
opinions. •The image transmitted through social
•Feedback from bottom to top can be media organization should to be related with
critical and opinions are interrelated and in- existing organizational culture type. A nega-
fluence each other and can cause currents of tive image transmitted from the organization
opinion for or against the management style can harm fragile company. This may how-
practiced in the firm. ever have a boomerang effect on employees:
•It favored the emergence of informal if their organization is in decline, their own
leaders who influence individual messages situation may be endangered, employees are
and lead to the structuring of group views; the ones who bear direct consequences.
also the use of social networking and the at- •The image spread outside organiza-
traction of a large number of ‘friends’ can tion involves the opinions of the employees
lead to the discovery of the structure leading related with the company internal commu-
to the person concerned. nication. The public relations departments
•The inhibitions disappear in front of send a positive global image of the orga-
the hierarchy by the fact that it can mask nization, while social media is transmitted
identities and thereby become more honest through personalized messages, individual
opinions and more virulent testimonies of leaders and employees who
•These decrease inhibitions may oc- are found in proximity relationship with the
cur due to lower average age of managers, hierarchy.
but also - in many private companies - the •A positive feedback received from
employees. group/person on a social network increases
•In Romania, managers do not take into self-esteem and confidence of the employees.
account the views expressed by employees in •An example of a negative reaction to
social media. the message group was a formal New Year
•An interesting observation was the greeting sent by a multinational CEO: only
result of the Apa Nova organization. Its em- 20% of employees surveyed (50) have opened
ployees are also beneficiaries of the compa- that email and only 5% read the message un-
ny. Expressing their opinions in social media til the end. The explanations: the message
influences company general opinion of the was formal without being adapted to the
beneficiaries of the company. These em- group (survey conducted at the Master of
ployees send out a high degree of credibility Corporate Communications).
(they are meant witness) of corporate image; This study also included 13 question-
to give a positive image of the organization, naires with open questions, addressed to
managers must increase the level of account- managers of Apa Nova, Raiffeisen Bank
ability and motivation of their employees. and Siveco Romania. All respondents be-
•The leader’s blog is less visible. The lieve that the democratic leadership allows
possible explanation is that the Romanian them to give and receive feedback and apply

No. 17 ~ 2013
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78
supportive communication style. In one form shared communication with both employees
or another, they agree that the use of new and clients.
types of communication help to organize, Conclusions
control and streamline communication and
information and increase reliability and cus- To conclude, leadership can not ignore
tomer satisfaction. the new media, this is an opportunity but also
However, according to respondents, a tool of self and even a risk factor for orga-
these new interactive media should not re- nizations that do not properly manage their
place face to face communication that favors image and internal communication. Social
direct relationship with employees and cus- networks cannot be controlled and subdued.
tomers. This is also one of the conclusions of Through their pressure, leadership must
Dominique Wolton, who found that the most evolve to authentic values, decisional trans-
important decisions pertaining to power is parency and direct and personalized com-
always done by word of mouth (D. Wolton, munication. In our opinion, the charismatic
p 42). New media open up new opportuni- and visionary leader will be one that will be
ties to assert the “personality” of a leadership able to align the group in achieving its objec-
organization and open an important role is tives and bring added value to the organiza-
tion in an open and competitive economy.

reFereNCes:
1. Cornescu, v., mihăilescu, i., stanciu, s., Managementul organizației, ALL BECK, București, 2003
2. hellriegel, D., slocum, j., w., woodman, R., w., Management des organizations, ed. De Boeck Univerité,
Bruxelles, 1992
3. li, Charlene, Open Leadership, how social technology can transform the way you lead, Jossey-Bass, A Wiley
Imprint, San Francisco, 2010
4. Nicolescu, ovidiu, Verboncu, ion, Management, Ed. Economică, Bucharest, 2000
5. tapscott, Don, The Digital Economy. Promise and peril in the age of networked intelligence, Mc Graw-Hill,
USA, 1996
6. tellier, yvan, Leadership şi management, in Resuse umane şi dezvoltare organizaţională, Cavallioti, Bucharest,
1999
7. zlate, m., Leadership şi management, Polirom, Iași, 2004
8. wolton, Dominique, De l`identité à la communication, in Science & Devenir de l`Homme-Les cahiers du
M.U.R.S., I-e trimestre, 2008, pp. 35-42

No. 17 ~ 2013
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79

Evolution trends of the leadership in the

romanian Academic environment

~ Ph. D. Professor Paul Marinescu (Faculty of Administration and Business, Uni-

versity of Bucharest, România)
E-mail: [email protected]
~ Ph. D. Professor sorin-george toma (Faculty of Administration and Business,
University of Bucharest, România)
E-mail: [email protected]

Abstract: The purpose of this paper is to analyze the trends that mark the evolution of leadership in
the Romanian academic environment from a systemic perspective to integrate the past, present and future.
In our approach we start from an analysis of how the multiple transformations that took place within the
Romanian society in its whole has influenced the academic environment, emphasizing especially the mo-
ments of rupture caused by the numerous reforms started and never completed and the problems of chronic
underfunding faced by the system.
Starting from the observation that globally there are many voices questioning the level of adaptation
of the current educational system to the realities of the contemporary world, we shall briefly present a cou-
ple of views on how the European and the American education of the future might look and also the way in
which the academic leadership should manage this process of change.
Since any vulnerability may represent in certain circumstances an opportunity, based on an existent
analysis, as well as on some personal opinions we shall present the way in which the Romanian academic
environment could develop. Believing that nowadays the exchange of experience and the know-how between
different branches of the society are the key to obtaining a booster effect that will allow the occurrence of a
synergy between them, we are proposing a vision through which the academic environment can take advan-
tages, seizing on the experiences of the business environment, the effect of “leapfrogging” to eliminate the
distance between the academic environment and similar systems in other countries with tradition.

No. 17 ~ 2013
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Such an approach would be not a benchmarking process, but a process of identifying the challenges of
the future and discovering through creative means the most adequate methods to support them. After all,
if there is a resource of which we can say with certainty that it is abundant in Romania, that resource is
creativity. The academic leadership could ensure the success of the process of making changes by the opti-
mal guidance of this resource and by this action would ensure the progress of the educational system, thus
regaining the rightful role as the engine of progress in the Romanian society.
key words: leadership, academic environment, change, trends

1.introduction simplistic and does not take into account the

many aspects such as the extremely high
The numerous changes the Romanian
level of change that humanity knows due to
society has passed through in the last period,
the evolution of technology, the changes of
starting with the transformation of the whole
paradigm taking place within the business
socio-economic system that took place in the
environment, increasing concern for the en-
90’s, continuing with the Euro-Atlantic ac-
vironmental protection and social justice, the
cession process and more recently the that
issues arising in relation to the sources of en-
was not fully overcome, have generated
ergy, the increasing numerous criticisms di-
huge costs that affected each sector. There is
rected towards political models, etc.
no need for a exhaustive analysis of this pe-
But what is clear is that the need for a
riod to observe that many of the problems
proper leadership suitable for these turbu-
emerged could have been avoided or attenu-
lent times is increased. Be it the political, eco-
ated, thus reducing the devastating impact
nomic, social, business or civil society, each
they had on some broad social strata.
environment faces such problems.
Looking at the global situation we clear-
Under these conditions, the academ-
ly see that the world is dominated by pow-
ic environment, criticised until recently by
erful conflicts and challenges that increase
many for (almost) all evil on Earth, becomes
the uncertainties and the risks are huge. The
today the place where increasingly more
financial crisis, the crisis of the Euro zone
people turn for answers. In the situation
together with the crisis of confidence that it
where the intellectual capital is increasingly
has caused among the population within the
seen by many as a chance to resolve the prob-
whole European Union, the revolutionary
lems that affect the modern society and can
movements that might break the already pre-
provide answers to the numerous challenges
carious balance existent within some regions,
faced by humanity, the role of the academic
represent just a few of the problems faced
environment becomes once again important,
and struggled by humanity.
both by training future leaders and by pro-
Therefore, in this context we do not find
viding solutions through research programs
it surprising that voices accusing the failure
that occur under its umbrella.
of the current leadership both in Romanian
In this seemingly complicated picture,
society and at European and global level are
the Romanian academic environment is chal-
becoming more numerous. Obviously, this
lenged and must respond, thus being forced
approach, which shifts the responsibility
to provide solutions to the problems of the
solely on the leaders’ shoulders is extremely

No. 17 ~ 2013
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81
national present and the challenges launched opportunities as well. We believe that, as
by the world in general, as well as the chal- some countries had technological benefits
lenges of the future we can only anticipate. through the leapfrogging effect, based on rel-
In this respect, Richard Riley’s opinion, for- evant analysis and forecasts, the Romanian
mer Secretary of State for Education in the education system can benefit from the same
United States of America under the Clinton kind of effect provided it identifies properly
administration, that “We are currently pre- the trends to where the education of the 21st
paring students for jobs that don’t yet exist, century is heading and finds the best routes
using technologies that haven’t been invent- to get there as quickly as possible.
ed yet, in order to solve problems we don’t Our approach will be based both on
even know are problems yet.” seems more studies and forecasts on the evolution of the
relevant today than ever. European and global education system and
In this context, leadership is becoming forecasts on the evolution of the Romanian
increasingly important in the Romanian aca- education system, on various studies and ex-
demic environment both in terms of how it is pert opinions, as well as on works published
communicated to students and the way it is by authors and their educational practice.
applied within various universities. Without claiming to revolutionize the
In this paper we wish to outline the view on the evolution of the academic lead-
evolution trends of the leadership in the ership and through it, the evolution of the
Romanian academic environment based on whole system, we believe that this paper pro-
the one hand from an analysis of how they vides a relevant and pertinent point of view,
have evolved over time and on the other hand offering the possibility to serve as basis for
from the analysis of the challenges that this wider discussions.
environment will face in the future. Given
that any educational project needs a long pe- 2.the evolution of leadership in the
riod of time to show results, either positive post-revolutionary romanian academ-
or negative, due to the particularities of this ic environment
system, we believe that any target set both at
central and each university level must take The authors of the work “White Paper
into account a time frame large enough to be for Quality and Leadership in Romanian
able to observe the effects and, perhaps more Higher Education in 2015” consider the
importantly, should be followed consistently current moment as being part of the third
throughout that period. cycle of reforms undergone by the post-rev-
Due to the essential importance that olutionary Romanian education. Although
such a project plays in the success of edu- there are a number of challenges faced by the
cational institutions, the national education Romanian education with constancy wor-
system, and society as a whole, we consider thy of better causes, among which we men-
that any approach for analysis and forecast is tion the constant underfunding and the often
highly relevant, especially since the gap exis- inconsistent nature of the reforms tried, we
tent in comparison with the developed coun- consider the delimitation provided by the
tries, offers in addition to many challenges, authors of the aforementioned paper to be

No. 17 ~ 2013
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82
extremely relevant for highlighting the chal- Such aspects determined us to believe
lenges faced during this period by the aca- that this period was one in which the role of
demic leadership. leadership in academia was as important as
The first cycle marks the era of “repara- it was difficult and to consider that the study
tive reforms” which marks the period when of the lessons from those years was extremely
the Romanian academic environment has important to those who want to play a role in
taken the first steps towards the process of the future as leaders in the Romanian educa-
adjusting to the new realities. It is obvious tion, regardless of the targeted level.
that this period was extremely difficult for The second reform cycle referred to
leaders from the academia and, to be objec- “strengthening the autonomy, governance
tive, even for those who were called to estab- and quality”. We believe that this period
lish policies nationally in this. We believe that marks the time when the objectives of the
this cycle has been a time when the success academic leadership have started to target
of the measures taken to modernize various the synchronization with the European ac-
universities depended mostly on the indi- ademia, mainly at the same time with the
vidual skills of those called upon to imple- commencement of the negotiations for the
ment them. Since the internal models were accession to the European Union. Although
practically nonexistent, and the ability to it was somewhat less turbulent than the pre-
successfully replicate the external models vious period, we believe that this period was
was severely limited by the numerous factors also marked by challenges at least as impor-
that covered various areas, from resistance tant as the previous one.
to change of the people involved in the sys- The process of harmonizing the prac-
tem (which was explainable after they were tices within the academic system with those
formed in an opposite system) to the prob- at the European level required a major effort
lems of material and property nature, and by the academic leadership, starting from
not least, to the uncertainties which are be- the observation that a very large number of
coming a constant generated by the inconsis- new policies and procedures had to be de-
tency of the government policies; this period signed, implemented and assessed in a very
marked a very slow progress. short period of time and that often some of
Another challenge faced by the lead- the stakeholders manifested a strong resis-
ership from the academic environment ac- tance caused by either divergent interests, or
ademics in this period was the profound poor understanding of the reasons for carry-
change marked by the request for training ing them out.
programs. If some specializations that were In the new context, another problem
highly popular before became undesirable faced by the leaders from the academic en-
overnight, the new labour market condi- vironment was represented by the increased
tions have entailed the creation of new ones, competition coming from the universities
which, in turn, has generated many problems from other European countries. At the same
that leaders had to respond to, from logistical time with the European Union accession, the
issues to difficulties in finding people with the cost of some university programs in other
necessary skills to fill the positions needed. member countries (which was previously a

No. 17 ~ 2013
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83
significant barrier) decreased dramatically, 3.the challenges of the global aca-
such programs becoming more accessible demic environment in the contempo-
also due to the simplification of access condi- rary world
tions (we are particularly referring to the bu-
Until now, the 21st century is character-
reaucratic aspect).
ized by remarkable progress in all fields of
Given that for obvious reasons the first
technology, with a particular focus on the
students (or potential students) who took
ICT area, and, there are many chances for
advantage of these opportunities were the
such trends to not only persist, but even in-
ones recommended for such a step by their
crease, so that fundamental changes they
results and capabilities, it is obvious that the
produce in nowadays people’s lifestyle will
Romanian academic system had a lot to lose
become tomorrow’s realities.
in this new context, both on short and long
In this context, the academic system,
term by reducing the recruitment base for fu-
which has by nature a very considerable in-
ture university teachers.
ertia in adapting to new, must identify very
Of course, there is also “the glass half
quickly and adequately the new challenges
full”, meaning that the European Union ac-
that such system will face in order to be able
cession also allowed an increase in mobility
to respond optimally, especially since this
of teachers, who thus had the chance to en-
process is facing difficulties in defining and
rich their experience by observing different
regulating on national levels.
ways of organizing the educational process
We present below some of the changes
and by learning other academics in a practi-
that the world will likely face in the future
cal way.
and that we consider extremely important for
We believe that these cycles, however
the near future, convinced that the evolution
difficult and often painful as they seemed,
of the global academic environment will de-
were essential in the way that they set the
pend upon our adjusting to such changes.
grounds for what can now be a new cycle of
The development of technology brings
academic environment reform. In our opin-
along a change in the skills required on the
ion, this new cycle should aim at continuing
labour market. Of course, the rate at which
the benchmarking effort and also an effort
this change occurs depends primarily on the
to anticipate the new realities that human-
level of development of each country, and it
ity will face, forecasting the challenges the
clear that this kind of change affects primarily
educational systems will face in this scenario,
the top areas that are present predominantly
challenges which, as we shall demonstrate
in the developed countries. Yet it is equally
in the next chapter, have a global nature and
clear that it is only a matter of time before
can identify the methods and techniques
such changes will propagate in the currently
by which such challenges can represent an
developing countries. This change causes the
opportunity.
labour market to capitalize more a series of
relatively new skills; for instance, advanced
problem-solving skills and advanced com-
munication skills . In fact, this is perfectly un-
derstandable if one considers that two of the
No. 17 ~ 2013
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84
effects of the development of technology are our view, creativity presents a series of some
represented by the increasing the complexity very important features that differentiate it
of the problems faced by the decision mak- from other subjects of study. For instance,
ers within any field and an explosive increase creativity cannot be taught the same way one
of the social interactions caused by the new would teach economy as there are only meth-
communication means. Under these condi- ods to stimulate creativity and not methods
tions, an update of the objectives set by the to transmit it; in this respect, we mention
academic educational programs is needed, Edward de Bono’s theories that regard the
and in this regard it is very important to have lateral thinking ; creativity is difficult to as-
an increasingly active dialogue with the busi- sess and almost impossible to quantify; cre-
ness environment. Also, the degree to which ativity does not have a unitary nature, it
these kinds of changes are performed at the has various forms of expression depending
institutional and national level represents an on the individual and context, therefore we
extremely important element, the lack of a mention in this regard Howard Gardener’s
national strategy might be having adverse ef- theory of multiple intelligences. All these
fects . In such a situation, the leadership skills make us believe that the way in which cre-
of those who can facilitate this process gain ativity is addressed in the academic context
a significant importance with a major impact is of huge importance, thus the leaders from
on a large period of time. Due to the inertial the academic environment are facing a seri-
nature of the academic systems, a mistake in ous challenge.
this planning stage would require more time Given the fact that an increasingly
to be identified and an infinitely large period number of occupations appear on the la-
of time to be corrected. bour market which require multidisciplinary
Another important consequence of the knowledge from various and sometimes
development of technology and “the world of unrelated fields, the education systems are
knowledge” brought by the last one is repre- facing another unexpected challenge. The
sented by the increasingly more importance dynamics in jobs transformation determines
creativity has within all the fields of activity. the employers to be increasingly less inter-
This observation in itself is neither surpris- ested in formal education completed by po-
ing, nor argued, and however, the difficulties tential employees, and to focus more and
arise when one thinks of the way such skills more on the skills they possess. Adding to
can be taught and assessed as well. From this this aspect the development of the ITC tech-
point of view, in our opinion, the academic nologies, the academic system begins to meet
environment plays a double role, the first one a strong competition from alternative educa-
is to encourage the development of creativ- tion programs. On the one hand, we consider
ity among students through the integration the classical training and coaching programs
of some teaching and assessment methods to with advantages such as short duration, flex-
stimulate and reward creativity, and the sec- ibility of the schedule, as well as a focus on
ond is helping the lower systems to integrate a specific area, all these enabling students
such elements in their activity by providing to chose solutions that suit them best and,
guidance and exchange of experiences. In on the other hand, we consider the strong

No. 17 ~ 2013
 Change and Leadership
85
development of distance education forms that theme is not a new one “higher education
offer training in very specific fields and have was always more internationally open than
a creative and innovative approach because most sectors because of its immersion in
they took advantages of all the technologi- knowledge, which never showed much re-
cal developments. The disadvantage of the spect for juridical boundaries.” Nevertheless,
latter, the fact that they usually do not issue given the fact that this process is stimulated
diplomas, is heavily compensated by the ex- by new technologies and the continuously
tremely low costs for the student – costs con- growing mobility that characterizes this pe-
sisting usually of internet connection – and, riod, there is a high risk that the less devel-
since employers do not consider diplomas to oped countries will face an acceleration of the
be essential anymore, this type of approach process of “brain drain”. This can push the
is appreciated by more and more students. academic environment in those countries in
Examples of such platforms include (but are a destructive spiral (they fail to maintain the
not limited to) Coursera or Khan Academy best graduates in the system, which results in
, both offering a range of courses in various a decline in quality of education, which leads
fields, also a very important aspect is that, to decreased attractiveness, which leads to
since they are not connected to a formal sys- the difficulty of having valuable graduates,
tem of education and its objective constraints etc.), while the systems in advanced countries
(curricular area, field, etc.), they have the have only to benefit from this process. From
possibility to provide highly creative courses this point of view, we believe that it is vital
by binding together elements that belong to that the exact countries, whose academic sys-
various domains, thus creating unexpected tems are facing this danger, to undertake the
and challenging connections. Also, by work- most determined measures to adjust to new
ing together with professors from different realities and the leadership within this envi-
universities acknowledged, these platforms ronment is the most important one.
have started to eliminate one of the main There are of course many challenges the
reproach in the past, namely that the infor- academic environment will face in the future,
mation provided might have been of ques- some of them are well known and analyzed,
tionable quality. In these circumstances, the some of them are a little less obvious and, for
role of the academic leadership increases in certain, some other challenges that could not
order to find new ways to enrich its offer so even be imagined will emerge but, our aim
as to meet the needs of this type of “custom- within this chapter was to point out some of
ers”, a process which is already taking place the directions that in our opinion will repre-
in some countries (such as the United States sent the concern of the academic leadership
of America) where some of the top universi- of the future, especially since, as we shall
ties have started to develop online platforms demonstrate further on, in certain contexts
and offer some free courses. they can represent important opportunities
We wish to emphasize the challenge of for progress.
globalization, even if there are hundreds of
papers and even more papers will be written
on this subject. Obviously, the globalization

No. 17 ~ 2013
 Change and Leadership
86
4.trends in the European and related to internationalization, flexibility and
American education system quality assurance .
In addition to these challenges specific
The academic systems in the United
to each of those systems, in both cases there
States and the European Union represent for
is growing concern regarding the training of
many benchmarks in terms of the quality of
the graduates and, in this respect, the conclu-
education, which is perfectly reasonable if
sion of the European Council is relevant as
we consider that only 19 of the best 100 uni-
it argues that “the graduates’ qualifications
versities in the world according to the “The
do not always meet the needs existent on the
Times Higher Education World University
labour market and the needs of the society.
Rankings 2011-2012” , do not belong to these
Public and private employers increasingly
areas.
report mismatches and difficulties in find-
However, the leadership within these
ing the right people to meet the continuous-
two academic environments is facing a num-
ly changing needs of the knowledge-based
ber of serious problems which proves that
economy.” Another common concern of the
the challenges created by the need to adjust
leaders from these two academic systems is
to new realities do not skip the developed
represented by the impressive level of the
countries either.
currently developing countries (especially
In the United States of America, the
China and India) which are developing their
academic system is facing problems related
own academic systems by making huge in-
to the low degree of completion of higher
vestments in these fields. Given the fact that
education by those who have started them,
the academic environment plays an extreme-
problems related to the continuously in-
ly important role in the development process
creasing level of debts that graduates have
in the knowledge era, it is clear that this kind
to reimburse once they graduate, as well as
of problems will concern the leadership with-
problems related to state funding of public
in the academic environments in question.
colleges and universities . At the same time,
5. Trends in the Romanian education
Moody’s rating agency has recently revised
(directions of development)
the forecast for 2013 for the private American
As we shown above, the leadership
universities from neutral to negative “mark-
within the global academic environment will
ing a shift to negative from stable for even the
have to face a large number of challenges in
sector’s market leading diversified colleges
the near future and the degree to which such
and universities” , which proves once again
leadership will succeed in this role will de-
the severe effects caused by the crisis in this
pend to a large extent the welfare of nations
area.
under the conditions in which the impor-
For the European Union there are still
tance of intellectual capital will continue to
many problems related to the creation of the
grow exponentially.
European Higher Education Area, as there
In this context it is clear that the mission
are still difficulties in harmonizing the na-
of leadership within the Romanian academic
tional academic systems and challenges in
environment will be even more complex as
achieving the objectives of “the students-
it will have to face both the European and
based universities”, as well as difficulties
No. 17 ~ 2013
 Change and Leadership
87
global specific challenges. We intend to pres- of future training needs and can adjust its
ent below some of the directions that, in our programs to such needs. If this will have a
opinion, will characterize this process. successful outcome, given the fact that the
The growing interest shown by the po- inter-community mobility is likely to in-
tential students to some interdisciplinary crease, then we can even witness a reversal of
training programs will represent the initial directions of students flow. A project which
step in the evolution of the Romanian educa- aims to help create and maintain this type
tion. In this context, the academic leadership of dialogue is the Centre for Organizational
will have to design programs that require Strategy and Leadership of the University of
collaboration between several departments Bucharest (CSOL-UB), which brings together
within the same university or even from dif- representatives from the academia, business
ferent universities. In the first phase, this will environment and civil society.
likely be reflected especially in the master The Romanian academic environment
programs, as they suit best such approach- will face another challenge in the next period,
es. An example in this regard is represented namely the increased competition from other
by Business Consultancy master’s pro- providers of educational programs. We have
grams within the Faculty of Administration already discussed about the competition
and Business of the University of Bucharest emerging from other European universities
which are the result of analysis made in col- based the decreasing of financial and bureau-
laboration with professors from other col- cratic obstacles raised by such an option and
leges (sociology, psychology, mathematics, it is obvious that this trend will continue. On
foreign languages, etc.). Such an approach the other hand, it is expected that, in the fu-
has the advantage of the multitude of view- ture, the quality of study programs offered
points which are taken into consideration by private universities in Romania to grow
when designing the programs, a better ade- continuously, so it is likely to attract more
quacy to market requirements, as well as the potential students from public universities.
possibility to minimize the necessary addi- It is also evident that as eLearning platforms
tional resources by using the material bases will become more efficient and affordable,
of several institutions there will be competitors in this direction
Another important aspect which is either by extending the educational offer of
closely related to the first, is the collabora- prestigious international universities, or by
tion with stakeholders. Given the nature of creating new structures. Nevertheless, in our
the business environment, it is very likely opinion, all these things require a tireless ef-
that many companies or institutions which fort from the academic leadership to find the
are potential employers of graduates to best methods to attract the best.
have made predictions on a strategic level, As we argued in this paper, we are con-
about the possible development directions vinced that the future academic environment
of these fields. Based on these and initiating will have to be extremely concerned about
and maintaining an active dialogue with the stimulating, encouraging and developing
business environment, the leadership from creativity. It becomes clear every day that
the academia is able to get a clearer picture the progress in tomorrow’s world depends

No. 17 ~ 2013
 Change and Leadership
88
on innovation which, in return is inextricably 6.Conclusions
linked to creativity because more and more
One of the few advantages that cur-
routine tasks tend to be at least partially au-
rently developing countries have in compari-
tomated and, in the developed countries, the
son with the developed countries is that, on
optimisation process are beginning to reach
their way to modernization, they can adopt
the maximum possible efficiency. Therefore,
the most modern methods (whether we are
under these conditions, it is essential for lead-
referring to technology, procedures or ideas)
ers in the academic environment to be able
without having to incur additional costs of
to manage the process of change towards an
change. In this respect, an illustrative exam-
approach of the educational process based
ple is the fact that in the Sub-Saharan Africa
on the imperative need to develop creativ-
the development of telephony has exceeded
ity, which, in a purely conservative environ-
the period of fixed landlines. Likewise we
ment, represents a major challenge. Such
believe that by understanding the challenges
project was started within the University of
that the future will bring we can do a similar
Bucharest. The educational concept named
leap.
SPHERE-AA is based on the observation that
We also strongly believe that a leading
there are nine channels that facilitate the for-
role in this process will be held by the aca-
mation of multiple intelligences: linguistic,
demic environment.
musical/rhythmic, naturalist, logical-mathe-
Therefore, we hope that this paper can
matical, spatial and visual, bodily-kinaesthet-
constitute a ground for analysis for those
ic, intrapersonal, interpersonal, existential
called to exercise leadership in the academic
and each of them has certain characteristics
environment, thus succeeding to identify the
regarding the optimal way of reception of in-
best directions to use in leading us down this
formation and intends to create methods to
path.
best stimulate this process.

1.  Elise s. Brezis, Paul R. Krugman, Daniel tsiddon, Leapfrogging in International Competition: A Theory of
Cycles in National Technological Leadership. (The American Economic Review, 1993), 1211-1219.
2.  liviu andreescu, adrian Curaj, Radu gheorghiu, marian zulean, White Paper for Quality and Lead-
ership in Romanian Higher Education in 2015, (available at www.edu2025.ro).
3.  frank levy, How Technology Changes Demands for Human Skills, (OECD Education Working Papers, No.
45, OECD Publishing, 2010).
4.  Kiira Kärkkäinen, Bringing About Curriculum Innovations: Implicit Approaches in the OECD Area, (OECD
Education Working Papers, No. 82, OECD Publishing, 2012).
5.  Bill lucas, guy Claxton, Ellen spencer, (2013), Progression in Student Creativity in School: First Steps
Towards New Forms of Formative Assessments, (OECD Education Working Papers, No. 86, OECD Publish-
ing, 2013).
6.  edward de Bono, Lateral thinking: Creativity step by step. (HarperCollins e-books, 2010).
7.  howard Gardner, Intelligence reframed: Multiple intelligences for the 21st century. (Basic Books AZ, 1999).
8.  https://www.coursera.org/
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 Change and Leadership
89
9.  https://www.khanacademy.org/
10.  simon marginson and marijk van der wende, Globalisation and Higher Education, (OECD Education
Working Papers, No. 8, OECD Publishing, 2007).
11.  The Times Higher Education World University Rankings 2011-2012, (available at http://www.timeshigher-
education.co.uk/).
12.  American Association of State Colleges and Universities. Top 10 Higher Education State Policy Issues for
2012, (available at http://www.aascu.org, 2012).
13.  Moody’s Industry Report (available at http://www.marquette.edu/budget/documents/, 2013).
14.  Andree Sursock and Hanne Smidt, Trends 2010: A decade of change in European Higher Education, (avail-
able at http://www.eua.be, 2010).
15.  The European Council, The conclusions of the European Council on modernizing the higher education, (avail-
able at http://ec.europa.eu/education/, 2011).

No. 17 ~ 2013
 Change and Leadership
90

the Role of forensic accountants in fraud

Detection And National security in Nigeria

~ Ph. D. Dickson mukoro (Department of Accounting,Covenant University, Ota,

Nigeria)
E:mail: [email protected]
~ Ph. D. ogijo yamusa (Department of Banking & Finance, Federal Polytechnic,
Ilaro, Nigeria)
E-mail: [email protected]
~ Ph. D. samuel Faboyede (Department of Accounting,Covenant University, Ca-
naanland, Ota, Nigeria)
E-mail: [email protected]

Abstract: This study aims at exploring the relevance of forensic accounting in curbing crime and
corruption in public sector. The objective of the research work seeks to explore the role a forensic accountant
can play in the fight against corruption by applying his investigative skills, providing litigation support
service and documentation and reporting. The population used in the research was the Federal Inland Rev-
enue Service (FIRS). The research design employed was the survey research. Data were majorly collected
from primary sources. The hypothesis testing in this research work was done using regression analysis.
The results of the empirical findings show that forensic accountants are relevant in investigating crime and
corruption in the public sector. Forensic accountants play a role in litigation support services in the public
sector, and forensic accountants are relevant in documentation and reporting. It was observed that the fo-
rensic accountants play a significant role in curbing crime and corrupt practices in any public sector since
they provide a mechanism to hold people accountable, such that those who manage resources in a fiduciary
capacity do not easily abuse that trust without detection. Amongst other proferred solutions, it was recom-

No. 17 ~ 2013
 Change and Leadership
91
mended that accounting professionals should always act proactively such that the members of the profes-
sion in Nigeria are kept abreast of emerging technologies, especially in the area of forensic accounting. The
legislature should also see to it that the executive grants full autonomy to the agents of government that are
charged with enforcing accountability. Office of the Auditor-General of the Federation, the Economic and
Financial Crimes Commission, Independent Corrupt Practices Commission, and Code of Conduct Bureau,
should be fully independent entities free to do their jobs without undue meddling and interference.
Key words: FIRS, Forensic Accounting, Regression Analysis, Crimes, Corruption

introduction to make the company look good and power-

ful on paper than it really was using special
The trend and the volume are increas-
purpose subsidiaries that have a single pur-
ing on a daily basis and all levels of the so-
pose and that did not need to be included in
ciety are involved. The rich, the poor, the
Enron’s balance sheet to hide risky invest-
young and the elderly, the male and the fe-
ment activities and financial losses. However,
male all are neck deep in fraud and fraud re-
forensic accounting helped subsequently to
lated activities that say a lot about our moral
determine that many of Enron’s recorded
and family situations. From the politicians to
assets and profits were inflated, and in some
the bank directors/executives, from the legal
cases, completely fraudulent and nonexis-
officers to the law enforcement personnel,
tent. Some of the company’s debts and losses
from the civil servants to the school teacher,
were recorded in offshore entities, remaining
from the trader in the market to the hawk-
absent from Enron’s financial statements. (
ers on the street, the tendency for fraud and
Folger, 2011)
fraud related crimes is endless.
In many quarters, forensic accounting is
For instance, if one may ask; what com-
equated to financial audit but they are miles
pels the senior level manager, the low level
apart. Forensic accounting is usually de-
employee or the longtime middle manager
scribed as the integration of accounting and
to ultimately risk everything, convinced that
auditing skills with investigative techniques
their crimes will go undetected? The charac-
and professional skepticism. Alan Zysman, a
ters in fiction on frauds and financial crimes,
noted forensic accountant since 1987, states,
as in the real world, are frequently motivated
“Forensic accounting provides an accounting
by financial need caused by avarice, gam-
analysis that is suitable to the court which
bling debts, business reversals, poor invest-
will form the basis for discussion, debate
ments or trying to maintain a lifestyle well
and ultimately dispute resolution.” (Hecht
beyond their means
and Redmond, 2012). One area of similarity
The first and most sophisticated way of
is the provision in the Statement of Auditing
carrying out the fraudulent activities in many
Standard (SAS 1) that requires an auditor to
organizations is through the accounting and
approach his assignment with ‘professional
financial records. It is a recognized fact that
skepticism’ which requires auditors to adopt
the management of Enron - the celebrated
a questioning mind and a critical assessment
energy company in USA defrauded by her
of audit evidence in assessing audit risk of
top management - used creative accounting
fraud. (Ojo, 2012)

No. 17 ~ 2013
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92
Objective verification is the primary Bologna and Lindquist (1995) as quoted
goal of forensic accounting. For this reason, by Chariri (2009) stated that as an investiga-
many forensic accountants are asked to tes- tor, a forensic accountant can be seen as those
tify in court cases as expert witnesses for ei- who are specialist in fraud detection, and
ther the prosecution or the defense. It can be particularly in documenting exactly the kind
said therefore that forensic accounting is not of evidence required for successful criminal
limited to fraud detection but also assisting prosecution; able to work in complex regu-
in litigations with the hope of recovering any latory and litigation environments; and with
losses, hence a forensic accountant assign- reasonable accuracy, can reconstruct missing,
ment must be of such a quality that it can destroyed, or deceptive accounting records.
withstand scrutiny by attorneys, judges and Meanwhile, as economists, they are par-
juries. ticularly effective at economic loss, damage,
On the other hand a forensic accountant and social harm estimates; familiar with the
may be asked to calculate economic damages assumptions, algorithms, and calculations
that occurred as a result of a breach of con- in econometric models and opportunity cost
tract or provide insight into a case based on scenarios; can measure and quantify such
a claim of professional negligence. In Nigeria things as loss of goodwill and reputation.
for instance, businesses are faced with breach Finally, as appraisal experts, forensic ac-
of contracts which may be reasons for many countants should be able to reliably express
abandoned projects mainly the government informed opinion on matters of business val-
sponsored, by contractors who might have ue, based on generally accepted theory; effec-
collected more than fifty percent of the con- tive at evaluating the historical and projected
tract sum. The application of forensic ac- degrees of risk and return of any going con-
counting can bring such fake contractors to cern as well as any and all financial transac-
book by providing appropriate financial evi- tions involving assets, property, taxes, and
dence that can aid legal actions against them. equities
Also, forensic accounting is considered to be
a mechanism for global war against money Forensic Accounting, Crime and
laundering, terrorism financing, as well as Corruption
other fraudulent and social vices that have
impeded the nation’s march to development To be successful as a forensic account-
(Oguma, 2011) ing professional, one must be detail oriented,
persistent, ambitious, and highly organized.
Forensic accounting also requires a great
literature review
deal of creativity, since you must often ex-
According to Jafaru (2011), Forensic plain complex financial concepts to an audi-
and investigative accounting should be seen ence that lacks basic accounting knowledge.
as the application of financial skills and in- It is not surprising that the American agency,
vestigative mentality conducted within the the Federal Bureau of Investigation (FBI) con-
context of the rules of evidence to resolve un- firmed that ‘one key element was the creation
resolved issues of a standardized, professional investigative

No. 17 ~ 2013
 Change and Leadership
93
support position known as the forensic ac- costly to implement and does not guarantee
countant in 2009’ . The forensic accountant at an adequate level of compliance. The bottom
FBI conducts the financial investigative por- line is that a person’s normative values of
tion of complex cases across a wide variety of right and wrong dictate his behavior and de-
Bureau programmes including investigating termine compliance or noncompliance with
terrorists, spices, and criminals of all kinds the law.
who are involved in financial wrongdoings. Corruption as a concept is usually dif-
The agency went ahead to list the responsi- ficult to define, because of its relativity but
bilities of forensic accountants to include: one can put it in a perspective when it is iden-
• Conducting thorough forensic finan- tified for the purpose of outlining ways and
cial analysis of business and personal records means of combating it.
and developing financial profiles of individ- According to Nye, (1967), corruption is
uals or groups identified as participating in a behavior which deviates from the normal
suspicious or illegal activity; duties of a public role because of private – re-
• Participating in gathering evidence garding family, close private clique, pecuni-
and preparing search warrants/affidavits as- ary or status gain, or violates rules against the
sociated with financial analysis; exercise of private-regarding influence. This
• Accompanying case agents on inter- includes such behavior as bribery (use of re-
views of subjects and key witnesses in secure ward to prevent the judgment of a person in
and non-confrontational settings; a position of trust); nepotism (bestowal of pa-
• Identifying and tracing funding tronage by reason of inscriptive relationship
sources and interrelated transactions; rather than merit); and misappropriation (il-
• Compiling findings and conclusions legal appropriation of public resources for
into financial investigative reports; and private-regarding use)
• Meeting with prosecuting attor- Mukoro, et al (2011:235) quoting
neys to discuss strategies and other litiga- Edafehirhaye and Edafehirhaye (2008:59) de-
tion support functions and testifying when fines corruption as tendency and propensity
needed as fact or expert witnesses in judicial to do what is wrong, evil or harmful to one’s
proceedings. neighbour in spite of the knowledge of what
The agency concluded that ‘today is good. It is an attempt of subverting the rule
around 15 percent of agents employed by the of the game using trick to take public fund
bureau are forensic accountants’ (FBI, 2012) and using them for one’s personal interest
In essence therefore forensic accounting can The dishonest and illegal behavior ex-
be used to investigate and curb all manner of hibited especially by people in authority for
financial crimes and terrorism sponsorship. their personal gain is corruption.(Ayobami,
Corruption and Forensic Accounting 2011) According to the ICPC Act (section
Most civilized societies are dependent 2), corruption includes vices like bribery,
upon people doing the right thing. Despite fraud, and other related offences. Corruption
rewards, punishment, and deterrence, the re- is the abuse or misuse of power or position
sources required to fully enforce all the laws of trust for personal or group benefit (mon-
would be astronomical. Even deterrence is etary or otherwise). The growing corruption

No. 17 ~ 2013
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94
in Nigeria can be traced to people holding Nigerians should emphasise transparency,
power at the federal, state, and local govern- integrity, and accountability in all their pri-
ment levels. Corruption does not involve just vate and public transactions.
people in government, but also to people in But the situation in Nigeria now is far
both private and public positions and even more serious for the above suggested solu-
traditional rulers. tions. In Businessday publication of May
Abayomi (2011) opined that our colo- 9th, 2012, Agbaje wrote ‘Everyone knows, or
nial heritage has altered our values and per- ought to know the features and consequenc-
ception of morality; and listed some of the es of cancer – it spreads very rapidly through
causes of corruption as follows: the host, destroying cells, weakening the
• Trade Restriction. This is body and, in due course, killing its victim. A
Government-induced source of rent a seek- cure from an advanced form of cancer, such
ing/corruption. The restriction on importa- as Nigerian corruption has become, is a rar-
tion of foreign automobiles are examples ity, and in the few cases in which that hap-
of how government officials and politicians pens, it requires decisive surgical and other
can make quick money via rent seeking/ scientific or medical intervention, and some
corruption. large dose of divine grace. Where cancer is
• Government subsidies. When gov- treated with levity, the patient is a living
ernment allocates scarce recourses to indi- dead. God forbid that Nigeria is just enjoy-
viduals and firms using legal criteria other ing its last stages of mobile morbidity! But if
than the ability or willingness to pay, corrup- we don’t engineer a quick and decisive on-
tion is likely to be the result. Corruption can slaught on corruption, it will destroy Nigeria
thrive under industrial policies that allow – sooner than later.
poorly-targeted subsidies to be appropriated The pension probe is not the only pa-
by firms for which they are not intended. rade of unmitigated graft and brigandage on
• Price controls. The purpose is to low- display in these times. The oil subsidy probe
er the price of some goods below market val- also shows, as we have all suspected, that the
ue. For social and political reason, these are subsidy, rather than a mechanism to smooth-
also a source of corruption. en oil prices for the benefit of the poor, had
• Low wages in civil service. When become oil industry bureaucrats’ (together
public wages are low, public servants may with their allies and contractors’) source of
be compelled to use their official positions massive enrichment. Though it seems clear
to collect bribes as a way of making ends enough that the House committee’s limited
meet, particularly when the chances of being knowledge of public finance, banking, inter-
caught are low. national trade and shipping, and oil and gas
• Sociological factors. Multi-ethnic so- transactions (as well perhaps as a little exu-
cieties may be more likely to fall prey to cor- berance) meant figures may have been some-
ruption as a result of failure to manage ethnic what exaggerated, but it is still apparent that
conflict in a way that is fair to everyone. significant impropriety took place within
In proffering solutions to the corrup- the oil subsidy regime, particularly during
tion cancer, Abayomi (2011) advised that the Yar’Adua and Jonathan regimes. It is

No. 17 ~ 2013
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95
a mystery that the lesson our people learnt H1: The forensic accountant is not rel-
from these is that subsidy must stay! (Agbaje, evant in investigating crime and corruption
2012) in the public sector
Nigeria’s anti-corruption agency has H2: The forensic accountant does not
made feeble attempts to clean up Nigerian play a role in litigation support services in
politics. Since 2005, it has charged 19 former the public sector
state governors with corruption. But none H3: The forensic accountant is not
has gone to jail despite the charges. Recently, relevant in documentation and reporting
a former state governor, quarreled with the Research Methods
president and was sacked. The EFCC then The exploratory research design was
said he had embezzled millions of dol- used in this study. The population is made up
lars and promptly declared him a fugitive. of the Federal Inland Revenue Service (FIRS)
Corruption, it seems, is only a problem when and we applied the non-probability sampling
you fall from grace. technique, specifically, the judgmental meth-
The spate of financial crime and corrup- ods of sampling in selecting a sample size
tion is gangantum, the weak auditing and of federal Inland Revenue Service in Lagos
reporting style and inadequate knowledge State, being the hub of Nigerian businesses
of forensic accounting practice and the con- with a large spread of offices of the Federal
sequences on the people and the economy of Inland Revenue Service
Nigeria prompted this study. The objectives Both primary and secondary data col-
therefore is to ascertain the relevance of fo- lection methods were adopted. The question-
rensic accounting in curbing financial crime naires were designed to generate concise and
and corruption in the public sector by specifi- precise answers from the respondents using
cally examining the relevance of forensic ac- close-ended questions. The response to the
countants investigating crime and corruption questionnaires were processed using elec-
in the public sector, as well as determining tronic statistical package (SPSS) using regres-
the roles and relevance of forensic accoun- sion analysis as a parameter to determine the
tants in litigations support services, docu- effects on the variables under study.
mentation and reporting. A total of 100 questionnaires were issued
According to Izedonmi, (2000) a hy- to the staff of the Federal Inland Revenue
pothesis is a hunch or an educated guess, a Service, Lagos. 25 each were given to their
logical speculation based on available in- branch offices (ITO) in Ikeja, Yaba, Apapa
formation relative to a problem, or a set of and Obalende. Of the 100 administered, 78
problems under investigation. We therefore were returned, (78% retrieval rate) which is a
developed the following hypotheses (stated reasonable level upon which research can be
in the null form) for this study – based and valid conclusion drawn.

No. 17 ~ 2013
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96
Hypothesis Testing

Hypothesis 1
H1: The forensic accountant is not relevant in investigating crime and corruption in the public
sector

Table 1.0 Coefficients(a)

Standardized
Model Unstandardized Coefficients t Sig
coefficients
B Std Error Beta B Std Error
1 (Constant) 5.576 .954 5.847 .000
The forensic ac-
countant searches for
evidence of criminal
conduct or assist in .021 .118 .019 .174 .863
the determination of
or rebuttal of claimed
damages
Forensic accounting
provides assistance
with the protec- .051 .143 .040 .361 .719
tion and recovery of
assets
Investigative ac-
counting provides co-
ordination of other
experts including pri-
.281 .110 -.284 -2.541 .013
vate investigations,
forensic document
examiner, consulting
engineers

interpretation explains 41% of the variance in the depen-

dent variable The statistical significance of
The result of the regression analysis
0.002 means that the null hypothesis should
showed how much of the variance in the de-
be rejected. Based on the result obtained from
pendent variable is explained by the mod-
the table, it can be concluded that forensic ac-
el. The R square value is 0.41. expressed
countants are relevant in investigating crime
by a percentage, this means that the model
and corruption in the public sector.
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 Change and Leadership
97

Hypothesis 2
H2: The forensic accountant does not play a role in litigation support services in the public sector

Table 1.1 Coefficients(a)

Standardized
Model Unstandardized Coefficients t Sig
coefficients
B Std Error Beta B Std Error
1 (Constant) 3.220 .874 3.684 .000
Forensic accountant
provides expert wit-
.093 .111 .096 .833 .407
ness in litigation sup-
port service
Forensic accountants
assist with the ex-
amination for dis-
covering, including .157 .125 .145 1.254 .214
the formulation of
the act regarding the
financials
Forensic accountants
obtain document nec-
.054 .105 .071 .614 .541
essary to support or
refute a claim

interpretation Thus the null hypothesis should be rejected

while the alternate should be accepted. Based
The R square value is 0.38 expressed in
on the results, it can be concluded that foren-
percentages means that the model explained
sic accountants play a role in litigation sup-
38% of the variance crime and corruption
port services in the public sector.
with a level of significance of less than 5%.

No. 17 ~ 2013
 Change and Leadership
98
Hypothesis 3
H3: The forensic accountant is not relevant in documentation and reporting

Table 1.2 Coefficients(a)

Standardized
Model Unstandardized Coefficients t Sig
coefficients
B Std Error Beta B Std Error
1 (Constant) 3.626 .651 5.568 .000
The forensic audi-
tor leaves audit trail
.215 .122 .199 1.759 .083
in carrying out his
investigation.
The forensic accoun-
tants expert’s report
is designed to sup-
port the client and
rebut his opponent .031 .085 -.042 -.370 .712
if the facts, issues,
answers and authori-
ties will lead to these
conclusions.

interpretation security scams and many up-coming issues

of this kind all are openly indicating the in-
The test of the hypothesis showed an creasing demand for forensic accountants.
R square value of 38% variance and with a • The causes of corruption in Nigeria
level of significance of 3.07, as such we reject- are mostly as a result of obsession with ma-
ed the null hypothesis. The result of the test terialism, compulsion for a shortcut to af-
informed our conclusion that the forensic ac- fluence, glorification and approbation of
countants are relevant in documentation and ill-gotten wealth by the general public. These
reporting. reasons, among others, account for the per-
sistence of corruption in Nigeria
Conclusion and recommendations • The forensic accountant plays an im-
portant role in litigation support services.
Forensic accounting and the forensic ac-
• The forensic accountant, in fighting
countants play significant roles in the curb-
crimes and corruption, has a better advan-
ing of crimes and corruption in the public
tage within his distinct functions or roles
sector. The following findings were made
performed compared to the regular audi-
from this study:
tor. If Nigeria desires to be ‘deranked’ as
• The relevance of forensic account-
the most corrupt nation by Transparency
ing is growing worldwide as rising crimes,
International, she must rush to embrace this
corruption, malfunctioning of regulators,
emerging trend in the accounting profession

No. 17 ~ 2013
 Change and Leadership
99
so that crimes and corruption can be com- make all anti-graft, financial crimes and cor-
bated adequately both in the private sector ruption agencies to not only be autonomous,
and most especially the public sector of the but effective and efficient in performing their
nation. duties. It is not when a corrupt government
• This is the age of knowledge econo- official has lost face with powers that be that
my and the accountancy professional bod- he should face investigation and trials.
ies should increase their effort in providing Finally, it is no doubt this study could
functional and cutting edge education to not have covered all areas of forensic ac-
their members and develop curriculum that counting. It is therefore suggested that other
would incorporate forensic accounting with researchers expand to the private sector and
a view to make them globally competitive. even increase the population to be covered.
• Educational institutions should lead In an economy such as the Nigerian econo-
the way while the legislative arm of govern- my, forensic accounting is needed as it goes
ment should enact legislations that will not deeper to uncover fraud and hidden records.

APPENDIX
Table 1 Descriptive Statistics

Cumulative
Question Frequency Percentage Valid Percentage
Percentage
Bsc/HND 23 29.5 29.5 29.5
Msc 34 43.6 43.6 73.1
Post Grad. Dip 11 14.1 14.1 97.2
Ph. D 10 12.8 12.8 100.0
0-5yrs Work Experience 12 15.4 15.4 15.4
6-10yrs Work Experience 29 37.2 37.2 52.0
11-15 yrs Work Experience 26 33.3 33.3 85.9
Above 15yrs W. Experience 11 14.1 14.1 100.0
Top Mgmt Staff 26 33.3 33.3 33.3
Middle Mgmt. Staff 32 41.0 41.0 74.4
Lower Mgmt Staff 11 14.1 14.1 88.5
Others 9 11.5 11.5 100

Q6 Forensic accountant review

factual situation and provides
suggestions regarding possible
course of action
Disagree 5 6.4 6.4 6.4
Undecided 11 14.1 14.1 20.5
Agree 26 33.3 33.3 53.8
Strongly Agree 36 46.2 46.2 100

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 Change and Leadership
100

Total 78 100 100

Q7 F.A. searches for evidence

of criminal conduct or assist the
determination of or rebuttal of
claimed damages
Disagree 3 3.3 3.8 3.8
Undecided 10 12.8 12.8 16.7
Agree 29 37.2 37.2 53.8
Strongly Agree 36 46.2 46.2 100
Total 78 100 100

Q8 Forensic Accounting pro-

vides assistance with the protec-
tion and recovery of assets
Disagree 4 5.1 5.1 5.1
Undecided 12 15.4 15.4 20.5
Agree 24 30.8 30.8 51.3
Strongly Agree 38 48.7 48.7 100.0
Total 78 100.0 100.0
Q9 Forensic accounting pro-
vides coordination of other
expert including, private inves-
tigations, forensic document
examiner, consulting engineers
Disagree 0 0 0 0
Undecided 4 5.1 5.1 5.1
Agree 27 34.6 34.6 55.1
Strongly Agree 35 44.9 44.9 100
Total 78 100.0 100.0

Q10 Forensic accountant pro-

vide expert witness in litigation
support services
Disagree 4 5.1 5.1 5.1
Undecided 12 15.4 15.4 20.5
Agree 24 30.8 30.8 51.3
Strongly Agree 38 48.7 48.7 100
Total 78 100.0 100.0
Source: Field Survey 2012

No. 17 ~ 2013
 Change and Leadership
101
Table 2.3 Forensic accountants review the relevant documentation to form an initial assessment of the case in an
identified area of loss

Q11 Forensic accountants review

the relevant documentation to form Valid Cumulative
Frequency Percent
an initial assessment of the case in Percent Percent
an identified area of loss

Disagree 9 11.5 11.5 11.5

Undecided 14 17.9 17.9 29.5
.Agree 26 33.3 33.3 62.8
Strongly Agree 29 37.2 37.2 100
Total 78 100.0 100.0
Source: Field Survey 2012

Table 2.4 Forensic accountants assist with the examination for discovering including the formation of the act regard-
ing the financial`

Q12. Forensic accountants assist

with the examination for discover- Valid Cumulative
Frequency Percent
ing including the formation of the Percent Percent
act regarding the financial

Disagree 2 2.6 2.6 2.6

Undecided 3 3.8 3.8 6.4
.Agree 28 35.9 35.9 42.3
Strongly Agree 45 57.7 57.7 100.0
Total 78 100.0 100.0
Source: Field Survey 2012

Table 2.5 Forensic accountants attend the examination for discovery to review the testimony, assist with the under-
standing the financial issues and to formulate additional questions to be asked

Q13 Forensic accountants attend the

examination for discovery to review the
Valid Cumulative
testimony, assist with the understand- Frequency Percent
Percent Percent
ing the financial issues and to formulate
additional questions to be asked
Disagree 5 6.4 6.4 6.4
Undecided 26 33.3 33.3 39.7
.Agree 30 38.5 38.5 78.2
Strongly Agree 17 21.8 21.8 100.0
Total 78 100.0 100.0
Source: Field Survey 2012

No. 17 ~ 2013
 Change and Leadership
102
Table 2.6 Forensic accountants obtain documents necessary to support or refute a claim

Q14 Forensic accountants obtain

Valid Cumulative
documents necessary to support or Frequency Percent
Percent Percent
refute a claim

Strongly Disagree 6 7.7 7.7 7.7

Disagree 4 5.1 5.1 12.8
Undecided 16 20.5 20.5 33.3
Agree 26 33.3 33.3 66.7
Strongly Agree 26 33.3 33.3 100.0
Total 78 100.0 100.0
Source: Field Survey 2012

Table 2.7 The forensic accountant provides relevant parties with report to judge the expert’s opinion and the basis for
these opinions

Q15 The forensic accountant pro-

vides relevant parties with report to Valid Cumulative
Frequency Percent
judge the expert’s opinion and the Percent Percent
basis for these opinions

Strongly Disagree 3 3.8 3.8 3.8

Disagree 4 5.1 5.1 9.0
Undecided 14 17.9 17.9 26.9
Agree 31 39.7 39.7 66.7
Strongly Agree 26 33.3 33.3 100.0
Total 78 100.0 100.0
Source: Field Survey 2012

Table 2.8 The forensic auditor leaves audit trail in carrying out his investigation

Q16 The forensic auditor leaves

Valid Cumulative
audit trail in carrying out his Frequency Percent
Percent Percent
investigation

Strongly Disagree 2 2.6 2.6 2.6

Disagree 3 3.8 3.8 6.4
Undecided 17 21.8 21.8 28.2
Agree 33 42.3 42.3 70.5
Strongly Agree 23 29.5 29.5 100.0
Total 78 100.0 100.0
Source: Field Survey 2012

No. 17 ~ 2013
 Change and Leadership
103
Table 2.9 The forensic accountant’s report is designed to support the client and rebut his opponent if the facts, issues,
answers and authorities will lead to these conclusions

Q17 The forensic accountant’s

report is designed to support the
Valid Cumulative
client and rebut his opponent if the Frequency Percent
Percent Percent
facts, issues, answers and authori-
ties will lead to these conclusions
Strongly Disagree
Disagree 4 5.1 5.1 5.1
Undecided 13 16.7 16.7 21.8
Agree 29 37.2 37.2 59.0
Strongly Agree 32 41.0 41.0 100.0
Total 78 100.0 100.0
Source: Field Survey 2012

Table 3.1 Forensic accountants review factual situation and provide suggestions regarding possible courses of action.

N Minimum Maximum Mean STD Deviatio

Forensic accountants review fac-
tual situation and provide sugges-
78 2 5 4.19 .913
tions regarding possible courses of
action.
Valid N (listwise) 78
Source: Field Survey 2012

Table 3.2 Forensic accountant searches for evidences of criminal conduct or assist in the determination of or rebuttal
of claimed damages.
N Minimum Maximum Mean STD Deviatio
Forensic accountant searches for
evidences of criminal conduct or
78 2 5 4.26 .829
assist in the determination of or re-
buttal of claimed damages.
Valid N (listwise) 78
Source: Field Survey 2012

No. 17 ~ 2013
 Change and Leadership
104
Table 3.3 Forensic accounting provides assistance with the protection and recovery of assets

N Minimum Maximum Mean STD Deviatio

Forensic accounting provides assis-
tance with the protection and recov- 78 2 5 4.23 .896
ery of assets
Valid N (listwise) 78
Source: Field Survey 2012

Table 3.4 Investigate accounting provides co-ordination of other experts including: private investigations, forensic
document examiner, consulting engineers

N Minimum Maximum Mean STD Deviatio

Investigate accounting provides co-
ordination of other experts includ-
ing: private investigations, forensic 78 2 5 4.24 .776
document examiner, consulting
engineers
Valid N (listwise) 78
Source: Field Survey 2012

Table 3.5 Forensic accountants provide expert witness in litigation support services

N Minimum Maximum Mean STD Deviatio

Forensic accountants provide ex-
pert witness in litigation support 78 2 5 4.40 .690
services
Valid N (listwise) 78
Source: Field Survey 2012

Table 3.6. Forensic accountants review the relevant documentation to form an initial assessment of the case in an
identified area of loss.

N Minimum Maximum Mean STD Deviatio

Forensic accountants review the
relevant documentation to form an
78 2 5 3.96 1.012
initial assessment of the case in an
identified area of loss
Valid N (listwise) 78
Source: Field Survey 2012

No. 17 ~ 2013
 Change and Leadership
105
Table 3.7 Forensic accountants assist with the examination for discovering, including the formulation of the act
regarding the financial evidence

N Minimum Maximum Mean STD Deviatio

Forensic accountants assist with
the examination for discovering,
78 2 5 4.49 .698
including the formulation of the act
regarding the financial evidence
Valid N (listwise) 78
Source: Field Survey 2012

Table 3.8 Forensic accountants attend the examination for discovery to review the testimony, assist with understand-
ing the financial issues and to formulate additional questions to be asked

N Minimum Maximum Mean STD Deviatio

Forensic accountants attend the ex-
amination for discovery to review
the testimony, assist with under-
78 2 5 3.79 .871
standing the financial issues and to
formulate additional questions to
be asked
Valid N (listwise) 78
Source: Field Survey 2012

Table 3.9 Forensic accountant obtain document necessary to support or refute a claim

N Minimum Maximum Mean STD Deviatio

Forensic accountant obtain docu-
ment necessary to support or refute 78 1 5 3.79 1.188
a claim
Valid N (listwise) 78
Source: Field Survey 2012

Table 3.10 The forensic accountant provides relevant parties with report to judge the expert’s opinion and the basis
for these opinions

N Minimum Maximum Mean STD Deviatio

The forensic accountant provides
relevant parties with report to judge
78 1 5 3.94 1.036
the expert’s opinion and the basis
for these opinions
Valid N (listwise) 78
Source: Field Survey 2012

No. 17 ~ 2013
 Change and Leadership
106
Table 3.11 The forensic auditor leaves trail in carrying out his investigation

N Minimum Maximum Mean STD Deviatio

The forensic auditor leaves trail in
78 1 5 3.92 .950
carrying out his investigation
Valid N (listwise) 78
Source: Field Survey 2012

Table 3.12 The forensic accountant’s expert’s report is designed to support the client and rebut his opponent if the
facts, issues, answers and authorities will lead to these conclusions.

N Minimum Maximum Mean STD Deviatio

The forensic accountant’s expert’s
report is designed to support the
client and rebut his opponent if the 78 2 5 4.14 .879
facts, issues, answers and authori-
ties will lead to these conclusions
Valid N (listwise) 78
Source: Field Survey 2012

reFereNCes:
1. Agbaje, o. (2012) Corruption in Nigeria. Businessday Online. Wednesday, 09 May 2012
2. Ayobami, o. o. (2011) Corruption Eradication in Nigeria: An Appraisal. Library Philosophy and Practice. ISSN
1522-0222
3. Balogna, G.J. and J.l. robert. (1995). Fraud Auditing and Forensic Accounting: New tool and Techniques.
New York: John Wiley and Sons.
4. Chariri, A. (2009)The Relevance of Forensic Accounting in Detecting Financial Frauds. Published by Centre
for Accountability, Shariah & Forensic Accounting Studies
5. Federal Bureau of Investigation (2012) FBI Forensic Accountants: Following the Money
6. izedonmi, o. J. (2000) Introduction to Auditing (1st Edition) Amik Press, Benin City
7. Jafar, J.(2011) Forensic Accounting Practice in Nigeria: A New Paradigm For Stakeholders.Available from
www.iiued.ed.press/journal/sds
8. Marion hecht and Maryellen redmond (2010) Unveiling the Mystery of Forensic Accounting.Oregon Society
of Certified Public Accountants. Published by AccountingToday Retrieved on 12/11/2012 from www.orcpa.org.
9. mukoro, D. o., faboyede, s. o., and edafejirhaye, V. i (2011). Forensic Accounting and Fraud Manage-
ment Perspective: An Integrated Approach. H-Link Excel, Lagos.
10. Nye, J.(1967) Corruption and Political Development: A Cost-benefit Analysis, American political science re-
view, Vol.16, No2, June 1967
11. oguma, s.(2011) Why We Train Our Members in Forensic Accounting. The Nigerian Accountant, April/
June 2011.Vol.22.N2 (p.15)
12. ojo, M. (2012) Forensic Accounting and The Law: The Forensic Accountant in the Capacity of An Expert Wit-
ness. Retrieved from http://ssm:com/abstract=2026071

No. 17 ~ 2013
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107

Determinants of Dividend Policy: A study

of selected listed Firms in Nigeria

~ Ph.D. uwuigbe olubukunola Ranti (Department of Accounting, School of Busi-

ness, College of Development Studies, Covenant University, Ogun State, Nigeria)
E-mail: [email protected]

Abstract: This study investigated the determinants of dividends policy in the Nigerian stock ex-
change market. To achieve the objectives of this study, a total of 50 listed firms in the Nigerian stock ex-
change market were selected and analyzed for the study using the judgmental sampling technique. Also, the
corporate annual reports for the period 2006-2011 were used for the study. The paper was basically modeled
to examine the effects of financial performance of firms, firm size, financial leverage and board independence
on the dividend payout decisions of listed firms operating in the Nigerian stock exchange market using the
regression analysis method. The study in its findings observed that there is a significant positive relation-
ship between firms’ financial performance, size of firms and board independence on the dividend payouts
decisions of listed firms in Nigeria.
Key words: Nigeria; Dividend Payout; Financial Leverage; Financial Performance; Board In-
dependence Annual Report

1.introduction consider when making dividend policy deci-

sions have been developed by academics and
Firms’ decisions relating to dividend
researchers. Dividend policy, in the context
policy have been a subject of debate in the
of this study, relates to firm’s dividend pay-
financial literatures. Series of theoretical
out policy that managers follow in deciding
models and explanations describing the fac-
the pattern and size of cash distribution to
tors that managers of organisations should
shareholders over time. Following the work

No. 17 ~ 2013
 Change and Leadership
108
of Lintner (1956) and Miller and Modigliani suggested as potentially significant in de-
(1961), dividend policy has remained one of termining firm’s dividend payout decisions.
the most controversial issues in corporate Nevertheless, attempt to examine these con-
finance. Over the years, series of academic tending features and process them has in turn
research has been carried out on firms’ divi- spawned a vast empirical literature major-
dend policy. This has led to a number of com- ity of which are from developed economies.
peting theoretical explanations for dividend Interestingly, as a central motivation for this
policy. However, according to Black (1976:5) study, additional insight into the dividend
the concept has remained a puzzle in that policy debate can be gained by an exami-
“the harder we look at the concept of divi- nation of an emerging market or economy,
dend policy the more it seems like an ending which is currently to the best knowledge of
puzzle, with pieces that just do not fit togeth- the researcher, is limited. To this end there-
er”. Some of the questions that remain unan- fore, this study will attempt to fill the gap
swered include: Does dividend policy affect in literature by examing the determinants of
value? What are the factors that determine firms’ dividend payouts in Nigeria.
dividend policy? Is dividend policy deter- To gain more insight into this paper,
mined dependently or independently?
the paper has been structured as follows.
Prior academic literatures have attempt-
Following the introductory section is the re-
ed to provide answers to these questions and
view of relevant literature and hypotheses
many more but mystery still shrouds the
development. The next section then presents
dividend policy decision of firms. Lintner
(1956) opined that firms in the developed the variables definitions, econometric mod-
markets target their dividend payout ratio el and the preliminary empirical evidence.
with the help of current earnings and past Finally, the last section summarizes the main
dividends. Therefore, in order to reach such findings and conclusion of the study.
target, various modifications are made in
the dividend policy of a firm and thus firms scope of study
should have stable dividend policies. Miller
and Modigliani (1961) on the other hand This study basically attempts to exam-
are of the opinion that dividend policy is ir- ine some of the features that determine the
relevant in measuring the current worth of behaviour of firms’ dividend payouts ratio in
shares considering the irrational postulations Nigeria. To accomplish this objective, the an-
of market perfections, zero transaction costs, nual reports for the period 2006 -2011 were
perfect certainty and indifferent behaviour of analyzed. In addition, the study considered
investors. a total of 50 listed firms in the Nigerian stock
However, despite the emergence of sev- exchange market. The choice of the firms’
eral decades of academic research mostly arises based on the frequency in which divi-
from developed markets, no agreement or dends are paid to shareholders and the avail-
consensus has emerged about the rival theo- ability of ownership structure data for the
retical approaches to dividend policy. Series period under consideration.
of market and firm characteristics have been

No. 17 ~ 2013
 Change and Leadership
109
2. literature review and hypothesis with fluctuating earnings. In other stud-
Development ies, Rozeff (1982), Lloyd et. al., (1985) and
Colins et. al., (1996), a statistically significant
The term dividend policy can be de-
negative relationship was observed to exist
scribed as the policy a company uses to de-
between beta and dividend payout. These
cide how much it will pay to shareholders in
findings further suggest that firms having
dividends. The dividend policy a firm adopts
higher level of market risk will payout divi-
has implications for different stakeholders
dends at lower rate.
such as managers, lenders, and investors. It
Olantundun (2000) examined the de-
is one of the most debated topics and a core
terminants of dividends in Nigeria using the
theory of corporate finance which still keeps
Lintner-Brittain model for the full sample of
its prominent place. Debate about what drive
observations from 1984-1994. Findings from
companies to pay dividends has continued
the study indicate that there are no signifi-
over the years. The earliest research was un-
cant interactions between the conventional
dertaken by Lintner (1956:97) on American
Lintner / Brittain model and dividend deci-
companies in the mid of 1950s. Findings
sions of Nigerian firms. They concluded that
from the study show that dividend decisions
the dividend behaviour of Nigerian firms de-
made by companies are based on the current
pends on the firm’s size, growth prospects
profitability and in part on the dividends of
and the level of gearing.
the previous year. However, since then, there
In a comparative study of Australia and
have been a plethora of on-going debate on
Japanese firms, Ho (2003) opined that out of
dividend policy and the results are mixed.
all the regressed variables of profitability,
Fama and Babiak (1968) analysing the
size, liquidity, leverage, risk, asset mix and
Lintner model on the dividend policy main-
growth, the dividend policies are affected
tained that firms will try to increase the
positively by size in Australia and liquidity
dividend only when the dividends can be
in Japan and negatively by risk in Japan only.
sustained in future. Black (1976) finds no
The study also observed that industry effect
convincing explanation of why companies
was also significant in both Australia and
pay dividends to their shareholders.
Japan which indicates the importance of the
However, in a related study, Booth
industry in which a firm competes. Similarly,
and Cleary (2001) in their study concluded
Kumar (2003) in a study of the possible asso-
that a firm’s dividend policy is affected by
ciation between ownership structure, corpo-
profitability, size, debt, risk, tangibility and
rate governance and firm’s dividend payout
growth.
policy; Kumar observed that a positive asso-
Pruitt and Gitman (1991) in their study
ciation exists between dividends and earn-
observed that risk is also a strong determin-
ings trend. While debt-to-equity was found
ing factor of firm’s dividend policy. They
to be negatively associated, past investment
opined that a firm that has relatively stable
opportunities where positively associated
earnings is often able to predict approximate-
with dividend payout policy in India.
ly what its future earning will be. According
Kania and Bacon (2005) examined the
to them, such a firm is more likely to pay a
impact of profitability, growth, risk, liquidity
higher percentage of its earnings than firm
No. 17 ~ 2013
 Change and Leadership
110
and expansion on the dividend decision/poli- with net earnings but less strongly. Neither
cy of a corporation by analyzing the financial the age of the paying dividend company nor
data of over 10,000 publicly traded firms. The its home sector had an impact on the amount
study concluded that the dividend payout paid on each share (DPS). However, size was
ratio is significantly affected by the profit- found to have a significant effect on the DPS
ability, growth, risk and liquidity. as compared to either the current, past or fu-
In Iran, Etemadi and Chalalki (2005) ex- ture net earnings.
amined the association between management Anil and Kapoor (2008) in their pa-
performance and the cash dividend of listed per examined the determinants of divi-
firms in Tehran stock exchange. The results dend payout ratio of the Indian Information
show that there is a significant positive rela- Technology sector. For the pooled data for
tionship between management performances seven years, they observed that cash flows,
and cash dividends. Similarly, Jahankhahi corporate tax, sales growth and market-to-
and Ghorbani (2005) attempted to find out book value ratio do not explain the dividend
the determining factors of dividend policy payment pattern that existed in the informa-
in Tehran stock exchange market. Findings tion technology industry. However, liquidity
from their study show that firm’s dividend and beta (year-to-year variability in earnings)
policy follows the random talk model. were found to be noteworthy determinants.
Amidu and Abor (2006) examined the Similarly, Abdelsalam et. al., (2008) investi-
determinants of dividend pay ratio on the gated the dividend policy of 50 listed firms
platform of financial statements of accept- in Egypt for the period 2003-2005. Findings
ed companies in African exchange within from the study show that a significant posi-
a 6-year period. The results of this research tive association existed between institutional
indicate a significant positive association be- ownership and firms’ efficiency.
tween dividend pay ratio and earning, cash Nevertheless, despite the series of prior
flow and tax and also a significant negative empirical researches that have been under-
association between dividend pay ratio and taken, it is observed that most of these stud-
risk, institutional ownership, development ies have emerged majorly from developed
and market value to the book value. economies. However, in order to shed more
Malkawi (2007) studied the determi- light on the determinants of firms’ dividend
nants of corporate dividend policy in Jordan policy, this study will attempt to re-examine
for the period 1989-2000. The study found some of the determinants of dividend payout
out that size, age and profitability of the firms of listed firms in Nigeria.
where major determing factors of corporate
dividend Policy in Jordan. The study further Development of hypotheses
provided a strong support for the agency
costs hypothesis and is broadly consistent In order determine some of the factors
with the pecking order assumptions. Also, that influence the dividend behaviour of
Al-Twaijry (2007) confirmed that current firms in Nigeria, the following hypotheses
dividends are affected by the past and future stated in the null form were tested in this
earnings. Also, dividends were associated study:

No. 17 ~ 2013
 Change and Leadership
111
H1: There is no association be- DPOit = f (ROEit, FSIZEit, FL it,
tween the financial performance of firms and BIit, eit (1)
dividend payout of listed firms in Nigeria. This can be written in explicit form as:
H2: There is no significant asso- DPO it = β0 + β1ROEit + β3FSIZEit
ciation between firm size and the dividend + β4FLit, + BIit + eit(2)
payout of listed firms in Nigeria. Where:
H3: There is no significant asso- DPO it = Dividend Payout ratio is
ciation between debt ratio and the dividend measured as the dividend per equity share
payout of listed firms in Nigeria. divided by earnings per share
H4: There is no significant asso- ROE it = Return on Equity for firm i at
ciation between board independence and the time t (in years). Used as a proxy for perfor-
dividend payout of listed firms in Nigeria mance and is measured as net profit after tax
divided by shareholders equity.
3. research Methodology FSIZE it = Firms size is measured by the
natural logarithm of the book value of the
To achieve the objectives of this study, firms Total Assets.
the annual reports for the period 2006-2011 FLit = Financial leverage is proxied as
were examined. This is due to the fact that an- the debt to equity ratio. It measures the per-
nual reports are readily accessible. However, centage of debt over equity.
using the judgmental sampling technique; BI it = Board independence relates to
a total of 50 listed firms operating in the the total non-executive directors over total
Nigerian stock exchange were selected. This number of directors
represents 21.5% of the total population. This e = Stochastic or disturbance term.
is consistent with the propositions of Krejcie t = Time dimension of the Variables
& Morgan (1970) where a minimum of 5% β0 = Constant or Intercept.
of a defined population is considered as an β1-4 = Coefficients to be estimated or
appropriate sample size in making general- the Coefficients of slope parameters.
ization. The choice of the sampled firms was The expected signs of the coefficients (a prio-
based on the availability of annual reports, ri expectations) are such that β1, β2, β4 > 0 while
size and most importantly their ability to pay on the other hand β3 < 0.
dividend during the period under consider-
ation. Nevertheless, in order to re-examine
the research hypotheses stated in this study,
the ordinary least square (OLS) data estima-
tion method was used.
Model Specification:
In line with the postulations as stated in
the hypotheses, the following model is used
to re-examine the association between inde-
pendent and the dependent variables of the
listed firms in Nigeria.

No. 17 ~ 2013
 Change and Leadership
112
4.Discussion of Findings
Table 1:Descriptive Statistics of Variables

variables observations mean std. Dev min. max

DPo 50 . 4570417 . 2922138 .1111 994987
roe 50 . 3357537 . 2746883 -.378712 .954602
fsizE 50 4.404154 6.275886 .11 19.5245
Fl 50 . 9212481 . 694288 .0013 6.6802
Bi 50 .59326 .1891958 .14 .973
Source: field survey (2012)

Table 2: Pearson Correlations Coefficients for Sampled firms

DPo roe fsizE Fl Bi

DPo 1.0000
roe 0.3776 1.0000
0.0069
fsizE 0.7709 0.1822 1.0000
0.0000 0.2053
Fl -0.3121 -0.2666 -1589 1.0000
0.0273 0.0612 0.2703
Bi 0.4752 -0.2139 0.4611 0.0025 1.0000
0.0005 0.1358 0.0008 0.9862
Source: field survey (2012)

Table 3: Anova

Source SS df MS
Model 3.03318145 4 .758295362
Residual 1.15087438 45 0.25574986
Total 4.18405583 49 .085388894
Source: field survey (2012)

Table 4: Regression Result

DPo Coefficients std. err. t P > |t| [95% Cof. interval

roe .3143026 .0924754 3.40 0.001 .1280475 .5005577
fsizE .0263581 .0043589 6.05 0.000 .0175788 .0351374
Fl -.0248522 .0408065 -1.76 0.084 -.0532238 .0035195
Bi .4289556 .1447921 2.96 0.005 .1373294 .7205818
_Cons .0038412 .0966071 0.04 0.968 -.1907354 .1984178

No. 17 ~ 2013
 Change and Leadership
113

No. of obs. 50
f (4, 45) 29.55
Prob > F 0.0000
r-squared 0.7249
Adj r-squared 0.7005
root Mse 0.15992

Table 5: Variance Inflation Factor

Variables VIF 1/VIF

BI 1.44 0.695515
FSIZE 1.43 0.697449
ROE 1.24 0.808884
FL 1.09 0.916303
Mean VIF 1.30

Results from our descriptive statistics as the dividend payout of the listed firms in
shown in table (1) present a mean dividend Nigeria and it is also significant at 1% proba-
payout (DPO) of about .4570417 for the se- bility level with a correlation coefficient (r) of
lected firms under consideration. This repre- about 0.7709. Similarly, findings from table
sents an averaged percentage distribution of (2) further indicate that there is a significant
about 45% for the period. On the other hand; positive association between board indepen-
return on equity, firm size, financial lever- dence (BI) and the dividend payout of listed
age and board independence maintains an firms. This is evident with a correlation coef-
averaged mean distribution value of about ficient of about (r) 0.4752 and it is significant
.3357537, 4.404154, .921248 and .59326 re- at 1% level. However, findings on the associ-
spectively for the sampled listed firms in the ation between the financial leverage (proxied
Nigerian stock exchange market. Further, by FL) and the dividend payout show that a
empirical findings from the Pearson corre- negative association does exist between the
lation analysis on the relationship between financial leverage of firms (proxied by FL)
dividend payout and the financial perfor- and the dividend payout of listed firms in
mance of firms show that there is a positive Nigeria.
association between the performance of firms Furthermore, the test for multicol-
(proxied by ROE) and the dividend payout of linearity was carried out before analysing
listed firms in Nigeria, and it is significant at the regression model. According to Field
1% probability level with a correlation coef- (2000), this test is necessary because mul-
ficient (r) of about 0.3776. ticollinearity can affect the parameters of a
Also, the Pearson correlation analysis regression model. Adeyemi and Fagbemi
result shows that there is a positive associa- (2010) suggested that a tolerance value less
tion between the size of firms (FSIZE) and than 0.1 indicates a serious multi-colinearity

No. 17 ~ 2013
 Change and Leadership
114
problem between the independent variables. significant positive relationship between the
Nevertheless, since all values are more than financial performance of firms and dividend
0.10, there is no issue of multi-colinearity payout of firms listed in Nigeria. This is evi-
between the independent variables. Also, dent with the t-statistics value of 3.40 and a
Myers (1990) suggested that a variance infla- P>|t| (0.001). This outcome basically implies
tion factor (VIF) value greater than 10 calls that with all other variable held constant, an
for concern, however, for this study, the VIF increase or a change in the financial perfor-
values are less than 10. mance of firms, say by one percent will on
Consequently, findings from the regres- the average bring about a .3143026 percent
sion analysis result for the selected firms as increase in the dividend payout policies of
depicted in table (4) indicates that from the listed firms operating in Nigeria. That is an
model, the R2 which is often referred to as the increase in the financial performance of firms
coefficient of determination of the variables will also lead to a positive improvement in
is 0.7249. The R-Squared which is also a mea- firms dividend payout ratio. In essences, we
sure of the overall fitness of the model indi- can deduce from this result that the finan-
cates that the model is capable of explaining cial performance of firms have a significant
about 72% of the variability the share prices positive impact on the dividend policy deci-
of firms. This means that the model explains sions of listed firms in Nigeria. Interestingly,
about 72% of the systematic variation in the this is in line with the propositions of Baker
dependent variable. That is, about 18% of the and Powell (2000), Al-Najjar and Hussainey
variations in dividend payout policies of the (2009), and Kowalewski (2007). The firm
sampled firms are accounted for by other fac- with high profits has the potential to pay
tors not captured by the model. This result is dividends more than less profitable firms.
complimented by the adjusted R2 (adjusted However, this result does not agree with
R-squared) of about 0.7005%, which in es- the findings of Kania and Bacon (2005) and
sence is the proportion of total variance that Amidu and Abor (2006) where they main-
is explained by the model. tained the fact that profitability is significant
Similarly, findings from the Fishers ra- and negatively associated with dividend
tio (i.e. the F-Statistics which is a proof of the payout. That is firms will prefer investing in
validity of the estimated model) as reflected their assets rather than rather than paying
in table (3), presents a p-value that is less than dividends to shareholders.
0.05 (p-value < 0.05); this invariably suggests Similarly, empirical findings provided
clearly that simultaneously the explanatory in table (4) show that there is a significant
variable (i.e. firms performance, firms size, positive relationship between the firms’ size
financial leverage and board independence) of firms and the dividend payout decisions
are significantly associated with the depen- of listed firms. This is also evident in the t-
dent variable (dividend payout). That is, they statistics value of (6.05 and the P>|t| = 0.000).
strongly determine the behaviour of firms’ This outcome basically implies that in line
dividend payout policies. with previous studies, larger size firms’ pays
However, further empirical findings out more dividends as compared to smaller
as provided in table (4) show that there is a size firms since larger firms typically have

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easier and better access to the capital mar- This result nevertheless, is in line with the
ket to raise funds with lower cost and fewer views of Rozeff (1982), Kowalewski (2007),
constraints compared to a small firm. This Al-Malkawi (2007) and Al-Kuwari (2009)
in a nutshell suggests that the dependence where they opined that a significant negative
on internal funding decreases as firm size association does exist between firms’ finan-
increases. Therefore, all things being equal, cial leverage and the dividend payout deci-
large firms are more likely to afford paying sions of firms; since firms with high financial
higher dividends to shareholders. This out- leverage tend to have low payout ratios in
come nevertheless corroborates the opin- order to reduce the transaction costs associ-
ions of Al-Najjar and Hussainey (2009), Ho ated with the external financing. However,
(2003), Aivazian et al. (2003), Kumar (2003) this result does not agree with the findings
and Malkawi (2007) where they opined that provided in Kania and Bacon (2005).
firm size was a strong determining factor in Finally, in addition to the aforemen-
firms’ dividend payout decisions since larger tioned findings, table (4) also provides the
firms has more and diversified resources to result on the relationship between board in-
pay dividends. dependence and the dividend payouts de-
Furthermore, empirical findings from cisions of listed firms. Regression analysis
the regression analysis on the relationship result shows that there is a significant posi-
between financial leverage (expressed in tive relationship between the board inde-
terms of debt-equity ratio) and the dividend pendence (proxied by total non-executive
payout of listed firms in Nigeria indicate that directors over total number of directors) and
there is a significant inverse relationship be- the dividend policy decisions of listed firms
tween firms’ financial leverage and the divi- in Nigeria. This is nonetheless evident in the
dend payouts decisions of listed firms. This t-statistics value of (2.96 and P>|t| = 0.005).
is however evident in the t-statistics value of This regression result basically implies that
(-1.76 and P>|t| = 0.084). This implies that the greater the number of independent di-
with the influence of other variable held con- rectors present in the board, the higher they
stant, as firms financial leverage position will be willing to pay more dividend since
changes; say by one percent, on average, the independent directors are monitoring inves-
dividend payout ratio of listed firms’ also tor interest by participating in the board’s de-
changes by -.0248522 percent in the opposite cisions. This outcome is consistent with the
direction. This outcome means that there is findings of Belden (2005), Kowalewski et al.
a significant inverse relationship between (2007) and Jiraporn et al. (2008) where they
firms’ financial leverage position (prox- maintained the fact that outside directors on
ied by debt-equity ratio) and the dividend the company board tend to reduce the agen-
policy decisions of listed firms in Nigeria. cy cost in the firm and also they basically
Accordingly, as the debt content in the capi- tend to represent the shareholders effectively
tal structure of a firm decreases, its dividend and ensure their rights in the company. As a
payout ratio rises and vice versa. Therefore, result, the more outside members that are on
riskier and more financially indebted firms the board, the more dividends the company
will always prefer to pay lower dividends. was willing to pay.

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Conclusion have easier and better access to the capital
market to raise funds with lower cost and
This study basically examined the de-
fewer constraints compared to a small firm.
terminants of dividend policy in Nigeria.
Similarly, the study also revealed that
To achieve the objectives of this study, the
that there is a significant positive relation-
Nigerian stock exchange fact book and the
ship between the board independence (prox-
corporate annual reports for the period 2006-
ied by total non-executive directors over total
2010 were analyzed. The study nevertheless
number of directors) and the dividend policy
came up with the following findings that are
decisions of listed firms in Nigeria. However,
of salient value to investors and scholars.
contrary to the findings provided in hypoth-
Based on the hypotheses tested, the
eses one, two and four; findings from the
study observed that there was a significant
third hypothesis revealed that there is a sig-
positive association between the financial
nificant negative relationship between firms’
performance of firms and dividend payout
financial leverage and the dividend payouts
of firms listed in Nigeria. This outcome nev-
decisions of listed firms operating in Nigeria.
ertheless was in line with the propositions
Therefore, as the debt content in the capital
of Baker and Powell (2000), Al-Najjar and
structure of a firm decreases, its dividend
Hussainey (2009), and Kowalewski (2007).
payout ratio rises and vice versa. To this end,
Also, in line with the views of Al-Najjar and
riskier and more financially indebted firms
Hussainey (2009), Ho (2003), Aivazian et al.
will always prefer to pay lower dividends.
(2003), Kumar (2003) and Malkawi (2007),
More so, firms with high financial leverage
the study observed that firm size was also a
tend to have low dividend payout ratios in
strong determinant of firms’ dividend pay-
order to reduce the transaction costs associ-
out decisions; since larger firms typically
ated with the external financing.

APPENDIX: List of Sampled Firms with Averaged Values for 2006-2011

S/N FIRMS DPO ROE FSIZE FL BI

1 7up Bottling Company Plc .499398 .309971 1.893000 .062900 .6700
2 Flourmill of Nigeria Plc .165005 .143451 .127600 .013400 .6900
3 Horneywell Flour Mills Plc .112000 .141421 .110000 5.037700 .7100
National Salt Company (Nigeria)
4 .994987 .590388 9.421000 .021200 .6700
Plc
5 Nestle Nigeria Plc .864548 .275300 18.52300 .016100 .7500
6 Nigerian Breweries Plc .149856 .097483 .212000 .551000 .7300
7 Cadbury Nigeria Plc .366950 .026222 1.222000 .410400 .5200
8 Premier Breweries Plc .158892 .229242 .121000 .001900 .5500
9 Nigeria Bottling Company Plc .233006 .341408 1.133000 .080200 .5800
10 International Breweries Plc .370835 .831726 .220000 .054600 .5400
11 Guinness Nigeria Plc .712523 .646619 4.545600 .112100 .6200

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12 Presco Plc .120000 -.113417 .210000 5.714500 .5700

13 Okomu Oil Palm Plc .112000 -.378712 .231000 4.112300 .6800
14 Okitipupa Oil Palm Plc .757440 .954602 2.340000 .001400 .6900
15 Livestock Feeds Plc .111100 -.006157 .123100 .001300 .6900
16 FTN Cocoa Processors Plc .317429 .435806 .941000 .058500 .6100
17 Ellah Lakes Plc .213000 -.036778 .986000 6.680600 .6000
18 Nigerian Wire Industries Plc .198063 .233465 .810000 .012100 .6100
19 Nigerian Ropes Plc .812242 .053232 14.20000 .002500 .8300
20 Lafarge Cement Wapco Nigeria Plc .372134 .010917 .610000 .002000 .7100
Cement Company of Northern
21 .210000 -.088579 .153400 4.187200 .6900
Nigeria Plc
22 Dangote Cement Plc .289763 .121646 1.134000 1.176700 .6000
23 Ashaka Cement Plc .877219 .563508 9.498000 .032300 .6000
24 Premier Paints Plc .764286 .498577 9.530000 .002300 .4500
25 African Paints (Nigeria) Plc .966585 .282288 3.455000 .039500 .6600
26 Berger Paints Plc .573653 .266971 .130000 .638400 .7300
27 Cap Plc .278165 .229905 1.300000 .181600 .6300
28 DN Meryer Plc .158892 .572925 .124000 .232400 .5300
29 IPWA Plc .330059 .234140 .220000 .156600 .5700
30 Nigerian German Chemicals Plc .198063 .039465 .213000 .062300 .5100
Paints & Coatings Manufacturers
31 .812242 .455323 19.52450 .023000 .8300
Nigeria Plc
32 PS Mandrides & Company Plc .317429 .436345 .342000 .320000 .3300
33 Beverages (West Africa) Plc .945875 .534565 5.370000 .012300 .9500
34 Costain (West Africa) Plc .856484 .212306 9.420000 .012300 .7700
35 Arbico Plc .167857 .345558 .240000 .240000 .1400
36 Unilever Nigeria Plc .333306 .234544 .160000 .160000 .3700
37 Grommac Industries plc .145269 .256722 .450000 .450000 .1500
38 Access Bank Plc .264859 .456777 .230000 .230000 .2500
39 Afribank Nigeria Plc .358235 .567559 .210000 .210000 .2600
40 Bank PHB Plc .770227 .299766 6.534500 .023000 .7500
41 Diamond Bank Plc .333423 .451662 .110000 .110000 .3900
42 Ecobank Nigeria Plc .778212 .563508 19.33000 .101300 .7900
43 Fidelity Bank Plc .864566 .456767 18.45000 3.450000 .6700
44 First Bank of Nigeria Plc .887655 .565488 14.55000 2.550000 .9730
45 First City Monument Bank Plc .267853 .569715 .120000 2.120000 .6800
46 W.A Glass Industries .274568 .945899 .130000 3.130000 .2800

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Japaul Oil And Maritime Services

47 .254456 .845242 .220000 3.220000 .2100
Plc
48 Incar Nigeria Plc .424565 .234140 12.32000 .011200 .7500
49 R.T. Briscoe Plc .694563 .394231 15.21000 .010200 .5200
50 DN Tyre and Rubber Plc .812346 .454532 13.55000 .023100 .6100

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Conceptualizing in special sciences

~Ph.D. Bogdan Boghitoi (Faculty of Philosophy, University of Bucharest)

E-mail: [email protected]

Abstract: the paper examines a few methods for drawing categories that can be employed in special
sciences. By examining some of the core phenomena that laid the basis of the most prominent approaches to
typing in special sciences, it shows that we must accept a novel approach to delineating scientific kinds. Its
peculiarity is that makes the latter parts of an array of structures, rather than possessing a fixed one. This
can provide with a useful principal line of approach the leaders attempting to organize complex and evolv-
ing phenomena.
Key words: concepts, special sciences, epistemology, evolution, functional, organization

One of the unfulfilled ideals of the mod- to provide reductions of the theory on the
ern mind is that of “unity of science”. It is , upper level to that on the lower one, and
at the core, a reductive ideal (Oppenheim ultimately to the most basic, namely that of
and Putnam 1958). A key part part of its re- physics. Nevertheless this ideal, according to
ductive approach consists, most often, in which every type of entity has to be shown
finding matches between the kinds one em- to be ultimately equated with a definite type
ploys to theorize about certain processes and of microstructure, has been vehemently chal-
unique types of entities on a lower level in lenged. One source was the functional ap-
a mereological scale. This is widely assumed proach, originating in the philosophy of

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mind. The origins of functionalism lay in the stable causal relation, but without being ca-
assimilation of our psychological states with pable to effectively indicate any fixed mi-
the functioning of a Turing machine. The crostructural pendants. As Fodor remarks
same way a Turing machine is characterized (Fodor 1974), there are scientifically inter-
by a “machine table”, which describes the estening general statements that can be made
transitions between an input, internal states about items whose physical description has
and output, a physical system will have an nothing to do with each other. Whatever
internal functional structure, which describes they have in common according to this low-
steady causal relations between the sensory er level descriptions has nothing to do with
stimulations, internal states and the behav- the truth of the upper level generalizations.
ioral output.(Putnam 1967). Mental proper- One example to this point could be economic
ties are nothing more than places typically general statements, such as those concerned
held in causal chains. What individuates the with monetary exchange (e.g. Gersham’s
mental states is their causal relations with the law). Nevertheless money can have differ-
input and output. (see Lewis 1972). ent physical make-ups, like coins of different
One rather immediate consequence of metals and sizes, banknotes, a certain electri-
the functionalist outlook is the multiple re- cal charge in the memory of a computer (in
alizability. The causal structure involved can the case of electronic money), they can be
be realized by a host of realization bases, not wampoons and so on. Such examples strong-
amenable to a unique description in the lan- ly suggest that any description of the physical
guage of the theories dealing with the infe- realization of money must be wildly disjunc-
rior levels. Such functional descriptions of tive. Nevertheless when it comes to monetary
phenomena imply nothing with regard to exchange, whatever the physical structure of
microstructural properties of what under- money, we are bound to attend to the upper
lies this web of causal relations. From this functional level because there are here inter-
standpoint, a theory about the mind means esting generalizations that otherwise would
tracking causes at this upper level, without be missed.
specifying anything what the lower level Of course, there is also a backlash.
phenomena implementing it are supposed According to Kim microstructure is crucial
to be. Any assembly of entities that can enter for having genuine natural kinds because the
into the patterns of causation specified by the macrophysical properties are determined by
functional description would do. microstructure. Take for instance jade, which
Although functionalism has started as is not a true mineral kind. “Jade” designates
a stance on the theories about mind and be- actually two different substances, with un-
havior, philosophers have been quick to re- like molecular structures, namely jadeite
alize that the same issues at the core of this and nephrite, although its surface proper-
approach also face other special sciences. ties might be similar, and we might employ
There are situations where our only chance both substances for similar purposes, which
to make science is to track this upper level makes us to employ the naïve taxonomy we
causal chains, between items that are typed use in our daily lives. Nevertheless being
so that they would be capable to enter into jade cannot be a scientific predicate, as any

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putative law containing it has problems with to examine what would work as an effective
projectability. We simply won’t have any procedure for categorizing the modalities,
guarantee that any new instance of jade will therefore some of cognitive processes. What
behave in a the way we anticipate it would this analysis will put forward is a method of
do, as we would expect by inductive reason- categorization that is neither functional nor
ing based on the properties of a given pool of microstructural. This pleads for a multitude
jade items we already investigated. It might of approaches when it comes to defining
for instance, simply turn out that all the sam- classes in special sciences, turning special sci-
ples of jade examined so far by scientists in ences into a patchwork with local rules rather
order to determine how it behaves in cer- than an unified landscape, where one meth-
tain circumstances – for instance how it re- od would assert its hegemony. Regardless
acts to a certain substance - might be actually of the value of the functional approach, the
nephrite, and we have no way to extrapolate microstructural individuation of scientific
the results to a new instance of jade which kind and even the functional approach to be
is made out of jadeite. What guarantees the supplemented by another approach, that re-
similarity in behavior is the microstructure lies on the evolution of a certain structure (be
of the instances. Were jade to have a unitary it described in terms applying to its macro-
microstructure, we would be entitled to pre- physical or microphysical makeup), not on
dict from the instances we already exam- its intrinsic characteristics.
ined the behavior any future jade piece will Thus, what we would like to do is re-
have. Entities having similar microstructure view the criteria traditionally employed for
behave similarly. Thus it is necessary to be- individuating the sense modalities. They are
long to a given natural kind to share the same a mix of functional and microstructural ap-
microstructure, which in turn, as Kim quite proaches, which unfortunately don’t succeed
elegantly shows allows a smooth microstruc- to establish a viable criterion for what is to be
tural reduction. (Kim 1992) a certain sense. The modern discussion on the
We won’t try a direct refutation of one issue of the modality individuation was prac-
or the other of the arguments produced by tically initiated by Grice (Grice 1962), who
one or another of the two antagonistic ap- identifies 4 criteria by which senses could be
proaches in order to establish its indispens- distinguished. To these four criteria, which
ability when it comes to determining what is acquired both friends and foes, the litera-
to count as a natural kind. The dispute be- ture on the subject added a few more, that we
tween the two camps already generated an need to discuss also. As a result, we can iden-
abundant literature, to which we won’t at- tify seven criteria that can provide support in
tempt to add. What we intend is propose a our attempt to have clear cut scientific kinds.
third way of typing. It preserves the mul- 1.One way to decide what counts as a
tiple realization, while being irreducible to certain modality is to rely on what we be-
both previous approaches. In this respect, come aware by the means of them. For in-
we will try to get as much help as we can stance sight makes us perceive whiteness
from a case study in the very field that kick- and or roundness, while hearing makes us
started functionalism. Namely, we will try perceive sounds of a certain pitch, loudness

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or with certain tone qualities1. This is at the 2. senses can be told apart by the special
root a commonsense functionalist approach introspective character of the experience they
to individuating the modalities. The core in- sustain. Regardless of what we learn through
tuition is that we “hear” or “see” such exter- them, the experience of seeing is qualitative-
nal properties of things, which impress our ly different from the experience of hearing.
senses and this sensing of specific qualities The sheer difference of what when we subjec-
is what is to be a certain modality. But al- tively experience when we see or hear makes
though many times folk psychology might us capable to tell them apart. This criterion,
get our mental states right and inspire valid of a definite philosophical origin, makes
approaches in science, coming up with clear use of the qualia that it functionalizes. They
cut formulae inspired by it, isn’t always act as triggers for a certain internal process
easy. In occurrence, the present attempt to that makes us aware of the different types of
get criteria for typing doesn’t seem to work. perceiving.
On one hand, certain advances in this field But as Keeley notices (Keeley. 2002. pp.
of research, in conjunction with rather well 23-25) such a criterion has difficulties dealing
studied phenomena, show that none of the with the vomeronasal sense. The peculiarity
proper contents of sight is necessary. First, it of vomeronasal sense is that detects phero-
is not necessary to see colors in order to have mones but it does not produce any accom-
vision – total achromatopsia does not pre- panying qualia. Although the evidence for
vent us from attributing sight. Also, there is such a system is piling up, the existence of
the case described by Zeki (Zeki at al. 1999) a vomeronasal system in humans is contro-
, of a patient whose visual experience was versial, as Keeley dully notices. Nevertheless,
limited to colors only. He was insensitive to the argument can be completed, so that it
shapes, spatial position and, generally speak- could cope with these prospects.. What we
ing, none of the other contents populating should notice above all is that the problem
our vision. These two pathologies encompass is conceptual. We can very well conceive a
practically the whole range of visual expe- sense that feeds data into cognitive subsys-
riences of men, so none of the things vision tems that are inaccessible to the conscious
parts of our psyche, thus failing to generate
makes us aware seems to be required. On
any qualia. After all, much of the data the
the other hand becoming aware that a cer-
nervous system processes remains uncon-
tain thing has a definite color or shape can
scious. A scientist needs to operate with such
be done by the means of other senses (for in-
a concept of sense, which does not require in-
stance because we hear someone telling us dividuation by qualia, in order even to for-
that this is the case). Therefore this approach mulate its hypotheses. And do we know that
cannot provide us with sufficient criteria for in animals where such a system is functional
a certain modality. it does produce qualia? To my knowledge
1
The proprieties involved should be clearly dis- no scientist has approached such a problem,
tinguished from those of the subjective experien- let alone making qualia a necessary criterion
ces and of the physical phenomena, making possi- for asserting that a certain species possess a
ble a certain type of sensory experience, that will specific sense. Therefore, the attribution of
be discussed below.
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modalities does not seem to depend on pre- connection with the brain.(Keeley 2002:13).
suming specific qualia. We should look at the anatomy of the senso-
3. Another criterion that has been ad- ry organs and of the nervous system. Thus,
vanced relies features of the physical events we need to find a certain organ responding to
which activate them. It ultimately substitutes certain types of physical stimuli, certain de-
the typing of stimuli in terms of the macro- terminate nerves and a certain organ, like the
scopic properties (color, shape and so on) brain, where these neurons lead to. This is an
with their microphysical basis, as described obviously microstructural criterion. Anyway,
in the language of physics. This is the crite- the it will have to deal with he anatomical di-
rion endorsed by Heil (Heil 1983). According versity of the sense organs emphasized by
to Heil modalities are to be distinguished (in- Pacherie (Pacherie 1997: 19). We can’t take
sofar as possible) by reference to the kinds of as reference the peculiar anatomy of human
“physical stimulation” enabling the creature sense organs, as the compound eyes of in-
to extract information from the environment sects are very different in their anatomy. We
(Heil 1983, p.8). For instance seeing extracts shall come back on this criterion as on one
information from light, hearing from cer- hand, I shall attempt to show, as it is not en-
tain types of pressure waves and so on. Heil tirely devoid of any value. On the other hand
admits that senses cannot be sharply distin- we have to face the fact that Pacherie points
guished. Nevertheless, if one attempts to use at one of its genuine weaknesses.
such a criterion to draw sharp demarcations, 5. There is also the criterion of “dedica-
he will face serious problems, especially with tion”. (Keeley 2002, p. 17), that is “the evolu-
constructing a set of physical events that is tionary or developmental importance of the
necessary for individuating senses. For in- putative sense to an organism “. We should
stance nocioperception, that is perception of not attribute a certain sensory modality un-
pain, is activated by a vast variety of physi- less the sensed proprieties are part of the en-
cal events, none of them necessary for feeling vironmental variables to which the organism
pain. Contact with the substances liberated is evolutionarily attuned through past natu-
by the stings of the nettle or electric shock ral selection. For instance we should not pos-
produce pain in humans but for other other it an electric sense just because we can sense
species it might be innocuous, or irritating electric discharge from a battery we put on
substances might fail altogether to activate our tongue. Criterion (5) attempts to select as
pain detectors, which are activated instead sense just what is biologically important for
by other events. Actually, for each type of the organism. The problem is that any physi-
physical event producing pain in humans, cal stimulation that the organism can detect
we can imagine a species that are insensitive can become important for it. Just because an
to it, while still possessing nocioperception, organism can respond to a class of stimuli
so none of them is necessary. does not mean they are important for him.
4. The fourth (and the last) Gricean The problem is that from an evolution-
criterion is the internal mechanisms of the ary standpoint it is impossible to trace demar-
senses, or as Keely puts it, the character of cation lines between what is important and
the putative sense organs and their modes of what is not. Being shaped by natural selection

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for performing a certain function can’t help its importance, should we say that the animal
us here, nor, as we shall see, trying to make has lost one of its senses? What if we pur-
this criterion a bit milder. As it happens, the posefully introduce B into S’s environment?
biological function an organ performs shifts. Should we then say that we endowed S with
Expatiation is quite a common phenomenon a novel sense? But the strangest consequence
in the living world. It makes structures that is this: imagine that some of the members of
evolved to serve a certain biological function S learn to use the electricity detection capa-
to be subsequently recruited for serving an- bilities of their tongues in order to hunt B,
other. Sometimes the environmental condi- while some don’t2. Thus electrical detection
tions change, so that the function does not is important for some of the members of S
get to serve anymore the purpose it was se- while for others is irrelevant. Should we say
lected for, but continues to serve its exapted that some of the members of that species has
function. So what is now a sense for some- an extra sense while others lack, moreover in
thing, might have have appeared for entirely the conditions where there is no anatomical
different reasons. Take for instance a species difference between them?
marine animals S, which evolved a tongue 6. Another criterion proposed by
whose purpose is to pick the chemical trail Keeley is the ability to discriminate behav-
left by pray A. As it happens the peculiar iorally between stimuli that differ only in
structure of the tongue enables it to pick the terms of a particular physical energy type ”
electric discharges. Sometimes in its evolu- (Keely 2002, p. 15). It is peculiar application
tionary history pray A disappears and pray of a method routinely employed scientists
B enters the scene. The muscle discharges of and philosophers embracing the functional-
pray B can be picked by S, which can thus ist creed in order to infer that someone has
hunt it effectively. Shouldn’t we credit S or a certain property. Nevertheless, it is made
with an electrical sense? We probably would, to yield, amongst the criteria advanced by
but that would mean the demise of this cri- Keeley for determining modalities, probably
terion. Thus, any physical event an organ- the weakest. We have no idea how this can
ism can detect can become a stimulus with a apply to people who suffer from total paraly-
certain evolutionary import, given the right sis. Should we hold that they are deprived of
circumstances. hearing or sight just because there is no be-
One might reformulate the criterion havior they can issue? Also it is hard to see
more liberally, by dropping the condition what these energy levels could mean when it
that it should have evolved specially for comes to senses like taste. What taste detects
that purpose. Thus biological import might is differences in molecular composition of
be taken to refer to anything that has conse- various substances, rather than the differenc-
quence with regard to survival. The electric- es in kinetic energy of the molecules (which
ity detection capabilities might be affecting is detected by thermal receptors).
S’s survival positively or negatively (for in- 2
This might be imagined as a result of a regular
stance if eating B leads to poisoning, in the naturally occurring reinforcement process, where-
long run). But if pray B disappears, and as a by some individuals are by mere chance rewarded
consequence such a detection capability loses a sufficient number of times, at the rignt moments,
to acquire the new behavior.
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7. There is another idea that has been might vary from species to species. For in-
pressed too into work, at least tentatively, stance finding that cats have wildly differ-
as a criterion for individuating the senses, ent sensorimotor contingencies compared
which tries to exploit Noë and O’Regan’s to humans, won’t preclude biologists or an-
enactive treatement of perception. It is this imal psychologist attributing them vision.
time a functional approach, which neverthe- Moreover, genetic or developmental acci-
less replicates on this upper echelon a prob- dents might modify these mechanisms even
lem we previously encountered with regard further, possibly without any principled lim-
to a microstructural criterion. According to it. The viability of the criterion depends on
it, for each sense there corresponds a type of effectively proposing an independent set of
exploration of the world that is underpinned sufficient and, more important for us, neces-
by of specific “sensorimotor contingencies”, sary conditions for any possible sensorimo-
that is laws governing the sensory changes tor contingency linked to a specific modality,
produced by determinate motor actions (Noë which nobody has attempted.
and O’Regan, 2001, p. 943). For instance to We have tracked so far a few analyses
see is to be capable to master vision-related that, beyond rather merely methodological
rules of sensorimotor contingency. It is un- proposal of the two camps we mentioned in
clear how much this idea was intended to the beginning of this paper, have effectively
be turned into a full-blown criterion by Noë tried to come up with criteria for individuat-
and O’Regan, but some others have taken it ing sensory modalities Although none had a
to function as such (Auvray and Myin 2009, doctrinal ax to grind, they could be easily pi-
p.1046). The trouble is that in spite of the geonholed in one or another of the two grand
role sensorimotor contingencies may have approaches. They all failed, but their demise
in the way we sense the world, they cannot leaves us with a heritage. We can learn from
provide necessary conditions for circum- their shortcomings, and and build viable cri-
scribing modalities. For a start, in order to terion for individuating sensory modalities.
decide that whether a certain organism hav- Ultimately, this way of individuating the
ing photoreceptors see or not, we will rather senses will help us better appreciate the pat-
need to know which these specific contingen- terns of conceptualization in special scienc-
cies are. Saying that they are vision-related is es, attesting to typing practices that which
clearly circular. In order to escape circularity, cut across the functional – microstructural
we need a way to independently pick them divide.
up, which is really a tall order. We quickly We propose to look once again at the cri-
find ourselves mired in basically the same teria four and seven. Both relied on the inner
difficulties Pacherie showed must be faced mechanisms, one of the level of the anatomy
by anyone trying to exploit the anatomy of and the other at the level of the “software”
the sensory organs. The reason lies too in the it implements. Both failed because they had
diversity of mechanisms we must expect in as a consequence an unpalatable chauvinism,
the living world. Thus, we might envisage which takes a certain mechanism.
the possibility that these sensorimotor con- For one thing, biological kinds, be they
tingencies, associated to a certain modality, cognitive or otherwise, require a certain

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degree of flexibility with regard to the pe- impair vision. Nevertheless, I think we can
culiar makeup of mechanisms they desig- draw quite a neat line here. The modifica-
nate, even within one and the same species. tions that suppress sight or hearing will sup-
For instance a certain mutation might intro- press any delivery of the information of the
duce modifications in the standard way a sort the previous structure delivered to the
certain physiological process is carried out. other structures of the brain. For instance
For instance a certain mutation, through the there are instances such as those of blind-
physiological changes it induces, might in- sight. In blindsight cases subjects that are
duce color blindness, yet we won’t consider cortically blind, and for that matter are not
the color blind persons as being deprived of consciously aware of certain events that we
vision. Also disease can modify the way the usually become aware of by visual means,
way that a certain biological process unfolds. are capable to issue certain responses to vi-
Yet we won’t for that matter place it under sual stimuli. The lack of cortical awareness is
another biological category. For instance most certainly due to damage in the primary
digestion affected by an ailment will still visual cortex, which cuts the flow of informa-
e considered digestion, albeit pathological tion towards other brain areas. Nevertheless
digestion. seemingly paradoxically, scientists are still
The case of a mutation introducing vari- capable to credit such patients with sight.
ants is even more instructive. The nonstan- There are several theories about the neu-
dard way of carying out the task might grant ral mechanism that enable such subjects to
the owner of such an organism an evolution- unconsciously see events outside them (see
ary advantage. For this reason it can spread Weiskrantz 1990, Kalat 2009, pp. 169-170,
in the population where it arose. The group Cowey 2010 etc) . Whatever the truth, sight
characterized by that mutation can even dif- can be attributed exactly to the measure to
ferentiate itself to the point as to starting a which parts of the normal information are
new species. This is after all, inter alia, the delivered, by the means of cortical structures
way speciation is presented by evolutionary that are still intact, further into other subsys-
theory. Such remarks are capable to put us tems such as control of the eye movement
on the right track with regard to a criterion or any other parts of our neural architecture
for modalities. Take a certain structure which that control the responses the subject is still
we know characterizes the way at some point capable to issue. If we are to scrutinize to the
in time the cognition of a given species nor- scientific practice, we will observe that sight
mally works – in occurrence a certain sensory is attributed to the extent that such informa-
modality. Some modifications of this struc- tion is made available downstream to other
ture will still have to instantiate that kind, al- structures whose role is to take over this in-
though the way it works, spelled out in the formation, and denied to the extent that the
language of the upper or lower level theory contrary happens.
doesn’t conform to a standard pattern. Given these limitations, we have here a
We don’t pretend that all such modifi- recursive procedure by the means of which
cations of mechanisms preserve the sensory to determine what is to be allowed to exem-
modality. Certain changes will definitely plify a certain modality. It is not having a

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specifiable structure. The way sight or hear- This isn’t just something that is specif-
ing work can be modified in many ways. ic to cognition. The same rules can account
Having sight or any other modality is rather to other scientific practices, such as those in
belonging to a certain continuum of modifi- economics. Take for instance money. When
cations, as effected initally by evolution by they were invented money were pieces of
natural selection, which created the ur-mech- stamped by an authority so that it would
anisms for each modality and continued to guarantee the content of the token. But as
tinker with them, but also by many other Fodor emphasized, money can’t be typed
processes that impact sensory cognition.3 by pointing at the microstructure. At first,
More generally and one step closer to money were made in electrum (a natural al-
our ultimate goal, this approach to sensory loy of gold and silver), then in gold, in silver
modality individuation documents a certain , copper, paper or as, electronic money, their
way scientists proceed in carving the kinds realization base is whatever material is em-
they use. It is neither functional nor micro- ployed for storing information abot people’s
structural. This continuum is ensured by accounts4. What Fodor failed to see is that
a process of change that occurs both on the money paticipate in a variety of exchange
level of “hardware” as in that of “software”. patterns. But the pattern of economic inter-
Damage to certain pathways or a genetic ac- action and exchange can be endlessly modi-
cident change can impact the way our neu- fied to. The limit is only our whim, as we can
ral structures work, which in its turn may legislate at will so that to change one or an-
impact the functional level. Also, certain odd other of the patterns of economic interaction
developmental circumstances can result in in our society. Therefore we won’t be able to
nonstandard routines involved in informa- pick up an uniquely describable pattern of
tion gathering. This rule of drawing does not interaction where money play a role, so that
make reference to any of the levels involved. we could individuate money irrevocably.
Moreover, it isn’t reducible to any of the other Nevertheless we won’t be deprived of such
two approaches, as it doesn’t employ a speci- an economic kind, as we can define it with
fiable structure, describable in the language reference to a certain evolutionary process,
of the lower level theory or in that of the up- to which various forms of money participate.
per level one, because any such specification This way of carving kinds is not an-
would imply the chauvinism we were talk- tagonistic to microstructural typing, nor to
ing about above, and that was emphasized employing functional relations to the same
by Pacherie. end. One can legitimately define functional
categories. For instance one can speak about
3
This continuum might be shaped by selective pre- modern human speech production or pri-
ssures “that attune” our senses to environmental mate vision, by identifying the patterns into
significant events (as crterion 5 requests) or not. which such types of processes enter in the
Evolution is not the only force impacting peculiar
4
instance of a certain sort of biological processes. Although the istory can be traced even further
As we have seen, the changes can be induced by back, to some premonetary items used in exchan-
various processes such as maladies that disturb ge (for a comprehensive history of money see Da-
the regular physiological mechanisms. vies 2002)
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case of each current species. Thus, it might the functional and the microstructural typing
be discovered that modern linguistic faculty as well as the approach we are trying to make
might employ certain defining algorithms in visible can coexist and pressed into the line
order to compose syntactically complex ut- of fire to provide us with the conceptual am-
terances, that can be spelled out functionally. munition needed to tackle the need for prin-
Modern speech might have no forerunner in cipled ways to organize our knowledge.
a simper form of verbal behavior hominids Our approach does not of course claim
were capable of. The modes of communica- to refute the reproaches made by the micro-
tion employed by our ancestors might have functionalistic camp to the idea of functional
lacked those algorithms, which are essential theory. This is an entirely different and quite a
for language. In this scenario, there would vast issue. Nevertheless it undermines its he-
have been an explosion of language that oc- gemonic and reductionist pretenses. It shows
curred with the emergence of the Homo sapi- that we can have a kind which underpinned
ens, that would allow only functional typing by a heterogeneous group microstructures,
of the linguistic processing, making the lan- but which are held together, under the um-
guage faculty a local phenomenon peculiar brella of the same kind, by sharing the same
to our species (and which might never evolve history of change .
any further). The only theoretical endeavor This phenomenon is not only of episte-
scientists can engage into would be deci- mological import. It is extremely important
phering these algorithms bursting onto the for the leadership in times of change. The
scene of evolution. We can even hold that morals for the manager is that s/he should
such a functional upper-level architecture not always find essential structures that an-
described by the algorithm that produce imate organizations or economic practices
speech reduces to a neural architecture that persisting over time. Sometimes the phenom-
is idiosyncratic to the homo sapiens. But the ena in the realm of special sciences, from bi-
opposite scenario is also possible. It might ology to economy, have to deal with concepts
equally turn out that our ancestors did pos- spanning over an array that could potentially
ses a simpler form language, based on a more end up including members with no struc-
rudimentary system of transformations, that tural commonalties. Nevertheless, our paper
engendered a different verbal behavior and provides him or her with an outlook that can
which is underpinned by less developed neu- help him or her tackle the change principally,
ral structures. This simpler functional struc- encouraging setting analysis units at the level
ture is the one that evolved into our current of these variegated continuum.
language faculty (which we might describe
functionally at the psychological level or mi- Acnowledgements
crostructurally, on the neural level), and in
this case having a proper concept imposes to This work was supported by the stra-
take the route we are pointing at. Moreover tegic grant POSDRU/89/1.5/S/62259, Project
our stance makes us capable to specify local “Applied social, human and political scienc-
functional structures, describing how a cer- es. Postdostoral training and postdoctoral
tain cognitive process works in one precise fellowships in social, human and political
population at a given time, as well as with sciences,” cofinanced by the European Social
a microstructural account of what makes its Fund within the
members tick. This situation illustrates how Sectorial Operational Program Human
Resources Development 2007 – 2013.
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130
reFereNCes:
1. Auvray,M and Myin, e (2009) Perception With Compensatory Devices: From Sensory Substitution to Senso-
rimotor Extension, Cognitive Science 33,1036–1058.
2. Cowey A. (2010) The blindsight saga , Exp Brain Res 200:3–24
3. Davies, G. ( 2002) A History of money from ancient times to the present day, 3rd. ed. Cardiff: University of
Wales Press,.
4.  Fodor J. A. (1968). Psychological Explanation: An Introduction To The Philosophy Of Psychology. Ny, Random
House.
5.  Fodor J. A. (1974). Special Sciences (Or: The Disunity of Science as a Working Hypothesis). Synthese 28 (2):97-
115.
6. heil, J. (1983). Perception and Cognition. University of California Press.
7. Grice h. P. (1962). Some Remarks About the Senses. In R. J. Butler (ed.), Analytical Philosophy, First Series.
Oxford University Press.
8. Kalat, j. w. (2009). Biological psychology. (10th ed). Wadsworth Publishing.
9. keeley, B. (2002) “Making sense of the senses: Individuating modalities in humans and other animals,” The
Journal of Philosophy, 99, 5-28.
10.  kim J. (1992). Multiple Realization and the Metaphysics of Reduction. Philosophy and Phenomenological
Research 52 (1):1-26.
11. lewis D. (1972). “Psychophysical and Theoretical Identifications”. Australasian Journal of Philosophy 50:
249-58
12. o’Regan, j.K., & noë, a. (2001). What it is like to see: A sensorimotor theory of visual experience. Synthèse,
129(1), 79-103.
13. oppenheim, P and Putnam, h. (1958). Unity of Science as a Working Hypothesis. In Herbert Feigl, Michael
Scriven & Grover Maxwell (eds.).
14. Pacherie, e. (1997). Du problème de Molyneux au problème de Bach-y-Rita. In J. Proust (ed.), Perception et
Intermodalité, Approches actuelles du Problème de Molyneux,, Paris, PUF, pp. 255-293.
15. Putnam, h (1967) “Psychological Predicates”, in W. H. Capitan and D. D. Merrill, eds., Art, Mind, and Re-
ligion (Pittsburgh: University of Pittsburgh ); reprinted as “The Nature of Mental States,” in Ned Block,
ed., Readings in Philosophy of Psychology, vol. 1 (Cambridge: Harvard University Press, 1980).
16.  weiskrantz l. (1990)Blindsight_ a case study and implications , Oxford Clarendon Press
17.  zeki, s. aglioti, s. mcKeefry, D. and Berlucchi g. (1999) The Neurological Basis of Conscious Color
Perception in a Blind Patient , in Proceedings of the National Academy of Sciences of the United States
of America, Vol. 96, No. 24 (Nov. 23, 1999), pp. 14124-1412

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hertzian Dynamic models in ludwig witt-

genstein’s theory of logic1

~Ph.D. andreea Eșanu (Faculty of Philosophy, University of Bucharest, Romania)

E-mail: [email protected]

Abstract: During the last century the social sciences grew from the stage of speculative system build-
ing to a more mature development in which empirical data are sought for the significance they can have
for systematic theories. A lot of work in this field concerns itself with determining the methodological and
conceptual prerequisites for a mature science of human reasoning and behavior. Modeling human reason-
ing and human behavior, although currently focused on social and economic phenomena like organizations,
organizational knowledge, leadership, cooperation etc., are historically dependent upon modeling natural
phenomena in physical science, precisely because physical science tackles successfully the issue of building
upon empirical data. This paper pursues an apparently small, but nonetheless significant, historical claim
concerning the “relative position of human reasoning and mechanics” a claim made possible by the devel-
opment of late 19th century’s epistemology of science (mainly Heinrich Hertz’s) and theoretical philosophy
(Ludwig Wittgenstein). The main idea of the paper is that Ludwig Wittgenstein’s concept of “logical repre-
sentation”, seen as a landmark for what human reasoning is about, is an intricate analogue to the Hertzian
“dynamic models” from the Principles of Mechanics. This analogy is analyzed and explained with regard
to the problem of the “logic of color”.
Key words: dynamic models; human reasoning; Hertzian mechanics; Wittgenstein’ logic of
color, representation.

1 This work was supported by the strategic grant POSDRU/89/1.5/S/62259, Project Applied social, human
and political sciences. Postdoctoral training and postdoctoral fellowships in social, human and political
sciences co-financed by the European
No. 17 ~ 2013
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1.introduction as projections on abstract n-dimensional man-
ifolds that allow for perceptual reasoning as
Almost every specialist in social scienc-
dynamic transformations on these manifolds,
es (and especially in economics) is familiar
while Ludwig Boltzmann is credited with the
with game-theory, a very strong logico-math-
idea that the language of science is an integrat-
ematical tool used to model human behavior:
ing image (Bild) of physical reality. Starting
e.g. cooperative behavior, organizations’ dy-
from here a large number of commentators
namics, the emergence of social groups and
and interpreters (P. Baker, P.M.S. Hacker,
group norms, the emergence and features
N.Griffin, E. Stenius, E. Anscombe etc.) of
of leadership based on cooperative/ defec-
Ludwig Wittgenstein’s early philosophical
tive behavior etc. This tool is also effective
writings have suggested different hypoth-
in studying human reasoning and cognitive
eses regarding the signification of “images”
biases from an evolutionary perspective and
(Bilder) in his philosophical work Tractatus
that is why it fits well in the analysis of group
logico-philosophicus. One interpretation
phenomena especially when the dynamics of
(Visser, 1999) associates early Wittgenstein’s
such groups becomes significant for econom-
account of propositions as images with von
ics or for sociology. But the tradition of using
Helmholtz’s phenomenological analysis of
logical or mathematical modeling, in order
perception. Thus, the proposition as an “im-
to capture human reasoning and human ac-
age” (Bild) of reality is the expression of a
tion in various practical contexts that under-
Vorstellung (or inner representation) and it
go aggregation and change, spreads from a
is composed of elementary sense-data. By
much older root. In fact, logico-mathemat-
contrast, other interpretations (Hyder, 2002;
ical modeling is historically and conceptu-
Hamilton, 2002), relate Wittgenstein’s thesis
ally connected with the activity of modeling
that propositions are images with a physical-
natural phenomena in physical science. This
ist perspective on representation. According
practice is made explicit, for instance, in the
to such points of view, propositional images
development of the late 19th century’s episte-
are expressions of material representations
mology of science (H. Hertz, L. Boltzmann),
of reality (Darstellungen) that form indepen-
and it relies on the concept of “dynamic mod-
dently from the mind and are composed of
els” from classical mechanics and on several
real objects (like physical atoms). It is sig-
philosophical developments regarding the
nificant to note that the distinction between
concept of human reasoning as an activity of
manipulating and integrating “representa- these two kinds of representations – inner
tions” (L. Wittgenstein). (Vorstellungen) and material representa-
The conceptual interplay between tions (Darstellungen) – was used by Ludwig
“representations”, “models” and “dynam- Boltzmann to distinguish science from phe-
ics” appears in the writings of several im- nomenological epistemology. In his view,
portant nineteenth century scientists and material representations of reality were gen-
epistemologists of science such as Heinrich erated by the laws of physics and they satis-
Hertz, Hermann von Helmholtz and Ludwig fied certain conditions of validity that inner
Boltzmann. Hermann von Helmholtz, for in- representations could not satisfy.
stance, is the author of a theory of perceptions
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If we take a close look at Tractatus evolution of a phenomenon (like motion,
logico-philosophicus, it is quite obvious for instance) by extracting physical conse-
that Ludwig Wittgenstein is not referring to quences from an initial state – described,
physical atoms, nor to elementary sense-data in principle, by a bunch of partial informa-
(meant to build up a subjective experience of tion. A dynamic model allows us to derive
reality) when speaking about Bilder, but to correctly future states of a physical system
a generic notion of atom involved in human even though we do not have a complete rep-
reasoning. My thesis is that it might be in- resentation of the initial state of that system.
sightful to pay attention to Heinrich Hertz’s A good example would be the differential
theory of dynamic models if we want to fully representation of motion – where masses
understand Wittgenstein’s idea that the lin- and forces that act upon material points are
guistic entities (i.e. propositions) involved neglected. However, the partial informa-
in human reasoning are “images” (Bilder) tion needed has to be organized in a relevant
made of logical atoms. manner in order to allow for the extraction
In his Mechanics, the physicist Heinrich of desired consequences (for instance, time
Hertz talks about a geometrical representa- and position must be considered indepen-
tion of nature. His point of view is, in some dently). This incomplete, but organized, in-
respects, perplexing. Hertz refers to his formation is what it is called the “scenario”
models both in terms of “mental images” of a model. It is interesting to see that in his
(Scheinbilder) and of “physical representa- introduction to the Principles of Mechanics,
tions” (Darstellungen) of nature by means Heinrich Hertz is using a very similar con-
of physical laws. However, his choices of cept, Scheinbilder:
words and concepts may lead the researcher “We form for ourselves images [innere
astray. It is a fact that in the late nineteenth Scheinbilder] or symbols of external objects;
century physics and epistemology of science and the form which we give them is such
there was no unanimous consensus regard- that necessary consequents of the images
ing to what a model of nature really is. This in thought are always images of the neces-
may explain some of Hertz’s ambiguities, but sary consequents in nature of the things pic-
also blur some of his theoretical intentions. tured.” (Hertz, 2001, 1).
That is why I shall bring into focus a more A “scenario” is also abstract – it struc-
specific and technical distinction that could tures information into relevant entities,
give a clearer meaning to Hertz’s conception properties and relations. For instance, in the
of models. What I have in mind is the dis- differential representation of motion we have
tinction between the “scenario” of a dynamic abstract material points characterized by in-
model (a concept that would explain Hertz’s dependent abstract properties like spatial
notion of Scheinbild) and the “parameterized and temporal position (in a motion space).
representation” of a physical phenomenon So Heinrich Hertz seems to refer to some ab-
within a dynamic model that would corre- stract information about a state of a system,
spond to Hertz’s notion of Darstellung. relevant to the extraction of necessary physi-
The most important feature of a dy- cal consequences (or reliable predictions).
namic model is that it follows the temporal But in order to make reliable predictions, a

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model needs, along with an adequate organi- and models. It is relevant to stress that in
zation of initial information, some equations the secondary literature there are loads of
of condition that allow for a perspicuous cal- studies that concentrate on the first issue,
culation of observable quantities such as dis- while to the second the references are rather
placement. It is worthwhile to stress that in few (Barker, 1980; Grasshoff, 1998; Tougas,
Hertz’s dynamic models mass is introduced 199;, Lammpert 2000). Usually, the concept
in the motion space not as an independent of logical multiplicity (Mannifältihkeit) is
variable, but as a parameter built in the equa- considered a terminological influence from
tions of condition. This suggests that Heinrich Hertz, with no substantial connection to the
Hertz had in mind a peculiar representation theory of dynamic models presented in his
of motion and a different organization of mo- Principles of Mechanics. In the following,
tion “scenarios” from the standard cinematic I shall argue that Wittgenstein’s concept of
representation. Indeed, he seems to propose a Mannifältihkeit bears indeed a substantial
“parameterized representation” of displace- connection to the theory of dynamic models
ment or a Darstellung, through equations of from Hertzian mechanics, and that this con-
condition with build-in parameters. This pe- nection is important in order to give a proper
culiar approach to models (Modelle) gives a account of early Wittgenstein’s atomism.
significant and technical load to the notion of But first let us see what logical mul-
Darstellung that is not present, for instance, tiplicity (Mannifältihkeit) means. I shall
in Boltzmann’s account, and yet, as we are keep certain remarks quite brief because it
about to see in the following sections, of great is impossible to give an extensive account
relevance to Ludwig Wittgenstein’s atomism in such a short paper. As some interpreters
from Tractatus logico-philosophicus. have already pointed out, Hertz’s concept
of Mannifältihkeit is an important influ-
2. Dynamic models ence from Riemannian geometry, absorbed
through von Helmholtz’s theory of percep-
Wittgenstein’s references to Hertz’s tion (Hyder, 2002):
dynamic models in the Tractatus are rather „Riemann calls a system of differences
scarce. In fact, the only explicit reference is to in which the individual element can be de-
be found at 4.04: termined by n measurements, a n-fold mani-
“In a proposition there must be ex- fold, or a manifold of n dimensions. Thus
actly as many distinguishable parts as in the the space that we know and in which we live
situation that it represents. The two must is a three-fold extended manifold, a plane a
possess the same logical (mathematical) mul- two-fold, and a line a one-fold manifold, as is
tiplicity. (Compare Hertz’s Mechanics on dy- indeed time. The system of colors also consti-
namical models.)” tutes a three-fold manifold, in that each color
This passage brings into focus two re- can be represented… as a mixture of three el-
lated issues: first, the connection between ementary colors, of each of which a definite
propositional “parts” or elements and logical quantum is to be chosen… we could just as
multiplicity (Mannifältihkeit), and second, well describe the domain of simple tones as
the correlation between logical multiplicity a manifold of two dimensions, if we are to

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take them to be differentiated only by pitch long? It seems that in order to be able to talk
and volume.” 1 about length we need a system of measure-
According to von Helmholtz all our em- ments for length, such as a yardstick, i.e., a
pirical knowledge is organized in complexes 1-dimensional manifold. Without the one-
of elementary data, called manifolds. Colors, fold of length, the sentence “This stick is 1.5
sounds, time etc. are such manifolds. The ba- meters long” would not have any meaning.
sic idea borrowed from Riemann’s geometry Likewise, any sentence bears with it a system
is that any quantity can be defined as a point of logical “measurements”: we know, for in-
in a space of n-dimensional measurements. stance, when a sentence refers to an object, to
Of course, in order to get an adequate mea- a property, a relation etc. We may spot eas-
surement of the desired quantities, it is nec- ily such differences as between “John is in
essary to determine the right multiplicity of the yard” and “Yellow is brighter than gray”,
the magnitude space, i.e. the correct number although the mechanism of such differenc-
of dimensions. In this respect, von Helmholtz es is by far more intricate than in the case
uses a phenomenological device – i.e. how of length. To such differences was intended
colors, sounds, time etc. form in human per- to answer, for instance, Betrand Russell’s
ception. Thus, he observes that colors can theory of types. However, never convinced
be analyzed 3-dimensionally as mixtures of by Russell’s theory, Ludwig Wittgenstein
three elementary colors; sounds can by ana- chose in the Tractatus a different solution,
lyzed 2-dimensionally by measuring pitch i.e. to deal away with predicative and rela-
and intensity; time is a 1-dimensional object tional concepts and present the system of
of our inner perception etc. So multiplicity logical differences in a quite original manner:
is determined phenomenologically and this the projection (Abbildung) of sentences like
seems to be one of the key aspects of Herman “John is in the yard” and “Yellow is brighter
von Helmholtz’s epistemology. His mani- than gray” on an aggregate of logical mani-
folds are perceptual manifolds. Interestingly, folds (called logical space).
they seem to offer a good account of Ludwig The logical measurements (that give the
Boltzmann’s concept of Vorstellung. As we logical multiplicity of a situation like John’s
have seen in the first part, a Vorstellung is a presence in the yard) are introduced in lan-
sort of internal model of reality. Perceptual guage along with each sentence like lengths
manifolds are in von Helmholtz’s epistemol- are introduced along with each quantity-
ogy internal models of reality – with ade- expression: “1 meter”, “2 meters” etc., and
quate multiplicity. therefore each sentence is associated with a
Keeping these observations in mind, manifold model, called by the author of the
we could see by analogy what the author of Tractatus, Darstellung. Later in Philosophical
the Tractatus meant by his concept of logi- Remarks, Ludwig Wittgenstein recalls this
cal multiplicity. Let us start with a simple approach of associating sentences and situa-
example, a sentence like: “This stick is 1.5 tions with the idea of logical manifolds:
meters long”. We may ask ourselves now “When I built language up by using a
what does it mean for a stick to be 1.5 meters coordinate system for representing a state of
affairs in space, I introduced into language an
1
(Hyder, 2002, 26).
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element which it doesn’t normally use. This In his Principles of Mechanics Heinrich
device is surely permissible. And it shows Hertz defines a dynamic model in the follow-
the connection between language and reality. ing manner. A material system (or a system
The written sign without the coordinate sys- of material points) is a dynamic model of an-
tem is senseless.” 2 other material system if and only if the two
But, in order for this approach to work, systems have:
it is necessary to express correctly the mul- a) the same number of coordinates of
tiplicity of the situation (i.e. its correct num- position;
ber of dimensions). As mentioned before, b) the same equations of condition;
Hermann von Helmholtz used a phenome- c) the same magnitude of displacement.
nological device: how qualities decompose in It should be pointed out that condi-
perception. Although Wittgenstein often re- tion (b) is by far the most interesting. If the
fers (especially in “Some Remarks on Logical first is referring to the projection (Abbildung)
Form” and in Philosophical Remarks) to a of a physical system on a coordinate space,
color and a sound space and even to the vi- and the third refers to the conservation of
sual field as a substitution for physical space displacement, the second one stipulates the
when presenting his examples, he does not existence of the same equations of condition
seem to have in mind a Helmholtzian phe- in both systems. The question is: why could
nomenological reduction, but only some per- they be different? Let us think of some exam-
tinent analogies. His statement concerning ples. Let us suppose that we want to model
multiplicity (Mannifältihkeit) is referring to the trajectory of a physical system with two
propositional and factual “parts” that can be material points that move through space.
depicted via a projection on coordinate sys- According to Hertz the model would be char-
tems corresponding to logical properties. A acterized by:
clearer image of this perspective can be found a) some spatial coordinates;
in Betrand Russell’s lecture on logical atom- b) assuming that the system contains
ism from 1924 (three years after the publica- “hidden masses”, we will have to express the
tion of Tractatus logico-philosophicus): path of the two points by referring to their
“When some set of supposed entities hidden masses in such a manner that their
has neat logical properties, it turns out, in a (geometrical) path in the configuration space
great many instances, that the supposed enti- will conform to the spatial displacement of
ties can be replaced by purely logical struc- the system described without the hidden
tures without altering in any detail any of the masses;
c) a magnitude for displacement.
body of propositions in question.”3
We could make this example even more
These logical structures may be in fact
intuitive focusing on condition (b). Let us
the manifolds that Ludwig Wittgenstein had
think of the physical system formed by the
in mind in the Tractatus. I shall try to develop
Earth and the Moon. As we all know the plan-
this idea next. ets of our solar system are situated at consid-
erable distances from one another and that
2
PR, 46,79.
is why they can be represented in classical
3
(Landini, 2003,108).
No. 17 ~ 2013
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137
mechanics as material points (without mass) displacement and the geometrical path of the
revolving around the Sun. For instance, the body are equal, or more philosophically put:
distance between the planet Mars and the “... if we regard the condition of the
Earth is big enough to neglect the gravita- model as the representation [my emphasis]
tional attraction exerted and therefore we can of the condition of the system, then the con-
represent them as material points in motion. sequents of this representation (...) are also
However, the physical system formed by the representation of the consequents which
the Earth and the Moon cannot be described must proceed from the original object...”
likewise because the two bodies are close (Hertz, 2002, 177).
enough as to exert observable gravitational So such a formal trick is permissible only
effects one upon the other. This means that if it leads to correct predictions, and the key
their masses are relevant to their motion. Yet, to making correct predictions lays, among
Hertz wants to reduce forces from classical other things, in finding the right equations of
mechanics and express gravitational effects condition for the model, such as expressing
in terms of free systems (like the Earth-Mars displacement in terms of geometrical paths.
system from our example) with some hid- Here it seems that multiplicity (the
den masses that would constrain internally number of coordinates of motion) is not es-
the system’s motion. In order to do that, he tablished by phenomenological analysis as
needs to introduce in his mechanics some in von Helmholtz’s epistemology, but more
new elements: likely through some sort of a priori analysis
“It is always permissible to regard a sys- of matter, focused on the conditions of me-
tem of material points as being composed of chanical representation of physical bodies.
an infinite number of material particles.” (H. This point of view has been expressed by
Hertz, 2002, 46) several authors interested in the epistemol-
But what makes this formal trick per- ogy that underlies Hertz’s system of mechan-
missible? Simply said, it is the equations of ics, and was also emphasized by Ludwig
condition stating that the spatial displace-
Boltzmann. Often cited is the following frag-
ment of the Earth-Moon, for instance, is
ment from the Principles of Mechanics:
equal to the geometrical path of a system
“The agreement between mind and na-
with an infinite number of material particles
in a configuration space. It is obvious that ture may by (...) likened to the agreement
Hertz is referring here to the same kind of between two systems which are models of
permissibility as is Ludwig Wittgenstein in one another, and we can even count for this
Philosophical Remarks. Each physical body agreement by assuming that the mind is ca-
with mass can be regarded as an n-dimen- pable of making actual dynamical models of
sional point in a geometrical manifold called things, and working with them” (Hertz, 2002,
the configuration space4 as long as the spatial 177).
4
“... it [mass] can be thought of as divided into ar- The “hidden masses” in Hertzian me-
bitrarily many equal mass-particles, each of which chanics are in fact elementary positions in the
indestructible and able to serve as a characteristic configuration space (an n¬-dimensional man-
in order to definitely and unambiguously coordi- ifold) to which a model associates semanti-
nate one point in space with another point in spa- cally some generic material characteristics
ce at another time.” (Hertz 1953, 300).
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and they are important in order to define a assumes the existence of a primitive 1:1 se-
structure in Hertzian mechanics – the de- mantic relation between propositional ele-
grees of freedom of a physical system. ments and elements of the world, but this
Let us go back to our example about relation is not interpreted extensionally in
the two physical systems discussed earlier: set-theoretic terms. Logical multiplicity ex-
Earth-Mars and Earth-Moon. Stipulating that presses not a 1:1 correspondence between
each system consists of n material particles set-theoretic extensions and names, predi-
moving in a three-dimensional Euclidian cates etc., but the degrees of freedom or the
space, the Earth-Mars (moving without con- structure that facts share with propositions
straints) would be projected on a 3n configu- in logical space with no reference whatsoever
ration space, while the Earth-Moon, moving to extensions and types. The 1:1 correspon-
with constraints, would be projected on a dence refers to an isomorphism of models
3n-k dimensional space. This means that the with generalized coordinates.
second system will have less degrees of free- As we have seen in the previous section,
dom, given the fact that certain connections the basic idea behind dynamic modeling is
between particles are rigid (i.e. those corre- that multiplicity should express the num-
sponding to gravitational attraction). So, the ber of freedoms that a system possesses in a
multiplicity of a model for a physical system state-space. To build a dynamic “scenario” is
is not given by the number of units of matter to make certain assumptions regarding how
that describe the system simpliciter, but by to organize the relevant information using
its structure, i.e. the degrees of freedom that coordinates, equations of conditions and n-
the system possesses. Thus, even if in our dimensional vectors organized in such man-
initial “situation” we had observable effects ifolds. Actually, this is the main function of
of gravitational attraction, in the geometric a theory of representation (Darstellung) in
Darstellung of the system, gravitational at- Hertzian mechanics. Only after these aspects
traction is dealt away or eliminated by stip- are settled, a dynamic model (understood as
ulating certain configurations of elementary number of equations that define the tempo-
material particles in an abstract space. ral evolution of the system) could express the
evolution of such n-dimensional vectors in
3. “images” and “representations” respect to time.
In order to see the analogy between se-
In the basic semantic view of how a mantic analysis and dynamic modeling in
proposition means something, propositions Tractatus, I suggest going back again to our
are considered “images” (Bilder) of facts example with the two specific physical sys-
in the following sense: there is a 1:1 corre- tems: Earth-Mars and Earth-Moon. The first
spondence between the elements of proposi- one is a free system with 6 degrees of free-
tions and the elements of facts. It seems that dom. The second one is not a free system, it
Wittgenstein presents a clear model-theoret- has only three degrees of freedom (because
ical approach to meaning in the Tractatus of the gravitational attraction that forms a
(Hacker, 1981). However, this interpretation rigid connection in the configuration space
hides a few traps. The author of the Tractatus between Earth and Moon, and so the two

No. 17 ~ 2013
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material bodies move like a single point). of elementary propositions in logical space,
However, the Earth-Moon can be treated without making reference to logical types.
like a free system with three degrees of free- In another paper5 I presented the formal
dom. So although it consists of two material details of a structural analysis of elementary
particles, the system is mechanically equiv- propositions as n-dimensional manifolds. I
alent to a single point and its displacement argued that elementary propositions cannot
is analyzed as a three-dimensional vector. be considered “images” (Bilder, Modelle)
The same situation holds, as the author of of states of affairs and vice versa unless we
the Tractatus points out, for propositions. define a “parameterized representation”
We can have propositions like (P) “The sky (Darstellung) in logical space of both elemen-
is blue and the grass is green” and proposi- tary propositions and states of affairs.
tions like (P’) “The sky is blue and the sky is Here, however, I choose to focus only
green”. In the first case our proposition has on some general aspects of such a struc-
four degrees of freedom. In the second case, tural analysis, in order to get a more ac-
the proposition has fewer degrees of freedom curate reading of Ludwig Wittgenstein’s
because of color exclusion, and so the analy- Bilder and Darstellungen from Tractatus
sis of (P) as: “p&q” is not a correct analysis logico-philosophicus. By appropriating the
(TLP 6.3751). method of generalized coordinates from
In order to get an elementary analysis classical mechanics, the elementary “parts”
we need to find an adequate Darstellung of of a proposition (or, in short, the elementa-
(P’), and for this we need to take into consid- ry propositions) can be defined formally as
eration what Wittgenstein calls “the logical “dimensions” in an abstract n-dimensional
structure of color” (TLP 6.3751) or, keeping space called a manifold. This explains why
in mind the analogy with Hertzian mechan- Wittgenstein takes elementary propositions
ics, the “rigid connections” of colors. Thus, to be logically independent. Nevertheless, el-
we need to deepen our analysis and dig for ementary “parts” – just like Hertz’s material
the structure of atomic/elementary proposi- points – have internal structure. Otherwise
tions. This step into the analysis of atomic/ they could not be considered isomorphic to
elementary propositions is similar to the states of affairs.
step taken by some logicians from first-order In some particular cases, like (P), ele-
propositional logic to first-order predicate mentary “parts” resemble the material points
logic. However, the author of the Tractatus in the Earth-Mars example – i.e. they are free.
does not analyze properties (like color, for in- In other cases, like (P’), elementary “parts”
stance) as predicates, but prefers a Hertzian, resemble the material points in the Earth-
eliminative approach in respect to them – a Moon example – i.e. they hide combinato-
strategy undertook also by Bertrand Russell rial constrains. It is impossible to treat the
in his 1924 lecture on logical atomism (see elementary “parts” of (P’) as independent
section 1) It seems that atomic/elementary
propositions as semantic “scenarios” of the 5
“The logical independence of elementary propo-
world may be structured as n-dimensional sitions in Tractatus logico-philosophicus” (in Ro-
manifolds by defining the degrees of freedom manian) Analele Universității București. Filosofie
(2006): 153-164.
No. 17 ~ 2013
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dimensions in propositional analysis. For a Two observations:
correct analysis of (P’) it is necessary to dig a) M is not a set; it is a topological ba-
out its complicated internal structure and es- sis for representing (darstellen) elementary
tablish the constraints. states/ propositions in logical space.
Following the Hertzian analysis of b) n expresses the freedoms of a propo-
material points into mass particles we may sition/fact in logical space, determined by the
describe briefly the structural analysis with constraints k applied on the base M.
constraints in the following terms: To illustrate these formal aspects I will
i) Formally, each proposition p can be now return to the discussion from the first
analyzed into manifolds of the form Mn, part of this section. Thus, following a simple
where M is the topological base (i.e. the T-F analysis of color predicates, the example I
base given that each proposition is either true chose above, we see that logical structure of
or false), and n is the number of freedoms de- color makes certain combinations of truth-
fined on M. A proposition p with n atomic/ values rigid. That is why the logical form of
independent parts is a 2n manifold. A propo- (P’) may by in fact something more compli-
sition with n-k atomic/independent parts is cated than “p&q”6 . The logical form of (P’)
a 2n-k manifold. This can be expressed more is more likely, as Wittgenstein suggests (TLP
perspicuously in the following manner: 6.3751) , “p& ~p”:
a) given a proposition p with a T-F p ~p p&~p
base (M) and n elementary parts, the corre- 1 0 0
sponding manifold for n dimensions with 0 0 1 0
constraints would be Mn. (D)
b) given a proposition p with a T-F (P’) is a proposition excluded by the
base (M) and n elementary parts, the corre- logic of color. According to our analysis, (P’)
sponding manifold for n dimensions with k may be described a 2-dimensional manifold
constraints would be Mn-k of truth-values (therefore by two degrees of
ii) Then, for each freedom r defined on freedom). This is because the second “part”
M, we assume a corresponding elementary of (P’) represents a dimension dependent
state of the world or a T/F value; and for each upon the first “part”. Thus, instead of having
Mr we assume a corresponding matrix of el- four degrees of freedom, (P’) has only two.
ementary states of the world or a matrix of Unlike (P’), (P) can be described by a
T/F values. 4-dimensional manifold of truth-values (1;1)
In this manner, any logical representa- (0;1), (1;0), (0,0), because all combinations are
tion Mn of a proposition is a n-dimensional 6
“Only when we analyze phenomena logically
manifold with 0 or 0 < k constraints. In other
shall we know what form elementary propositi-
words, the manifold of a complex proposition
ons have. (...) The logical structure of elementary
is dependent upon the T/F combinations of
propositions need not have the slightest similarity
elementary propositions. However, the only
with the logical structure of propositions. Just
explanation for the fact that in some cases we
think of the equations of physics – how tremen-
have constraints upon the T/F combinations
dously complex their structure is. Elementary pro-
of elementary propositions is that elementary
positions too, will have this degree of complexity”
propositions have internal structure.
(WVC, 42).
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141
permitted by the logic of color. colors or two different sounds, but it can
p q p&q be at the same time a position and a color, a
1 1 1 color and a sound etc. The parameter r ex-
0 1 0 presses such dependencies in logical space
1 0 0 in terms of freedoms and constraints on base
0 0 0 manifolds (M), without analyzing physical
(D1) properties (TLP, 2.0231)
(D) and (D1) are Bilder of proposi- From this perspective that assigns
tions (P) and (P’) in logical space. Their form structure to elementary propositions and
is dependent upon giving the adequate states, we can also get a better grasping of
Darstellung for (P) and (P’), i.e., upon find- Wittgenstein’s own critique of logical analy-
ing the right number of freedoms (or the pa- sis, presented in “Some Remarks on Logical
rameter r) of the situations described by (P) Form” (1929). There, he starts from the ob-
and (P’). In the case of a free model (with no servation that a correct logical formaliza-
constraints), r = n (the maximum number of tion of (P’) is not “p&~p” because (P’) does
possible T/F combinations for conjunction). not express a contradiction, as he believed
In the case of a model with rigid connections in the Tractatus, but only a false statement.
or constraints, we should have r < n. “The sky is green” is not equivalent to deny-
However, it is not really clear whether ing “The sky is blue”. In fact, it is possible to
in the Tractatus Wittgenstein accepted that have a situation in which the sky is neither
elementary states have indeed structure – blue, nor green, but a sort of dark gray. And
although he refers to “configurations of ob- for this we need a different logical analysis of
jects” (TLP, 2.01, 2.0272) as an analysis for color and, more generally, a different way to
elementary states of the world, quite simi- express dependencies of states/propositions
larly to the manner in which Hertz refers upon their content. The main reason why
to “configurations of mass particles” as an the type of analysis from the Tractatus fails
analysis for material points with mass. As we is that it cannot formalize properly propo-
have seen in the previous section, mass par- sitions like (P’). While (P) has four degrees
ticles do not measure mass, but they only ex- of freedom, (P’) has only three. Most of the
press the dependence of the path of material argument from RLF runs in the direction of
points in the configuration space upon mass. showing that: (i) the second “part” of (P’)
Mutatis mutandis, the Tractarian objects are cannot be analyzed as a rigid dimension,
not objects per se, but rather they express the i.e. as dependent upon the first dimension
dependence of states of affairs, and conse- of (P’) as in “p&~p”: we cannot obtain “The
quently of propositions, upon their internal sky is green” by applying negation to “The
structure, i.e. upon what these states actu- sky is blue” because between the two colors
ally are: colors, sounds, time etc. Each spa- there is a difference of degree that cannot be
tial, temporal or color configuration leaves a caught by the logical formalism of negation.
space of 0 ≤ r ≤ n dimensions or degrees of However: (ii) the two colors are not entirely
freedom for combinations. For instance, no independent, and (P’) cannot be formalized
as “p&q”, so the analysis from the Tractatus
fact can be at the same time two different
must fail in some respect.
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Wittgenstein had in mind certain basic means to express (CP) in full generality, i.e.
postulates regulating the behavior of argu- for the form of any object, although it can be
ment-places for color when he discussed “the done for particular cases. The analysis from
logic of color”. Thus, even if we cannot obtain the Tractatus fails because Wittgenstein’s
straightforwardly “The sky is green” from assumption that the relation between the
denying “The sky is blue”, we can generate propositional and the object levels is straight-
a contradiction in the following manner. Let forward fails. The main problem is that
a be an object and ‘…’ indicate other argu- Wittgenstein never specified what should be
ment-places which may be form indicators of the number of argument places of a proposi-
the object (spatiotemporal position, etc.) and tion in general; it is what is missing to give an
c its color. The postulate would be: appropriate use of Hertz’s idea and calculate
(CP) If Pa…c… then for every x which is freedom more accurately.
a color (i.e. fills the argument-place of a col-
or) distinct from c, then ~Pa…x… . 4. final remarks
Let “The sky is blue” be Pa…b… Now,
by (WC), if Pa…b… then for every color x Understanding how the human mind
distinct from b, ~Pa…x…. Now, suppose that reasons and how reasoning influences be-
the sky is blue and green: Pa…b…& Pa…g…. havior represents very important topics in
Two applications of simplification, a modus the field of the social sciences today (like
ponens, an introduction of conjunction are economics) not only from a theoretical per-
all it takes to obtain the contradiction. What spective, but also from a practical one. Such
Wittgenstein was trying to say in “Some understanding could be useful in order to as-
Remarks on Logical Form” was that Pa…b… sess and solve, for instance, leadership issues,
and Pa…g… are contraries: they cannot be i.e. by determining the breadth and limits of
both true but they can be both false. This is a cooperative behavior inside organizations,
clear consequence of (CP). or by explaining how collective behavior
But would not this imply that all prop- emerges from individual behaviors in differ-
ositions with a difference in their composi- ent social groups etc. In this paper I focused
tion contradict each other in this sense? Not on a historical aspect concerning an impor-
necessarily. For example, take Px1,…, xn and tant step in the development of modeling
Px1,…, xm to mean “This very person in this human reasoning: the suggestion from late
very spatiotemporal position and with this 19th century’s epistemology of science to as-
very color and so on is sitting on the couch” sociate the modeling of physical phenomena
and “This very person in this very spatiotem- with logical modeling, in order to figure out
poral position and with this very color and so what human reasoning is really about. As we
is watching TV”, respectively. There is only can easily see from this study, the endeavor
a contradiction when there is a difference in was troublesome and prone to severe difficul-
the argument-place fillers when these consti- ties, even when seeking to analyze reasoning
tute part of the form of the object. about simple things such as the color of ob-
The problem with this analysis at the jects. Nevertheless, this scientific approach
propositional level is that there is no finite to representation and inference managed to

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raise a larger interest for logical modeling game-theory, a very sophisticated abstract
and it led over time to one of the most effec- tool that Ludwig Wittgenstein’s early at-
tive tools that we currently have in model- tempts could not really anticipate.
ing both human reasoning and behavior: i.e.

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Non-Governmental organization
leadership And Development.
a Review of the literature

~ Ph.D. Candidate Dragoș – Cătălin apostu (National School of Political Studies and
Public Administration, Romania)
E-mail: [email protected]

Abstract: Leaders of the Non-Governmental Organisations (NGOs) often face extraordinary chal-
lenges – both at a personal and organisational level. These challenges are demanding, and distinct from
those faced by governments or the for-profit sector.
NGO leaders are often isolated and unsupported. There is talk of a leadership deficit, because of the
shortage of talented leaders and the growth of the non-profit sector generally. As a result there is some ur-
gency in attempts to develop a new generation of leaders, and to provide relevant support to existing and
future leaders. Leadership development programmes designed for NGO leaders must as a consequence in-
corporate best practice and current experience rather than rehashing tired, traditional approaches to lead-
ership training.
This paper examines the role of leaders and leadership in NGOs. It draws on the analysis of recent
research into the characteristics of NGO leaders, and explores the challenges of designing leadership de-
velopment programmes appropriate to the needs of NGOs. This paper identifies the elements of successful
leadership development, and assesses the skills or competencies that need be developed.
Key words: NGO, skills and competencies, leadership, capacity building, leadership devel-
opment programmes, change and transformation

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introduction them. Leadership is defined as the capac-
ity to lead. In a recent review of leadership
Non-Governmental Organisation
theory Northouse (2004) identified four com-
(NGO) leaders often face extraordinary chal-
mon themes that run through much of lead-
lenges – both at a personal and organisation-
ership theory: 1) leadership is a process; 2)
al level. They work long hours with limited
leadership involves influence; 3) leadership
resources in uncertain and volatile political
occurs in a group context; 4) leadership in-
and economic circumstances to help the most
volves the attainment of goals. Based on this
marginalised and disadvantaged members of
analysis leadership was defined as “a process
their communities. The complex managerial
whereby an individual influences a group or
challenges they face have been documented
individuals to achieve a common goal”. But
in a small, but growing, body of research
it is clear that no one definition encapsulates
(Smillie, 1995; Fowler, 1997; Eade, 2000;
all the facets of leadership. Consequently we
Lewis, 2001; Smillie & Hailey, 2001; Edwards
must accept there will be a range of different
& Fowler, 2002; Hailey & James, 2004; James
interpretations and perceptions of leadership
et al., 2005). Reviewing this literature one can
and what leaders do.
but conclude that these challenges are de-
Another way of trying to identify the
manding, and distinct from those faced by
different elements of leadership is to create
governments or the for-profit sector.
a typology of different kinds of leadership.
NGO leaders are often isolated and
This typology is derived from the research
unsupported. There is talk of a leadership
reviewed in this paper, and outlines four dif-
deficit, because of the shortage of talented
ferent types of NGO leader: 1) Paternalistic;
leaders and the growth of the non-profit sec-
2) Activist; 3) Managerialist; and 4) Catalytic.
tor generally. As a result there is some urgen-
1. Paternalistic leaders typically dem-
cy in attempts to develop a new generation
onstrate a patriarchal or matriarchal style
of leaders, and to provide relevant support
of leadership. Their approach is often built
to existing and future leaders. Leadership de-
on established personal or kinship relation-
velopment programmes designed for NGO
ships. They can inspire great loyalty, and
leaders must as a consequence incorporate
have strong, close, possibly even a familial
best practice and current experience rather
relationship with staff and volunteers. But to
than rehashing tired, traditional approaches
outsiders they can appear autocratic, reliant
to leadership training.
on hierarchical ways of working or top-down
organisational structures, and overly-depen-
Perspectives on leadership dent on traditional relationship which may
not be sustainable in the long run.
Definitions
2. Activist leaders are actively engaged
There are a wide range of definitions in advocacy and lobbying work. They are
of the concept of leadership and the role highly motivated, often charismatic, and typ-
of a leader. Dictionary definitions identify ically focused on a single issue. They have
a leader as one that provides guidance by the ability to channel the anger or concerns
going in front, or causes others to go with of local communities and solidarity groups to

No. 17 ~ 2013
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147
achieve political imperatives. In practice they the particular context in which it operates.
energise and inspire “followers” with clearly However, as will be explored later, the “cata-
articulated messages – sometimes at the ex- lytic” leadership type is more likely to gener-
pense of dealing with more mundane mana- ate longer-term, sustainable, strategic growth
gerial or organisational issues. than the others.
3. Managerialist leaders are rated for
their managerial and administrative abili- leadership traits, styles and
ties. They typically demonstrate an instru- Competencies
mental ability to manage organisations, and
can effectively establish reliable systems and Our attitude to, and understanding of,
appropriate structures, as well as manage a leadership has developed and evolved over
diverse workforce with established roles and time. Early thinking about leadership has
responsibilities. While they may not be com- been influenced by the belief that leadership
fortable with change or coping with diverse was innate and that some individuals were
partners and external stakeholders, they born with certain traits that made them ef-
demonstrate a “professional” approach to fective leaders. This led to much interest in
development, have a track record in raising the personality and charisma of what came
funds, meeting deadlines and undertaking to be known as “heroic leaders”. Researchers
commissions as a “contractor”. assumed that it would be possible to identify
4. Catalytic leaders typically act as stra- and isolate a definitive list of leadership traits
tegic catalysts within the NGO context, and (Stogdill, 1974). This ambition has never real-
have the ability to promote and implement ly been fulfilled. But a review of the research
change. They demonstrate a wider world- on leadership traits suggests that leaders
view, and the capacity to take a longer-term score higher in such areas as ability (intelli-
strategic view while balancing tough deci- gence, relevant knowledge, verbal facility),
sions about strategic priorities with organ- sociability (participation, co-operativeness,
isational values and identity. Their success popularity), and motivation (initiative and
as change agents depends on their ability persistence).
to delegate work to talented colleagues, so However, this emphasis on leadership
freeing time to engage actively with external traits was open to the criticism that it under-
stakeholders and partners, build coalitions played or overlooked the influence of exter-
and strategic alliances, and be involved in a nal factors. For example, there was concern
variety of networks. that the focus on the individual was at the
The value of such a typology is that it cost of an understanding of the impact of
goes beyond simple definitions and gives distinct organisational cultures on the way
an insight into the variety of different lead- different leadership styles evolved and de-
ership styles around. The typology high- veloped. In the 1970s researchers therefore
lights the complexity of trying to identify the began to focus their attentions on what lead-
characteristics of successful leaders – if only ers did in practice and how organisations
because, in their own ways, each of these shaped different leadership styles, rath-
different leadership types is successful in er than attempting to identify or measure

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leaders’ underlying characteristics or traits. an ongoing fascination with efforts to iden-
In particular, researchers were interested in tify the key characteristics and core compe-
the way leaders adapted their public per- tencies of successful leaders. In particular,
sona and leadership style to suit the situa- interest has focused on the role and impor-
tion they found themselves in or the people tance of individual competencies. Such com-
with whom they were involved (Hersey & petencies are seen as distinct from general
Blanchard, 1988; Mintzberg, 1998). skills in that they are considered to be the
In the 1980s there was renewed inter- underlying characteristics found in any indi-
est in those leaders who actively promoted vidual that lead to, or are causally related to,
organisational change. Arguably such trans- effective or superior performance. This inter-
formational leaders enabled ordinary people est has led to what is now referred to as the
to achieve extraordinary results (Peters & “competency approach” to leadership.
Waterman, 1982; Bass, 1985). In some ways The development of the competency
this was a return to the trait-based analy- approach is partly the result of the growing
sis of the “heroic leader” with its focus on a interest among organisations as to how to at-
leader’s ability to communicate and inspire, tract talent and how best to identify and re-
or act as a catalyst for change. Interestingly cruit a new generation of leaders. It is also
in the late 1990s there was a reaction against partly driven by the needs of those involved
this approach, partly because only a few of in designing and running leadership devel-
such transformational leaders achieved sus- opment programmes who want to identify
tainable success and partly because as organ- the skills, competencies and capabilities that
isations became flatter, more decentralised, they should be trying to encourage and de-
and less bureaucratic their leaders needed a velop. The interest in this approach reflects a
new skill-set based around networking, ne- desire to identify and harness the leadership
gotiation, delegation and team building. This competencies and management skills that
reaction is reflected in recent research that lead to effective performance. This has re-
endorses the value of “quieter”, humbler, less sulted in organisations, and human resource
charismatic leaders who are keen to be seen specialists in particular, placing great em-
to be part of a broader management team and phasis on measuring, monitoring, appraising
actively encourage others to succeed (Bennis and comparing core competencies. As a con-
& Nanus, 2004). In a similar vein Mintzberg sequence they have created a range of typolo-
(2006), drawing on his work with local lead- gies or frameworks which identify the mix of
ers in enterprise development agencies in skills and competencies needed .1
West Africa, argues that the future lies with However, this emphasis on measure-
“fostering” a new generation of leaders who ment and ranking may be at the cost of
can practise what he refers to as “engaging 1
Examples of such typologies or frameworks can
management”. Such leaders have the abil- be found on the following websites:
ity to engage with or inspire others through •CEML Framework of Management and Leader-
their thoughtfulness and humility. ship Abilities www.managementandleadership-
Whatever the ebb and flow of research- council.org
ers’ interest in leadership there seems to be •Investors in People Leadership and Management
Model www.investorsinpeople.co.uk
No. 17 ~ 2013
 Change and Leadership
149
valuing less tangible leadership behaviours followers and teams
such as intuition or good judgement (Bolden
Despite this concentration on the char-
& Gosling, 2006)
acter and competencies of successful leaders,
While these competency-based typolo-
many researchers and commentators argue
gies commonly paint a picture of leaders
that you cannot understand the dynamic role
as multi-talented individuals, there is some
of a leader unless you see it in the context of
concern that they under-play the negative as-
their relationship with their “followers” (col-
pects of strong leadership and over-idealise
leagues, subordinates, or team members).
the role and character of strong leaders. The
Such “followers” can play a crucial role in
impact of “bad” or incompetent leaders must
reinforcing the power of individual lead-
not be ignored or overlooked. The down-
ers, influencing their behaviour, and help-
side of strong leaders is that they can exploit
ing construct internal systems and structures
their power for their own benefit or agenda.
that act to enhance the status of those they
Their central role leads to a degree of depen- see playing a leadership role (Howell and
dency among their staff that in turn may lead Shamir, 2005). The success of most leaders
to their disempowerment and de-skilling. is determined in part by the resources, ener-
Such strong leaders have been characterised gy, expertise and knowledge that such “fol-
as out of touch with reality, inflexible, ego- lowers” can muster. Leaders can attempt to
centric, and isolated. This in turn can lead to control or manipulate them through fear or
poor judgement, abuse of power, confusion coercion, but more often than not, they have
between personal and organisational inter- to work with their “followers” or colleagues
ests, and corrupt and unethical behaviour in an egalitarian and co-operative manner.
(Kellerman, 2004). Appreciation of the influential role of
such “followers” is critical in informing our
Such poor performance or unethical be-
understanding of the socialisation process
haviour can threaten the viability, credibility
that shapes the leadership style adopted.
and sustainability of any organisation. In the
This relational or team-based approach
context of the non-profit sector these con-
to leadership is supported by the concept of
cerns highlight the importance of identifying “distributed leadership”, in which there is a
appropriate leadership competencies that re- shared sense of purpose and ownership of is-
flect the values of the sector and the needs sues at all levels of the organisation. This con-
of individual staff and volunteers. They also cept suggests that leadership is a collective
suggest that one should be cautious about be- task based on shared decision-making and
coming over-reliant on mechanistic compe- delegated authority. Leadership is therefore a
tency frameworks – in particular those that social process in which everyone is engaged.
don’t incorporate intangible personal com- As such leadership development should be
petencies such as how personal judgement is seen as an investment in building human
applied, and how personal relationships with capital and developing the “collective capac-
ity” of organisation members to “interact and
teams, colleagues and “followers” develop.
work together in a meaningful way” (Day,
2001). As will be explored in the following
No. 17 ~ 2013
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150
sections this emphasis on leadership as a col- that not only do individual leaders play a
lective process, rather than something that is central role in shaping the destiny of many
specific to one individual, means that leader- NGOs, but that their role and effectiveness
ship development is as much about how best is in part determined by the environment in
to manage teams and delegate authority, as which they work (Kelleher & McLaren, 1996,
it is about building networks and maintain- Fowler, 1997, Smillie & Hailey, 2001, Hailey
ing good personal relationships. It should be & James, 2004, James et al. 2005).
seen as an investment in building the social There are also worries about the lack of
capital of an organisation. leadership talent to be found within the con-
These different theories and concepts of text of the non-profit sector as a whole. This
leadership provide insights into the different “leadership deficit” will become a matter of
facets of individual leaders and the dynam- urgency as the sector expands over the next
ics of leadership. We can only conclude that twenty years. It is estimated that in the US
leadership is a complex phenomenon. It is alone over half a million new senior manag-
also something we need to understand and ers will have to be developed for leadership
develop because of its crucial role in mobil- positions in the period 2007–2016. What is
ising resources and motivating people. This also apparent is that many of these jobs will
is particularly true for many civil society be filled by individuals recruited from out-
organisations (including NGOs and com- side the sector who will have had limited ex-
munity-based organisations). For too long perience of running non-profits at a senior
capacity builders have neglected the key role level. Currently it is estimated that only 40
that local NGO leaders play in the develop- per cent of senior management positions in
ment process, and overlooked the complex US non-profits are filled by internal appoint-
and collective dynamics of leadership within ments, and that the remainder are recruited
many NGOs. They appear to have underesti- externally (Tierney, 2006).
mated the influence of the particular culture In the 1990s the International Forum
and context in which many NGO leaders op- on Capacity Building, which was an inter-
erate, and as a result many capacity building national coalition of NGOs concerned with
initiatives designed to support a new genera- building the organisational and managerial
tion of NGO leaders have been inappropriate capacity of the sector as a whole, consistently
and irrelevant. voiced its concerns at the quality and avail-
ability of appropriate leadership. It argued
ngo leaders: Context and Culture strongly for increased investment to develop
a new generation of NGO leaders (1998 and
This section focuses on the evolving 2001). CIVICUS, an international alliance of
role of NGO leaders and the way the envi- civil society organisations, similarly identi-
ronment in which they work impacts on this fied the lack of NGO leadership talent as a
role. It draws on research from a variety of matter of particular concern. It suggested
sources, and sees leadership in the particu- that this was partly a consequence of the rap-
lar cultures and contexts in which NGOs id turnover of senior staff and the difficulty
operate. What is clear from this research is in replacing them, and that NGOs needed to

No. 17 ~ 2013
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do more to recruit and retain effective leaders know what style to adopt and when to adapt
(CIVICUS, 2002). their style to suit the circumstances. This in-
Unfortunately much of our understand- fluence of culture and context on leadership
ing of the way leaders work and what mo- styles is highlighted in the recent research
tivates them is based on research into the into NGO leadership in South Asia (see for
role and character of leaders in the business, example Smillie & Hailey, 2001) or sub-Saha-
political or military sectors. Furthermore, ran Africa (see for example Fowler et al., 2002;
much of this research is based on studies in James, 2005a). The conclusions are supported
the developed industrialised countries of the by the findings of researchers analysing the
North, with a particular focus on the individ- characteristics of leadership styles of African
ualistic, low power distance cultures of North managers generally. Mintzberg (2006) refers
America or Europe (Kotter, 1996, Adair, 2002, to what he calls their “engaging” manage-
Bennis & Nanus, 2004). Relatively little re- ment style, while Jackson (2004a) highlights
search has been undertaken on leadership in the importance of a “humanist” style in the
the non-profit or public sector, and what re- African cultural context.
search there is has mainly been based on the Any understanding of the role and per-
experience of US non-profits and has focused formance of NGO leaders must incorporate
on the work of Boards rather than individual the environment in which they work. Recent
leaders. Allison (2002) reviewed the number research into NGO leaders in Kenya, Malawi
of books concerned with non-profit manage- and Uganda highlights the way in which
ment carried by Amazon.com, and estimated they operate simultaneously in three differ-
that only about 10 per cent were concerned ent worlds – the global aid world, the urban
with non-profit leadership – virtually all of context in which they live and work, and the
which were based on the US experience and rural village setting where many of their ex-
were concerned with Board and Governance tended family still live (James, 2005a). This
issues. research reveals how NGO leaders have to
Much of the current leadership research adapt to new leadership roles, the stresses
is therefore not relevant to the different so- arising from pressure of work, and the de-
cial, cultural and political environments in mands of organisational crises – commonly
which NGO leaders work (Hailey & James, around financial shortfalls, internal conflicts
2004). While NGO-specific research and writ- or tensions between the staff and the Board.
ing on leadership may be in short supply, it Kaplan (2002) concludes that the unrealis-
does exist and is growing. Some of the con- tic and artificial demands placed by aid do-
clusions of this work are analysed below. nors adds to the pressure faced by local NGO
leaders. The donor’s emphasis on tight proj-
Responding to Culture and Context ect schedules, over-hasty timeframes and
quick results is both unrealistic, developmen-
Clearly leadership styles are contingent tal bad-practice, and has a negative impact
on the context in which they are applied. But on the credibility and confidence of NGO
they also depend on the ability of the indi- leaders. Such demands have a detrimental
vidual’s diagnostic skills and judgement to effect on the ability of many NGO leaders to

No. 17 ~ 2013
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152
pursue long-term goals or develop a degree things through their “guts, vision and com-
of financial sustainability. mitment”, but the way they use (or abuse)
There is an ongoing debate as to the power is a “disability” that jeopardises or-
influence of culture on management strate- ganisational effectiveness. He argues such
gies and leadership styles (Jackson, 2004a). charismatic leaders are “vulnerable to acqui-
Contradictory evidence suggests that on the escence, deference, flattery and placation”.
one hand, the more participative and col- They are not easily contradicted or corrected.
lective leadership style that many NGOs As a result they actively suffocate promis-
espouse is shaped by the collectivist nature ing initiatives that may threaten their power
of society found in much of the developing base, relationships or position of patronage.
world; on the other hand, the more auto- Despite these concerns most of the re-
cratic approach adopted by individual NGO cent research into NGO leadership empha-
leaders is the product of the high power dis- sises the significance of good leadership. An
tance dimensions common to these cultures. effective leader can transform an organisa-
However benign this role may be, it detracts tion by providing direction, inspiring staff,
from their ability to make hard decisions or mobilising new resources while still main-
play a more “professional” managerial role taining a clear organisational identity, and
(James et al., 2005). In turn this places indi- promoting shared values.
vidual leaders under great personal pressure.
They have to meet the expectations and finan- working Relationships and
cial demands of family members, and man- Participation
age the “power distance” relations between
themselves as managers and their staff. It has As has already been noted leadership
also been suggested that the paternalistic na- behaviour is directly influenced by leaders’
ture of many NGO leaders is a natural conse- definitions of themselves in relation to their
quence of the high levels of commitment and colleagues and work teams. As such leader-
shared sense of ownership common to many ship is not so much about individuals as it is
NGOs (Fowler, 1997). about relationships. It is a dynamic process
The paternalistic nature of some leader- of mutual influence between leaders and fol-
ship in the NGO sector is a matter of some lowers. A noteworthy finding of the recent
concern. There are many anecdotal stories research among NGO leaders has been the
about the detrimental impact of paternalistic way in which leaders have embraced a more
founder leaders, “charismatic autocrats” or participatory leadership style. Traditionally
“the guru syndrome”. On the one hand such dominant leaders are increasingly sharing
leaders demonstrate drive and commitment, decision-making with their staff and encour-
and a remarkable ability to mobilise people aging a more participatory culture in their or-
and resources; on the other hand they are ganisations (James et al., 2005).
criticised for dominating organisations, be- One of the paradoxical issues that re-
ing unaccountable, and failing to adapt to search has uncovered concerns the way
changing circumstances. Chambers (1997) in which successful NGO leaders man-
suggests that many NGO leaders achieve age the tensions inherent in being a strong

No. 17 ~ 2013
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153
individual lead while still appearing to be inspire teams, motivate individuals, and
highly participative and collegial in they way identify opportunities and initiate transfor-
they manage. Many NGOs espouse collective mation. Recent research in the UK sponsored
decision-making and participatory manage- by ACEVO, which represents and supports
ment, yet have clear hierarchies and accept the leaders of non-profit organisations in
strong leadership. To some, the concepts of Britain, suggests that they exhibited an un-
leadership and participation seem incom- usually broad range of competencies com-
patible. Yet what has emerged is that strong pared to leaders in the public and private
leadership and participatory management sectors (Bolton & Abdy, 2003). They need
can be complementary and compatible. a rare balance of inward-looking (manage-
What is also striking from any review of ment) and outwardlooking (influencing)
this research is the different roles that such skills, with exceptional communication and
leaders have to play whatever the culture or networking skills, as well as resilience and
context. Their success is determined by their emotional attachment.
ability to work in a participative manner, be This finding reflects the belief that effec-
comfortable with sharing their leadership tive leaders display high levels of “emotional
role, and work in a collective style. As a re- intelligence”, and their performance is deter-
sult many NGO leaders have a chameleon- mined by their emotional maturity and abil-
like ability to play different roles and adopt ity to mobilise their emotional intelligence
different leadership styles. Yet they are also (Goleman, 2000). Emotional intelligence de-
capable of undertaking the most basic man- scribes one’s innate ability to feel, use, under-
agement tasks, as well as balancing the de- stand and learn from your own emotions and
mands of different stakeholders in ways that those of others and of groups. Those with
do not compromise their individual identity high levels of emotional intelligence have an
and values. These “development leaders” ability to motivate both themselves and oth-
display an extraordinary set of skills and ers. Many effective leaders demonstrate high
competencies because of the complexity of levels of self-awareness, are capable of self-
the contexts in which they have to operate management, are socially aware and are well
and the challenges they have to face. able to manage a diverse range of relation-
ships. Emotional intelligence represents the
NGo leadership: evolving roles and intangible aspects of leadership that are all so
Characteristics important.
Many international NGOs have created
This section focuses on the key charac- assessment tools that try to capture both hard
teristics and competencies shared by NGO skills and some of these softer, more intangi-
leaders. ble, attributes. For example, the International
Federation of the Red Cross introduced an
Competencies and Characteristics “Effective Leadership Inventory” of over sev-
enty questions both to elicit and to reinforce
Typical of the competencies commonly
the leadership qualities the Federation be-
associated with leadership are the ability of
lieves its leaders will need to demonstrate in
a leader to communicate vision or strategy,
No. 17 ~ 2013
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154
order to ensure the continued success of the • a clear vision and a firm personal
organisation. Similarly, the Save the Children value-set. This gave them a strong sense of
Alliance has established a set of Leadership commitment to helping the rural poor that
Standards that apply to all levels of the or- they were able to share with, and use to in-
ganisation, independent of function or coun- spire, others;
try. The list of standards is selfmeasurable, • a willingness to learn and experi-
and has been designed to encourage learning ment. This meant they were comfortable
and self-improvement. It is based on the indi- applying new technologies or developing in-
vidual leader’s ability to envision (create and novative organisational forms, and keen to
communicate individual strategy), enable draw on science or other sources of applied
(identify and apply appropriate tools, pro- or professional knowledge;
cesses, and people), empower (develop effec- • a curiosity and ability to scan the ex-
tive teams), and energise (communicate and ternal environment. As a consequence they
inspire through personal leadership). were able to track changes, analyse trends,
As was identified earlier, there is also a and identify ways to respond to changing
small but growing body of research whose circumstances;
findings give practical insights into the char- • strong communication and interper-
acter and capabilities of NGO leaders in sonal skills. These enabled them to motivate
both Asia and Africa. For example, research staff and engage with a cross-section of soci-
in South Asia highlighted the distinct charac- ety in a proactive and positive manner;
ter and leadership style common to the lead- • the ability to balance competing de-
ers of large NGOs in Bangladesh, India and mands on their time and manage the pres-
Pakistan (Smiley and Hailey, 2001). This re- sures from a range of different stakeholders.
search emphasised the crucial role of individ-
ual leaders in the development and growth NGo leadership and Change
of these organisations. The leaders studied
had a highly personalised and distinctive As has already been noted, strong lead-
leadership style. They appeared pragmatic, ership is most needed in times of change when
rational and aspirational. They also demon- organisations are experiencing rapid growth
strated a striking ability to balance compet- or operating in a volatile environment. NGO
ing demands on their time and energy with leaders demonstrate a chameleon-like ability
their own values and ambitions. They ap- to balance competing demands and a diver-
peared both managerial and value-driven. sity of roles according to the circumstances
They had clear and ambitious development and the individuals involved; for example,
aspirations, as well as an ability to under- balancing their personal vision with the prac-
stand and work with what resources they
tical needs of local communities, as well as
had and the volatile environment in which
the demands of donors or the vested interests
they found themselves.
of local politicians.
Such “development leaders” could be
But it should also be noted that many
characterised as being value-driven, knowl-
NGO leaders have built their reputation by
edgebased, and responsive. In practice this
effecting change in very traditional, static,
meant that they had:

No. 17 ~ 2013
 Change and Leadership
155
even paralysed, communities. In other words commented “you can never change society if
they are the source of change, and the cause you have not changed yourself”.
of instability. Such “catalytic” leaders (see Research in both the private and non-
the typology in Section 2) are change agents profit sectors reinforces the point that such
who promote innovation and mobilise new personal change is crucial. For example,
resources. This is well-exemplified in Uphoff Quinn (2000: 116) notes that “the bottom line
and Esmans (1998) review of “successful” ru- is that they (leaders) cannot change the or-
ral development programmes, which high- ganisation unless they change themselves”.
lighted the catalytic role of key individuals Edwards and Fowler (2002: 42) writing about
in leadership positions. These individuals developments in civil society note that “it is
played a crucial role in initiating change and rarely possible to generate substantial change
guiding innovation; a role made somewhat in human behaviour simply by altering the
easier because they were “outsiders” them- rules and institutions that govern our lives.
selves, coming as they did from outside the The missing ingredient is personal change
rural community studied, and as a result bet- which acts as a well spring of change in oth-
ter able to promote new thinking or argue er areas”. While James (2003) also noted the
for change. Uphoff and Esman describe this way behavioural changes are preceded by
group of unusually able and motivated indi- highly personal internal changes in his re-
viduals as “development entrepreneurs” or search among local NGO leaders in Malawi.
“social innovators”. The crucial question is how to ensure such
The capacity to play different roles and personal change occurs? This challenge
balance competing demands, as well as de- seems to lie at the heart of the work of those
velop strategies that enable them to cope designing and running leadership develop-
with the exigencies of complex and difficult ment programmes.
external environments appears to be one of
the hallmarks of many successful NGO lead- the Challenge of leadership
ers. Interestingly this echoes the findings of Development
the ACEVO survey of non-profit leaders in
the UK, who demonstrated an unusually This section focuses on some of the is-
broad range of competencies to handle the sues which need to be considered by those
demands of competing stakeholders and or- involved in developing a new generation of
ganisational change. leaders. There is now much greater recogni-
One consequence of this interest in tion of the importance of personal change,
the role of individual leaders in promoting individual empowerment, experiential learn-
change is that there is greater awareness of ing, and face to face support. Leadership
the need for these individuals to become Development Programmes (LDPs) have
more self-aware and change their own be- evolved over time from formal, structured,
haviour and attitudes if genuine change is one-off training courses to more process-
to take place. In other words leaders have to based, experiential programmes with an
change themselves, not just try to change the emphasis on personal development and
organisations. As Nelson Mandela famously self-directed learning. This shift reflects

No. 17 ~ 2013
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156
frustration with the limited impact of tra- biggest challenges facing the non-profit sec-
ditional one-off training courses with little tor is the dearth of leaders – a problem that
real follow-up, and a greater appreciation is only going to get worse as the sector ex-
that more holistic, self-learning programmes pands (Tierney, 2006). The task of any LDP is
spread over time are better able to develop to both mobilise existing talent but also to de-
personal confidence and new leadership velop and motivate new leaders – in part by
competencies. helping ordinary managers or administrators
The varied challenges which NGOs are to become effective leaders. So LDPs prepare
up against have focused attention on how people to play roles beyond their normal ex-
to develop a new generation of NGO lead- perience or frame of reference. One measure
ers. In practical terms this is reflected in the of the success of any LDP is to what degree
increased investment in LDPs. For example, it helps transform personal behaviour and
Save the Children Fund is in the process of change attitudes.
identifying core leadership competencies Such personal transformation is depen-
for its senior staff, and is currently develop- dent on greater self-awareness and willing-
ing in-house leadership development cours- ness to engage in new ways of working or
es. Similarly the Organisation Development thinking. Raising awareness and promoting
Department of the International Federation personal change is therefore a crucial compo-
of the Red Cross has introduced a series of nent of any successful LDP. Unfortunately too
leadership development workshops for the many NGO capacity building programmes
senior staff and Board members of different have overlooked this obvious fact. They have
Red Cross societies. CARE, and a consor- focused too much on organisational and in-
tium of US-based NGOs, are developing a stitutional issues rather than trying to pro-
virtual NGO university (LINGO – Learning mote changes to the attitude and behaviour
for International NGOs) whose initial pro- of individual leaders. One implication of the
grammes will focus on NGO leadership current interest in emotional intelligence, as
development. These are not just one-off ini- well as team-based or collective leadership,
tiatives but part of a growing awareness of is the need to develop competencies that pro-
the importance of developing the role and mote collaboration and networking, but also
skills of NGO leaders (Lewis 2001; Smillie which ensure real personal change.
& Hailey 2001, Hailey & James 2004, James This focus on individualised self-de-
2005a). velopment raises the question as to whether
leadership behaviours and competencies can
Empowerment and transformation actually be developed through some form
of taught training course. Or do we just ac-
The primary purpose of any NGO- cept that leadership is an innate characteristic
based LDP is to develop a new generation that some individuals are lucky enough to be
of NGO leaders. All the indicators are that born with and which can merely be refined
not enough talented natural leaders are ei- – like the natural balance that a gymnast has
ther attracted to, or remain in, the sector. or the sense of perspective that a great art-
Recent research suggests that one of the ist enjoys. The consensus today is that while

No. 17 ~ 2013
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157
some leadership qualities can be developed, design interventions that will develop NGO
there are some personal characteristics that leaders who can thrive in, and not just cope
are less amenable to change through a lead- with, the complex environment in which
ership development process (drive, perse- most NGOs operate. There is also greater
verance, emotional resilience, etc). Thus we appreciation of the role that leaders play in
need to accept that LDPs cannot develop organisational change. As a result those in
the ‘complete leader’, but they can go a long leadership positions have to gain insights
way in developing key leadership skills and into both the context in which they operate
behaviours. as well as the organisational challenges fac-
Some of these skills cannot be taught in ing local NGOs. LDPs need to develop an
the traditional sense of the word, but can be understanding of these strategic challenges,
developed through promoting greater self- and help participants become more strategic
awareness and generating some insight into in their thinking and entrepreneurial in their
the impact of personal behaviour or leader- actions. The current interest in social entre-
ship style on others. Experience suggests that
preneurship has highlighted this dimension
such insights can best be developed through
of leadership development work. Successful
some process that builds on participants’ own
LDPs ought therefore to be rooted in the
experience, and provides feedback through
mentoring and coaching sessions, 360-degree practical experience and strategic reality of
appraisals, learning sets, or team building ex- those running CBOs and NGOs, but also in-
ercises. 360 degree is an increasingly popular corporate the findings of recent research in
feedback mechanism, as it enables individu- this area.
als to gauge the attitudes and perceptions of
their colleagues (superiors, peers and sub- Methods and Approaches
ordinates) as to their management style and
behaviour in a systematic and facilitated Leadership development therefore isn’t
manner. It acts as a reality check based on about a single training event, it is about a
external sources, but for it to be effective it process that incorporates a range of activities
needs to be administered by trained facilita- including:
tors. If badly administered it is not worth do- • coaching and mentoring;
ing, because it alienates participants, creates
• self-assessment questionnaires;
artificial tensions between work colleagues,
• psychometric testing (such as Myers
and casts doubt on the efficacy of other ap-
Briggs or 16PF);
praisal or feedback mechanisms. But if done
well it can be of immense value in raising sel- • journaling and narrative description;
fawareness and acting as a catalyst for per- • photographs and video diarying;
sonal change. • cases and simulation exercises;
• specialist workshops and seminars;
• learning sets and peer group support;
Practical Experience and strategic
• internships, attachments, second-
reality
ments and observation exercises.
One of the challenges for those involved This mix of inputs and approaches not
in such capacity building work is how to only provides participants with specific skills

No. 17 ~ 2013
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158
and experiential learning, but also insights confidence, analyse options and explore
and feedback that help promote greater self- ways of implementing alternative solutions.
awareness and self-confidence in their role
as leaders. Of the activities identified it is ap- Conclusions
parent that coaching and mentoring play an
increasingly important role in leadership de- All the evidence suggests that the lead-
velopment – to the extent that it is commonly ership of NGOs is an issue of some impor-
expected that most individuals in leadership tance. Such leaders can shape the destiny of
positions should have the support of some not just the organisation itself, but also the
kind of coach or mentor. communities with which they work. Effective
International experience suggests that NGO leaders do have a pro-poor agenda,
there is a move to support such developmen- and can impact the lives of the most vulner-
tal processes with new web-based e-learning able and disadvantaged. Unfortunately there
opportunities. Such e-learning initiatives are is some concern about a growing “leadership
attractive because of their flexibility and low deficit”, and where the next generation of
cost to deliver internationally. But there are leaders will come from and how they will be
commonly high attrition rates with web- developed or trained.
based programmes. The success of such dis-
tance-learning initiatives depends on regular leadership Development: A Personal
feedback and intermittent face to face con- Challenge
tact, as well as access to the wider ‘communi-
Experience tells us that NGO leaders
ties of practice’. It seems that because of the
don’t want or need traditional skill-based
innovative nature of many e-learning initia-
training programmes with fixed and finite
tives, participants need to work at their own
structures. Instead they want flexible, per-
speed, and slowly build their confidence in
sonalised, process-based programmes that
the process and the technology involved. It is
are geared to their own needs; programmes
not a process that can be forced or imposed.
that are concerned with the strategic and op-
In conclusion, the current thinking sug-
erational issues they have to cope with on a
gests that leadership development should
daily basis. As a result there has been a move
be seen as an emergent, experiential and be-
away from generic, skill-based traditional ap-
spoke process. LDPs should be seen as pro-
proaches to leadership training to more be-
viding a safe space to explore new issues,
spoke, process-based programmes designed
receive feedback and reflect on personal
to develop the untapped potential of individ-
performance and behaviour. Because of the
ual leaders.
emphasis on experiential learning, many suc-
One consequence of this shift to a more
cessful programmes incorporate a planned
personalised, process-based approach is that
programme of secondments, attachments
many different methods and techniques are
and job rotation. As such they should not be
employed, including coaching and mentor-
seen in the same light as traditional training
ing, personal reflection, diarying, learning
courses, but more as a mix of methodolo-
sets and peer group support. Thus the de-
gies that help generate self-awareness, build
sign of LDPs is increasingly based around a
No. 17 ~ 2013
 Change and Leadership
159
modular mix of inputs, with greater empha- competency. Research in the different dimen-
sis on experiential learning, personal learn- sions of emotional intelligence has empha-
ing or “learning from within”. sised the centrality of the way we manage
This reflects the realisation that lead- ourselves and our relationships, and brought
ership development cannot be reduced to a out the role of a few fundamental capabili-
checklist of characteristics or competencies to ties (self-awareness, selfmanagement, social
be worked on and ticked off. LDPs build con- awareness and social skills) as crucial deter-
fidence, offer alternative solutions, and help minants of effective
individuals deal with issues of personal con- leadership (Goleman, 2000). There is
cern. As a result they incorporate techniques therefore much greater appreciation that lead-
and group processes to help overcome com- ership development is a complex, dynamic
mon psychological barriers such as low self- and highly personal process. Leadership
esteem, lack of selfconfidence, fear of failure, skills develop and evolve to suit the context
and stress. and culture in which they operate. They can-
Another aspect that is often overlooked not be simplistically transferred.
is the role of LDPs in attempting to alter un-
acceptable behaviour or attitudes. As has al- leadership Development: A Capacity
ready been noted there are issues about the Building Priority?
dark side of leadership behaviour. This is not
just about the abuse of power for personal This paper has identified some of the
benefit, but also about the way autocratic challenges that NGO leaders face, and con-
behaviour displayed by some NGO lead- cludes that they need a set of attributes above
ers becomes ‘addictive’ and disempowering and beyond those commonly found. In par-
(James, 2005b). Such negative behaviour, ticular they need integrity, personal strength,
which may have a highly detrimental effect political acumen and managerial ability to
on small organisations, can be addressed balance the competing pressures they face as
through self-awareness and conscious- well as the judgement and insight to know
nessraising as well as ongoing mentoring what leadership style or strategies best suit
or coaching. It also implies that LDP pro- the circumstances. They also need to main-
grammes should not merely be available to tain their personal values and deep-rooted
established leaders but also to a new genera- contacts with the community within which
tion of potential leaders early in their careers, they work. As a result they will develop a
before inappropriate behaviour has become remarkable ability to adopt different man-
the norm, or autocratic habits have taken agement styles while remaining true to their
hold and solidified into addiction. values and aspirations, and where appropri-
There is also a more sophisticated un- ate work in a participative and consensual
derstanding of the range of social skills and manner.
leadership competencies that such pro- The future of many NGOs depends on
grammes should be developing. This has their ability to recruit and retain effective
been reinforced by an appreciation of the im- leaders who are self-starters, can inspire oth-
portance of emotional intelligence as a core ers, and have the ability to effect real change.

No. 17 ~ 2013
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160
Such ‘catalytic’ leaders (see typology in the NGO sector is different from leadership in
Section 2) have the ability to take a longer- other sectors. NGOs are vulnerable to the exi-
term strategic view while balancing tough gencies of donors, the political sensitivities of
decisions as to strategic priorities with organ- governments, and the needs and imperatives
isational values and identity. Their success of the local community. Development NGOs
as change agents depends on their ability to are susceptible to the unpredictable demands
delegate work to talented colleagues so free-
of an uncertain development environment.
ing time to build coalitions, develop strategic
The question for the future is how will such
alliances, and work as ‘boundary spanners’
organisations find or develop a new gener-
across organisational divides. Above all they
are effective and committed networkers who ation of managers or leaders who can meet
can lever up resources and enhance status these challenges. Thus, leadership develop-
and impact by actively engaging with exter- ment needs to become a priority issue on the
nal stakeholders and working with a range NGO agenda – an issue of central importance
of partners. for all those concerned with capacity building.
It is also clear from any review of the
research that leadership and management in

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Public And Private leadership And

Performance Management

~ PhD Student Christine (mihaescu) Demeter (Management Faculty, Academy of

Economic Studies, Romania)
E-mail: [email protected]
~ PhD Student ana-Claudia Țapardel (Management Faculty, Academy of Economic
Studies, Romania)
E-mail: [email protected]

Abstract: The aim of this article is to make a comparing between the private and public leadership.
We analyze (1) whether there are differences between public and private sector leadership based on some
variables related to job complexity of a manager (including the managerial behaviour, job autonomy, and
job clarity), decision-making vs policymaking process and the stakeholders vs political influence, and (2) to
assess the degree of their effects on the managerial competences and performance management. Our study
is conducted from the Romanian perspective on public organizations.
As the methodology used, in order to identify the perception on political influence in Romanian public
administration we conducted a survey among civil servants at central and local level. Our research is based
on the empirical analysis of the relevant literature in public administration, leadership and organizational
performance.
Key words: leadership, managerial competences, performance management, public admin-
istration, private organizations.
Jel: L3, L33

1.introduction organizations and private management in

order to establish whether there are differ-
In the public administration and pub-
ences between public and private sector man-
lic management literature, a large num-
agers. There are not so many studies related
ber of studies make references to private

No. 17 ~ 2013
 Change and Leadership
163
to leadership differences between public and From this perspective, we consider as
private organizations (Anderson 2010). In an ending point of this analysis the desirable
particular, the public leadership adopted by managerial competences and performance
the public managers is presented in related management that private and public organi-
literature as public managerial abilities and zations are trying to achieve.
skills (Fernandez 2005). Managerial Competences
The phenomenon of public leadership
is more related to New Public Management Most private and public managers,
(Pollitt and Bouckhaert 2004), in the context who are responsible for management devel-
on public administration reforms, which opment and learning, accept that competen-
promote introducing managerial skills and cies comprise a mixture of three essential
abilities of management from private compa- elements: (1) the skills and abilities practiced
nies into public organizations. The fact that in daily actions; (2), knowledge, expertise
leadership is different in public administra- and experience in making the decisions and
tion than this is in private companies had (3) the personal qualities, attitudes and val-
been already demonstrated (Anderson 2010). ues they espouse.
Moreover, the literature argues that there are These three elements that promote the
different styles of leadership depending on managerial competences could easily be de-
the specific structure of organizations, based scribed as understanding how a manager
on the organization-context, even there are should or would acts (skills), based on what
private or public. These identified differences it needed to know (knowledge) and what at-
make the effects of influence to be different, titude to adopt in order to make a decision, or
from this point of view, because managers to implement a policy.
are operating under different and very spe- These three combined elements give the
cific constrains. behaviours of the manager. There are not, so
Our research objectives are: (1) to identi- far, differences between public and private
fy what are these differences between the pri- manager. The components are similar for
vate and public leadership styles sectors, and both sectors.
(2) to assess the degree of their effects on the Besides these, the public manager has
managerial competences and performance a political role in his organization. He is
management. Therefore, we agreed on some not representing only the organization he
internal and external factors that, from the worked for, but the whole society or tar-
literature perspective, we consider as hav- get group, to whom the public services are
ing great influence on leadership adopted ei- provided. The public managers are, mostly,
ther by private or public organizations. The political figures, elected or appointed for a
factors we considered for our analysis are: determined period of time. They are leading
related to job complexity of a manager (in- the public organizations. Politicians make a
cluding the managerial behavior, style, job distinctive contribution by rising controver-
autonomy, and job clarity), decision-making sial issues, promoting projects and setting di-
(vs policymaking) process and the stakehold- rections, generating resources, even making
ers (vs political) influence. compromises – mobilizing citizens – they are

No. 17 ~ 2013
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164
making the things move. This is the leader- for different leadership model.
ship definition for the public managers. The private leadership is more con-
Performance management centrated on the results and profit, on the
efficiency of the well done job, while the
The managerial competences are very public leadership is concentrated on dis-
much related to the performance of the or- tributing powers between different levels of
ganization, both private and public. The governance. Different styles of leadership
performance is about achieving the estab- characterize the two sectors: participative
lish objectives and desired results. The per- leadership for private organization which en-
formance of private organizations is related courage the support and collaboration, even
to their profits, while the managerial perfor- implication of the employees, and directive
mance of public administration is about pro- leadership for the public administration that
viding services and running projects with incorporates rules, control and indications.
limited resources and efficiently spending of From the job description point of view,
the public money. public managers have more job complexity
There are internal and external factors than private managers (Hansen and Villadsen
that influence both the managerial compe- 2010). The reasons are: public administration
tences and the performance management of is more bureaucratic than private companies
private as well as public organizations, as we (Boyne 2002). The goals of public administra-
are describing in the following sections. tion are more open to environmental influ-
2. Managerial complexity ence, are more complex and less stable and
The managerial complexity is related to they have to face a lot of external constrains,
the context by which the managers are con- such as the political factor.
ducting their activities. From this perspective As referring to job autonomy, the public
the managerial style depends by different managers have less autonomy than the pri-
organizational context related to employees, vate managers. The more political influence
power and task structure. Thus, the job com- leads the public administration management
plex is related to clarity, complexity, and au- the less autonomy public managers have. The
tonomy of a job that influences managerial reason of this affirmation is based on the fact
performance. that political factor is external and “above”
the public institutions. The managers have
On the other hand, the job complexity
week authority and power if they are in re-
is influenced by several factors related to: na-
lations with their superiors (as well consid-
ture of the task they need to be solved, the or-
ered an external political factor of influence)
ganization of work and cooperation system
and even on their subordinates dues to insti-
within and outside the organization, exist-
tutional and regulatory constrains. The leg-
ing systems and technologies, organizational
islation is very conservative for the public
structure, as a whole and the organizational
institutions in terms of defining their roles,
culture.
the management style, procedures and struc-
Taking into account all the above men-
tures. This not let so much space for defining
tioned factors, the job complexity and con-
performance and establishing performance
text could create opportunities and barriers
measuring procedures.

No. 17 ~ 2013
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165
3.Decision making process vs 4.stakeholders vs Political influence
policymaking on performance

The decision making process, in the We already have presented the influ-
public and private sectors, is very much in- ences stakeholders could have on the man-
fluenced by the institution’s management agement and on the leadership of a private
functions and its organizational structure. company, as well as the political factor is a
The management is a dynamic process, by very influential one on the public administra-
which organizations are directed, controlled, tion. The impact of these two factors is reflect-
and held accountable, consisting of various ed on the performance of the organization.
elements and activities. The process is about Referring to the public administration,
the selection of a course of action among sev- Edmund C. Stazyk and Holly T. Goerdell
eral alternative scenarios. The difference that (2011) have demonstrated the relationship
appears between private and public organi- between ambiguity of the managerial goals,
zation is related to decision making and pol- hierarchical authority, political support and
icy making, as long as the main objective of organizational effectiveness/performance.
public administration is to implement public The main conclusion of their research is that
policies that address to the whole society or high organizational performance is linked to
to a specific defined target group. low political performance, low authority and
The decision making process in public less bureaucracy.
institution is hierarchical decision-making In order to demonstrate the great im-
process in a traditional institution. pact that political influence has on Romanian
The general picture of a public institu- public administration we conducted a survey
tion’ structure is pretty similar. The head of among civil servants from the central and lo-
the public institution, which is the highest cal level of Romania public Administration.
position (mainly political one), who is rep- The survey was conducted in January and
resenting the institution’ mission, objectives February 2013, and we gather about 300 re-
and approve the whole processed and activi- spondents to questions.
ties is the president, state secretary, minister In our survey we wanted: to assess the
etc. The next position is mainly a highest ex- actual system of performance management
ecutive position who will most likely receive of Romanian public administration, to inden-
a certain segment of the workload to be com- tify the influence of the external factors on
pleting and to coordinate the activities and the policymaking process and on the public
the projects run by the institution. management efficiency and to identify the
This responsibility will then be passed membership of civil servants at different as-
from this position down the hierarchy so that sociative structures or organizations.
each aspect of the administration is being Regarding the actual system of perfor-
covered correctly. mance management, we can remark that civ-
The decision making process looks il servants considered that their institutions
more participative and is based on the gener- have in percent of 28 % an acceptable level
al consensus in the private organization than of performance, 17% evaluated a low level of
in public administration. performance and only 14 % considered that
No. 17 ~ 2013
 Change and Leadership
166
the Romanian public institutions have a high and behaviours. We argued that the differ-
level of performance. ences are because of different internal and
In order to identify the influence of the external factors that influence and impact
external factors on the policymaking process the managerial competences and the per-
and on the public management efficiency of formance management of an organizational.
the Romanian public institutions, we iden- The managerial job is very complex, ambigu-
tified a very strong political influence: 40% ous, with less autonomy and with a strong
high, 16% acceptable and only 10 % of the political influence on the policy making pro-
civil servants appreciated a low level of po- cess in the public organizations that conducts
litical influence. Other external factors with to a directive leadership style. On the other
a major impact are: the economic and social hand, private organizations are developing
factors – 45 % high level of influence; the le- a more participatory style based on the fact
gal framework and the actual legislation – 50 that the jobs are more clearly defined, more
% high level of influence and responsibilities autonomous, flexible and the decision mak-
and government policies undertaken at na- ing process is a not so highly influenced by
tional, European and international level (the the stakeholders. The results of the survey
relation with European Union, International showed that the political factor has a huge
Monetary Fund and World Bank) – 40 % high impact on the on the policymaking process
level of influence. and on the public management efficiency of
Regarding the membership of civil ser- the Romanian public institutions and that the
vants at different associative structures or actual performance management system in
organizations we can see the only 11 % rec- the Romanian public administration is not a
ognized or declared that they are member of very satisfactory one and is necessary to de-
a political party. Most of them declared their velop and implement new management in-
membership to a professional association or struments in the public sector, instruments
to a trade union. which may come from the private leadership
But we can note that a huge percent of experience.
civil servants, between 35 – 40%, didn’t an- acknowledgments
swer to some of the survey questions and the
reasons can be numerous and interpretable. This work was cofinanced from the
European Social Fund through Sectoral
Operational Programme Human Resources
Conclusions
Development 2007-2013; project number
In this article we presented the differ- POSDRU/107/1.5/S/77213„ Ph.D. for a career
ences between private and public manag- in interdisciplinary economic research at the
ers that lead to different leadership styles European standards”.

No. 17 ~ 2013
 Change and Leadership
167
reFereNCes:
1. Andersen, J. A. ‘‘Public Versus Private Managers: How Public and Private Managers Differ in Leader-
ship Behavior.’’ Public Administration Review 70(1): 131–141, 2010
2. Fernandez, s. ‘‘Developing and Testing an Integrative Framework of Public Sector Leadership: Evi-
dence from the Public Education Arena.’’ Journal of Public Administration Research and Theory 15(2):
197–217, 2005
3. Edmund C. stazyk, holly t. goerdel. “The Benefits of Bureaucracy: Public Managers’ Perceptions of Political
Support, Goal Ambiguity, and Organizational Effectiveness”, Journal of Public Administration Research and
Theory” 21 (4): p. 663, 2011
4. hansen, jesper Rosenberg & villadsen, anders R. “Comparing Public and Private Managers’ Leader-
ship Styles: Understanding the Role of Job Context”, International Public Management Journal, 13:3,
247-274, 2010
5. Pollit, C. & Bouckaert, “C. Public management reform: a comparative analysis”. (2nd Edition). Oxford:
Oxford University Press, 2004

No. 17 ~ 2013
 Change and Leadership
168

Confronting the Consequences of a

Permanent Changing environment

~ Ph.D. Student raluca ioana Vosloban (Marketing, Academy of Economic Studies,

Bucharest, Romania)
E-mail: [email protected]
~ Ph.D. Student Monica Vrabiuta (Marketing, Academy of Economic Studies, Bu-
charest, Romania)
E-mail: [email protected]
~ Ph.D. Student Roxana Elena aldea (Marketing, Academy of Economic Studies,
Bucharest, Romania)
E-mail: [email protected]

Abstract: Businesses and governments choose how they wish to deal with change. Whether this
change is organizational, technological, political, financial etc or even individual pursuing actions as usual
is likely to lead to a downward path. The authors of this paper are giving a set of tools for confronting and
understanding the consequences of this era of permanent changes by building strengths and seeking oppor-
tunities within organizations (private or public) and within family (including friends). The work environ-
ment and the personal life of the individual have a common point which is adaptability, coping efficiently
with changes, a demanded ability of the 3rd millennium human being.
Key words: organizational change, employee, family, technological environment
Jel Classification: D23, M12, L2, D1, L86

No. 17 ~ 2013
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169
introduction managers and employees informed about
how changes are to proceed in their organi-
Organizational change is seen as a step
zations. Communicating the organization’s
forward, as a consequence to continuous im-
new mission and vision is seldom carried out
provement and development. In the same
in an effective and satisfactory manner.
time it is seen as a delicate subject with em-
Moreover, top-level executives often
ployees as first actors. The question that rises
do not provide training for the middle-lev-
within this context is what an organization
el managers who are responsible for im-
can practically do to minimize the negative
plementing change. Communicating with
impact that a change might have on its em-
employees, determining employee expec-
ployees and to maximize the positive one
tations about what will happen, reducing
that leads to satisfaction. Moreover, recent
uncertainty and ambiguity by providing rel-
changes in the world and the workplace have
evant and timely information, and address-
proved to effects/impacts also the family life
ing the issue of job security can mitigate the
from the founding of a home to the parents
negative effects caused by mergers.
relationships with their children.
Multiple forms of employee communi-
cation resulted in higher satisfaction, com-
effects of the organizational change mitment, and perceptions of trust and caring
than in a control group that did not receive
Organizational change can be perceived
this information. However, from a social ex-
positively or negatively. Sometimes it could
change perspective, it is still necessary to in-
be difficult to respond to dissatisfaction, but
form employees about progress in a timely
actions like addressing to other employees,
manner, clarify how employees will be treated
to ask to speak with the manager or fill in a
after the changes are implemented, and then
complaint file are to be taken into account.
build and maintain employee commitment to
With all these in mind, there are many indi-
the new organization. Communicating with
viduals who do not express their complaint
employees, keeping them informed about the
and choose to adopt a negative attitude, be-
progress of the changes, and providing ad-
come unfriendly with colleagues, friends,
equate training gives people both the confi-
and family (Lovelock and Wirtz, 2007, p.
dence and skills necessary to smoothly make
381). To underline, this has a negative influ-
the transition. As employees become more fa-
ence on the quality of service delivered to the
miliar with the change and how it may affect
company’s clients, as such an employee can-
them, their support for management and the
not deliver the customer’s expectations.
change effort increases, according to Chiang
The necessary actions are to be taken in-
(2010, p. 159).
ternally, by implementing certain procedures
According to the traditional under-
and ways of communication that aim to pre-
standing, employees have to adapt to orga-
vent such situations and underline the ben-
nizational change and learn new strategies to
efits the change brings.
achieve redefined goals while being resilient
The major problem in unsuccessful
to setbacks during change. Employees’ adap-
change is a lack of communication. Studies
tive behavior is driven by their emotions.
show that many companies fail to keep

No. 17 ~ 2013
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170
Prior studies on employees’ emotions during the importance of the internal marketing pro-
change often characterize emotions in terms cedures and strategies.
of hedonic tone or pleasantness. They are Mahin (2010, p. 1798) considers that
classified as either positive emotions, such managers who understand the psychological
as joy and excitement, or negative emotions, aspects of organizational change can better
such as fear and grief. plan what methods are used, when and how,
In the context of organizational change, and under what specific conditions they may
positive emotions include being confident lead to more positive results. Yet, positive or-
about change and enhance trust, leading to ganizational changes, in many situations, rely
commitment and emotional engagement, on managers’ creativity, enthusiasm, impro-
while negative emotions include feeling visation, exploration, and enterprise. Finding
stressed or insecure about change, leading to creative ways of implementing organization-
mistrust and resistance (Klarner et al., 2011, al changes that motivate positive responses
p. 333). of employees is a worthwhile challenge.
Failure of change is frequently due to Consequences of the labor market
the lack of commitment and motivation of changes over the family life
the employees, but their emotional intelli- Lim and Loo (2003) state that the recent
gence could predict organizational readiness changes in the world and in the workplace
for change (Norshidah, 2011, p. 129). Not sur- have generated considerable feelings of job
prisingly, studies went on to investigate the insecurity among today employees. These
causes of and solutions to, resistance. Causes changes had effects/impact also in the family
were typically conceptualized in terms of life beginning with the founding of a home to
shortcomings in an individual’s attitudes, the parents relationships with their children.
emotions and/or behaviors. First of all the age that the young people get
Other deficiencies on the part of employ- married had increased because they consider
ees included misunderstanding the change; housing a big problem along with econom-
a lack of tolerance for change; and cynicism ic problems and work-life conflicts (Kong,
towards change. Some work did argue that 2012). After they get married the appearance
resistance could be caused by the mishan- of children which implies at first nursery and
dling of the change by change agents but, kinder-garden costs and later the payment
even here, subordinates were still blamed of various studies are raising pressures on
for engaging in resistance. Solutions to this all parents - mothers and fathers, couple and
continued challenge of resistance are mani- single - to work for payment (Strazdins et al,
fold. Some appear to be benign insofar as 2010). According to Edwards (2001), parents
they revolve around communication, educa- are placed on the labor market primarily fi-
tion, and participation, according to Thomas nancial uncertainty and the desire of wealth
and Hardy (2011, p. 323). It is important to for the whole family.
emphasize the fact that the internal relation- Current changes in workplace, social
ships between employees and between man- and demographic structures are increas-
agement and employees might be impacted ing children influence on both their parents’
by the change and here comes into discussion decisions and their general involvement

No. 17 ~ 2013
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171
in the family making decision (Aldea and level. The parent-child interaction must be
Brandabur, 2012). First of all, as mentioned warm, serene, elaborated from the job stress
before, the realization of a family and of to avoid the changes which parents accu-
course bringing up a child is delayed un- mulate. In this sense, children will no lon-
til the workplace provides a satisfaction for ger have to suffer from the changes occurred
the individuals involved (Pelsmacker, 2002). with the mothers establishment on the labor
Second of all, regarding the changes occurred market or different changes that happen with
in parent-child relationship concerning the their parents at work (deadlines, job chang-
influence level that the child has, a major ing, various pressures from the boss or col-
role was the necessity of a bigger income per leagues etc.)
capita. There by, the entrance of mothers on
the labor market (Pelsmacker, 2003) made the technological tools at hand
communication between mother and child
difficult. These days mothers can no longer The set tools of tools for preparing and
refuse so easily the children demands for dif- facing changes is necessary both on a concep-
ferent products or worse they accept the bad tual level and by experimental applications.
behavior changes of their children (Berry and About the conceptual level, the set of tools
Gubber, 1993, Yavuzer et al., 1993). comes directly under the influence of the
The more the age of giving birth in- digital evolution over the individual. There
creases, the more the influence on parents is are three general directions of strategies used
bigger because the payment that they have to educate the individual:
offers the satisfaction of various needs and 1. Online training
desires. 2. Sharing using social websites
Besides all of these, it is imperative to 3. Internet (re-)searching
mention that the instability and the stress These three directions work both ways,
from the job have an important part in the one from the company/government institu-
tion to the individual, being completely con-
parent-child relationship, but this time in a
trolled, positive, or defensive, explanatory,
negative sense. Namely individuals expe-
and the other from the individual itself, be-
riencing work stress have been found to be
ing partially controlled, but full of opportu-
more irritable and hostile in their family in-
nities for the business/the state.
teractions, leading to more punishing and The Internet Revolution started a new
unresponsive parenting behaviors with their era of economic development, significantly
children (Almeida et al., 1999). Job stress has increasing productivity and enhancing the
large and persistent negative effects on fam- prosperity of small to multi-national busi-
ily (Coelli, 2011). Thereby the working place nesses and governmental institutions. The
of the parents can place the mark on the chil- variety of information available to consum-
dren because they can confront with experi- ers and the ease in obtaining them altered the
enced social and school-related problems. structure of industries and the internal orga-
The problems of the parents from the nization of companies.
job area should not influence the children on For defining the social network tools
the social level and much less on the school we must understand that the core of this

No. 17 ~ 2013
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172
phenomenon is information. Companies growing the productivity of its employees if
and governments thrive to find solutions to involved in this activity.
permanently adapt to the changes of the in- From the management point of view
formation technology era and effectively re- the Digital Revolution gives a pallet of online
structure over and over again to gain from tools for project management, for time
the use of web-based technology. management, for tracking an enormous
A BBC profile report made about amount of details, for remembering ideas,
Romania spread the information that collecting needed supplies and seeing the big
“Romania, a slower developer than other for- picture all the time.
mer communist countries of Eastern Europe,
took a major step away from its past” after Conclusions
the World War II, under the communist rule.
According to the Internet Usage There are many individuals who do not
Statistics and Market Report in 2010 more express their complaint, that choose to adopt
than 35% of the Romanian population was a negative attitude, become unfriendly with
active Internet users. In 2012 the Percentage colleagues, friends, and family. The neces-
of Population Online grew to 39.2%. sary actions that need to be taken are inter-
In January 2011 the U.S. Public nally, by implementing certain procedures
Intelligence reported that the most popu- and ways of communication that aim to pre-
lar place for people to access the Internet in vent such situations and underline the ben-
Romania (46.4%) is at home and is followed efits the change brings (individual strengths
by work (15.6%) and school (8.4%). Businesses and opportunities).
should focus their strategies on two aspects: The major problem in unsuccess-
first the number of employees using the in- ful change is a lack of communication.
ternet (at work) is below European average Communicating with employees, determin-
and this is a full professional reflection over ing employee expectations about what will
the Romania labor market and second over happen, reducing uncertainty and ambiguity
20% of Romanians use the Internet while on by providing relevant and timely informa-
the move having more than one mobile de- tion, and addressing the issue of job security
vice and access to free public access points. can mitigate the negative effects caused by
The cell phone market has reached changes.
its saturation point, accordingly to the U.S. From a social exchange perspective,
Public Intelligence (2011) there are more than it is necessary to inform employees about
24.5 million active cell phone SIM cards in progress in a timely manner, clarify how
use in Romania, against a human population employees will be treated after the chang-
of less than 21 million, giving a penetration es are implemented, and then build and
rate in excess of 110%. This, combined with maintain employee commitment to the new
the limited level of fixed line infrastructure
organization.
explains the relatively high level of mobile
The Internet has proved to be a creative
internet use at 22.7%.
environment for the companies and helped
The Internet has proved to be a creative
growing the productivity of its employees.
environment for the companies and helped

No. 17 ~ 2013
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173
Managers use multiple tools for project man- Managers who understand the psycho-
agement, for time management, for tracking logical aspects of organizational change can
an enormous amount of details, for remem- better plan what methods are used, when
bering ideas, collecting needed supplies and how, and under what specific conditions
while seeing the big picture of the business. they may lead to more positive results.

reFereNCes:
1. lovelock, Christopher, wirtz, jochen, Services Marketing – people, technology, strategy, 6th Edition, Pear-
son Prentice Hall, SUA, 2007
2. Chiang, Chun-Fang, Perceived organizational change in the hotel industry: An implication of change schema,
International Journal of Hospitality Management, vol. 29, 2010, pp. 157–167
3. Klarner, Patricia, todnem, Rune, Diefenbach, thomas, Employee emotions during organizational change–
Towards a new research agenda, Scandinavian Journal of Management, vol. 27, pp. 332-340, 2011
4. Nordin, Norshidah, The Influence of Emotional intelligence, Leadership Behaviour and Organizational Commit-
ment on Organizational Readiness for Change in Higher Learning Institution, Procedia - Social and Behavioral
Sciences, vol, 29, pp. 129-138, 2011
5. thomas, Robyn, hardy, Cynthia, Reframing resistance to organizational change, Scandinavian Journal of
Management, vol. 27, pp. 322-331, 2011
6. tavakoli, mahin, A positive approach to stress, resistance, and organizational change, Procedia Social and
Behavioral Sciences, vol. 5, pp. 1794–1798, 2010
7. lim, vivien K.g., loo, geok leng, Effects of parental job insecurity and parenting behaviors on youth_s self-
efficacy and work attitudes, Journal of Vocational Behavior, vol. 63, 2003, p. 86–98
8. kong, haiyan, Relationships among work-family supportive supervisors, career competencies, and job involve-
ment, International Journal of Hospitality Management, 2012, http://dx.doi.org/10.1016/j.ijhm.2012.09.006
9. strazdins, lyndall, shipley, megan, Clements, mark, obrien, léan v., h. Broom, Dorothy, Job quality
and inequality: Parents’ jobs and children’s emotional and behavioral difficulties, Social Science & Medicine,
vol. 70, 2010, pp. 2052-2060
10. aldea, Roxana Elena, Brandabur, Raluca Ecaterina, Children In Family Purchase Decision Making, A Theo-
retical Review, “Ovidius” University Annals, Economic Sciences Series, 2012, vol. XII, Issue 2
11. geuens, m., Pelsmacker, P, Children’s Influence on Family Purchase Behavior: The Role of Family Structure,
Asia Pacific Advances in Consumer Research, 2002
12. almeida, D. m., wethington, E., Chandler, a. l., Daily transmission of tensions between marital dyads and
parent–child dyads, Journal of Marriage and the Family, 1999, vol. 61, pp.49–61
13. Michael B. Coelli, Parental job loss and the education enrollment of youth, Labour Economics, vol. 18, 2011,
pp. 25–35
14. geuens, m., Pelsmacker, P., mast, g., How family structure affects parent-child communication about con-
sumption, Advertising and Marketing to Children, January-March, 2003
15. Berry, J., Guber, s., In Influence of children on purchasing decisions of well-to-do families, Marketing to and
through Kids, McGraw Hill, New York, 1993

No. 17 ~ 2013
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16. yavuzer, h., Cocuk P., Remzi K., Istanbul, 1993 in F. Bahar Isin and Sanem Alkibay, „Influence of children
on purchasing decisions of well-to-do families, 2011, Young Consumers, vol. 12, no. 1
17. edwards, M. e., Uncertainty and the rise of the work-family dilemma. Journal of Marriage and the Family, vol.
1(63), 2001, pp. 183-196
18. kotler, P., Caslione, J., Chaotics. The Business of Managing and Marketing in the Age of Turbulence. Publica,
2009, (Chapter 3)
19. seybold, P., The Customer Revolution – How to Thrive When Customers are in Control. Crown Business New
York, 2001, (Chapter 1, 2 and 3)
20. larry e. Greiner, Evolution and Revolution as organizations grow, Harvard Business Review Classic, pag. 5,
21. http://raj.rajaditi.com/management/Strategy/grainer.pdf
22. http://www.internetworldstats.com/eu/ro.htm
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No. 17 ~ 2013
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Competitive strategies in the Context of

Political marketing

~ Ph.D. eleonora Gabriela Baban (The Bucharest Academy of Economic Studies,

Romania)
E-mail: [email protected]

Abstract: By implementing effective marketing strategies organizations can achieve their strategic
objectives and be competitive. The main objectives of the study are: 1). presentation of the main characteris-
tics that define market strategy in the context of political marketing; 2). analysis of the competitive strate-
gies according to the position held by an organization on the market; 3). presentation of the main trends of
competitive environment in the contemporary business context. To obtain the vote of the electorate politi-
cal parties apply specific competitive strategies according to the position they hold on the market. Electoral
success depends largely on how political parties (or candidates) manage to gain the voters’ trust by using
effective strategies in order to improve and maintain their position on the market over a long period of time.
Key words: strategy, political marketing, competitiveness
Jel Classification: M31

1.introduction objectives on a short and long term basis, an

organization must face the challenges com-
Organizations achieve their goals by
ing from the environment in which it op-
implementing effective competitive strate-
erates, the permanent need being that of
gies managing to maintain their market posi-
adjusting the activity according to dynamic
tion. In order to achieve tactical and strategic
environmental trends characteristic to the
No. 17 ~ 2013
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176
current stage. This study aims to highlight organizations and parties in order to achieve
the main features of competitive strategies their objectives and targets. Osuagwu (2008)
used by both companies and political enti- considers that “political marketing strategy,
ties closely linked to the position they hold generally, is a series of persuasional tech-
on the market. Competitive strategies are a niques deployed in competitive situations to
central element in an organization’s market- construct and reinforce a political entity’s im-
ing policy and a careful and rigorous imple- age, products and persons” (Osuagwu, 2008,
mentation of these strategies can only lead to pp.800).
increased turnover for manufacturing firms, Moreover, “political marketing strategy,
and to attracting a large number of voters for specifically, seeks to describe how political
parties / candidates who wish to obtain elec- entities and persons attempt to market their
toral success. To enjoy successful competi- programmes, policies, persons and ideas to
tive strategies organisations need to exploit the relevant publics, while being sensitive
the opportunities offered by the competi- to the realities of the political environment”
tive environment by applying an appropri- (Osuagwu, 2008, pp.800).
ate marketing mix to accomplish the desired Firms will seek key competitive advan-
performance. Achieving competitive advan- tages which can differentiate from competi-
tages, correct information about direct and tors. Competitive advantages can be of two
indirect competitors, the ability to meet cus- types, namely: cost advantages (firms prac-
tomers’ needs at a higher level and a better tice a low price) and performance advantages
knowledge of competitive business environ- (companies focus on quality and efficiency)
ment trends are essential prerequisites for (Bruhn, 1999, pp.80). Also, Bruhn (1999) ar-
achieving success. gues that “implementation of strategy with-
in the company” requires the “creation of
2. the market strategy and its char- internal assumptions market performance”
acteristics in the context of political (Bruhn, 1999, pp.86). With respect to organi-
marketing zations setting strategic objectives represents
the key to achieving expected performance.
Political entities take into account po- According to Osuagwu (2008) “politi-
litical marketing features by applying mar- cal marketing strategy may be applied (or be
keting tools in the electoral field. Osuagwu relevant) to such areas of governance/politics
(2008) considers that “political marketing can as interest/lobby groups, local government,
be conceptualised as the application of mar- legislature, the civil service, public service
keting concepts, principles and approaches in etc.”(Osuagwu, 2008, pp.800).
political issues by persons, groups, organisa-
tions and nations” (Osuagwu, 2008, pp.794),
3. Competitive strategies according to
because “marketing concepts, principles,
market position
strategies and analytical methods have con-
siderable applicability in political marketing” According to the market position occu-
(Osuagwu, 2008, p.798). Political marketing pied by a firm (organization) the following
principles and strategies are used by political market structure can be mentioned: 40% is

No. 17 ~ 2013
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held by the market leader, 30% is held by the threatening area, and lessen their intensity”
market challenger, 20% is held by the market (Kotler and Keller, 2006, pp.353). According
follower and 10% is held by the market nich- to Butler and Collins (1996) “market leaders
ers ( Kotler and Keller, 2006, pp.349). These in politics are seldom able to expand their ap-
four positions peal without risk” (Butler and Collins, 1996,
held by the firms (organizations) on the pp. 36). But there are several dangers for the
market assume different strategies. leader, such as technological changes, dissat-
isfied voters, or even “losing market share to
new venture” (Butler and Collins, 1996, pp.
36). To gain the voters’ attention and trust
a market leader should be creative, friendly
and reputable. In various situations if the
market leader cannot sustain his/her offer to
the electorate, he/she might adopt a defen-
sive strategy in order to reinforce his/her im-
age in voters’ mind (Butler and Collins, 1996,
pp. 37).
Challenger
A challenger’s performance depends
on using various attack strategies to improve
and maintain its position over a long period
of time. In competitive terms, the challeng-
er’s role is to “depose the leader”, by using
active strategies that “require an aggressive
approach” (Butler and Collins, 1996, pp. 37).
Butler and Collins (1996) note that chal-
lengers take into account three fundamen-
tal conditions for “a successful attack on the
According to Osuagwu (2008) “politi- market leader”, such as: “the challenger must
cal marketing strategy addresses different have a sustainable competitive advantage;
issues, such as how political organisations the challenger must be able to neutralize the
listen to the people they seek to serve, de- leader’s other advantages; and there must be
termine what they offer to the public and some impediment to the leader’s retaliating”
achieve their goals. It studies politics from (Butler and Collins, 1996, pp. 37).
the supply side (political parties) and from For a challenger, having a strategy of
the demand side (voters, relevant audience)” the electoral system is a fundamental fac-
(Osuagwu, 2008, pp.800). tor, because “the more proportional the sys-
market leaders should permanently de- tem the less are the rewards of an aggressive
fend their position. The dominant firm uses stance” (Butler and Collins, 1996, pp. 38).
defense strategies in order to “reduce the Challengers use various strategies for antici-
probability of attack, divert attacks to less pating voters’ preferences and wishes such as

No. 17 ~ 2013
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178
“back-door strategies” or they often “reduce market is to be a leader in a small market,
policy differences and rely on rival claims of or niche” (Kotler and Keller, 2006, pp.362).
competency, reliability or honesty” (Butler Nicher strategy targets a market segment and
and Collins, 1996, pp. 38). its fundamental objective is to satisfy custom-
Follower ers’ needs. A market nicher uses several strat-
According to Kotler and Keller (2006) “a egies in order to “create, expand and defend
market follower must know how to hold cur- niches” (Butler and Collins, 1996, pp. 40). In
rent customers and win a fair share of new the political field “niche parties may be re-
customers” (Kotler and Keller, 2006, pp.360). liant on votes from a distinctive part of the
In a competitive environment “the follower is jurisdiction”, because “some electoral sys-
susceptible to attack by challengers engaged tem allows very specialist nicher strategies”
in a strategy of engaging the leader indirect- (Butler and Collins, 1996, pp. 40).
ly through taking over other competitors”
(Butler and Collins, 1996, pp. 39). A market 4. Competitive environment – futures
follower uses the following main strategies: in the contemporary context
counterfeiter duplicates, cloning, copying
and adapting the leader’s product (Kotler The whole process of setting an organi-
and Keller, 2006, pp.360-361). Counterfeiter zational strategy involves finding the most
strategy involves the fact that “the counter- appropriate ways in which business skills
feiter duplicates the leader’s product and and competitive strategy adopted by organ-
package and sells it on the black market” isations could interact with the influences of
(Kotler and Keller, 2006, pp.360).Cloning economic, political, social and technological
strategy “involves close imitation” of the environment. In the context of this approach
leader’s product, copying strategy “involves it is necessary to ask the following key ques-
replicating other market products, but with tions: “What is the company’s mission? What
just enough differentiation to avoid retalia- does it want? What will it do?” (Popa, 2004,
tion” and adapting strategy “involves taking pp.62). After setting the company’s mission,
other market products, but marketing them setting strategic objectives and evaluating
in different markets or segments to avoid di- competitive strategies, the organization can
rect confrontation” (Butler and Collins,1996, choose the final strategy whose implemen-
pp. 39). tation leads to the achievement of the per-
In the political arena parties “act to cir- formance desired. Business environment
cumscribe their political market” for “pro- has several important trends that need to
tecting traditional supporters” and they use be known by the companies if they want to
several strategies in order to develop “in the accomplish the strategic objectives in terms
recognition of their limitations in appealing of efficiency. These trends are: evolution of
to a wide cross-section of the national mar- technique and technology in contemporary
ket” (Butler and Collins, 1996, pp. 39). context creates various possibilities for inno-
Nicher vation and creativity, “enhancement of busi-
According to Kotler and Keller (2006) ness legislation, enhancing the role of interest
“an alternative to being a follower in a large groups and political entities”, “international

No. 17 ~ 2013
 Change and Leadership
179
orientation in cultural domain towards an al- 5. Conclusions
truistic society, and towards consistent and
A market leader implements strategies
sustainable values” (Stanciu, 2002, pp.82). In
in order to expand global market by diver-
order to develop strategies on long-term ba-
sifying its product range and creating inno-
sis it is necessary for organizations to know
vative products (in the context of political
these interesting trends (Stanciu, 2002, pp.
marketing, political offer and social objec-
82). Connecting organization activity with
tives supported by a major party / candidate
the environment is an essential condition for
can lead to obtaining the voters’ vote). Firms
identifying the opportunities and threats that
ranked second (challenger) are trying to ex-
could affect its evolution over time. There
pand market share by using offensive strat-
are three types of environment, namely: sta-
egies and firms ranked third and fourth,
ble environment - characterized by changes
respectively follower firms and small com-
that are easy to predict and takes place over
panies (nicher) take a fight for survival, try-
a long period of time, being also the base line
ing to maintain position market by using
for future analysis, changing environment
competitive strategies in order to attract new
- characterized by constant changes that are
customers.
generally predictable and are characteristic
According to the position held on the
also to the present period, firms facing this
market firms use different competitive mar-
type of environment in the current stage, tur-
keting strategies. This study summarizes
bulent environment - characterized by sud-
these various competitive strategies by pre-
den and unpredictable movements, being
senting the main characteristics of competitive
specific to the “top branches”, having thus a
marketing strategies used by manufacturing
permanent character (Stanciu, 2002, pp. 78).
firms, and also by political parties, in order to
obtain the expected performance.

reFereNCes:
1. Bruhn, M. (1999), Marketing-noţiuni de bază pentru studiu şi practică, Editura Economică, Bucureşti
2. Butler, P., Collins, N. (1996), Strategic analysis in political markets, European Journal of Marketing, Vol.30,
No. 10/11, pp. 32-44.
3. kotler, P. (1998), Managementul marketingului, Editura Teora, Bucureşti.
4. kotler, P., keller, k.l. (2006), Marketing – Management Twelfth ed., Pearson Practice Hall, New Jersey.
5. lock, a., harris, P. (1996), Political marketing – vive la différence!, European Journal of Marketing, Vol. 30,
No. 10/11, pp. 14-24.
6. o’Cass, A. (2003): Electoral Choice, Journal of Political Marketing, Vol. 3(1), pp. 61-85.
7. osuagwu, l. (2008), Political marketing: conceptualisation, dimensions and research agenda, Marketing Intel-
ligence & Planning, Vol. 26 No. 7, pp. 793-810.
8. Popa, i. (2004), Management strategic, Editura Economică, Bucureşti.
9. stanciu, s. (2002), Marketing general – Particularităţi în organizaţiile non-profit, Editura Dareco, Bucureşti.
10. thrassou, a., vrontis, D., mcDonald, m. h.B. (2009), A marketing communications framework for small
political parties in developed countries, Marketing Intelligence & Planning, Vol. 27, No. 2, pp. 268-292.

No. 17 ~ 2013
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180

the Role of leadership inside organiza-

tions in the Context of globalization

~ Ph. D. Associate Professor Cornelia tureac (Faculty of Economics Sciences, „Danu-

bius” University of Galati, Galati, Romania)
E-mail: [email protected]
~ Ph. D. Senior Lecturer Dan Păuna (Faculty of Economics Sciences, „Danubius” Uni-
versity of Galati, Galati, Romania
E-mail: [email protected]

Abstract: Any organization, irrespective of the field, needs skilled leaders who have a vision and
confidence in action.The leader plays various roles and the key issue is to determine how they influence the
performance of the team they coordinate. The research method used was the mathematical modeling applied
to the example of a team. The aim of the research is to identify the cooperation method in order to improve
workers’ performance but also to minimize the possible conflicts which can affect the level of performance.
The results of this research led us to conclusions regarding the characteristics of the team leader.
Key words: leader, organization, performance, models
Jel Classification: D23, F15,

introduction such as human resources, product quality

and offered services, competition. But it must
In order to ensure its success on the new
not overlook the fact that one of the most im-
market and society structure, an organiza-
portant factors is the way of organizing the
tion should take into account various factors,
employee teams and their managers. Their

No. 17 ~ 2013
 Change and Leadership
181
performance depends not only on the work- - xik = ( xi-[k / 2], ..., x i-1, x i, x i +1, ..., x i + [k / 2]),
ers’ and managers’ individual skills, but also evolving cyclic if necessary.
on dynamic, that is both the team members - z = team leader.
and their leaders can change.( Bennis 2009) - pi(xi k,z) = a number between 0 and 1
Among the new obtained perspectives that represents the contribution of worker xi,
there is the fact that having a qualified leader who depends on the team x , the leader z and
can be more important for the team’s perfor- K- other workers.
mance than the control on the team mem- The closer to 1 pi(xi k,z) is, the more
bers. Furthermore, another result is related worker xi contributes to the performance of
to the fact that a qualified leader, when at- team x.
taining cooperation, can overcome or at least - p(x, z) = performance of team x with
minimize the interacti on issues among the the leader z.
team members, issues which can damage the - (x*, z) = a local maximum of team x*
team’s performance level.(Draghici, Nistor, with the leader z whose level of performance
Popescu, Macarie , 2008) is higher or the same in all the situations of
Related to improving a team’s perfor- replacing team members.
mance, specialized publications mainly fo- - E (p (x*, z)) = expected performance
cused on forming methods and feedback. by the local maximum of team x* with the
Despite all this, managers can intentionally leader z.
replace the members of a team when other
methods do not allow the reach of the wanted results
results. The impact of hiring new members
can be substantial: hiring the wrong person In the simplest case, a team is made up
can lead to wasting the firm’s resources. of at least two workers, aspect noted with A
= 2. Each of the 2 N teams is represented by
a binary N-vector, x = (x1,..., xn), where xi =
research methodology
0 means that one of the two available work-
The main challenge of this initiative is ers is chosen for the position i and xi = 1
given by including on the team a leader who means that another worker is chosen for this
controls, motivates and leads the team to- position.
wards a common goal. The key problem is to By introducing a leader z, the contri-
determine how the leader influences the per- bution of the worker i depends not only on
formance of the team they coordinate. worker xi but also on the contribution of oth-
For the mathematic modeling there are er members of team K, but also on the leader
the following notations: z, aspect reflected mathematically on the fol-
- N = number of jobs or workplaces on lowing ratio:
a team.
- K = number of workers that affect the
contribution of each team member. (1)
- x = (x1,..., Xn) represents the team, Next, we associated the following two
where each xi ≡ {0, 1}. new parameters with the leader:

No. 17 ~ 2013
 Change and Leadership
182
- μ = a non-negative number which Generally, there can be 2 k+1 possible
represents the level of qualification of the combinations for the workers from K +1 po-
leader when achieving cooperation among sitions to affect position i, so that we can de-
workers. If μ is 0, the leader has no quali- fine the value of pi (xiK) for one of 2 k+1 ,
fication, and as the value of μ is higher, the consistent random value between 0 -1 – that
leader has more abilities/qualifications. corresponds to the combinations of workers
- σ = a non-negative number which in position i and K- team positions. The per-
represents the leader’s variation, which prac- formance p(x), of team x is then considered
tically refers to the variation of the leader’s as being the average of these contributions:
ability to achieve cooperation among differ-
ent subordinates. If the value of this param-
(2)
eter is closer to 0, we can talk about the fact
Given the values for N, K and N – charts
that the leader elicits the most of each real
for 2N+1 consistent random value from the
team member performance. Since this pa-
interval 0-1, we will aim to find the global
rameter increases, the influence of the lead-
maximum, that is a team whose performance
er concerning performance varies from one
is better than that of all the other teams.
team member to another.
Starting with an initial team - x, by re-
Each constant choice of people for the
placing the worker in position i with another
N positions inside the team x, whose perfor-
worker available for that position we create
mance can be modeled as a real number, p(x),
a new team - x’, obtaining what it is called
with values between 0 and 1.
in this case” a replacing neighbor for x”. The
Thus, when A is close to the value of 1,
new team is only kept if x’ has better perfor-
it indicates a team with relatively good per-
mance than x. This replacing process implies
formance, and when A has a value close to
a sequence of teams, each with a better per-
0 it indicates a team with a relatively weak
formance than the one of its predecessor, so
performance.
It is assumed that each position i con- that the sequence continues until it reaches a
tributes with an amount pi (xik) to the team’s local maximum, that is a team whose perfor-
performance. In the case when pi (xik) de- mance is better or the same for all the versions
pends on the worker in position i and the of team member replacement. Therefore, us-
workers in other positions K on the team (0 ing computer simulations with the help of
≤ K ≤ N - 1), we can assert that positions K/2 SPSS program, we obtain chart no.1 with the
on each side of position i, require the rep- values associated to expected performance
etition of evaluation cycle. (Fitzsimmons J.., for a team when N = 20 and K = 10.
Fitzsimmons Mona, 1998) Table 1. Performance of the team ac-
Therefore, if K = 0 it means that the con- cording to the leader’s level of qualification
tribution to the team performance depends and the degree of cooperation among the
only on the worker in position i, and for K team members
= N - 1 it means that the contribution to the
team performance in position i depends on
the worker in position i and on the workers
on all the other N – 1 team positions.

No. 17 ~ 2013
 Change and Leadership
183
members so that they work better together
and, so, closer to the maximum individual
abilities.(Abrudan 2009)
In this case it is necessary to add a set of
notations:
• ai (xi) = a worker’s least possible con-
tribution - xi (0 ≤ ai (xi) ≤ 1).
• bi (xi) = a worker’s biggest possible
contribution - xi (0 ≤ bi (xi) ≤ 1).
• ri (xi k ,z) = a - a number between 0 and
Source: Buiga, A., (2009), Statistică inferențială.
1, which represents the relationship achieved
Aplicații în Spss, Todesco, Cluj Napoca
by leader z between worker xi and K ≥ 1 the
Graphically, the situation is presented
other workers who affect the performance of
in diagram no.1:
worker xi.
Diagram no.1 – Variation of team per-
If ri (xi k,z) is closer to 1, leader z achieves
formance according to the leader’s level of
a better collaboration between worker xi and
qualification and the degree of cooperation
the other workers K.
among the team members
In the case when the work group leader
does not have any specialization, it can be as-
sumed that each worker contributes to team
performance in the interval [ai (xi), bi (xi)],
where:
ai (xi) = min {u1,u2}, bi (xi) = max {u1,u2},
u1,u2 U [0,1] (3)
The relationship ri (xi k ,z) U [0,1]
achieved by leader z between worker xi and
other workers K is then used to determine
the time when worker xi contributes effec-
tively in the interval [ai(Xi), bi (xi)]. That is,
the contribution to performance of a worker
xi is computed as a convex combination of
We can notice that the team perfor-
the following elements ai (xi) and bi (xi):
mance is the highest when the maximum
pi (xik,z) = (1-ri(xik,z))ai(xi)+ri(xik,z)(bi(xi)
number of workers that need to be coordi-
(4)
nated is 4 and the leader has a high number
and the team performance p (x, z), is the
of qualifications (in our case μ is 5).
average of all the worker’s contributions.
The following approach incorporates
We can notice from the formula (4) that
the leader’s ability to achieve a good relation-
when the relationship ri (xi k ,z) is close to
ship among workers for a fixed sum of inter-
1, the leader reaches a high level of coopera-
actions among them. This relationship can
tion between worker xi and K- other work-
be limited to offering advice or the attempt
ers, therefore the performance of worker xi is
to solve interpersonal conflicts among team

No. 17 ~ 2013
 Change and Leadership
184
closer to the maximum individual potential, from a normal distribution with parameters
noted bi(xi). μ and σ. The approach is carried out in two
As well, when the relationship ri (xi k ,z) steps, as follows:
is closer to 0, the leader determines that the - a random number will be generated
performance of worker xi is closer to the min- - y from a normal distribution N (μ, σ) and
imum individual potential, noted ai(xi). then
Since the relationship’s variable is gen- - there will be computerized attempts
erated in the interval U [0, 1], the leader is de- for the relationship ri (xi k ,z) in the area of
clared to be without any specialization. normal distribution N (μ, σ) for number y.
In conclusion, in the case when the team Notational, relationship ri (xi k ,z) = Φ(y),
leader does not have a specialization in this where y ~ N (μ, σ).
way, the team can obtain a series of advantag- The computer simulations with the help
es when there is a low quantity of interaction of SPSS programs are presented in the table
among workers. When the team is coordinat- no.2 and they compare the expected perfor-
ed by a specialized leader, this characteristic mance at the level of the team for the various
is included in the following approach by gen- levels of qualifications of the leader.
erating values for the relationship’s variables

Table.2. Expected performance at team level according to K and N

N(μ,σ) N(0,0) N(0.5,1) N(1,1) N(2,1) N(3,1)

K
0 0,63215 0,67708 0,71746 0,76881 0,7891
1 0,63916 0,68455 0,72133 0,77164 0,79016
2 0,64179 0,68725 0,72374 0,77314 0,79144
3 0,64318 0,68766 0,72431 0,77338 0,79092
4 0,6411 0,6856 0,72261 0,77504 0,79041
5 0,63896 0,68354 0,72145 0,77446 0,79154
6 0,63507 0,67965 0,71968 0,77435 0,79217
7 0,62943 0,67591 0,71792 0,77464 0,78866
8 0,6264 0,6753 0,71618 0,77345 0,79086
9 0,62386 0,67191 0,71462 0,77202 0,79261
10 0,62568 0,66598 0,70825 0,77156 0,79152
11 0,61552 0,66154 0,70788 0,77097 0,79262
12 0,61029 0,65687 0,70715 0,77013 0,78898
13 0,60561 0,65449 0,69931 0,76956 0,79273
14 0,60377 0,64744 0,69703 0,76755 0,79194
15 0,5969 0,64769 0,69116 0,76723 0,7916
16 0,59463 0,64312 0,68978 0,76321 0,79158

No. 17 ~ 2013
 Change and Leadership
185

17 0,59142 0,64192 0,68547 0,76363 0,78256

18 0,59093 0,63586 0,68154 0,76173 0,78489
19 0,58768 0,63556 0,68119 0,76098 0,78899
Source: Constantin Draghici, Gheorghe Nistor, Marin Nicolae Popescu, Marius Macarie , (2008), Modelarea
matematica in economie, Editura Tiparg, Bucuresti

These aspects can be shown graphically For example, if pi(xik)= 1, then it is pos-
in diagram no.2. sible that pi(xik+1) = 0,9. So, the distance from
Diagram no.2. Interpretation of expected pi(xik+1) to pi(xik) depends on the cooperation-
performance at team level according to K and N al leader’s abilities.
At the other extreme, in the case when
the interaction with the supplementary
worker is beneficial, a skilled leader should
be able to improve this benefit.
For this we will have:
• α = a number between 0 and 1 rep-
resenting the leader’s level of cooperational
Taking into account that the range of qualification. When α is 0, the leader has no
contributions is in the interval [ai (xi), bi (xi)], qualification.
the model allows different workers to have When the value of α is higher, we can
different contribution levels. The simulation talk about leader qualification.
results presented in chart no. and diagram • [lik+1,(pi(xik),α),uik+1 (pi(xik), α]= the
no. emphasize the way in which the leader’s range of possible worker xi contributions,
when the interaction sum is K + 1, as function
qualification variation affects the team per-
pi(xik) and α.
formance for the fixed values of μ.
To determine the new low lik+1 , (pi(xik),
In the case when the leader has the ca-
α) depends on the leader’s skill.
pacity to achieve cooperation when there is a
When the value of the interaction with
fixed amount of interaction among the team
a new worker increases, the contribution to
members, we must take into account the
performance of worker xi can be decreased
leader’s capacity to cooperate in the condi-
theoretically from (pi(xik) to 0.
tions of the increase of the number of worker
To the other extreme, a highly qualified
interactions.
leader, that corresponds to α = 1, could pre-
For this purpose we take into account
vent the contribution of worker xi to decrease
what happens when K increases by 1, then
under the current value pi(xik).
the contribution of a worker, who, in turn,
Therefore, the new bottom limit increas-
depends on the contribution of a supplemen-
es as much as the level of the leader’s quali-
tary worker.
fication, according to the following formula:
Initially, value pi(xik+1) is generated by a
lik+1 , (pi(xik), α) = α(pi(xik) (5)
uniform distribution 0 - 1, independent of the
The high limit uik+1 (pi(xik), α) also de-
value of pi(xik). As a result, pi(xik+1) could be
pends on the leader’s ability.
different from pi(xik).
No. 17 ~ 2013
 Change and Leadership
186
As well, a skilled leader will more than leader, the bigger the probability that the ef-
likely get a higher contribution of worker xi fects of supplementary interactions among
if the conclusion is that the interaction with workers improve.
the new worker is beneficial for worker xi. In Starting from the results of comput-
conclusion, after generating pi(xi0) ~ U[0,1], er simulation we can make a series of rec-
each consecutive contribution will be based ommendations for the management of the
on the following relation: organizations:
pi(xik+1) ~ U[lik+1 (pi(xik), α), uik+1 (pi(xik), α) - a team leader’s performance will be
(6) higher if the team does not have more than 4
members and the leader has a large number
Conclusions of abilities (for example being a good orga-
nizer, promoting open communication with
In conclusion, in this paper we have the team members, capacity to motivate the
presented a few simple approaches of math- team members, acknowledging workers’
ematical models in order to study the effects qualities, being a good mediator, etc.).
of the cooperational leadership on a team’s - organizations must invest continu-
performance in which the quality of mem- ously in the training of those holding man-
bers changes in time. These models include agement positions in order to give teams a
controllable parameters which allude to: the chance to improve their performance.
leader’s qualification and the degree of inter- Collaboration means primarily people
action among the team members. Therefore, involvement in creating their own solutions
when we talk about the collaborative leader’s for the problems they face and giving up or
advantages, we talk about a better perfor- adopting existing solutions (Collins 2007).
mance of the team, as well as about the capac- Also, this implies the identification of com-
ity of the qualified leader to place emphasis mon interests and giving up adopting rigid
on worker interaction. (Abrudan 2009) positions. When we assume a position we are
In the case when the qualification of ready to defend that position and we adopt a
the collaborative leader is included, workers defensive attitude.
are differentiated according to the extent in Identifying common interests implies
which they can contribute to the team per- finding those areas which manage to bring us
formance. Their work relationship with other closer to the ones who have different views.
workers K depends on two parameters: μ - Many times collaboration means working
collaborative leader’s skill and σ - leader’s with those individuals or groups that we
variation. The more trained the leader, the normally perceive as being our opponents. In
bigger the probability that each worker con- collaboration process people have the oppor-
tribution to the team performance is closer to tunity to find out the others’ point of view
their maximum capacity. and perspective and to consider together the
If we notice a certain capacity of the common future of the community they be-
collaborative leader to increase the value of long to. Shortly, collaboration means consci-
worker interaction, the main result of mod- entious effort to involve all the community
eling is the fact that the more trained the sectors – nongovernmental organizations,

No. 17 ~ 2013
 Change and Leadership
187
decentralized governmental agencies, busi- team work and trust among the members of
nesses and individuals –that can significantly the organization/institution. As well, collab-
contribute to such a community effort. orative leaders show some specific abilities.
Cooperation is a relationship in a cer- They know how to analyze and understand
tain way, when all parts involved choose leadership challenges, how to develop strat-
from a strategic point of view to cooperate in egies that can overcome the inaction or op-
order to reach a common goal. The success position moments, how to gather individuals
of collaboration, due to its voluntary nature, around them, how to instill a feeling of trust
greatly depends on the ability of one or more among them and to transmit the necessary
leaders to maintain the relationships among abilities to make collaborative actions pos-
parties. In this context, organizations must sible. These mathematical approaches of
better monitor the activity of human resource leadership offer a new perspective on team
department concerning the team members management, that is a talented and trained
hiring procedure, in order to initiate or im- leader can be more important for the team
prove the system of establishing project performance than the control of the interac-
teams, assessing individual performance, the tion level among team workers.(Draghici,
system of replacements in the project teams. Nistor, Popescu, Macarie , 2008)
Collaborative leaders will try to involve Besides, the leader’s ability can over-
all people in the leading and decision-making come or diminish the problems that might
process. Decisions are made after a collabora- appear as a consequence of the team’s inter-
tive process of talks and by applying the ma- action and which might generate a decrease
jority rule or, ideally, by reaching consensus. in performance.
Finally a collaborative leader will encourage

reFereNCes:
1. aaron Kozbelt., Ronald Beghetto., mark Runco., „Theories of Creativity, Kaufman”, în The Cambridge
Handbook of Creativity, J.C., Sternberg, R.J., (ed.), Cambridge University Press, New York, 2010.
2. anuţa Buiga, Statistică inferențială. Aplicații în Spss, Todesco, Cluj Napoca, 2009;
3. Constantin Draghici, Gheorghe Nistor, Marin Nicolae Popescu, Marius Macarie, Modelarea matematica
in economie, Editura Tiparg, Bucuresti, 2008;
4. Denisa Abrudan, Excelenta in managementul resurselor umane, Editura Eurobit, Timisoara, 2009;
5.  Jim Collins, Excelenta in afaceri. Editura Curtea veche, Bucuresti, 2007;
6. James Fitzsimmons., Mona Fitzsimmons, Service Management For Competitive Advantage, New York,
USA Mcgraw-Hill Inc., 1997;
7. kim kanaga., „Designing an Effective Competency Model”, în Leadership în Action, Volumul 27, Nr. 4,
Centre for Creative Leadership, Jossey-Bass, San Francisco, 2007;
8. warren Bennis. On Becoming a Leader, Basic Books, New York, 2009;

No. 17 ~ 2013
 Change and Leadership
188

operations management and leadership;

A Case-study of implementation of
Centralized Back office activities

~ Ph.D. Camelia Cojocaru (Faculty of Business and Administration, University of

Bucharest, Romania)
E-mail: [email protected]
~ Ph.D. silviu Cojocaru (Faculty of Business and Administration, University of
Bucharest, Romania)
E-mail: [email protected]

Abstract: The concept of leadership is extremely complex and very often, there is a confusion between
leadership and management. Although people are using these words interchangeably, they play very differ-
ent, but still essential, roles. This paper aims to present a case study regarding an implementation project
in banking back-office activities, in order to prove the importance of managing correct the back-office re-
sources, but in the same time the need for a vision that would lead the people toward the scope of a project.
The paper describes the existence of a relationship between leadership and operational excellence, also.
Key words: back office, productivity, leadership, management, operational improvements
Jel Classification: J24 - Human Capital; Skills; Occupational Choice; Labor Productivity

1. introduction budgeting, structuring jobs, staffing jobs,

processing various transactions with maxi-
The banking back-office activities are
mum correctness and minimum costs, and
mostly about managing correctly the back-
constantly measuring the performance of
office resources. Back-office activity is a set
all these processes. The predictability of the
of well-known processes, like planning,

No. 17 ~ 2013
 Change and Leadership
189
processes helps the organization to do what The management guru Peter Drucker
it knows how to do well. In organizations of has also his own definition: “Leadership is
such size and complexity, like a bank, this is the lifting of a man’s vision to higher sights,
a very difficult task. But, while the complex- the raising of a man’s performance to a high-
ity of such managing is not under discussion, er standard, the building of a man’s person-
the need for leadership is often out of the vi- ality beyond its normal limitations.” Peter
sion of top management. In my opinion, the Drucker
operational excellence is not always a result Having in view the new knowledge-
of how efficient your processes are, but also based organizations, we could also mention
is a matter of leading people and involving the following definition, too: “Leadership is
them in achieving the common goals of the ….. the ability to build and maintain a group
organization. that performs well relative to its competi-
tion.” (Hogan & Kaiser, 2005, p. 172). And, in
2. literature review line with the motivational theories, we could
mention Vroom’s definition: “…a process of
The leadership theories are very much motivating people to work together collabor-
diverse. The concept of leadership is com- atively to accomplish great things.” (Vroom
plex, and one could notice that almost ev- & Jago, 2007, p. 18).
ery researcher tried to give a new definition Without trying to enunciate too many
of leadership. Nearly 40 years ago, Stogdill definitions, we could focus on the so called
(1974) noted “there are almost as many dif- “leadership – management difference”. One
ferent definitions of leadership as there are of the most common topics in this regard is
persons who have attempted to define the the distinction between leadership and man-
concept”. While not intending to develop a agement. Many times the two concepts over-
new definition, I will provide a sampling of lap each other. According to Kotter, these are
leadership definitions. the most common mistakes people make on
Bolden described leadership as “… a this issue:
complex phenomenon that touches on many a) People use the terms “management”
other important organizational, social and and “leadership” interchangeably. That
personal processes. It depends on a process means they don’t differentiate the vital func-
of influence, whereby people are inspired to tions that each role plays.
work towards group goals, not through co- b) People use the term “leadership” to
ercion, but through personal motivation.” refer to the people at the very top of hierar-
(Bolden, 2004, p. 5) chies. They then call the people in the layers
Another author described leadership below them in the organization “manage-
as….. „persons with certain motives and pur- ment.” And then all the rest are workers, or
poses mobilize, in competition or conflict specialists.
with others, institutional, political, psycho- c) People often think of “leadership” in
logical, and other resources so as to arouse, terms of tremendous personality character-
engage, and satisfy the motives of followers.” istics. This leads to the conclusion that few
(Burns, 1978, p. 18) people can provide leadership.

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The leaderships are the process of in- The high degree of banks network develop-
fluencing people by providing purpose, ment, the increased portfolio of services, con-
direction, and motivation, while operat- tinued growth in the number of customers,
ing to accomplish the mission and improve imposed the banks as major employers in the
the organization. Still, in his 1989 book “On labour market.
Becoming a Leader,” Warren Bennis com- Currently, there are 39 banks operating
posed a list of the differences between the in Romania, the banking market being divid-
managers and the leaders: ed into more than 5,500 branches. According
– The manager administers; the leader to statistics, about 80,000 people are working
innovates. in banking in Romania. The figures continu-
– The manager maintains; the leader ously increased in the latest years, due to the
develops. extension of banks networks. This territory
– The manager focuses on systems and expansion means attracting human resourc-
structure; the leader focuses on people.
es. For many years, the banks faced difficult
– The manager relies on control; the
conditions for attracting and retaining attrac-
leader inspires trust.
tive talents into the specialized departments,
– The manager has a short-range view;
the leader has a long-range perspective. even if they provided better salary packages.
– The manager asks how and when; the In general, the scarcity of specialists in the
leader asks what and why. field of banking is in the case of middle and
– The manager accepts the status quo; top management positions. It is also increas-
the leader challenges it. ingly difficult to find qualified and available
– The manager does things right; the candidates in departments such us: admin-
leader does the right thing. istrative, human resources, operations, and
A.Zaleznik (1977) appears to be the first IT. There are highly specialized and techni-
author who has drawn a line between lead- cal positions, such as operations, sales or de-
ers and managers, according to his article partment manager, who experience lack of
entitled Managers and leaders: are they dif-
trained people.
ferent?, through a system of criteria that are
For the entry level positions, the sal-
based on analysis and characterization of
ary level is one of the main reasons that lead
leaders and managers.
In this article I will present the case- to the lack of specialists. However, a work-
study of a back-office implementation. The er in a back-office department could earn
bottom line is to share the importance of lead- about 300 Euro at the debut. For this reason,
ership in a project’s success, beyond the man- many young people who come to interviews
agers’ budgets and processes coordination. change their option, giving up the idea of
working for back-office. Some of them claim
3. human resources management in that they prefer to work in other areas, which
the banking industry and back-office bring better income.
work characteristics Also, the personnel turnover is very
high among the entry level positions for back-
Romanian banking system is among the office departments. Beside the salary, they
fastest growing sectors in Romania after 1990. claim the repetitive tasks and the content of

No. 17 ~ 2013
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191
the activity are the main reasons they prefer absenteeism and staff turnover, increased job
to change to the sales or loans, rather than satisfaction of employees and increase the ca-
developing a career in back-office. I could pacity for innovation, problem solving and
very much say that this misconception has change organization.
its roots in the poor human resources man-
agement strategies of the banks. They failed 4. Centralizing and automating the
in motivating people and offering them new transactions processing activities
ways of development, beside the salary. and the challenges faced by the bank
Recruitment in the banking system has managers
suffered as a result, and has to change in or-
der to find new suitable employees. Territorial expansion of networks banks
Faced with a difficult market in the lat- has to be accompanied by the streamlining of
est years and affected by the economic crisis, the business processes, so that the network
the companies in the banking industry have to function optimally. Therefore, the expan-
been among the first to understand and im- sion of the territory sales activity and bring-
plement a modern human resource manage- ing the sales channels closer to the customers
ment. Of course, most of the Romanian banks are accompanied by the centralizing of most
are subsidiaries of large European companies of the processing activities. Processing a
and they have benefited from the experience growing volume of transactions with mini-
of parent companies, implementing one of mal cost brought to the forefront the need for
the first modern systems. Under the pressure centralization and automation of back office
of competition and the fight for revenues activities.
and market share, the banks (mostly foreign- In this context, we consider the case of
owned banking groups) have developed new creating a processing centre for a bank in
procedures for both recruitment and reten- Romania. The bank in question was the date
tion of staff. of implementation of a network of about 170
Banks have understood among the first locations all over the country. Transaction
to apply the basic principles of human re- processing was performed in each branch, by
sources management: assessing the human the local staff. At the branch level, there are
factor as a vital resource, and therefore cor- both customer officer positions and payments
relation in an integrated manner, the human back-office officer positions in some larger
resource policies and systems with the orga- units. There is also a dedicated payments
nization’s mission and strategy. processing department in the head-office. In
In order to achieve their objectives, the view of centralization, the activities to be
banks have realized the importance of de- centralized have been thoroughly assessed in
veloping a healthy organizational culture, the first phase of the project.
and invested in researching and influenc- Selected transactions to be centralized
ing it. Generally, banks have invested in hu- processed in the first phase of the project
man resource management programs that were:
aim to improve the efficiency and effective- - Execution of payment orders (domes-
ness of staff (increased productivity), reduce tic and cross border)

No. 17 ~ 2013
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192
- Collection and payment of checks and activities are going to be entirely automated.
promissory notes The central goal of the project was orga-
- Foreign exchange orders. nizing a “payments factory”, with the follow-
Choosing the types of transactions as ing features
subject to centralization was influenced by a) processing benchmarks have to be
economic and legal criteria (for example, le- put in place, by types of transactions
gal provisions issued by the National Bank b) reduced interaction with third parties
of Romania regarding the settlement through (internal and external customers)
centralized payment systems). c) teams managed by supervisors who
The chosen technical solution was based validate the transactions in the system
on ABBYY technology, meaning the custom- d) KPI related to the amount and qual-
ers instructions (payment orders, cheques, ity of transactions processed, depending on
promissory notes, foreign exchange orders) which is given a bonus.
are received in the branches, scanned by the The staffing strategy for the next period
branch staff and processed by the head-office was determined after analysing the entire ac-
(processing centre) staff. tivities to be centralized:
Fig.1 – The technical solution chosen for - the branch staff having positions pre-
transactions processing viously related to back- office payments pro-
cessing are reallocated to other activities in
the branch (sales, customer care) in a sub-
project involving specialized departments
(Retail, Human Resources).
- the new processing centre needs the
correct sizing, so as to ensure the quantitative
and qualitative parameters requested.

Fig. 2 - The architecture of the solution

The project milestones were:

- reducing transaction costs by
centralization;
- improving productivity in back-office
activities by designing standard processes;
- increasing flexibility to customers’
needs.
Following the project implementation,
all processing activities were about to be
transferred to back- office departments in
Head Office. In addition, some processing

No. 17 ~ 2013
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193
The back-office division in the Head creating the new hierarchical structures.
Office has developed several projects aimed The performed analyses showed that
at increasing the quality and efficiency of processing has several stages: primary pro-
payment processing tools in order to im- cessing, transaction authorization, effective
prove the quality of customer service. settlement, transactions verification and con-
Fig.3 - The Summary of the activity trol, and post-settlement services - reconcilia-
analysis tion and investigations.

Regarding the size of processing centre Therefore, the evaluation and ranking
were taken into account many factors, such of positions were determined by comparing
as: the factors of difficulty.
- average number of personal nec- Staff must be within the following
essary to process an average transaction categories:
volume; a) operators for correction stations
- average number of personal neces- b) operators for authorization stations. It
sary to process a high volume of transactions was determined that these operations can be
(so-called peaks, usually associated with ma- performed with the same personal practice.
turity dates for certain transactions) c) teams supervisors
- temporary staffing to cover peak d) settlement activity authorized opera-
periods. tors (Electronic Payment System, Electronic
Determining staffing needs was fol- funds transfer systems, etc.)
lowed by a period dedicated to the personal e) authorized agents for settlement in
profiles need to be recruited to the process- relation to the National Bank of Romania
ing centre, updating the job descriptions and f) officers for post-processing activities.

No. 17 ~ 2013
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194
Fig.4 – Daily staff need schedule by • A very accurate assessment of the im-
hours pact of online recruitment notice. In most
cases, the person concerned shall apply for
a specific position through a link on the site.
Thus, we will know exactly how many peo-
ple have applied after publication of the no-
tice for recruitment on the website.
• Recruitment Process Automation.
Using the systems and their ability to inte-
grate with websites or company’s recruit-
ment portal, the recruitment flows were
simplified. The applicants filled out forms
with the same structure as in the simplified
centralized recruitment data.
After establishing the recruitment
• Effective selection of suitable candi-
needs (both quantitative and qualitative),
dates. The system has powerful features for
the recruitment program was launched.
managing external applicants. Information is
Recruitment focused on finding and attract-
entered into a common format, being easy to
ing qualified personnel for supervisors po-
search the database by various features. Data
sitions and unqualified staff (juniors) for
structure is uniform for all applicants, there-
operators positions.
by increasing the efficiency of the recruit-
Successful recruitment involves the
ment department.
use of traditional channels (print), modern
CVs of applicants are the primary infor-
recruitment channels (Internet or Web sites
mation in the recruitment process.
specialist recruitment) and alternative chan-
Among the CV entries stored in the sys-
nels such as “networking” made by former
tem we could include:
or current employees.
• Education - an exhaustive description
These methods attracted many young
of studies of the applicant / employee.
graduates who were interested in developing
• Skills - information about the skills
a career in this field. References provided by
and abilities gained in the profession.
bank employees have proven to be valuable, • Professional experience - their career
and those who make such recommendations history of each applicant.
and help recruit the right person for the or- • Training and continuing professional
ganization have been rewarded in different development - will be included data on spe-
ways. cialization courses by employee / applicant.
An HR application allowed the inte- • Certificates and diplomas obtained af-
gration with various recruitment portals. In ter completion of the courses.
addition, notices were published on the com- • History employee in the compa-
pany’s Web portal. Among the advantages of ny - information on the positions occupied
the use of the online recruitment channels, by the employee in the company and proj-
ects realized (section is devoted to internal
we could mention:

No. 17 ~ 2013
 Change and Leadership
195
recruitment processes). variation. Therefore, in order to prevent the
• Applicants’ photos. turnover of personnel due to lack of over-
Generally, in the case described, inter- view of these positions, a system of rotating
nal recruitment did not bring a sufficient positions has been created, aiming to bring
number of candidates. The main reason more motivated employees. Thus, an em-
was the processing work did not appear to ployee can rotate the processing activity from
be challenging and properly rewarded. The one type of transactions to another, and can
tasks were “too repetitive” and the there was be trained to perform other activities of the
a lack of motivation. Besides that, in the era centre.
of large credit expansion, the most attractive Also, given that the employee’s inter-
jobs were, of course, the ones related to the est and motivation could not be maintain,
loans approval, not the back-office. usually, more than a year, a specific system
Regarding the external recruitment, the of advancing was created. New employees
interviews with inexperienced people have proving the required skills are included since
concluded that their salary expectations were beginning in a training system that will al-
generally 30-40% higher than the offers that low them to take on new responsibilities as
the company was prepared to do. Wage re- supervisors or authorized operators, after a
quests of the applicants were far above expe- period of time.
rience, skills and knowledge they proved. This model provided to existing staff
Personnel selection was made accord- the motivation and training, creating an ex-
ing to criteria previously established, aiming perienced staff reserve that do not put the or-
at creating coherent teams which could suc- ganization in difficulty in the event that some
cessfully implement the new concept of pro- key people leave the organization.
cessing centre. Career management and employee
These new employees were enrolled in skills were part of the plan adopted by the
an intensive training program. This program company. Through these activities, the com-
was created and implemented with internal pany provides both the motivation of its em-
resources. Given the fact that the technology ployees and the staff forecast for medium
used was supplied by a third party, its in- and long-term.
stallation was accompanied by training pro- Annual evaluations - are devoted to
grams for users. assessing the work of the previous year
Subsequently the enrolments of new and identify opportunities for future career
staff, new key performance indicators and development.
assessment criteria have been implemented.
One of the main obstacles that loom in 5. the role of leadership in central-
the future work of processing centre is just izing and automating the transactions
one of those who have made recruitment dif- processing activities
ficult, namely work content itself.
Entry-level positions such as the correc- Despite the implementation path de-
tion stations operators are characterized by a scribes above, the management noticed,
high repetition of the task and a very small shortly after going live with the project, that

No. 17 ~ 2013
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196
the new processing centre had sign of not demanded more appreciation for their work
working properly. The employees proved instead of KPIs, and more understanding for
they were not organized and do not act sys- their personal skills, beliefs and emotions.
temically. The supervisors system put in The new plan for improving the pro-
place did not work in a strategic way and cessing centre activity consisted in:
the expected management changes were not a) The supervisors were replaced by
appropriate. new team leaders. The team leaders were
What were the first signs that the pro- selected among the most skilled persons in
cessing centre needed a quick and consistent terms of interpersonal communication, be-
review? side the technical skills. They had as objec-
Most of the employee did not achieve tive to create coherent teams, able of working
more of 70% of their daily targets, in terms of together for meeting the deadlines.
volume. Overwork and overtime appeared. b) The specific daily target was replaced
The employees challenged the goals under by general goals for each team. The team
the pretext that they are not real; they are leader together with the team members, were
very large or have no connection with real- free to adopt their own path and split of the
ity. The employees proved they did not know daily activities, with the only condition of
how the objectives were described and con- completing the general goals.
sequently not submitted any effort to achieve c) The rewards plans were changed in
them. Some of the employees achieved their order to include non-material items: em-
goals only with high, unjustified costs. ployee of the month, most dedicated person,
The external pressure of the top man- birthday-gifts, invitations to lunch for the
agement for achieving the goals very quickly best team players, etc. These proved to be
intensified the stress. The supervisors made very useful and the general performance of
huge psychological pressure on employees to the team improved within a few months.
achieve their assigned goals and did not get d) The communication between the
nothing but more stress. The new processing back-office and the branches (included the
centre procedures were not observed or as- customers) have been established. This com-
sumed. There were a lot of malfunctions on munication improved immediately the re-
the degree of achievement of objectives. The sults of the work, mostly because of the new
performance indicators were not achieved, sense of sureness attached to their work.
also. The reports presented by the supervi- e) The training sessions were extended.
sors proved to be incomplete, inconsistent This way, no new employee had left the
or ambiguous, and the evaluation system in company, and the long-term effects on em-
place had no impact in motivating the people. ployees, managers and financial results were
After performing a deep analysis, the excellent. The team leaders achieved the goal
results led to the conclusion that the manage- to cope with the new system and business
ment, operator/supervisor system with daily management. Their ability to lead the team
targets did not work in place. The people members toward the common goals made the
expressed their desire to feel more inspired, difference in this project. The micromanage-
more comfortable with their work. They ment tasks proved their limits. There were

No. 17 ~ 2013
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197
the motivation, the vision, and the implica- 6. Conclusions
tion of the people that brought the success.
In conclusion, we can say that the suc-
Now, the employees assume the setting
cess of the approach to centralize all transac-
and achievement of objectives. They are mo-
tion processing activities depend to a large
tivated and involved to succeed as a result of
extent on the ability of staff to work effec-
actual support received from their team lead-
tively in a healthy and competitive work en-
ers. The leaders and the head of the depart-
vironment. The leadership is very important
ment are focused on mentoring and coaching
in order to create an environment where em-
activities of subordinate employees and less
ployees’ results are recognized and they are
targeted to psychological pressure.
motivated. Beyond the HR policies in place,
After the first six months initiating and
the main responsibility of achieving the busi-
implementing the above actions, the process-
ness objectives rests on the business line
ing centre is recognized as one of the best
managers. Their abilities to lead people, more
organized system in the organization, with
than their skills to manage the budgets, are
good results. The employees have proposed
essential. As Yukl & Van Fleet said, the lead-
also other customer- oriented solutions cen-
ership is viewed as a process that includes in-
tred on concrete actions to increase the busi-
fluencing the task objectives and strategies of
ness. The processing centre eliminates the
a group or organization, influencing people
malfunctions caused by lack of coherent con-
in the organization to implement the strate-
trol actions and results. The processing centre
gies and achieve the objectives, influencing
could now focus on growth and consolida-
group maintenance and identification, and
tion actions, and the employees are motivat-
influencing the culture of the organization.
ed to remain in the company and grow with
This is definitively a winning way of doing
the company.
business.

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study of 62 societies, edited by Robert J. House, Paul J. Hanges, Mansour Javidan, Peter W. Dorfman and
Vipin Gupta, 9-26. London: Sage Publications.
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11. schein, e.h. (2004). Organizational Culture and Leadership. San Francisco, CA: Jossey-Bass, 3rd edition
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lead from within

~ Ph.D. Ana-Maria Grigore (Faculty of Business and Administration, University of

Bucharest, Romania)
E-mail: [email protected]

Motto: “Trust men and they will be true to you; treat

them greatly and they will show themselves great.”
Ralph Waldo Emerson

Abstract: The world nowadays is different, through a series of essential steps, from the one we had
been familiar with for a long time. The crisis has revealed not only the flaws within the dominant economic
model, but also the flaws in our society. The workforce needs a change in the leaders’ mentality. Leader-
ship, more than ever, implies self awareness and self-control. The people nowadays have a great need for
integrity. They want to be able to trust their leaders and to enjoy their leaders’ trust. There is a need for the
reconstruction of confidence. The present paper outlines a leadership alternative – the spiritual leadership,
presenting this model’s advantages and principles.
Key words: crisis, leader, leadership based on spiritual values, trust

introduction what new things can we still come up with?

How can we still keep this topic fresh? Very
Leadership is a hot topic. We all want
often it is difficult to notice what is new. And
to know what is new in leadership. But since
it is difficult because the fundamental fea-
we are talking so much about leadership,
tures remain unchanged: as the time passes,

No. 17 ~ 2013
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200
the behavior and the actions of an effective Young was considering in 2009 that the
leader seem well-known because they are so present crisis represented the most recent
commonplace. What is not so commonplace, and the most serious consequence of neglect-
however, is our workplace. (Daskal, 2012). ing ethics and responsibility in the decision-
The world nowadays is different, making process in the business environment,
through a series of essential aspects, from the and Gore and Blood stated in 2008 that the
one we had been familiar with for a long time. market economy is at a crossroads at pres-
What is changing is our culture. Things are ent. In order for it to go on, major trans-
different today from how they were five, ten formation is needed. They believe that the
or twenty years ago. The workplace culture, following causes are fundamental for the re-
also, is completely different. First of all, tech- cently occurred crash: short-term thinking,
nology has changed everything. Information poor management and set of rules, wrong
is instantly available, ideas travel fast and far. compensations, lack of transparency, medi-
With a workforce almost permanently on- ocre leadership and an inoperable business
line, the line between the work time and the culture.
personal time is very fuzzy. The internet has The workforce needs a change in the
shaken our world to the ground. We can have leaders’ mentality. There is a need for an
connections (and interactions) with a human open-minded leadership and for a leadership
resource that is increasingly heterogeneous. with open heart. Today, leadership needs to
The variety of cultures and nationalities has be born within us.
changed the professional environment, so Leadership today, more than ever, im-
that the context for leadership is completely plies self-knowledge and self-control. The
different. ( Daskal, 2012). What is the new re- workforce is requesting authenticity and
ality of leadership? We know that, at least, we transparency from its leaders.
are dealing with a different human resource: People have a huge need for integrity.
now it is a diverse, dispersed one, a human They want to be able to trust their leaders and
resource which generally has an increased to enjoy their leaders’ trust. ( Daskal, 2012).
need of communication and with new expec-
tations regarding the coordination and the 1. A Crisis of Confidence
specific collaboration. How can we capital-
ize on it at the desired efficiency? How can “The spreading of distrust in a soci-
we use communication as a support to guide ety... imposes a kind of tax on all kinds of
them and to satisfy their needs? economic activity, a tax that societies with a
On the other hand, “the crisis has re- high level of trust don’t have to pay”. Francis
vealed not only the flaws in the dominant eco- Fukuyama
nomic model, but also the flaws in our society. Stephen Covey and Bob Whitman (2010)
The senseless pursuit of profit and raising self were stating that in turbulent times the level
interest at the highest level of priority seem of trust is falling. Stock exchanges are crash-
not to have led to the hoped for prosperity, ing due to a lack of trust. People are losing
but they have definitely contributed to the faith in their own organizations. When driv-
creation of the moral deficit”. (Stiglitz, 2010). ing on an unsafe road, one that is full of traps,

No. 17 ~ 2013
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201
everybody brakes. It’s why they are calling it acting with an unshakeable integrity and
“slowdown”. with honorable intentions.
A crisis of trust gives rise to fear. Fear
and anxiety lead to a loss of focus. And the 2. leadership Based on spiritual
loss of focus endangers the implementation Values
of strategy.
Trust always affects two measurable re- Before proposing a definition of spiri-
sults: speed and cost. When trust decreases, tuality in leadership, we must examine the
speed decreases and the costs rise. Lack of meaning of the two key words of the issue:
trust slows everything down. Sales diminish, spirit / spiritual and leader. A dictionary
customers go away and the team members definition for spirit is “what is traditionally
are discouraged or fired. Lack of trust has believed as the vital principle, or the driving
steep costs. If you are untrustworthy, people force of all the living beings”. In this sense,
will suddenly refuse to do business with you the spirit is the deeper meaning, the sense,
and your income will decrease. the significance. Richard Wolman (2001)
Lack of trust has taken on global pro- stated that, by „spiritual” I understand that
portions. A crisis of trust has overwhelmed search, as old as the world itself, that man has
the economy. We have witnessed the fall of started since the beginning of time in order
great corporations due to a lack of trust. We to find a connection with something bigger,
have witnessed an unprecedented lack of more profound and more certain than his
trust on the financial markets. We have wit- own self – a connection with our souls, with
nessed a global economy slowing down to our neighbour, with the world of history and
the point where the flow of credit has com- nature, with the indivisible winds of the spir-
pletely frozen. it, with the mystery of life. A simple defini-
Another authority on trust, Stephen M. tion for leader is: “somebody who shows the
R. Covey, phrases it like this: “The serious, way forward; person convincing others to
practical impact of the economy of trust is follow a course of action.”
that in many relationships and interactions, Therefore, the leader is one who influ-
we pay a hidden tax on mistrust... Lack of ences his followers to think and behave in
trust doubles the cost of business. I consider a certain way. The combination of the two
that, just like the tax created by mistrust is terms suggests that the leader who has em-
real, measurable and very high, the dividend bedded spiritual values in his approach will
of high trust is also very real, quantifiable give a deeper meaning to his group’s actions,
and enormous... When trust is high, the divi- which will end up having a significance be-
dend you get is a performance multiplier, yond automatism and immediate perception
boosting and improving every dimension of (Barnett, 2006).
your organization.” Some people are uncomfortable with
The competitive advantage on the mar- the word spiritual and they prefer to talk
ket is held by the most trustworthy compa- more about values and ethics when they are
nies. They get high trust dividends. The moral trying to describe the same things that others
authority comes from two commitments: would call spiritual. However, there are some

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people who will talk about God as being their values at the workplace. The spiritual leader
business partner. (McLaughlin, 2004). must understand the importance of his em-
Spirituality offers substantial implica- ployees finding a purpose in their work and
tions for management and leadership. The must be able to discover the human being in
way in which we rule depends on the kind the person of his employee. (Barnett, 2006)
of people we are. Spirituality is not a certain How can he do this? the above-men-
way of leading. If it exists in our nature, it tioned author asks herself. By answering, to-
will resurface in the leadership process. gether with his employees, questions such as
Management is a challenge for spiri- these:
tuality. The connection is not intrinsic: it re- • Who are we, as an organization?
quires a lot of effort and care in order for it • Is our work valuable?
to be developed. The practices of manage- • What values do we respect?
ment generate feedback; this in turn, changes • What are we leaving behind?
our own perception on existence and on our A spiritual leader doesn’t take only his
spirituality. position seriously, but also the responsibili-
There is plenty of evidence that the ties it comes with. Spirituality in leadership
managers’ interest in the spiritual values has implies a focus on people, not on hierarchies;
started to grow. Kerns (2002) signals a large it is less about the formalization and more
number of sites and books about the business about transformation and diversity; less con-
that deals with spirituality and a large num- trol and more partnership, collaboration and
ber of ‘business gurus’ that hold seminars inspiration.
related to this topic. Patricia Aburdene says Kouzes and Posner (2011) suggest that:
in her recent book, Megatrends 2010, that the “The leaders we admire do not place them-
focus on spirituality in business is becoming selves at the centre, it is others that place
so prevalent that one can say it is “the big- them there. They do not seek other people’s
gest megatrend today”. She claims that more attention, but they give their attention to oth-
and more people are making choices at their ers. They don’t focus on satisfying their own
workplace as “consumers focussed on spir- goals and desires; they are looking for ways
itual values” and that the power of spiritu- to answer to their team members’ needs and
ality has a bigger and bigger impact on our interests”.
personal lives and it is spreading in organi- Truly successful leaders firstly under-
zations in order to create a moral transforma- stand the needs of their team, and only then
tion in them. do they present their own needs. Then they
White (2006) considers that the aca- make up a plan which will take both aspects
demic world will no longer have the choice into consideration. In this way, the expecta-
and will become ‘visionary in relation to new tions are clear, the compromises are negotiat-
generations of students and their need for ed, and thus the team goes further on a road
spiritual development, which will have to be that has no ambiguities.
stimulated in school.’ Dee Hock, the founder and CEO emeri-
The spiritual leadership implies the tus of the Visa International company says
implementation of spiritual principles and that, if you want to be a leader you will need

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to invest at least 50% of your time in your praise may become critique. Glory is ephem-
own person – goals, ethics, principles, mo- eral: in a moment success may change to fail-
tivation, conduct - at least 20% in leading ure. (Swami, 2012).
those under your authority and 15% in lead- What makes a truly great leader ? Some
ing your partners. “If you don’t understand say it is his ability to make hard decisions.
that you are working for your employees Others say that it is his ability to command,
who have no title, you don’t understand any- control and inspire loyalty.
thing about leadership. You only know tyr- However, the top leader has first of all
anny”, Dee Hock states. (J. Ridderstrale, K. vision – not any kind of vision, but one that
Nordstrom, 2007) we may appreciate as being intellectual, emo-
Somebody might ask: what is wrong tional and spiritual.
about being popular or rich? There’s nothing Intelligent Management from the spiri-
wrong, but when this is the only goal of our tual point of view can be developed by ap-
existence, we get attached to these “external” plying 12 principles (Zohar, 2005):
things, which are, due to their very nature, 1. Self-Awaerness – Knowing what I be-
transient. As long as we build our existence live in, value, and deeply motivates me
on these ephemeral values, we fall down 2. Vision and Value Led – Acting from
either when we lose them, or when we feel principles and deep beliefs, and living
threatened by another popular (or rich) fig- accordingly
ure. Our (extrinsic) fight for wealth or fame 3. Positive Use of Adversity – Learning
brings with it an unbearable amount of stress, and growing from mistakes, setbacks, and
not to mention an unhealthy legacy for future suffering
leaders. A spiritual leader may have mate- 4. Holistic – Seeing larger patterns, rela-
rial ambitions, this is all right as long as he tionships, and connections; having a sense of
doesn’t cross the boundary of personal eth- belonging
ics and superior principles. When one cross- 5. Compassion – Having the quality of
es that line, it’s no more ambition, it becomes “feeling-with” and deep empathy
greed. If you don’t succeed at centering your 6. Celebration of Diversity – Regarding
life on stable principles and you are repeat- other people for their differences, not despite
edly deviating from them, it is no more en- them
thusiasm or passion, it becomes restlessness 7. Field – Independent – Standing
and instability. Few people understand the against the crowd and having one`s
reality behind the scenes: behind the smil- convictions
ing mask and the „winner” pose, a leader 8. Ask Fundamental “Why” Question –
with controversial principles is never happy. Needing to understand things and get to the
Deep within him, he is always worried about bottom of them
keeping up the appearances, about plotting 9. Ability to Reframe – Standing back
against his enemies and about fighting to from a situation/problem and seeing the big-
keep his position. An authentic leader never ger picture: seeing problems in wider context
takes the flatterers seriously. He knows that 10. Spontaneity – Living in and being re-
people are generally inconstant, and in time sponsive to the moment

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11. Sense of Vocation – Feeling called and conquered by those who have helped us
upon to serve, to give something back selflessly: our parents, teachers, etc; in this
12. Humility – Having the sense of being way, we were much closer to accepting and
a player in a larger drama, of one`s true place adopting their ideas. (Swami,2012).
in the world A leader who truly wants to “serve” and
A leader who applies the 12 principles who is in a mission which is in accordance
of spiritual intelligence, can provide the kind with the good principles attracts followers
of inspiration and energy that it releases. who naturally like and follow him.
Some management gurus sometimes
3. the servant leadership – influence use the “servant” principle as an efficient
on the Character leadership technique. But we have to be cau-
tious! We are not talking about a mere ma-
Just like an archer, who, before releasing nipulation device: it is a special feature which
his arrow, calmly stretches his bow and care- cannot be produced on the spot with over-
fully calculates his moves, so is also a leader used texts. You cannot fake sincerity for too
before launching a grand project or before long. The real character gets revealed too
engaging in a major effort, he has to take a quickly, and this is especially true for a lead-
few steps back and to build a foundation of er who is always facing difficult situations,
simple and solid principles. Quite often, the who shows the kind of material he’s made of.
obsession with success shields the principles; If we meditate seriously, we will under-
many neglect or even violate ethical codes stand that the others have the same needs,
in order to fulfill their ambitious goals. It is desires and fears – either physical, emotional
tempting to think big, to try Herculean la- or spiritual ones – as we ourselves have. By
bours and to burn stages in order to achieve deeply internalizing this to the level that en-
rapid growth and success (Swami,2012). ables us to apply it, this is the secret of an ex-
The positive and sustainable influence ceptional leadership.
is obtainable when people trust their lead-
ers, when the individuals perceive the lead-
4. spirituality at the workplace
er as being honorable. If the leader’s vision
and character generates trust and acceptance Spirituality in leadership cannot be un-
from his subordinates and awakes in them derstood outside the general framework rep-
the natural desire of being led, then leader- resented by the workplace. Many employees
ship is successful. regard the workplace as a way of finding
How can someone become such a lead- meaning and as a social component.
er? A leader with the fundamental mentality Nowadays the workplace is being
to serve: a cause, a group of people, his com- shaped as a “community”, while other com-
pany – exerts the greatest influence. munities are disintegrating because of the
We all know this deep within us, and we change in lifestyles. It is a common thing
have seen its outcome any time we have ap- nowadays for neighbours not to socialize
plied this principle in our personal relation- with each other, and generally people are
ships and we ourselves have been attracted lonely, even in small towns, without feeling

No. 17 ~ 2013
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they belong to a community ( Barnett, 2006). Nowadays, people no longer want to
In this context it is easy to explain the leave their fundamental values at the enter-
tendency to consider that the workmates prise gateway. Fogel (2000), a Nobel Prize
are the most convenient social partners. laureate in 1993, is one of the economists who
Friendships, sport activities, even marriages have stressed the importance of spirituality
are common occurrences at the workplace. in the new economy. He identified fifteen vi-
Thus, the workplace is becoming more than tal spiritual resources that include concepts
just a place where people earn their living. It such as: a perception of the purpose, a per-
is becoming a place where they can be rec- ception of the opportunity, a sense of the idea
ognized as individuals, where they can find of community, strong family morals, a strong
friends, share common ideas or hobbies. This work ethic and high self esteem.
reality is very favourable for leaders, and The main challenge of spirituality is to
they should encourage and develop it. If the overcome the false perception that spiritu-
local leader possesses a strong spiritual sense, ality is a taboo and that it does not apply to
which is able to influence his attitude, emo- most organizations. Rhodes (2006) emphasiz-
tions and behavior, then it is very likely for es that ‘workplace spirituality’ has become a
him to be able to influence his employees in respectable topic, discussed in management
their quest for finding the moral way in their textbooks.
lives. Some claim even that these are precise- Although currently there are no data
ly some of the most spectacular features of available, not even empirical ones, that could
leadership: finally giving meaning to people, reveal in what way a particular approach to
the feeling of being part of a community, that spirituality has proven more effective than
they belong to a group which has principles others in promoting spirituality at the work-
and a purpose ( Barnett, 2006). This point of place, two approaches have been outlined as
view suggests that the spiritual way of lead- being closer to the concept of spiritual leader-
ing is less concerned with directives and with ship: the servant leadership and the transfor-
a command algorithm, and more with defin- mational leadership.
ing the organization values and with helping However, the contemporary models of
its members to perceive their contribution to leadership are especially focussed on the es-
a set of valid and valuable goals. calation of the force approach and on the ver-
Above all, people are constantly search- ticalization and consolidation of hierarchy.
ing for meaning and purpose in life. And
they will find them where they spend most 5. the Benefits of spirituality in
of their time, i.e. at work. They want to work leadership
for a good organization, one that treats them
and everyone else with respect. Research also There is very little research regarding
shows that organizations which have learned this phenomenon, so we can’t make any mea-
to meet the spiritual needs of all stakeholders surable statements on the benefits (and the
and employees are more profitable and pro- costs) of spirituality in leadership. Still, we
ductive. But equally important, they are hap- do know enough to be able to outline a few
pier places to work in (Mitroff, 2008). potential benefits. From the point of view of

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the subordinates, the incorporation of spiri- importance given to self. When we cannot
tuality in leadership has all the chances of control these negative emotions, we have less
building a workplace where everybody goes confidence in ourselves and in other people,
to with pleasure. As far as the organization and strive to act from a tiny place within
is concerned, the incorporation of spiritual- ourselves.
ity leads to trust, to a positive and stable at- We can change our motivations in more
mosphere, in which people feel support and positive ones if we are inspired to do this.
where they are themselves more responsible
and scrupulous. (Barnett, 2006). Conclusions
The incorporation of ethics and spiritu-
al values in the workplace may also lead to Many of the considerations above seem
a growth in the level of employee retention, truisms, that is how obvious they are. At the
to customer loyalty and to brand reputation. same time, they also seem considerably uto-
All these will grow the organization perfor- pian. Because every time we try to connect
mance. But, again, attention must be paid to objective categories with the subjectivity of
the natural, not pragmatic way in which the human nature, we are always ambushed by
spiritual component is to be developed. the traps of idealistic naiveties: Communism,
Such a leadership perspective is not as a social ,economic and political solution –
yet mainstream. It is necessary a change in with its obvious nefarious consequences, is
mentality, in the set of values and principles the best example.
of leaders, of those who provide finance, of At the same time, we can notice that im-
teachers and mentors who form them. The perceptibly, humanity has passed to another
idea of perspective must be taken into ac- state, from a phase where it was riven in dis-
count, the idea of the long-term effect. tinct systems, still relatively sparsely popu-
We can imagine two scenarios: the first lated, to a system that tends to be unique,
one, business as it is now – short-term inter- heavily populated, with an entropy that is
est, short-term gains, isolationist thinking; totally different from that of the systems that
the second one – a business culture centered made it up, a system governed by new laws
on deeper purposes that will generate a de- and whose evolution is highly unpredictable.
cent profit while working on the common It is a system with a spirituality in transition
good. The vital problem is how do we move and, for its evolution and stability it is prob-
from one scenario to the other? ably important, if not decisive, that opinion
If one wants to change systems, one makers, mentors and teachers insist on the
must first change human behavior. But hu- explicit presentation and consolidation of
man behavior does not change easily. To moral principles (especially for the economic
get a real transformation one must change vectors), principles which, in fact, regarded
the incentives that induce the behavior. This from the historical point of view, have actu-
is the responsibility of a visionary leader. ally already saved and taken the human spe-
Nowadays business, politics, education and cie forward.
society in general are driven by four negative
motivations: fear, greed, anger and too much

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reFereNCes:
1. Barnett, t., Spirituality-in-Leadership: An entry from Thomson Gale’s Encyclopedia of Management, Thomson
Gale, 2006
2. Covey, st., whitman , B., Rezultate previzibile in vremuri imprevizibile, Editura All, 2010
3. Covey, st., M. r., The speed of trust, Simon and Schuster, 2006
4. Daskal, l., What`s new in leadership, http://www.lollydaskal.com/leadership/whats-new-in-leadership/
, Jul., 2012.
5. Richard wolman, Thinking with Your Soul, New York: Harmony Books, 2001
6. Fogel, r., The fourth great awakening, University of Chicago Press, 2000
7. Gore, Al., Blood, D., We need sustainable capitalism, Wall Street Journal, 5 November, 2008
8. kerns, Ch., Putting spirituality to work, Graziadio Business Report, 2002
9. Kouzes j.m , B.z, Posner, Credibility: How Leaders Gain and Lose It, Why People Demand It, Jossey-Bass,
2011
10. Mclaughlin Corinne, Spirituality and ethics in Business, 2004, http://www.visionarylead.org/articles/
spbus.htm
11. Mitroff, i., Two Challences: Crisis Management and Spirituality, http://blogs.harvardbusiness.org/gold-
smith/2008/09/preparing_your_company_for_a_crisis.html
12. ridderstrale,J. k. Nordstrom, Karaoke capitalism, Management pentru omenire, Editura Publica, 2007
13. rhodes, k., Six components of a model for workplace spirituality, Graziodio Business Report, 9(2), 2006
14. swami, radhanath, What is spiritual about leadership, 2012 http://leadershipandspirituality.com/articles/
leasson-on-different-themes-related-to-leadership-by-radhanath-swami/what-is-spiritual-about-leader-
ship/
15. stiglitz, J., In cadere libera, America, Piata libera si Prabusirea economiei mondiale, Editura Publica, 2010
16. white, s., Spirituality and the intellectual development of college students: The new leadership challenge in
higher education, International Electronic Journal for Leadership in Learning, 10(3), 2006
17. young st., Capitalism moral – o reconciliere a interesului privat cu binele public, Editura Curtea Veche, 2009
18. zohar, D., “Spiritually Intelligent Leadership”, Leader to Leader. 38 Fall 2005, p. 45-51

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leadership between skill and competency

~ Manole Diana Alina (Business Consultancy Master Programme, Business and Ad-
ministration Faculty, University of Bucharest)
E-mail: [email protected]

Abstract: The following paper aims to present the way in which leaders are made up in nowadays,
and which are the big differences between a born leader and a person that is working hard every day to be-
come one. The history is full of examples of true leaders, but the present has shown to us that leaders can
also be created in time. The purpose of this article is to bring up front examples of leadership and also meth-
ods through which you can practice your skills and gain competency in leading people.
Key words: leaders, leadership, skill, competency, education

i. introduction methods to realize that vision, and coordinat-

ing and balancing the conflicting interests of
Leadership is defined as the activity of
all members and stakeholders. A leader steps
leading a group of people or an organization
up in times of crisis, and is able to think and
or the ability to do this. Leadership involves
act creatively in difficult situations.1
establishing a clear vision, sharing that vision
with others so that they will follow willingly, 1
http://www.businessdictionary.com/definition/
providing the information, knowledge and leadership.html
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Even, over time, people tried to find ii. leadership in the past
out the perfect recipe for becoming a leader,
Since the first leader borne, philoso-
there still are many questions, and things left
phers tried to find out which are the main
unspoken. Leadership evolves and changes
characteristics or traits that a leader possess
in the same time with people and technology.
in order to make others to follow him. Over
Leaders from the past could not face the chal-
the decades, eight major theories have been
lenges from nowadays. In time, the concept
developed:
of leading people received so many defini-
- the great man theory – which sus-
tion, was seen from so different perspectives
tain the idea that leaders are born, not made,
and analyzed in so many situations and envi-
and that they will arise when there is a great
ronments, that we still wonder: Are leaders
need. This theory was proposed by Thomas
born or made?
Carlyle, and his research was based on the
Warren Bennis, Burt Nanus, James
study of people who were already great lead-
O’Toole, Stephen Covey, Max DePree, John
ers like: Jesus, Mohammed, Moses, Buddha,
W. Gardner are only some of the great au-
Churchill etc.
thors that tried through their writings to an-
- the trait theory – says that some
swer to that question, but after so many years
people born with particular inherited traits
of research and studies, opinions are more
which suit to leadership. Stodgill, McCall
than ever split.
and Lombardo were the philosophers that
Is leadership a skill? A trait that we
promoted this theory. They have based their
are born with, and that evolves in the same
studies on families of powerful men.
time with us, reaching out in the moments of
- the Behavioral theory – stands by
need? Many philosophers developed theo-
the idea that leaders can be made, rather than
ries based on the inherited abilities of people,
are born. Researchers like McClelland, Kurt
and they stand by their ideas arguing that
Lewin, Ronald Lipitt, Robert Blake and Jane
leadership is about talent, gut, aptitude or
Mouton were the ones that expanded this
endowment.
theory. They didn’t search the traits, but the
Or is leadership a competence?
actions that make a person a leader.
Something that you work on every day, that
you read about and apply in real life, in or- - Participative leadership theory – as-
der to become competent in your own field? sume that leaders involve in their decision-
There are researchers that argue the fact that making process other people. In this way
leadership is a talent, saying that this concept people are less competitive and more col-
is more complex than just a genetic gift. laborative. This approach is also known as
In the following three chapters I will try consultation, empowerment, joint decision-
to come up with some examples of theories, making, democratic leadership, Management
leaders from the past and leaders from nowa- by Objective (MBO) and power-sharing.2This
days in order to get a more clear perspective theory was developed by Lewin, Lippit and
over this concept, and also some methods to Likert.
help the wannabe leaders of today.
2
http://changingminds.org/disciplines/leadership/
styles/participative_leadership.htm
No. 17 ~ 2013
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210
- situational leadership theory - The can look up at leaders like Caesar, Cleopatra,
best action of the leader depends on a range Alexander the Great, Plato, Galileo Galilee,
of situational factors like the motivation and Archimedes and the list could continue. They
capability of followers, the leader’s percep- were examples of comportment, of thinking,
tion, stress, mood etc.3 Hersey and Blanchard of courage, of virtuosity and people were fol-
suggest that leaders should adapt their own low them willingly, in many cases with the
style to the followers; Vroom and Yetton on cost of their lives.
the other hand propose that the followers As previously during, when territo-
should stand by the leader and accept his de- ries became countries others leaders aris-
cisions; Path-Goal theory describe a collab- en. For example in America we can find
orative relationship between the leader and Abraham Lincoln, in France Napoleon who
the followers, and that they should encour- is a very outstanding example of leadership,
age and support each other. In England the queen Elizabeth etc. During
- Contingency theory – similar to the the World War I and the World War II, the
Situational Theory, emphasis the fact that much known leaders were Mussolini, Stalin,
The leader’s ability to lead is contingent Hitler, Churchill, Charles de Gaulle, Franklin
upon various situational factors, including D. Roosevelt and Harry S. Truman.
the leader’s preferred style, the capabilities Most of the historical leaders we know
and behaviors of followers and also various tend to be military or political. They are
other situational factor.4 This approach was people who stood out as incredibly unique;
developed by Fiedler. as if no one else contributed to their success
- transactional leadership theory – — standalone, one-of-a-kind leaders who
according this theory people are motivated seemed to achieve everything singlehanded-
by reward and punishment, and a clear chain ly and were certainly the driving force behind
of command is the proper way of organizing events. Those sorts of leaders will continue to
a system. It is based on Pavlov and Skinner’s exist. They will be remembered as uniquely
studies. fitting into their time and circumstances, to
- transformational leadership theory form a seemingly perfect match for the needs
– assume the fact that people will follow a of the moment.5
person who inspires them, a person with vi- But, in nowadays people ask for a dif-
sion and passion who can lead them in the ferent type of leader. Since the Industrial
wright direction, and can help them achieve Revolution from the early 1800’s, a new field
great things. Bernard M. Bass and James attracted the people attention: economy.
MacGregor Burns introduced this concept. The new leaders don’t plan anymore strate-
Across history leaders arise every time gic attacks over the enemy’s army, but plans
they were needed. In the ancient history, strategies of developing a business, of gain-
when people where fighting for territories we ing market shares, of attracting customers
and improving the commerce, which is one
3
http://changingminds.org/disciplines/leadership/ of the oldest activities of humankind. The
styles/situational_leadership.htm
4 5
http://changingminds.org/disciplines/leadership/ http://www.hrreporter.com/blog/strategic-hr/ar-
theories/contingency_theory.htm chive/2011/06/13/inspired-by-leaders-of-the-past
No. 17 ~ 2013
 Change and Leadership
211
new leaders don’t develop projects which John Kotter, author and leadership ex-
involve resources like soldiers, guns, can- pert at Harvard, states that the role of the
nons; instead they use human resources and leader is to define what the future looks like,
prime materials to create products that are align people with that vision, and inspire
required on the market. They don’t negotiate them to make it happen despite obstacles.
territories or alliances, but contracts, prices After all, implicit in the word lead is the no-
or mergers. And the most important, they are tion of going somewhere.6
not followed anymore by an entire nation, Today’s leaders have more different
but by their employees. roles. They don’t represent only a nation,
The new leaders were inspired by the they stand up for a multicultural and a multi-
military and political persons. They ―stole‖ national organization. They don’t just set an
from them the way of organizing resources objective for the entire group, they have to
and time, the strategic thinking, the ways of be collaborative and match individual goals
inspiring their followers, their ways of set- with the company’s ones. They have to in-
ting objectives and so on, and tried to adapt volve everybody in the organization in the
all of that tactics to the new field. One of the decision making process, in order to show
most representative book that sustain this to every person how important they are to
idea is ―The art of war‖ written by Sun Tzu. the organization. He also has to be a friend,
But if the past leaders were born, what a mentor or a philosopher if the situation
makes the new leaders stand out in the crowd requires to. From my point of view, leaders
and determine people, in time of peace, to nowadays have to struggle, to learn every
follow them? day, to develop their own traits in order to
face all the challenges that they will confront.
iii. leadership in present Even they are born or made, the education
process is very important for their formation.
The concept of present leadership hasn’t They have to show they possess a multiple
changed that much. The definition remains sets of intelligence as Howard Gardner de-
the same, but the methods and principles of
scribes them.
becoming a leader have evolved. Today we
A leader should have a very precise set
embrace all theories of leadership, we agree
of values, so that he can offer to his followers
that some leaders are born and some are
made up in time, but we sustain that no mat- a stable work environment, but in the same
ter the source of the leading power we still time he should be versatile, ready to embrace
have to work hard on developing our set of the change, to shift, to adjust and to make
abilities and talents. needed organizational changes, and show
In times of economic crisis people tend that he can be trusted. Honesty, integrity,
to look up to their leaders. They need to consistency, congruency, reliability are other
know that there is a person who will help some characteristic that he should possess.
them pass through rough times, that will in- And it’s possible that some of these traits
spire and motivated them that will offer fi- were inherited from family, some need to be
nancial security and that will lead them on
the right path.
6
http://www.collegiateproject.com/articles/To-
days%20Leadership%20Challenge.pdf
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 Change and Leadership
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developed through education and some may team punt returners, and so on. Leaders,
not exist. We all possess the capacity for lead- however, have to learn to become generalists
ership, but only those who cultivate it will and usually have to do so well after they have
ever become truly effective leaders. left our colleges, graduate schools and pro-
So how do you developed or actually fessional schools.7
gain different abilities? Can we teach people sixth, leadership is highly situational
to become leaders? Can we teach leadership? and contextual. Some leaders can be great in
Many people think the education a field, but fail in another.
should represent a huge part in develop- seventh, leadership has its basis in cre-
ing our leadership talent. So institutions like ativity. But how you can teach creativity?
schools, high-schools and universities are go- So what is left to do?
ing to focus their attention into this matter, Well, we still have the literature, the
but there are still some obstacles in the way. books that great professors written, in order
First, there are people who still believe to give us some tools to learn how to make
and sustain the idea that leaders are born, or other listen, trust, follow us. Some examples
that they are a product of some circumstanc- of great writers are:
es, and that there is no way you can teach - Warren Bennis Professor of Business
leadership. Administration, University of Southern
second, the complaint that leadership California; author of ―On Becoming a
training would more than likely be preoccu- Leader‖;
pied with skills, techniques, and the means of - Burt Nanus, Professor Emeritus
getting things done. But leadership for what? of Management at the University of
third, leadership isn’t a skill that you Southern California’s School of Business
can anatomize on your table, is more a prac- Administration, former Director of Research
tical ability that you can only achieve at the at USC’s Leadership Institute and co-au-
work, in summer jobs, internships or NGOs thor with Warren Bennis of Leaders : The
where you will have a mentor to help you Strategies for Taking Charge;
learn step by step. - James O’Toole, former Vice President
Fourth, leading people usually can be- of the Aspen Institute and Director of the
come easily manipulating people, and Stalin Leadership Institute at USC;
and Hitler stand as examples for this fact. - Stephen Covey, author of the bestsell-
Fifth, colleges and universities are in- ing The Seven Habits of Highly Successful
creasingly organized in highly specialized People in which he introduced the philoso-
divisions and department all geared to train phy of `people-centered leadership’ and
specialists. While the mission of the college more recently `principle-centered leadership;
may be to educate “the educated person” - Max DePree, retired CEO of Herman
and society’s future leaders, in fact the incen- Miller Inc, and author Leadership Jazz;
tive system is geared to training specialists. - John W Gardner, formerly US
Society today rewards the expert or the super Secretary of Health, Education and welfare,
specialist – the data processors, the pilots, the
7
financial whiz, the heart surgeon, the special http://www.au.af.mil/au/awc/awcgate/navy/re-
flections_on_leadership.htm
No. 17 ~ 2013
 Change and Leadership
213
an advisor to six Presidents and Professor of to trust yourself, to be sure of the decision
Business at Stanford University. Author of you are making. But you should also involve
On Leadership. them into your work. You cannot fix the com-
For example in Kerry Bunker vision pany or implement a new process or come
there are six areas that you should focus on up with a new strategy all on your own. You
in order to develop your ability to lead: need the support of peers and subordinates,
- Manage the change, but lead the transi- not only to get the work done but also as fel-
tion. You should connect with your follow- low travelers on a challenging journey.
ers, put in their shoes, try to understand how - Know your strengths, and try new
they see the changes, and then try to com- things. In an environment that is changing
municate as clearly as possible the reasons of from a trimester to another, you are confront-
those changes. ing different situations every day and you
- Balance the drive to keep things moving should be prepared for them. So make your
with the need to give people time to catch up. own analyze of your qualities and defects, set
Since all of us are different, also you follow- some goals and try to reach them.
ers reactions will be different, If some of them
will respond you on the spot, other will may iV. Conclusions
need some time to analyze the situation. You
should have to be patient, to communicate or In my opinion leaders are 1/3 born, 1/3
even to coach. educated and 1/3 is left to their choice to cul-
- Know when to empathize and when to be tivate or not their talents. You can’t become
tough. Effective leaders know to be tough and a great leader by waiting; you have to chase
assertive in terms of goals, accountability, fo- every opportunity to exercise your skills, to
cus and perseverance. However, they are also read everything that is related to the art of
empathetic. Listen with an open mind and leadership, to take advantage of others expe-
without judging. Tell people--repeatedly- riences, either are good or bad, to get involve
-that you value them, and acknowledge the in different projects in order to be surround-
emotional impact of seeing colleagues and ed by people and the most important to es-
friends escorted out the door.8 tablished a model of leadership so that you
- Balance realism and optimism. You can compare your achievements and envi-
should tell people the truth, acknowledge sioning your objective.
mistakes and be clear about your situation Is hard to become a leader, taking in
and prospects for the future. You can be res- consideration that you will have to become
olute and hopeful without sugarcoating the a very complex person and not a specialist.
challenge.9 Peter Drucker used to say “Management is
- Trust yourself, and trust others. In order doing things right; leadership is doing the right
to make other trust you, first you will have things.”
To conclude I choose another quote
8
http://www.forbes.com/2009/06/24/human-chan- from Peter Drucker that can be considered a
ge-management-leadership-managing-ccl.html definition of a leader: “The leaders who work
9
http://www.forbes.com/2009/06/24/human-chan- most effectively, it seems to me, never say “I.”
ge-management-leadership-managing-ccl.html
No. 17 ~ 2013
 Change and Leadership
214
And that’s not because they have trained them- accept responsibility and don’t sidestep it, but
selves not to say “I.” They don’t think “I.” They “we” gets the credit. This is what creates trust,
think “we”; they think “team.” They understand what enables you to get the task done.”10
their job to be to make the team function. They 10
http://www.goodreads.com/author/quo-
tes/12008.Peter_F_Drucker

reFereNCes:
1. Bennis, warren g., On Becoming A Leader, Basic Books, 2009
2. De Pree, max, Leadership Jazz: The Art of Conducting Business through Leadership, Followership, Teamwork,
Voice, Touch, Dell Publishing, Revised 2008
3. De Pree, max, Leadership Is An Art, Currency, 2004 Revised
4. Cashman, kevin, Leadership from the Inside Out: Becoming a Leader for Life, Berrett-Koehler Publishers, 2nd
Edition 2008
5. maxwell, john C., Irrefutable Laws of Leadership: Follow Them and People Will Follow You, Thomas Nelson,
1998
6. http://www.businessdictionary.com/
7. http://changingminds.org/
8. http://www.hrreporter.com/
9. http://www.forbes.com/
10. http://en.wikipedia.org/wiki/Main_Page
11. www.goodreads.com

No. 17 ~ 2013
 Change and Leadership
215

outside-the-box, but inside-the-elevator: a

Case of leadership Myopia reaching Media

~ Ph.D. Associate Miriam Costea (University of Bucharest, Romania)

E-mail: [email protected]

Abstract: Practitioners claim that successful leaders should be able to think out-of-the-box and “first
break all the rules”. However, when it comes to organizational regulation inside some public institutions,
more often than not the leaders replace the organizational creativity with an extreme exploitation of the
existing rules. The “tendency to overinvest in exploitation” (Levinthal & March 1993) of the routines that
proved successful in the past is well-known in the literature on organizational learning.
In the present study, we examine a specific context in which a traditional rule meant to offer legiti-
macy to the public leaders was over-exploited up to the point when all national media reacted against the
actions of the public institution. Thus, instead of obtaining more legitimacy, the leaders learned the hard
way that the organizational rules should be assessed periodically and the obsolete ones be replaced/balanced
with new rules, resulting from the exploratory dimension of organizational learning.
We consider that an explanation for this specific case of leadership myopia may be found in a recently
defined leadership style, ie, the spiritual leadership (Fry, 2003), situated in a case of over-exploiting an im-
permanent institutionalized rule (Schulz, 2003).
Key words: organizational learning traps, spiritual leadership, organizational rules, imper-
manent institutionalization
Jel Classification: D23

No. 17 ~ 2013
 Change and Leadership
216
introduction. Not an elevator, but a specific orthodox sermon, before the official
symbol cutting of the ribbon.1
The Prefect, the President of the County
Extensive coverage in the Romanian
Council, a senator and two deputies deliv-
media had recently presented in the most
ered inaugural speaches. Also, the Mayor of-
negatively manner the fastuous public cere-
fered his statements to the audience and to
mony of inaugurating an elevator, organized
the media, reminding everyone that he al-
by the local authorities. The elevator was part
ways stated that the hospital would exist as
of a much larger investment in the local hos-
long as the doctors would want to. He also
pital of a small city called Gura Humorului,
mentioned that the modernization of the el-
placed in the Romanian North-Eastern
evator is celebrated as the last step from a
County named Suceava.
complete investment in the refurbishment
Hospital inauguration as a key com-
of the hospital, which cost around 1 million
ponent of managing reputation and pub-
euro. In 2010, the hospital was scheduled to
lic relations seems to be an usual routine of
be closed during an extensive reform of the
public authorities in several countries. When
national health system. The mayor declared
searching online, the majority of similar in-
that it was normal that all the key leaders be
auguration ceremonies are anounced for hos-
present to the event, and “unfortunately the
pitals in countries such as India, Indonesia,
other representatives of the Parliament could
Taiwan, Malaysia, Mozambique, Haiti, aso.
not come”, he joked.
Also, mission hospitals are publicly inaugu-
The following speach, held by a dep-
rated throughout the world and anounced
uty, transformed the elevator into a symbol
online.
of the commitment to church, health, cul-
However, searching the online sphere,
ture and education, that, together with the
there seems that no other elevator inaugura-
people from the local public administration,
tion has been held in such a way as to reach
are “managing to keep alive the national tri-
the English-speaking online world. In the
coloured flag”.
first pages of google search, the single men-
In spite of the special focus of media on
tioning of an elevator inauguration is an iron-
the elevator inauguration, another acknowl-
ic Romanian twitt, with the hashtag #funny.
edged symbol was vaguely promoted by the
The event was held in the presence
Mayor – a list with almost 18,000 signatures
of the highest local representatives of the
of the local citizens, against the closure of the
Government and the Parliament. The event
hospital in 2010. Unfortunately, even the list
was presided by the mayor, dressed up with
was connected with the presence of the new
artifacts such as the tricolour sash . Among
elevator, whose existence was considered
the guests there were Prefect of the County,
a direct consequence of the citizens’ list in
the President and the Vice—president of the
2010. As the Mayor declares, the list of sig-
County Council, one senator and three depu-
natures was “given as a gift to the hospital
ties, several mayors of neighbouring localities
and other local opinion leaders. A number of 1
http://www.ziare.com/politica/parlamentari/
three priests were specially invited to give bascalia-cu-tricolor-de-la-gura-humorului-opi-
the spiritual blessing to the event, through a nii-1227315
No. 17 ~ 2013
 Change and Leadership
217
management”, to be used just in case the management comprised rules of “grasstops”
hospital would be in imminent danger to be advocacy and “grassroots” advocacy, based
closed again. “I didn’t submit the list to the on the positive intervention of third parties
press, I told them to keep it there, with the who have a significant recognition in the
implicit wish for them of not to be in the situ- community or at the central level of the pub-
ation of needing it.” 2 lic administration. In the present case, the
leadership used both type of endorsements,
Managing reputation although they chose to make a public show-
case from the grasstops advocacy, in which
The Mayor was in fact continuing a long “influential community leaders (e.g., local or
tradition of managing reputation through state officials, business owners, and heads of
appeal to the advocacy or endorsement of local organizations) are targeted to commu-
third parties. Romanian leadership gives spe- nicate their feelings on an issue to their re-
cial significance to such procedures of trans- spective members of Congress, Senators, or
ferring credibility from the key people in the executive branch officials.” (Doorley & Fred
Government and Parliament. Also, the pres- Garcia 2007, p. 172)
ence of the priests invited to deliver a sermon While the 18,000 signatures list can be
is more the rule, rather than the exception, for seen also as part of a stakeholders manage-
inaugurations of new public buildings. The ment, the way the leader decided to use it
experience of the public authorities showed indicates rather a reputation management
that the presence of high ranking public ad- approach, i.e., the “grassroots” advocacy3
ministration representatives is indeed an . The benefits and merits of a true involve-
useful procedure for obtaining recognition, ment of the community was shadowed by
reconfirming the status and the power of the the decision of the Mayor of using publicly
leaders that host such ceremonies. the signature list just as a “survival kit” for
The transfer of credibility from third- the emergency cases.
party endorsers is one of the main tools for Thus, there seems to be a linearity in
creating success in public relations actions thinking the opportunities brought about by
for media relations or public events. Third- the participation of the stakeholders in the of-
party advocates deliver speeches in which ficial opening of a modernized hospital. Both
they prove their commitment and their in- the local authorities and the priests had the
terest for the public cause. They accept to be role of legitimizing the leadership and of en-
guest speakers to the fastuous inauguration hancing the key actors’ coalition and power
ceremonies and to remind everyone that they 3
One of the most effective tools in a company’s
believe in the actions, statements and visions
government relations tool box can be the use of
of the public authorities acting as hosts.
third-party “grassroots” advocacy. Grassroots
In the present context, reputation advocacy is an indirect form of lobbying in whi-
2
http://www.gandul.info/stiri/marea-taiere-de- ch constituents of a given congressional district
panglica-la-lift-cum-au-venit-seful-cj-primarul- or state are encouraged to write a letter, send an
deputatii-si-preotii-ca-sa-sfinteasca-megainvesti- e-mail, or make a phone call to a member of Con-
tia-lumea-a-zis-uite-e-un-lift-nu-e-cireasa-de-pe- gress or Senator.” (Doorley & Fred Garcia 2007, p.
tort-10700013 172)
No. 17 ~ 2013
 Change and Leadership
218
in the public eye, rather than having a say in Leaders have a significant role in organi-
the community wellfare and success. zational learning that leads to organizational
success, as they “influence the organization’s
organizational learning ability to integrate exploration and exploita-
tion through a combination of their behaviors
One of the main theories about orga- and the culture and structures they create”
nizational learning is provided by March (Berson 2006, p. 588).
(1991), who examined the learning produced “Balancing strategic contradictions re-
and managed by the organization as a ten- quires that leaders engage in paradoxical cog-
sion between two different strategic direc- nition that both differentiates the distinctions
tions – exploitation and exploration – of the between existing knowledge and new ideas,
organizational knowledge. Thus, the organi- and identifies synergies between them by
zations look for their previous positive expe- mentally shifting between the team or proj-
riences and lessons learned, and exploit the ect level of analysis and the superordinate or
know-how and rules that proved to work organization level” (Smith & Tushman 2005,
and to lead the organizations to success. On apud Berson et al 2006, p. 588).
short term, the exploitation of the existing
technologies, rules or rituals, is providing
leadership and organizational learn-
prosperity for the organizations. However,
ing traps
as the author showed, too much exploitation
of former success lessons can lead to sub- Leaders are not always able to act as ex-
optimal development of the organization. In pected moderators between the paradoxical
order to counter-balance such strategies, the strategic tendencies towards exploitation and
leadership looks for new mechanisms of de- exploration. Organizations seek a balance be-
velopment and success on the market. The tween exploring new knowledge or exploit-
exploratory component of the organizational
ing the existing successful procedures, with
development, although needed, cannot be
an outcome that depends on the leadership
assumed without high risks of failure and of
style, organizational culture and openness to
facing uncertainty.
innovation.
Within the exploitation-exploration
While using intuition or formal mecha-
framework, authors attempted to identify
nisms to create organizational learning is an
the role of leadership in managing the bal-
organizational reality, the tendency to over-
ance between the two strategic directions or
simplificate is generated by many factors,
in encouraging one of the types of learning.
among which one has to mention the bound-
Re-evaluating and enriching Bateson’s
ed rationality describing organizations in
theories (1973) on the learning levels, new
general, and public institutions in particular.
ideas about organizational learning such as Thus, the context, the causes and even the
learning ecology transform past organiza- solutions are more leadership-tailored than
tional experiences and conclusions in col- situationally adjusted.
lective actions of developing new routines, Authors describe learning myopia as a
norms and standards as part of the organiza- “tendency to overlook distant times, distant
tional behaviour (Levitt & March 1988). places, and failures” (Levinthal & March

No. 17 ~ 2013
 Change and Leadership
219
1993, p. 95). In the learning myopia generat- spiritual leadership and organization-
ed by exaggerated exploitation of success les- al success
sons from the past, leaders do fall in the traps
The deep roots of the over-legitimacy
of their own success, in that of previously
through third-parties may find an answer in
working contexts or of transferred knowl-
the spiritual leadership enthusiastically man-
edge about others’ organizational perfor-
ifested by the Mayor in front of the media
mance. Once acquired a competence or a rule
and the gathered audience.
that leads organization to success, leadership
Spiritual leadership was presented the-
myopia will focus even more on that path of
oretically by Fry (2003) as an ideal model for
development. A positive, vicious feedback
learning organizations. “This study, using
circle is in place, with the emergent risk of
data collected from an army squadron, found
reaching the organizational/procedural lim-
that spiritual leadership is important in cre-
its of growth.
ating an intrinsically motivated, learning or-
The trap of over-exploitation deter-
ganization” (Fry et al. 2005, apud Berson , p.
mines the organization to avoid new explor-
583 ).
atory strategies or to disregard the need of
The spiritual leadership is considered
changing the rules even when the latter be-
as a good indicator of openness, commit-
come obviously obsolete. “This competency
ment and happinnes of the employees, due
trap is a standard, potentially self-destructive
to the focus on the spirituality approach.
product of learning. The trap can be broken
“Therefore, Spiritual Leadership is ultimate-
by rapid upward adjustment of aspirations
ly the driver of the learning and growth per-
or by false feedback as to the high value of
formance category that produces continuous
exploration, but it forms a powerful conse-
improvement in operations and the develop-
quence of learning processes.” (Levinthal &
ment of high-quality products and services.
March 1993, p. 106)
This in turn generates high levels of customer
In the particular case of the rules dynam-
satisfaction, leading to better financial per-
ics and organizational learning, the dilemma
formance; and sustainable organizations that
between rules that seem to bring success to
maximize the triple bottom line.” (Fry 2003,
the organization and those who are obsolete
p.292)
is still in place. “Rules in organizations can
Spiritual leadership is considered as
be seen both as products of learning and as
based on two requirements. Firstly, the or-
carriers of knowledge. Indeed, it seems like-
ganizational vision, which implies that the
ly that any theory of organizational learning
leaders and the supporters feel the “sense
will want to treat rules as major factors in the
of calling” that gives meaning to their work
accumulation of competence in an organiza-
as well as to their lives, counting on intrin-
tion. We will show how rules evolve as or-
sic motivation of people. Second, the orga-
ganizations solve the political and technical
nizational culture that nurtures the sense of
problems they face and how they mediate
mutual support, understanding and concern
interactions between the actions and lessons
among employees or stakeholders.
of the past and those of the present.” (March
“It also creates the context for em-
Schulz & Zhou, 2000, pp. 3-4)
ployees to receive the altruistic love that,
No. 17 ~ 2013
 Change and Leadership
220
in turn, forms the basis for intrinsic moti- The public leaders, in search for a high-
vation through hope/faith in the organiza- er status after gaining the elections, decided
tion’s vision in socially responsible service to emphasize their success in the community
to internal and external stakeholders. (...) through a traditional ceremony. What striked
Organizational spiritual leadership through the media was in this instance the importance
the learning and growth category is ultimate- given to an elevator, eventually promoted at
ly the driver of continuous improvement in the rank of official symbol for a local victory.
operations and high quality products and The routine of spiritually inaugurating new
services that lead to higher levels of customer infrastructure investments was manipulated
satisfaction, which then leads to better finan- so as to serve the need to gain a superior sta-
cial performance – in other words, conscious, tus in the community.
stakeholder focused, sustainable organiza- Instead of the spiritual leadership, the
tions that maximize the triple bottom line.” leaders could have used other more participa-
(Fry 2003, p. 305) tory rules of action. They could have used the
Features of spiritual leadership are to be 18,000 signatures for involving the citizens
not only in preserving the hospital, but also
found in the present case as obvious leader-
in transparent activities of support for devel-
ship learning style: the employees were high-
oping better public services for the patients
ly involved at emotional level, as they faced
in the hospital. While the leaders seemed to
in 2010 the danger of unemployment due to
be managing a stakeholders approach, the
the proposed closure of the hospital; the lo-
stress on other stakeholders’ interest and
cal community supported the endeavour of
involvement was subsumed to the need for
the Mayor and of the other local authorities
through signatures and other visible forms acquiring a higher status. Recognition of the
of involvement; the Mayor considered the fi- leaders’ role in the final victory seemed to be
nalization of the 1 million euros investment more important than other processes through
as a victory that he can pretend to, on behalf which legitimacy may be obtained.
of the customers, citizens, employees and As useful as it proves to be, spiritual
community. leadership reaches its limits once the eggs are
But the most obvious mark of the spiri- all placed in the same basket of over-moti-
tual leadership is the presence of the priests, vating people for believing in a shared credo
invited to bless the spiritual community be- and victory. The rules of empowerment can
tween all stakeholders. While exploiting the act as a boomerang when it comes to better
traditional routine of combining the opening empowerment of the leaders. Once the lead-
of a public service with a religious sermon ers’ desire of getting higher status became so
blessed by prestigious third-parties, the lead- visible, the media sanctioned their endeav-
ers had self-attributed the spiritual recogni- our and treated it as ridiculous and blamable.
tion of their superior virtues. It is a paradigm
often used in the reputation and PR manage- the dynamics of rules. the imperma-
ment, that of the hero that conquers against nent institutionalization issue
all adversities and thus is blessed with quali-
ties that make him superior to the enemies From our viewpoint, simply the learn-
and to its own community. ing trap of over-exploitation of a traditional

No. 17 ~ 2013
 Change and Leadership
221
organizational rule could not push the lead- representing public administration. As the
ership into such a highly criticized position. media mentioned, even a few kilometers of
In what consists, then, the error of the lead- highway were before the object of an inaugu-
ers, since the manifesto of the public leader is ration ceremony, celebrated as a great success
typical for the spiritual leadership approach, of the leadership. The unwritten rule of invit-
considered by authors as a basis for organi- ing special guests and get more credibility
zational learning and success. We consider from their presence at the inauguration cer-
that the negative impact on the audience that emonies seemed so good, that no one of the
led to the disastrous media coverage was due key leaders invited to the inauguration of the
to the specifics of the rule used and to the symbolic elevator could foresee that the rule
context of the spiritual leadership approach. was just reaching its limits of exploitation.
More specifically, we estimate it is the result The over-exploitation of this peculiar
of the toxic combination between the ob- rule is not accidental as it may seem, and its
solete rule of acquiring legitimacy through roots should be deeply debated. According to
third-parties and the spiritual attribution to March Schulz & Zhou (2000), “rules are fol-
the elevator of the role of a symbol of victory. lowed because they are seen as natural, right-
Recent authors interested in the field of ful, expected, and legitimate. Actors seek to
dynamics of the rules describe a category of fulfill the obligations encapsulated in a role,
rules that have a peculiar development inside an identity, a membership in a political com-
the organizations. They are considered as munity or group, and the ethos, practices and
key rules and leadership treats them as being expectations of its institutions. Embedded in
“the rule” of some specific contexts, while a social collectivity, they do what they see as
in fact they are obsolete rules that survive in appropriate for themselves in a specific type
the organization in a latent way and that can of situation.”
be changed only once a radical change is in Moreover, “the interpretations of his-
place. tory are political, reflecting efforts to assign
In this case, the public leaders consid- and evade responsibility and to establish
ered normal that they should inaugurate the favorable historical stories” (Sagan, 1993).
final stage of an investment of 1 million eu- Organizations “record the lessons of histories
ros and the opening of the modernized hos- in the modification of rules and the elabora-
pital, even though the symbol used was just tion of stories, but neither is a perfect instru-
the elevator within the hospital building. ment.” (Levinthal & March1993, p. 1997)
They used an usual stake – informing pub- The possible explanation of the error
lics through media - and an even more usual made by the leaders is that the rule was in
unwritten rule of legitimizing their success a state of impermanent institutionalization.
and power – third-party advocacy from the According to Schulz 2003, p. 1094), “imper-
Governmental, Parliamentary and local high manent institutionalization (...) is a state that
representatives, along with the Orthodox emerges when permanence mechanisms cre-
priests. ate periods of stabilization that are punc-
It was a procedure used even in the past tuated by radical changes stemming from
with great success by the political leaders impermanence mechanisms. Impermanent

No. 17 ~ 2013
 Change and Leadership
222
institutionalization can generate patterns of that is not necessarily a very successful one,
change that are characterised by declining but actually just so obsolete that it might be
rates of incremental changes and increasing changed only through radical actions.
rates of radical changes.” 4 By spiritually leveraging the obsolete
Thus, the rule of third-party endorse- rule grounded in an impermanent institu-
ment at prestigious ceremonies reached its tionalization status, the procedure reached
limits of beneficial impact. It is not surprising its limits of exploitation, in a sense similar
that sometimes “the development of rules re- to that of the limits of organizational growth
flects an inefficient story. The learning that (Senge, 1990). The positive feedback cycles
translates political and technical pressures were blocked by the firm reaction of the pub-
into rules is a complex process in which at- lic opinion, who introduced negative feed-
tention, prior experience, and rule ecologies back loops aiming at stopping the extreme
all operate to frustrate any simple hypothesis use of the procedure. Thus, an attempt of
of a unique match between rules and envi- raising positive reputation and status was
ronments.” (March Schulz & Zhou, 2000, p. transformed into an event that jeopardized
4) In this context, “designing organizations to the good reputation of the leaders .
learn without attention to those limits is no Assuming that in the future the leader-
more sensible than designing organizations ship will be more cautious when it comes to
to be rational without attention to the limits initiating such inauguration ceremonies, we
of rationality.” (Levinthal & March 1993, p. can hope that they will look for other, more
95) participative and stakeholders-focused meth-
The attempt of obtaining a higher sta- ods of managing their own reputation. Also,
tus, through an over-interpretation of the sig- they may take into consideration a second
nificance of such symbolic ceremonies, raises look at what works and what doesn’t among
the question of the subjective interest mani- the organizational procedures and routines,
fested by some public leaders into selective- and avoid the misperception between an
ly exploiting one organizational rule rather obsolete rule and a successful one. A criti-
than others. These rules seem to be chosen cal thinking when it comes to organization-
by in direct connection with their potential of al learning can help the leaders to inquire if
raising the status of the leader. Still, as visible there are not other more exploratory options.
in the present study, the leadership risks to
obtain the contrary effect, in a context of the Conclusions
impermanent institutionalization of the rule
4
The need to periodically assess and
One explanation can be the organizational to-
question the routines and rules in place and
lerance for obsolence, which is specific to public
confront them with other possible options
administration. “Organizational tolerance for ob-
solence can delay changes of rules and thereby
and opportunities. In case of spiritual leader-
make them too obsolete to be repairable, though ship, the management of reputation should
ultimately, radical changes become unavoidable. re-balance the tendency to induce high
The empirical outcomes are declining rates of rule motivation with other leverages bringing
revision and increasing rates of rule suspension” about legitimacy – such as a true two-way
(Schulz 2003, p. 1094)
No. 17 ~ 2013
 Change and Leadership
223
communication (Dozier Grunig & Grunig, by urging for an extensive assessment of the
1995), in which the members of the commu- existing organizational rules, their dura-
nity may be part of the decision-making pro- tion, usefulness and relevance. The balanced
cesses and may encourage the leadership to scorecard examination is an example of use-
explore new ways towards success. ful tool that can be correlated with spiritual
As a new theory in the field, spiritual leadership (Fry 2003) and applied at public
leadership lacks comprehensive studies that administration level in the form of a Spiritual
would shed a light not only on its positive Leadership Balanced Scorecard Business
significant aspects, but also on the limits of Model. When organizational rules and ob-
the concept. In the present case study, we jectives are not carefully balanced, even the
proposed a correlation between the spiritual spiritual leadership can prove counter-pro-
leadership approach and its consequent man- ductive to the well-being of the organization.
agement of organizational rules. As showed, For that, organizational learning cannot be
we question the positive impact of the spiri- seen as a result of spiritual leadership, but as
tual leadership on the overall organizational a main organizational process that managers
performance and reputation in some specific will conect with organizational performance.
learning contexts, such as the impermanent Moreover, further research can look into the
institutionalized rules. direction of the correlation between the dy-
Before proclaiming the need for an out- namics of selective exploiting/exploring or-
of-the-box type of organizational creativity, ganizational rules and the leadership interest
leadership myopia may be overcomed firstly for acquiring higher organizational statuses.

reFereNCes:
1. BatEson, g., Steps to an Ecology of Mind. Collected Essays in Anthropology, Psychiatry, Evolution and Epis-
temology, Chandler, San Francisco, 1973
2. BERson, y., l. nemanich, D. a. waldman, B. m. galvin, R. t. Keller, Leadership and Organizational
Learning: A multiple levels perspective, The Leadership Quarterly, 17, Harvard Review, 2006
3. CRossan, m. m., lane, h. w., white, R. E., An Organizational Learning Framework: From Intuition to
Institution, The Academy of Management Review, Vol. 24, 1999, pp. 522-537
4. CyERt, R. m., march, j. g., A Behavioral Theory of Firm, Prentice-Hall, Englewood Cliffs NJ, 1963
5. Doorley, J., Garcia, h.F. Reputation Management: The Key to Successful Public Relations and Corporate
Communications. New York: Routledge, 2006
6. DoziER, D. m., l. a. grunig, j. E. grunig. Manager’s guide to excellence in public relations and communica-
tion management. Mahwah, NJ: Lawrence Erlbaum Associates, 1995
7. fRy, l. w. Toward a theory of spiritual leadership. The Leadership Quarterly, 14, 693−727, 2003
8. lEvinthal, D. a., March, J. G., „The myopia of learning”, Strategic Management Journal, Vol. 14, 1993,
pp 95-112
9. lEvitt, B., and j. maRCh. Organizational learning. Annual Review of Sociology 14, 1988: 319-340

No. 17 ~ 2013
 Change and Leadership
224
10. MArCh, J. G., olsen J. P., Organizational Learning and the Ambiguity of the Past, în Ambiguity and Choice
in Organizations, Universitetsforlaget, Bergen, Norway, 1976, pp 54-68
11. MArCh, J.G., olsen J.P., The uncertainty of the past: Organizational learning under ambiguity, în J. G.
MARCH (Ed), Decision and Organizations, Blackwell, Oxford, 1988
12. MArCh, J. G., Exploration and exploitation in organization learning. Organization Science, 2, 1991, pp 71-
87
13. maRCh, j.g., m. schulz, and x zhou, 2000. The Dynamics of Rules: Studies of Change in Written Organi-
zational Codes
14. sChulz, m., Impermanent Institutionalization: The Duration Dependence of Organizational Rules Change,
Industrial and Corporate Change, Vol. 12, 2003, pp 1077-1098
15. seNGe, P., The Fifth Discipline: The art and practice of the learning organization. New York: Currency,
Doubleday, 1990
16. siMoN, h. A, Bounded Rationality and Organizational Learning, Organization Science, Vol. 2, 1991, pp.
125-134
17. wEBER, m., Economy and Society. An Outline of Interpretative Sociology. New York: Bedminster Press.
1968.
18. zhou, x., The Dynamics of Organizational Rules, American Journal of Sociology Vol. 98 (5), 1993, pp.
1134–1166
19. http://www.ziare.com/politica/parlamentari/bascalia-cu-tricolor-de-la-gura-humorului-opinii-1227315
20. http://www.gandul.info/stiri/marea-taiere-de-panglica-la-lift-cum-au-venit-seful-cj-primarul-deputatii-
si-preotii-ca-sa-sfinteasca-megainvestitia-lumea-a-zis-uite-e-un-lift-nu-e-cireasa-de-pe-tort-10700013

No. 17 ~ 2013
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225

a swot analysis for organizing a sum-

mer school: Case study for “Advanced sum-
mer school in analyzing market Data 2013“

~ Lecturer PhD. radu herman (Faculty of Administration and Business, University of

Bucharest, Romania)
E-mail: [email protected]

Abstract: The economics scholars agree that investment in education is a competitive advantage.
After participating and graduating the “Advanced Summer School in Analyzing Market Data 2013”, the
students will gain some formal competences is applied knowledge in Statistics with the IBM SPSS Statis-
tics software. Studies show that the employers seek also practical competences in the undergraduate stu-
dents, along with the theoretical knowledge. The article focuses on a SWOT analysis for organizing a Sum-
mer School in order to compose lists of strengths, weaknesses, opportunities and threats. The purpose of
the “Advanced Summer School in Analyzing Market Data 2013“ is to train undergraduate students from
social-human sciences to gain competences which are valued in the market and a certificate for attendance,
to develop an appropriate training program which combines applied knowledge, statistics and IBM SPSS
software and to create a „Summer School quality brand” with high-quality training programs for the Fac-
ulty of Administration and Business.
Key words: SWOT, Summer School, Competences, Education, Knowledge.
Jel Classification: I21, M53, M10

1.introduction and Business, University of Bucharest. It

could represent an opportunity for the stu-
Organising a Summer School represents
dents who are interested in continuous learn-
a continuity for the supply of educational
ing, after the semesters end. Although it has
programs by the Faculty of Administration

No. 17 ~ 2013
 Change and Leadership
226
a formal structure, a Summer School is more way of raising student achievement scores
flexible compared to the University classes than class-size reductions.
due to the flexibility of educational themes, Lindahl (2001) compared learning dur-
time frame, grading structure, diplomas etc. ing the school year, when schools are open,
Ussualy, a Summer School has a period of with learning during the summer, when
days or weeks, and the scheduled duration schools are closed, and show that math skills
of “Advanced Summer School in Analyzing are lost when pupils are not in school.
Market Data 2013“ (ASSAMD2013) is for a Sahinidis and Bouris (2008: 63) show
week. The theme of this Summer School is re- that there is a significant correlation between
lated to Applied Statistics using ”IBM SPSS the employee perceived training effective-
Statistics”. The program includes an average ness and their commitment, job satisfaction
of 6 hours training per day and includes a and motivation and additionally, high corre-
separate topic for every day: Day 1, Working lations were found between the latter three
with data in SPSS, Day 2, Univariate descrip- variables.
tive statitics with tables and graphs, Day 3: Nartgun S., Ozen, Rasit and Nartgun
Multivariate descriptive statitics with ta- Z. (2012: 260) found that summer school was
bles and graphs, Day 4: Inferential statis- not an advantage for students who had lower
tics, part1 and Day 5: Inferential statistics, incomes; it could be considered as an oppor-
part 2. Organising a Summer School event
tunity for university students and there was
needs resources, management and market-
no difference between the summer semester
ing and SWOT analysis was chosen in this
and fall and spring semesters.
study to identify the priorities, strengths,
weaknesses, opportunities and threats for Serbu, Miron, and Paun (2012: 743)
the ASSAMD2013 event. After graduating, focused on a SWOT analysis to find some
the students receive a certificate for the spe- possible solutions for the Romanian higher
cific competences. On http://targetjobs.co.uk education and argued that there is low cor-
we find that key skills for statisticians in- relation between field of study and qualifica-
clude good IT skills, numerical skills, analyti- tions obtained in the labor market.
cal skills, written and verbal communication
skills, self-confidence and good interper-
3. Main elements for organizing
sonal skills. Due to the heterogeneous com-
the “Advanced summer school
petences needed by a statistician, and to the
in analyzing market Data 2013“
mix of interdisciplinarry competences like
IT, numerical and verbal skills, we consider (assamD2013)
appropriate this research in organising this
Education demands relevance with
Summer School, for the purpose of a deeper
today’s multidimensional digital age. The
understanding of the management compo-
Summer School is organized as a training
nents and strategy for this event.
program due to it’s component of practical
knowledge learned and applied with IBM
2. literature review SPSS Statistics.
Matsudaira (2008: 829) argues that the The management problem is main-
summer school may be a more cost-effective ly related to the available choices for

No. 17 ~ 2013
 Change and Leadership
227
allocating resources and the identification The practical knowledge is considered
of the priorities for the event. The event is a to be valuable by the business environment.
factor of change and relevant aspects of the In the sociologic study regarding “Situatia
ASSAMD2013 are related to the competences si rezultatele participarii elevilor si studenti-
gained by the students, the brand of the or- lor la programele si stagiile de practica sco-
ganisers, the logistics etc. and other aspects lara din Romania anului 2010” evidence was
which will be analyzed using the SWOT found that 46% of the employers appreciate
analysis. Some relevant issues in organising „experience in the profession/job” and 34%
an event are related to choosing the appro- appreciate „enhanced practical skills”. The
priate organisers of the event, according to same study argues that 70% of the students
their ability of organising an event, their past consider that the school trains them well for
experience, ability of negotiating, their char- doing their work, but they still need practi-
acter, ability of communication etc. cal skills to find job easier and the careers
Organising a summer school for the with economics degrees are very appreciated
first time has a high degree of uncertainty be- professions.
cause in the past was not organised this type The summer period (between semes-
of event by the Faculty of Administration ters) when the event is organised can be ap-
and Business – however scientific conferenc- preciated as an advantage by some students,
es were organised, wokshops and other re- but others may not appreciate it. Choosing
lated scientific and educational events if were the title and the theme for the summer school
necessary within the undertaken projects. was related to the values presented earlier, a
The Romanian Education System is chronic valuable market mix of elements which in-
underfunded, the funded opportunities for clude IT and Statistics.
the teaching staff are limited and teaching at The structure of the program was in-
a summer school is an opportunity for con- tended to be rigurous enough to be consid-
tinuing the teaching activity. ered a challenge for the students due the
Due to the Romanian actual teaching formal knowledge from Statistics and IBM
context, the knowledge taught during the SPSS but flexible enough to be applied in the
semesters are in general appreciated rather fields of social-human sciences by the under-
more theoretical that practical, so the prac- graduates from economics, administration
tical skills are well appreciated by the stu- and business, marketing, public relations, so-
dents, and this could be an important reason
ciology and other related fields. The choice
for attending the event.
of the period for organizing the event is re-
Although Informatics Laboratories ex-
stricted to the program of the professors, the
ist within The Faculty of Administration and
ability to do the logistics and the duration be-
Business - except Informatics (and related
tween holidays.
fields) no economics and statistics disciplines
• The main objective of ASSAMD2013
are learned using computer software with-
is to train 20 participants, preferable
in the formal courses during the semesters.
from undergraduate level, with diverse re-
ASSAMD2013 is an opportunity for com-
search profiles for 6 hours a day, 5 days from
bining practical knowledge with statistics/
one week, to gain competences which are
econometrics knowledge and IT skills.
No. 17 ~ 2013
 Change and Leadership
228
valued in the market, and a certificate for • Little applied knowledge within the
attendance; teaching curricula;
• Specific objectives include: • Low financial resources and support;
h Developing a „Summer school qual- • Poor fundraising history;
ity brand” with high-quality training pro- • The institutional routines for
grams for the Faculty of Administration and administrative and financial manage-
Business; ment within the University of Bucharest;
h Developing a training program for • The quantity and quality of the
the connections with the business envi-
ASSAMD2013 which includes applied ronment, media, partners, supporters and
knowledge, statistics and IBM SPSS software. networks;
• Poor visibility of a new summer
4. a swot analysis for school event;
AssAMD2013 • Little information regarding the op-
A SWOT Analysis that presents portunities of public and private funding;
strengths, weaknesses, opportunities and • Weak advertisement and promotion-
threats is a way for a strategic organization of al activities.
the ASSAMD2013 event.
4.3 opportunities
4.1 strengths:
• Scope of the Summer School Strategy;
• Summer School Strategy; • Developing a competitive priced
• High number of professors and program;
students; • Developing innovative training
• Availability of Computer Software li-
programs;
censes for IBM SPSS software;
• Creating networks and infrastructure
• Availability of logistics for physical
for knowledge dissemination;
computers, Internet, classrooms etc.;
• High Quality of Staff; • Summer school programs of
• Tradition (old University) with high-quality;
reputation; • Good reputation for the Faculty of
• Valuable services provided; Administration and Business;
• Located in Bucharest; • New funding schemes through
• Focus on real life issues and cases; Private, National or European Union
• Low prices for attendance; programs;
• Efficient and responsable manage- • Developing a more complex
ment of the event. Advanced Summer School from UEFISCDI
funding;
• Partnerships with business
4.2 weaknesses:
environment;
• Budget for the event; • Developing new training programs
• No Summer school present or similar and project due to the Life Long Learning
past events; Strategy of the European Union;

No. 17 ~ 2013
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229
• The training sector will become more opportunity for participating at an educa-
important in the knowledge-based economy; tional program between the school semesters.
• The investments in human resources From an organizer’s point of view, creating a
are growing; (new) summer school rises issues of resourc-
• Competences in Applied Computer es allocation, themes of the event, schedule,
Software are very appreciated by the labor title, program, targeted competences etc.
market; Starting a new summer school has
• Cultivating partnerships between the a high degree of uncertainty and the use of
University and NGO’s; SWOT analysis as a management tool can re-
• Developing a rigurous methodology duce the uncertainty, identify and prioritize
for training programs, applied manuals and the elements of the processes to improve the
guides for trainig programs using computer allocation decisions. Strong evidence were
software; found in the literature that math skills are
• Increasing financial self-reliance and reduced if students don’t have a continuity
need to search for other external sources of in the learning process, so a numerical ori-
funding ented summer school makes sense. Other
relevant reasons for choosing a numerical
Conclusions oriented program are related to the compe-
tences gained by the participants which are
Organizing a summer school is an op- appreciated both as a profession and by the
portunity of gaining practical competenc- labor market.
es for the participants and represents an

reFereNCes:
1. lindahl, mikael, (2001). Summer Learning and the Effect of Schooling: Evidence from Sweden, IZA Discussion
Papers 262, Institute for the Study of Labor (IZA), Available at SSRN: http://ssrn.com/abstract=267194,
accessed 07 may 2013, 13:33
2. Matsudaira, Jordan D., (2008). “Mandatory summer school and student achievement”, Journal of Economet-
rics, Volume 142, Issue 2, February, Pp. 829-850.
3. nartgun, senay sezgin, ozen, Rasit and nartgun, zekeriya, (2012). “Opinions of Academicians and Pre-
service Teachers about Summer School: A Case Study”, Procedia - Social and Behavioral Sciences, Volume
46, Pp. 260-266
4. sahinidis, alexandros g., Bouris, john, (2008). “Employee perceived training effectiveness relationship to
employee attitudes”, Journal of European Industrial Training, Vol. 32, Iss: 1, pp.63 – 76
5. serbu, matei-valentin, miron, andreea, Paun (Ciobanu) mihaela, Cristina (2012), “Aspects and Proposi-
tions Regarding Higher Education in Romania Using SWOT Analysis”, Journal of economic-financial theory
and practice, Supplement No. 1/2012, pp. 741-746
6. Sociologic study regarding “Situatia si rezultatele participarii elevilor si studentilor la programele si stagiile
de practica scolara din Romania anului 2010”, [Online], Available: http://m.business24.ro/locuri-de-munca/
vezi-care-sunt-cele-mai-apreciate-meserii-pe-piata-muncii-1486761 [07 May 2013]
7. Statistician: job description, [Online], Available: http://targetjobs.co.uk/careers-advice/job-
descriptions/279107-statistician-job-description?mobile=1 [07 May 2013]
No. 17 ~ 2013
 Change and Leadership
230

the strategic sport marketing Planning

Process

~ Ph.D. Candidate alexandru lucian mihai (Faculty: Marketing, Academy of

Economic Studies, Bucharest, Romania)
E-mail: [email protected]

Abstract: In many segments of the sport industry, sport marketers are pressured to increase their
product sales to generate increased revenues for their organizations. This pressure poses a challenge. Be-
cause sport marketers are involved in persuading consumers to buy, they run the risk of exaggerating or
misrepresenting their products in an effort to sell them. Today, and in the future, sport marketers should
recognize this risk and monitor their marketing strategies to ensure that they communicate honest images
and messages about their products that are consistent with the core values of their organizations.
A marketing program is not delivered in isolation of the organization-wide planning process. In nor-
mal circumstances, the marketing planning process must reflect the overall plans for the organization.
Key words: sport marketing, strategy, marketing program, planning process
Jel Classification: M31

introduction People tend to define marketing in

terms of their experiences, instead of rec-
The term ‘sport marketing’ was first ognizing one of the most important roles of
used in the United States by the Advertising marketing—carrying out the mission of an
Age in 1978. Since then it has been used to organization. Some corporate executives
describe a variety of activities associated might describe sport marketing as selling
with sport promotion.

No. 17 ~ 2013
 Change and Leadership
231
goods and services to generate a profit. But responsible for ensuring that participation
sport marketing is more than selling. Sport in their sport remains healthy. Participants
marketing is more than advertising and pub- are the lifeblood of sport, as they become the
lic relations. Sport marketing is more than next generation of champions and spectators.
community relations.
Pitts and Stotlar (2007) defined sport marketing ‘through’ sport
marketing as „the process of designing and
implementing activities for the production, Sponsorship of sport by firms is an ex-
pricing, promotion, and distribution of a ample of marketing ‘through’ sport. Large
sport product to satisfy the needs or desires corporations use sport as a vehicle to pro-
of consumers and to achieve the company’s mote and advertise their products, usual-
objectives”. ly to specifically identifiable demographic
Sport marketing is the application of markets known to follow a particular sport.
marketing concepts to sport products and Sports with significant television time are
services, and the marketing of non-sport very attractive to firms seeking to promote
products through an association to sport. their products through an association with
Sport marketing therefore has two key fea- sport. Developing licensing programs is an-
tures. First, it is the application of general other example of marketing through sport.
marketing practices to sport-related prod- The sport marketer must be able to rec-
ucts and services. Second, it is the marketing ognize and analyze business environments,
of other consumer and industrial products or determine their effects, and make strategic
services through sport. decisions that will enhance the success of the
sport business.
marketing ’of’ sport and marketing the sport marketer must identify what
needs and wants are being satisfied through
‘through’ sport
the exchange process. What is offered in
marketing ’of’ sport return for the sport consumer’s member-
ship fees or entry fee may include social in-
This refers to the use of marketing mix teraction, physical activity, an avenue for
variables to communicate the benefits of competition, health and fitness, as well as en-
sport participation and spectatorship to po- tertainment. Identifying the needs of various
tential consumers. Ultimately, the goal is to segments of the population is the challenge
ensure the ongoing survival of the sport in inherent in the early phase of the marketing
rapidly changing environmental circum- process. Obtaining this information will al-
stances. Survival depends largely on the prin- low the sport product benefits to be commu-
cipal purpose of the sporting organization. nicated in such a way as to define the sport’s
National sporting organizations predomi- positioning.
nantly associated with elite-level professional Having established the range of prod-
sporting competitions will be striving to de- uct attributes in relation to needs and wants,
velop their marketing mix to ensure that the the sport marketer embarks on the chal-
sport product is attractive as a form of live lenge of effecting the exchange. Sporting
entertainment and live broadcast through organizations must develop a mix of mar-
television, the internet and other mobile out- keting strategies to influence consumers to
lets. Sports-governing bodies will also be buy their products, via either attendance or

No. 17 ~ 2013
 Change and Leadership
232
participation. Combined, the four variables Stage 1 – Identification of marketing
of product, price, promotion and place are opportunities
known as the traditional four Ps of marketing.
Step 1 — Analyse internal and external
environments (SWOT and com-
the strategic sport marketing plan- petitor analysis)
ning process Step 2 — Analyse organization (mission,
objectives and goals )
The strategic sport marketing planning Step 3 — Examine market research and
process describes the stages and activities marketing information systems
of sport marketing. It is the backbone of all Step 4 — Determine marketing mission
sport marketing efforts. It is made up of three and objectives
stages and is illustrated in Figure 1.

stage 1 – identification of marketing

opportunities Stage 2 – Strategy determination
Step 5 — Determine core marketing
strategy
analyse internal and external Marketing mix—sport product,
environments pricing
The first activity in stage 1 prescribes Service variables—place, physi-
an analysis of the internal and external en- cal evidence, people, process,
vironments in which a sport organization is customer satisfaction
placed. Promotion mix—sales promo-
tion, advertising, television,
The internal environment refers to the
internet, sponsorship, public re-
unique circumstances of the sport organi-
lations, promotional licensing
zation for which the plan is developed. It is Step 6 — Determine tactics and perfor-
therefore essential to determine the strengths mance benchmarks
and weaknesses of the sport organization.
For example, a local football club may be
strong in terms of its positive community
profile and the support it receives from a
Stage 3 – Strategy implementation, evalua-
regional association which provides access
tion and adjustment
to a well-organised competition structure.
However, the club may be weak in financial Step 7 — Implement and coordinate mar-
keting and service mix
terms and may have difficulty in attracting
Step 8 — Control marketing function
young players.
(feedback, evaluation)
Source: adapted from Shilbury D., Westerbeek H.,
Quick S., Funk D., Strategic Sport Marketing, 3rd
edition, Allen & Unwin, Sydney, Australia, 2009

The external environment refers to

the marketplace in which a sport organiza-
tion operates. This includes the immediate

No. 17 ~ 2013
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233
sport industry as well as the national and threats include inflating player salaries, po-
international context. In fact, it is important tential new competitors, or unfavourable
to understand the industry-related exter- trends in the marketplace such as the in-
nal environment, the nature of competitors, creased popularity of gaming consoles.
and the broad national and global environ- Every sport organization exists for a
ment. In the example of a local soccer club, purpose. The organization defines this pur-
an analysis of the external environment may pose in its mission statement, which rep-
reveal that soccer is not a popular sport in the resents the core values of the organization.
region, or that there is limited government Sport does not exist
support for its development. These external in isolation; rather, various societal is-
factors may also have a strong influence on sues and trends affect sport. Therefore, the
the specific strengths and weaknesses of a mission statement of a sport organization
sport organization. must reflect the values and beliefs that are
the analysis of strengths and weak- prevalent in the environments in which it
nesses should be focused on present-day cir- operates. If the organization does not have
cumstances. Common strengths may include a mission statement, it should create one.
committed coaching staff, a sound mem- Everyone in the organization should be in-
bership base, a good junior development volved in writing the mission statement so
program, or management staff with sound that all will be committed to carrying out the
business skills and knowledge. Weaknesses mission and acting in accordance with the
should be seen as limitations or inadequa- core values. A sport marketing plan derived
cies that will prevent or hinder the strate- from and consistent with the organization’s
gic direction from being achieved. Common mission statement and core values is neces-
weaknesses may include poor training fa- sary to ensure that the packaging, promotion,
cilities, inadequate sponsorship, a diminish- and delivery of sport will be conducted in so-
ing volunteer workforce or a weak financial cially responsible ways.
position. Sports organization marketing strate-
While strengths and weaknesses should gies should balance commercial, social and
be focused on the present-day situation, op- environmental objectives.
portunities and threats should be future A large majority of sporting organiza-
oriented. Opportunities are the favourable tions are becoming increasingly focused on
situations or events that an organization can commercial objectives (e.g. increasing the
use to its advantage in order to enhance its number of members and potential revenues).
performance. For example, common oppor- This commercial focus creates a real problem
tunities include new government grants, the for both non-profit and for-profit organiza-
identification of a new market or potential tions, as it is difficult for a club or a nation-
product, or the chance to appoint a new staff al federation to optimise income from their
member with unique skills. Threats, in con- marketing activities while preserving their
trast, are the unfavourable situations which social base. It can lead to conflict between
could make performance more difficult for their values and the ‘business’ culture they
the organization in the future. Common have to develop. In addition, all types of

No. 17 ~ 2013
 Change and Leadership
234
sports organizations, whether they are for- point for the construction of a management
profit or non-profit, create social marketing information system (MIS). Once compiled,
programmes in an attempt to alleviate the this information must be integrated, anal-
social problems within their environment. ysed and used to guide the direction of the
This involves applying marketing concepts organization.
and methods to create and implement pro- The sport marketer will need the in-
grammes that will influence the behaviour formation gained through research to for-
of the organization’s target groups and that mulate decisions and strategies concerning
will improve the well-being of the groups to every aspect of the company and its market-
which these organizations belong. ing plan. Marketing research usually focuses
organisational goals refer to the broad on one problem. At the same time, broad da-
aims that organizations strive to achieve. In tabases may be established and maintained
sport, these may include ensuring financial concerning specific aspects of the company
viability, increasing participation, raising the or the company’s consumer markets and
number of members, and stimulating public competitors.
interest in the sport.
stage 2 – strategy determination
Examining market research and utilis-
ing information systems Defining the sport marketing mix

Step 3 recognises that the important Figure 2 depicts the seven component
phase of marketing research is undertaken strategies of the marketing mix, composed
to ensure that decisions made in relation to of the traditional 4Ps of marketing plus the
marketing missions and objectives are based 3Ps of service—process, people and physical
on a sound understanding of the market- evidence.
place. Basically, market research in sporting A brief description of the 7Ps is as
organizations seeks to answer six questions follows:
•Product—ensures that product char-
about consumers in relation to their con-
acteristics provide benefits to the consumer
sumption of the product. Initially, sporting
(includes identifying the actual product).
organizations need to know WHO their con-
• Price—ensures that the product is
sumers are, but this is only the tip of the ice-
priced at a level that reflects consumer value.
berg. WHY they choose the particular sport •Place—distributes the product to the
product and WHEN and WHERE that con- right place at the right time to allow ease of
sumption takes place are equally important. purchase.
WHAT that consumption entails in terms of •Physical evidence—is the visual and/
pre- and post-event activities, and HOW the or tangible clues of the service product, such
product is used also are critical in terms of as the design and construction of the facility,
establishing a complete consumer profile. and in general the aesthetic appeal.
To make informed decisions, organisa- •Process—represents the convergence
tions need information—and lots of it. Yet the of the marketing and operations functions
collection of this material is only a starting and therefore affects real-time service deliv-
ery and quality.
No. 17 ~ 2013
 Change and Leadership
235
•People—are responsible for deliver- in terms of three complementary and inter-
ing the event and are a major distinguishing dependent sub-systems: network, market
quality factor in the consumption process. and internal. Consequently, sports organi-
•Promotion—communicates the prod- zations must implement actions aimed at
uct’s ability to satisfy the customer through each of these sub-systems. A sports organi-
advertising, personal selling, sales promo- zation’s relational strategy should cover the
tions, sponsorship, public relations and pro- end-users within its market, the stakehold-
motional licensing. ers it will have to engage in its programmes,
and its relations with the people inside the
organization.

stage 3 – strategy implementation,

evaluation and adjustment

The sport business must have a system

for managing the process of sport market-
ing. This system includes the implementa-
tion, management, and evaluation of all sport
marketing components. Management is a
multidimensional step that involves setting
objectives for the sport marketing strategy,
developing the sport marketing plan, select-
ing and managing sport marketing person-
nel, establishing a financial plan, establishing
and managing an organizational structure,
establishing and overseeing deadlines and
scheduling, acting as the liaison between
sport marketing personnel and top manage-
ment, and coordinating all sport marketing
functions.
The development of the sport market-
ing plan is an important task. Strategic plan-
ning functions to strengthen relationships
between sport marketing and other manage-
ment functional areas in the company. The
sport marketing plan is the written, estab-
lished plan of action for the company or for
Determine tactics and performance
an element (or product) of the company. It
benchmarks
drives the company.
According to the principles of relation- The plan contains the marketing ob-
ship marketing, marketing can be viewed jectives, identified target markets, financial

No. 17 ~ 2013
 Change and Leadership
236
strategies, and details of the marketing mix plan. The core of this process is the market-
strategies. The marketing plan can be written ing mix, traditionally known as the four Ps
for a single sport product, a group of prod- (product, price, place, and promotion). The
ucts, a new promotional strategy, or the en- process also includes additional factors such
tire sport company. as organizational, environmental, and con-
The sport marketing plan should not sumer-related considerations (purpose, pro-
be taken lightly. It requires time, research, jecting the market, positioning, picking the
and critical analysis. It should be the culmi- players, packaging, and promise).
nation of this effort during which every pos- A sport marketing plan will most likely
sible task, angle, financial analysis, and every succeed when marketing is viewed as a com-
function of the company and the product prehensive process of packaging, promot-
have been thoroughly studied and analyzed. ing, and delivering sport to consumers in a
The final plan should reflect informed deci- manner that satisfies consumers’ wants and
sion making and strategy formulation. needs and simultaneously meets the sport or-
Implementation involves establishing a ganization’s marketing goals and objectives.
system for planning and managing the imple- Tactical marketing mix strategies (product,
mentation of the sport company’s marketing price, promotions, place) should therefore
strategies. Evaluation involves establishing a communicate a distinct, positive, and hon-
system for analyzing marketing strategies to est image of a product and the consumers
determine if the strategies are accomplishing to whom it is targeted. Such strategies will
the established objectives. enable the sport organization to establish a
favourable position among its targeted con-
Conclusions sumers in the market and will subsequently
fulfil the promise of socially responsible mar-
This article outlined a 8-step process keting that is linked to and consistent with the
that it can use to develop a sport marketing mission and core values of the organization.

reFereNCes:
1. Constantinescu, M., Sport Marketing. From a transactional approach to a relational perspective, ASE Publish-
ing, Bucharest, 2009
2. ferrand, a.; mcCarthy, s., Marketing the Sports Organisation. Building networks and relationships, Rout-
ledge, London, 2009
3. Fullerton, s., Sports Marketing, Eastern Michigan University, Michigan, 2007
4. Masterman, G., Strategic Sports Event Management. An international approach, Butterworth-Heinemann,
London, 2004
5. Pitts, B. g.; stotlar, D. K. , Fundamentals of Sport Marketing. Third edition, West Virginia University, Mor-
gantown, 2007
6. schwarz, E. C.; hunter, j. D., Advanced Theory and Practice in Sport Marketing, Elsevier’s Science & Tech-
nology Department, Oxford, 2008
7. shilbury, D.; westerbeek, h.; Quick, s.; funk, D. Strategic Sport Marketing. 3rd edition, Allen & Unwin,
Crows Nest (Australia), 2009
8. smith, a. C. t., Introduction to Sport Marketing, Elsevier’s Science & Technology Department, Oxford, 2008

No. 17 ~ 2013
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237

transformational approach to school

leadership: Contribution to Continued im-
provement of education

~ Ph.D. Associate Professor Anca Nedelcu (Faculty of Psychology and Education

Sciences, University of Bucharest, Romania)
E-mail: [email protected]

Abstract: Over the last decades, an impressive number of conceptual models in the field of educa-
tional leadership have emerged; contingency or trait theories, situational, instructional, shared or distrib-
uted school leadership approaches, all tried to demonstrate their specific impact on school development and
students achievement. The present paper is focused on exploring one of the foremost models, subject of sys-
tematic inquiry and controversial debates developed in relation with school or in nonschool organizations:
transformational school leadership. The approach is considered a relevant support for school change process.
Its contribution is analyzed in comparison with the benefits of other competing models, the aim of the paper
being not to establish hierarchies but to gather significant solutions for better schooling. As a reconciliation
solution, the integrative leadership model is also advocated.
Key words: transformational school leadership, shared instructional leadership, distributed
leadership, school improvement and development

1. Comparative approach to school invariably assume that success of their ef-

leadership models fort is indestructibly linked with leadership
involvement. Alongside recognition of this
No matter the educational context,
overall contribution of effective educational
initiators of any school changing process

No. 17 ~ 2013
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238
leadership to school reform, a wide range For he purpose of this paper, three mod-
of international studies have confirmed that els are considered relevant and have been se-
leaders clearly facilitate major and concrete lected for an in-depth presentation, all being
in-school differences to student achieve- subjected to extended empirical study over
ment or organizational culture and relations, the time:
teachers motivation etc. • instructional school leadership
In supporting this complex “school • transformational school leadership
change journey” (Fullan, 2002), leaders have • distributed school leadership.
to creatively expand their leadership reper- Narrowly defined, instructional school
toires; for this purpose, diverse models can leadership focuses on leadership func-
be taken into consideration, as conceptions tions directly related to teaching and learn-
of educational leadership have been continu- ing (Murphy, 1988). The model emerged in
ally evolving over recent times. Thus, during North America in 1980s from early research
last decade, a refreshed conception of educa- on effective schools. Prior to this moment,
tional leadership has emerged, shifting from there were neither coherent models nor val-
early traditional administrative positions, to idated instruments available for the pur-
managerial ones, to individually assumed pose of studying instructional leadership;
leading roles and to distributed leadership. then several conceptualisations of the model
This dynamics of developing new ap- emerged concurrently (Hallinger, 2010).
proaches in describing school leadership was One frequently used conceptualisa-
motivated not only by improvement pur- tion of instructional leadership is based on
poses; Hallinger (2010) notices that today’s Hallinger’s (2000) three-dimensional model;
favourite brand is soon replaced by another the approach includes defining the school’s
and that leadership models in education are mission, managing the instructional pro-
subject to the same faddism that is appar- gram, and promoting a positive school-learn-
ent in other areas of education. As a conse- ing climate. By integrating these dimensions,
quence, as Dinham et al. (2011) notice, focus Hallinger defines instructional leadership as
on school leadership and educational effec- being focused predominantly on the role of
tiveness resulted in a variety of leadership the school headmaster in coordinating, con-
theories: instructional leadership, transfor- trolling, supervising, and developing cur-
mational leadership, moral leadership, con- riculum and instruction school (idem). In his
structivist leadership, servant leadership, view, instructional leaders lead from a com-
cultural leadership, and primal leadership. bination of expertise and charisma; they are
Certainly some of these models appear to hands-on principals, ‘hip-deep’ in curricu-
be no more than ‘slogans’ (Leithwood et al. lum and instruction, and unafraid of work-
2006, 7); some have almost no reference to a ing with teachers on the improvement of
body of evidence or a cohesive conceptual teaching and learning (idem).
framework (Dinham et al., 2011) or are just During the 1990s, this model of instruc-
stylistic exercises meant to demonstrate au- tional leadership was criticized as being pa-
thors’ ability of adding text to some newly ternalistic, archaic, and dependent on docile
invented labels. followers (Burlingame, 1987, cit in Marks

No. 17 ~ 2013
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239
and Printy, 2003); as a consequence, other of curriculum and instruction, transforma-
terms came to light, such as shared leader- tional leadership seeks to build the organi-
ship, teacher leadership, distributed leader- zation’s capacity to select its purposes and
ship, and transformational leadership. As to support the development of changes to
Hallinger (2010) underlines, the emergence practices of teaching and learning (Hallinger,
of these models indicated a broader dissat- 2010).
isfaction with the instructional leadership This theory of transformational school
approach, which many believed focused too leadership was funded 1970s and 1980s. It
much on the principal as the centre of exper- found a receptive audience in the education-
tise, power and authority. Leithwood (1994) al community during the 1990s as part of a
has labelled this evolution of educational general reaction against the top-down policy
leadership role as ‘second order’ changes as driven Hallinger (2010). The main argument
it is targeted organization’s normative struc- convincing the educationalists was the fact
ture before any other dimensions. that transformational leader motivates the
One of the models mentioned above, teachers and students by raising their con-
shared leadership, describes the active col- sciousness about the importance of orga-
laboration of principal and teachers on im- nizational goals and by “inspiring them to
portant pedagogical issues as curriculum or transcend their own self-interest for the sake
assessment. Within this model, teachers are of the organization” (Marks and Printy, 2003,
not only “followers”, but experts ready to pg. 375). In their relationships with followers,
be involved in school improvement process. this theory posits, transformational leaders
Thus, the headmaster is not the sole instruc- exhibit at least one of these leadership factors:
tional leader but the “leader of instructional idealized influence, inspirational motivation,
leaders” (Glickman, 1989). In this way, the ap- intellectual stimulation, and individualized
proach was analyzed in comparison with the consideration (idem).
individualistic views of leadership supposed
to be specific to transformational model. 2. transformational school leader-
Distributed leadership is also consid- ship practices: impact on school
ered concerned with the co-performance of improvement
leadership practice. In this model, formal
leaders prompt emergent and creative ac- Extensive research undertaken in a
tions among groups to whom leadership is variety of organizational school contexts
distributed and those in formal leadership highlighted the important functions transfor-
roles emphasise the management of interde- mational school leaders perform for improv-
pendencies, rather than controls over process ing education. Roles and concrete practices
or outcomes (Harris, 2009). associated with this particular approach have
In comparison with the previous mod- been a consistent research topic for many
els, “transformational leadership focuses on studies including: Leithwood, Aitken, and
developing the organization’s capacity to in- Jantzi’s (2001) transformational school
novate. Rather than focusing specifically on leadership model, Leadership Practices
direct coordination, control, and supervision Inventory (LPI) proposed by Kouzes and

No. 17 ~ 2013
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240
Posner’s (1995), Principal’s Transformational overlapping sets of transformational lead-
Leadership Inventory developed by Chong- ers practices performed within concrete
Hee No (1994, in Ham, 1999). schools. Sun and Leithwood (2013) identified
A comparative analyze of these stud- and described 11 of such specific leadership
ies demonstrates a lot of common and practices:

Transformational school leaders practices (Sun and Leithwood, 2013):

-identification, development, and articulation of a shared vision that is
appealing and inspiring to staff;
Developing a shared -achieving goal consensus among staff; motivating staff with challeng-
vision and building ing but achievable goals;
goal consensus -communicating optimism about future goals;
-giving staff an overall sense of purpose for their work and monitoring
and referring to school goals when staff are making decisions.
-challenging staff’s assumptions;
Providing intellectual -stimulating and encouraging their creativity;
stimulation -providing information to staff to help them evaluate their practices,
refine them, and carry out their tasks more effectively
-listening
-attending to individual opinions and needs,
Providing individual-
ized support -acting as mentors or coaches to staff members, treating them as indi-
viduals with unique needs and capacities, and supporting their profes-
sional development.
-“walking the talk,” providing a role model of ethical behavior;
-instilling pride, respect and trust in staff; symbolizing success;
Modeling behavior.
- demonstrating a willingness to change one’s own practices as a result
of new understandings
-demonstrating through their behaviors that they expect a high level
Holding high perfor-
of professionalism from staff, hold high expectations for students, and
mance expectations
expect staff to be effective innovators.
Providing contingent -rewarding followers for completing agreed-upon work.
rewards
Management by -monitoring the work of followers but intervening only when followers’
exception performance deviates from the norm or from the leaders’ expectations.
-ensuring that staff have adequate involvement in decisions about pro-
grams and instruction,
Building collaborative
- establishing working conditions that facilitate staff collaboration for
structures
planning and professional growth,
- distributing leadership broadly among staff.

No. 17 ~ 2013
 Change and Leadership
241

-promoting an atmosphere of caring and trust among staff,

Strengthening school
-building a collaborative school culture that reflects the school vision,
culture
-encouraging ongoing collaboration for program implementation
-demonstrating sensitivity to community aspirations and requests
Engaging
communities - incorporating community characteristics and values in the school,
and actively encourage parents and guardians to become involved in
their children’s education
-planning and supervising instruction, providing instructional sup-
Improving the in- port, frequent and regular monitoring of school progress,
structional program buffering staff from district or state initiatives that are potential dis-
tractions from school priories.

By integrating such complex and com- Conclusion: from instructional, to

prehensive practices in a coherent and func- transformational, to integrated school
tional profile, the transformational school leadership
leader has all the chances to influence signifi-
Even the main purpose of the present
cantly school change process. Studies dem-
paper was not to assess different competing
onstrate the clear impact of transformational
school leadership conceptualizations, the re-
leader on schools improvement, on teachers
view of some of these constructs indicates an
and students. Thus, it has frequently proven
obvious conclusion: no matter the label at-
that this type of leadership counts for teach-
tributed to different models, they do share
ers (Geijsel et al. 2009) and it positively af-
significant similarities. All these leadership
fects teachers’ commitment to the school
models have improvement-oriented targets,
goals and their participation in professional
they all aim to build leadership capacity
learning activities (Krüger, 2009, pg.115).
among all school members in order to fos-
Additionally, transformational leadership in-
ter progress. As an example, one comparison
fluences teachers’ perceptions of school con-
between instructional and transformational
ditions, their commitment to change, and the
school leadership construction showed that
organisational learning (Fullan, 2002). In the
they both are focused on:
same time, a particularly noteworthy find-
• Creating a shared sense of purpose in
ing is the empirical link between this model
the school.
and student achievements. In this case, Sun
• Focus on developing a climate of high
and Leithwood (2013) underline that some expectations and a school culture focused on
transformational practices make much larger the improvement of teaching and learning.
contributions to student achievement than • Shaping the reward structure of the
others. For instance, building collaborative school to reflect the goals set for staff and
structures and providing individualized con- students.
sideration made the largest of those contribu- • Organise and provide a wide range
tions (idem). of activities aimed at intellectual stimulation
and development for staff.

No. 17 ~ 2013
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242
• Being a visible presence in the school, Printy, Marks, Bower (forthcoming) demon-
modelling the values that are being fostered strate this: while quantitative methods such
in the school (Hallinger, 2010). as the utilization of surveys permit the iso-
Sharing such common aims, the two lation of transformational and instruction-
models tend to absorb each other charac- al forms based on the content of questions,
teristics, as a possible avenue of reconcilia- these forms are likely to cohere in practice.
tion for these constructs (Hallinger, 2010). As such, it is sometimes difficult with case
Thus, when teachers perceive principals’ study data to disentangle a transformational
instructional leadership behaviours to be behavior from an instructional one or deter-
appropriate, they grow in commitment, mine whether any specific action or comment
professional involvement, and willingness represents instructional or transformational
to innovate (Sheppard, 1996). In this way, influence.
instructional leadership can itself be trans- These practical research challenges un-
formational (Hallinger, 2010). Others opin- derscore the interdependent nature of lead-
ions plead for enlarging transformational ership enacted by principals and teachers
leadership areas, by including many other (Printy, Marks, Bower, forthcoming); facing
leadership models. “The inclusion of these this situation, Printy, Marks, Bower had one
newer dimensions into the transformational single, significant conclusion: a new emerg-
leadership model makes it a more compre- ing concept has to be highlighted: integrated
hensive leadership model in different set- school leadership. Thus, while some authors
tings. Especially, in educational settings, plead for a hybrid formula and others are con-
the inclusion of instructional management vinced that enlarging up the territory of one
dimensions makes transformational school model is a very promising direction for new
leadership more relevant for schools (Sun leadership research, Marks and Printy (2003)
and Leithwood , 2013). propose an integrative framework. This con-
As such conceptual common or over- clusion is adopted within present paper as
lapping aspects among different school lead- well, as it highlights the synergistic power of
ership models seem to be stronger and more leadership shared by individuals throughout
evident that the differences, they are even the school organization (Hallinger, 2010).
difficult to be identified in research practice.

reFereNCes:
1. andrews, R. & soder, R. (1987), Principal instructional leadership and school achievement, Educational Lead-
ership, 44, pp. 9–11
2. avolio, B. j., sivasubraminiam, n., murry, w. D., jung, D. & garger, j. w. (2003), Assessing shared lead-
ership: Development and preliminary validation of a team multifactor leadership questionnaire. In C. L. Pearce
& J. A. Conger (Eds.), Shared leadership: Reframing the hows and whys of leadership (pp. 143-172).
Thousand Oaks: Sage
3. Bass, B. (1997), Does the transactional-transformational leadership paradigm transcend organizational and na-
tional boundaries? American Psychologist, 52 (2), pp. 130–138

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243
4. Bass, B. M., Avolio, B. J. (1993), Transformational leadership: a response to critiques, in Chemers, M. M,
Ayman, R. (Eds), Leadership Theory and Research: perspectives and directions, San Diego, CA, Aca-
demic Press
5. Burlingame, M. (1987), Images of leadership in effective schools literature. In W. Greenfield (Ed.), Instruction-
al leadership: Concepts, issues, and controversies (pp. 3-16), Toronto:Allyn & Bacon., in Marks, H., M.,
Printy, S. M., (2003), Principal Leadership and School Performance: An Integration of Transformational
and Instructional Leadership
6. Dinham, s., anderson , m., Caldwell, B., weldon, P. (2011), Breakthroughs in school leadership development
in Australia, School Leadership & Management: Formerly School Organisation, 31:2, 139-154
7. Fullan, M. (2002), The change leader, Educational Leadership, 59(8), pp. 16–20.
8. Geijsel, F.P., sleegers, P.J.C., van den Berg, r.M.(1999), Transformational leadership and the implementa-
tion of large-scale innovation programs. Journal of Educational Administration
9. glickman, C. (1989), Has Sam and Samantha’s time come at last? Educational Leadership, 46(8), 4-9
10. hallinger, P. (2003), Leading Educational Change: reflections on the practice of instructional and transforma-
tional leadership, Cambridge Journal of Education, 33:3, 329-352
11. hallinger, P. (2005), Instructional leadership and the school principal: A passing fancy that refuses to fade away.
Leadership and Policy in Schools, 4, 221-239
12. ham, s. (1999), A study of the relationship between principal leadership and school climate in Korean secondary
schools. Dissertation Abstracts International, 60(08)A, AAI9945411.
13. harris, A. (2009), Distributed school leadership: Evidence, issues and future directions. Penrith: Australian
Council for Educational Leaders
14. Kouzes, j. m., & Posner, B. z. (1995), The leadership challenge: How to keep getting extraordinary things done
in organizations (Rev. ed.). San Francisco, CA
15. krüger, M. (2009), The Big Five of school leadership competences in the Netherlands, School Leadership &
Management: Formerly School Organisation
16. leithwood, k. (1994), Leadership for school restructuring, Educational Administration Quarterly, 30(4),
pp. 498–518
17. leithwood, K., & sun, j. P. (2009), Transformational school leadership effects on schools, teachers and students,
in W. Hoy & M. Dipaola (Series Eds.), Research and theory in educational administration: Vol. 8. Studies
in school improvement programs (pp. 1–22). Charlotte, NC: Information Age.
18. leithwood, K., aitken, R., & jantzi, D. (2001), Making school smarter: Leading with evidence (1st ed.).
Thousand Oaks, CA: Corwin Press
19. leithwood, k., Patten, s., Jantzi, D. (2010), Testing a conception of how leadership influences student learn-
ing. Educational Administration Quarterly, 46(5), 671–706
20. leithwood, K.a., C. Day, P. sammons, a. harris, hopkins, D (2006), Successful school leadership: What it
is and how it influences pupil learning. Nottingham: University of Nottingham
21. marks, h., m., Printy, s. m., (2003), Principal Leadership and School Performance: An Integration of Transfor-
mational and Instructional Leadership, Educational Administration Quarterly, 39(3), 370-397
22. Murphy,J. (1988), Methodological, measurement, and conceptual problems in the study of instructional leader-
ship. Educational Evaluation and Policy Analysis, 10(2), 117-139

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23. Printy, s. m , marks, h., m., Bower, a.j. (forthcoming), Integrated leadership: How principals and teachers
share transformational and instructional influence. Manuscript to be published in an upcoming edition of
Journal of School Leadership
24. sheppard, B. (1996), Exploring the transformational nature of instructional leadership, The Alberta Journal of
Educational Research, 42(4), pp. 325–344
25. spillane, J. (2006), Distributed leadership. San Francisco: Jossey-Bass
26. sun, J., leithwood, k. (2012), Transformational School Leadership. Effects on Student Achievement, Leadership
and Policy in Schools, 11:4, 418-451Hallinger, P.(2003): Leading Educational Change: reflections on the
practice of instructional and transformational leadership, Cambridge Journal of Education, 33:3, 329-352

No. 17 ~ 2013
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245

leadership evidences:
Communication and the organizational
Change success

~ Ph.D. Student orlando Voica (Faculty of Cybernetics, The Bucharest University of

Economic Studies (ASE), Bucharest, Romania)
E-mail: [email protected]
~ Ph.D. Lecturer Marian Vasile (Faculty of Sociology and Social Work, University of
Bucharest, Bucharest, Romania)
E-mail: [email protected]

Abstract: The aim of this paper is to highlight the importance of the organizational communication
to the most important leadership effects - the success of changes within the Romanian companies. A set of
hypotheses are tested in order to identify the links between the success of change implementation and ele-
ments such as objectives and organizational communication components.
A set of hypothesis was tested during our research, using specific methods of quantitative and quali-
tative analysis and the SPSS software. The results of our research, limited to the purpose and the sample
size, shows that that organizational communication is liable to the success of changes promoted by leaders
within Romanian firms.
Key words: leaders, organizational change, organizational communication
Jel Classification: L29, C59, O52, M13

Motto:
“Progress is impossible without change”
Winston Churchill

No. 17 ~ 2013
 Change and Leadership
246
1.introduction followers, ethic or communicational abilities.
However, a sign of the leaders’ existence is
The economic crisis revealed the impor-
the successful changes implemented within
tance of organizational capability to adapt to
the organization they do belong.
the everlasting changing environment. Organizational change reflect the move
While change has become a regular fea- from the ongoing situation towards certain
ture of organisational life (Burnes, 2004), lead- desired situation in the future that is aimed at
ership plays a crucial role in this endeavour. increased efficiency and competitiveness2 . It
The change success can be assessed consid- has been studied by many scholars and vari-
ering different parameters such as organiza- ous key success factors were revealed. Lippitt
tional context, factor necessitating change, (1958) considers that interventions intended
strategy for change and actors involvement. to modify the functioning of an organiza-
However, while specific pre-planned steps tion should be premeditated. Lewin, Elrod
for each change project are necessary, the and Tippett (2002), reflect that specific pre-
planned steps are necessary for each change
implementation is liable to the perception of
initiative. Therefore, they consider planning
individual benefits and the satisfaction the
of change implementation as the most impor-
change actors can get1 . Therefore, the social
tant key success factor.
trustfulness relationships within organiza-
However, change implementation
tion are important and various theories tack- methods based on planning might not be ef-
le both the expected roles of leaders as well as fective in rapid and unpredictable environ-
the required traits of them. mental changes. Scholars like Kotter (1996),
The purpose of this paper is to highlight Kanter et al. (1992) and Luecke (2003) reflect-
a few organizational drivers of successful ed on the ‘emergent approach’ of change. In
changes within Romanian companies, such their view, change is a process of learning,
as the internal processes and communication, developed by organisations in their quest to
attention for the final result or objectives. responds to the internal and external envi-
The first part of the paper briefly pres- ronment. Moreover, Todnem (2005) consider
ents some theoretical elements of change that “change readiness and facilitating for
change” of the organizational players is the
leadership and communication. The second
most proper approach of change.
part of the paper treats in detail the research
Leaders have a significant role in the
methodology used. The results are analyzed
launching and implementation of organiza-
and interpreted in the last part, followed by
tional changes. They must be successful in
final conclusions.
scanning and interpreting of environmen-
tal opportunities and threats, as well as they
2.theoretical background
must motivate people to accept changes
A couple of terms commonly appear designed to solve problems or to seize the
in discussions related to leaders: vision, opportunities.

1
Robert Fabac (2010), Complexity In Organizati- 2
Gaffney, S. (2010), Dynamics of Organisational
ons And Environment - Adaptive Changes And Change - the Belfast model, Gestalt Journal of Aus-
Adaptive Decision-Making, Interdisciplinary De- tralia and New Zealand, 2010, Vol 7 No 1 Pages
scription Of Complex Systems 8(1), 34-48. 75-88, GANZ
No. 17 ~ 2013
 Change and Leadership
247
Figure 1. The proposed model

The leadership researchers have found to overcome resistance from other members
out that there is a significant difference in the of their organization, but also to encourage
expected roles of leaders and required traits them to adopt new practices (Van de Ven,
of leaders3 . Traditional images show leader 1986). Therefore, the change process is a real
as the main designer, the one that implement exercise of social influence5 . Consequently,
changes, a highly-empathic and skilled ora-
leaders become the most relevant agents
tor. It has a vision, is familiar with project
within changing organizations in which vari-
management, and successfully supervises
ous interpersonal interactions (including
and controls. On the other side, the leader is
“facilitator of emergent change” that makes conflicts) take place.
connecting possible, while amplifies issues4 Communication is, we believe, the
to get the critical mass necessary to move for- most important tool that a leader uses to
ward the organization. generate results. While he delivers right-
on-time personalized messages for each
To be effective in change implementa-
change-stakeholder to get her support and
tion, leaders, as change agents, need not only
involvement, the leader should be aware of
3
Robert Fabac (2010), Complexity In Organizati- their on-going interest for the final results of
ons And Environment - Adaptive Changes And change. Moreover, he should secure effective
Adaptive Decision-Making, Interdisciplinary De- internal processes such as effective manage-
scription Of Complex Systems 8(1), 34-48. ment of conflicts and harmonization of the
4
individual activities.
Cameron, E. and Green, M.: Making Sense of
Change Management.Kogan Page Limited, 2004 5
Idem 2
No. 17 ~ 2013
 Change and Leadership
248
3. research Methodology change than those aiming to tap opportunities
2. There is a positive relationship be-
The purpose of this paper is to high-
tween the types of messages delivered dur-
light a few drivers of successful organiza-
ing the change processes and the level of
tional changes within Romanian companies.
achievement of the objective.
Among them an important role is played by
3. There is a direct, positive, relation-
the management of organizational processes,
ship between the internal processes (conflict
communication, as well as by the concentra-
management, harmonization of individual
tion for the final result or for reaching the
actions, concern for awareness opportunities
objectives. In Figure 1 we present a graphic
/ threats) and the level of achievement of the
form of the relations being tested.
objective.
We assume that there is a direct re-
4. There is a direct, positive relationship
lationship between the purpose of change
between the interest shown by stakeholders
(solving a problem vs. seizing opportunities)
(originators, implementation team) and the
and achieving the change objective, while we
level of achievement of the change’s goal.
control for the level it was planned, by the or-
In order to test out the assumptions, a re-
ganizational internal processes and the atten-
quest to provide answers to an on-line ques-
tion for the outcome.
tionnaire was sent to members of Romanian
Therefore, we have surmised a set of re-
companies that experimented organizational
lationships, as follows:
changes within the last 3 years. Table 1 pres-
1. Changes initiated to solve a problem
ents a brief typology of the organizations to
have a greater influence on the outcome of
which respondents belongs.

Table 1. Distribution of the respondents by the type of company

Type of company No of answers

Private company owned (mostly by) Romanian investors 73
Private company owned (mostly by) foreign investors 35
Public institution 34
Cross-border (multinational) enterprise 36
NGO / Social partner 8
grand total 186

The changes implemented by firms of NGOs or social partners. Also, there were
respondents were very different. In the se- investigated various types of finalized or-
lection of firms, our research tried to cap- ganizational changes such as applying new
ture the diversity of fields of activity. Thus, ERP models (24 answers), installation of new
there were investigated changes finalized in manufacturing equipment & implement-
private companies with various degrees of ing a new software (30 answers), optimiza-
ownership, as well as in public institutions, tion of business processes (58), relocation of

No. 17 ~ 2013
 Change and Leadership
249
activities (17) or restructuring / reorganiza- participants were informed about the study
tion (57). goal and were requested to fill-up the on-line
The questionnaire was developed by questionnaire. Data collection took place be-
Orlando Voica and pre-tested on a number tween 15 February and 31 March 2013. The
of fifteen respondents. respondents were mainly managers or direc-
The online filling of the questionnaire tors of companies that were involved in or-
succeeded the e-mail contacting phase of ganizational changes finalized within the last
respondents. Through an e-mail message 3 years.

Table 2. Definition of variables

Min max
Variable 1 2 3 4 5
Not at all / Higher
Achievement of the To a small
very small Largely Full than
change objective(s) extent
exten planned
Change objective:
To a small To a great
solve an existing Not at all Largely Full
extent extent
problem
Change objective: To a small To a great
Not at all Largely Full
seize an opportunity extent extent
1- 10 –
Planned vs Unplanned
Completely Detailed
change
unplanned planned
Implementing team
To a small To a great ex-
was committed to fi- Not at all Largely
extent tent / full
nalize the project
Change monitoring by To a small To a great ex-
Not at all Largely
sponsors / promoters extent tent / full
Personalized messag-
To a small To a great ex-
es presenting the indi- Not at all Largely
extent tent / full
vidual’s benefits
(Right) On-time deliv- To a small To a great ex-
Not at all Largely
ered messages extent tent / full
Messages that request To a small To a great ex-
Not at all Largely
personal involvement extent tent / full
Effective management To a small To a great ex-
Not at all Largely
of conflicts extent tent / full
Awareness of new op- To a small To a great ex-
Not at all Largely
portunities and threats extent tent / full
Harmonization of the To a small To a great ex-
Not at all Largely
individual activities extent tent / full

No. 17 ~ 2013
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250

Min max Mean

Dependent variable: achievement of the change objective(s) 1 5 3.24
Change objective: solve an existing problem 1 5 3.47
Change objective: seize an opportunity 1 5 3.20
Planned vs Unplanned change 1 10 7.37
Implementing team was committed to finalize the project 1 4 3.01
Change monitoring by sponsors / promoters 1 4 2.95
Personalized messages presenting the individual’s benefits 1 4 2.61
(Right) On-time delivered messages 1 4 2.85
Messages that request personal involvement 1 4 2.99
Effective management of conflicts 1 4 2.67
Awareness of new opportunities and threats 1 4 2.89
Harmonization of the individual activities 1 4 2.71

4. results suggesting that the model encompass the or-

ganizational reality.
Table 4 presents the descriptive statis-
The OLS regression show that a change
tics for the variables used and the results of
will be perceived as successful if it is moni-
ordinary least squares (OLS) regression.
tored by sponsors / promoters and of the
The Tolerance coefficients show that
messages regarding it are delivered right on
there is little multicolinearity among the
time. The last one seems to be the most im-
independent variables while the adjust-
portant in this process.
ed R-Square level of .323 is satisfactory

Table 4. OLS regression coefficients

Model Coefficients Correlations

Dependent
Variable: B Beta p Zero-
DV Part
Achievement of the (Unstandardized) (Standardized) order
change objective(s)
(Constant) .427 .187
Change objective:
Iv 1 solve an existing .081 .103 .121 .288 .094
problem
Change objec-
Iv 2 tive: seize an .035 .048 .485 .200 .042
opportunity
Planned vs
Iv 3 .040 .099 .195 .389 .079
Unplanned change

No. 17 ~ 2013
 Change and Leadership
251

Implementing team
Iv 4 was committed to .138 .115 .120 .390 .094
finalize the project
Change monitor-
Iv 5 ing by sponsors / .194 .187 .015 .456 .149
promoters
Personalized mes-
sages presenting
Iv 6 -.061 -.066 .403 .255 -.051
the individual’s
benefits
(Right) On-time de-
Iv 7 .342 .268 .003 .471 .182
livered messages
Messages that
Iv 8 request personal .032 .027 .713 .298 .022
involvement
Effective manage-
Iv 9 -.074 -.063 .410 .230 -.050
ment of conflicts
Awareness of new
Iv 10 opportunities and .083 .079 .347 .403 .057
threats
Harmonization
Iv 11 of the individual .068 .058 .453 .351 .046
activities

Based on the OLS results there are a few of the objective and internal processes such
conclusions related to the initial assumptions: as (conflict management, harmonization of
1. Even though it looks like the neces- individual actions or concern for awareness
sity to solve a problem has a higher effect opportunities / threats.
on the outcome of change (part = .094) than 4. There is a positive relationship be-
those modifications aiming to seize opportu- tween the level of achievement of the change’s
nities (part = .042), the correlation is not sta- goal and monitoring by stakeholders (p =
tistically significant (p > 0.05). 0.015<0.05). However, there is an insignifi-
2. There is a positive relationship be- cant effect of the variables “Implementing
tween the level of achievement of the change team was committed to finalize the project”
objectives and (right) on-time delivered mes- on the achievement of the change objectives.
sages (p = 0.003). However, there is no sig-
nificant effect of the variables “Messages 5. Conclusions
that request personal involvement” and
“Personalized messages presenting the indi- Organizational change is the process
vidual’s benefits” on the achievement of the used by organizations to redesign their struc-
change objectives. ture, processes and culture. While the aim of
3. There is a not statistically significant change is to move from the current state to-
relationship between the level of achievement ward a future desired state to increase their

No. 17 ~ 2013
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252
effectiveness and efficiency6 , leaders have an have various causes such as lack of trust of
outstanding influence on the initiation and individuals or leaders’ inability to align and
implementation processes. energize followers.
The study has tried to detect the mech- However, our research is consistent
anisms that stimulate the roles of leaders as with Mitchell et al. (1997) researches regard-
well as the traits of successful organizations ing stakeholders’ relevance and manage-
of change implementation. ment’s efforts. We have found out that there
The reason for change ignition could is a direct, positive relationship between the
make the difference between a visionary and level of achievement of the change’s goal
a “fire-fighting” leader. The study has tried and interest shown by stakeholders (origi-
to prove that a change initiated to solve a nators/initiators or implementation team).
problem is more probable to achieve the in- Specifically, monitoring by stakeholders will
tended results than a change that aim to seize have a significant effect on the achievement
opportunities, but the results are not statisti- of the change’s goal, but there is a lower and
cally significant for our endeavor. insignificant effect of the commitment of the
The analysis of responses shows that iimplementing team
there is a positive relationship between the Leaders are the most relevant agents
level of achievement of the objective and inside the changing organizations, where
messages delivered right-on-time during the various interpersonal interactions, including
change processes. This is consistent with the conflicts, appear. Our study found that the
researches that suggest that successful lead- level of goal achievement for changes imple-
ers, who implement changes, are skilled mented in Romanian organizations is not sta-
orators, familiar with project management tistically significant liable to processes such
communication techniques. as conflict management, harmonization of
On the other side, the leader is present- individual actions or concern for awareness
ed by the Cameron and Green as “facilitator opportunities / threats.
of emergent change” that present individ- These results are limited in scope. The
ual benefits and amplifies issues7 to get the limits come from the fact that the study does
critical mass necessary to move forward the not make a thorough distinction between
organization. Bearing in mind the achieve- variables that can influence the change (im-
ment of the change objectives, our study on plementation) processes. For instance, the
Romanian companies identify a positive, but organizational communicational process has
no significant effect of the messages that re- not been considered all the specific facets
quest personal involvement or of those pre- such as the formal/informal communication,
senting the individual’s benefits. This might top-down / upward communication, level &
quality of feedback, aso.
6
Gaffney, S. (2010), Dynamics of Organisational Moreover, the change result is liable
Change - the Belfast model, Gestalt Journal of Aus- to the implementation team commitment,
tralia and New Zealand, 2010, Vol 7 No 1 Pages which is determined by various motivational
75-88. elements that were not clearly distinguished
7
Cameron, E. and Green, M.: Making Sense of in our research.
Change Management.Kogan Page Limited, 2004
No. 17 ~ 2013
 Change and Leadership
253
However, a few strategies and direc- Also, even though individuals’ priori-
tions of activity arise from this study. First, ties (and needs) might shift during the pe-
organizations should set up mechanisms to riod of change, it is important for a leader to
deliver (right) on-time messages about the energize the team and to deliver messages
change rationales, status and processes. Also, that assure the participants’ involvement and
commitment.
it is important for change initiators (or spon-
This research, limited by its scope and
sors) to monitor the whole process of imple-
size of the sample, is a starting point for
mentation. A good implementation plan has
further studies of the relationship between
proved to be an important ingredient for suc-
change success and the organizational capa-
cess when it was followed. bilities of the Romanian companies.

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2. Battilana, j. , Casciaro, t, (2012), Change agents, networks, and institutions: A contingency theory of organi-
zational change, Academy Of Management Journal, Vol. 55, No. 2, 381–398., http://Dx.Doi.Org/10.5465/
Amj.2009.0891
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4. Cummings, t.g. and worley, C.g.: Organization Development &Change. 9th edition, South-Western Col-
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tive Role for Learning?. British Journal of Management, 19: 235–249. doi: 10.1111/j.1467-8551.2007.00543.x
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and New Zealand, 2010, Vol 7 No 1 Pages 75-88, GANZ
8. Jones, G.r.: Organizational Theory, Design and Change. Pearson Education, Inc., New Jersey, 2004
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namic Capabilities. Available at SSRN: http://dx.doi.org/10.2139/ssrn.905526
10. Mase, C.: The Adaptive Organization. Shift: At the Frontiers of Consciousness 22, 26-31, 2009, http://hbr.
org/1977/09/double-loop-learning-in-organizations/ar/1,
11. mitchell, R., agle, B. and wood, D. (1997), Toward a theory of stakeholder identification and salience: defin-
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No. 17 ~ 2013
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254

welfare reform- major challenge for the

social management in romania

~ Ph. D. Candidate ioana irina Dumitrescu (National Institute of Economic

Research”Costin C. Kiritescu”, Romania)
E-mail: [email protected]

Abstract: The article analyses the main amendments brought by Law of the social work no. 292/2011
from the perspective of the social management and efficiency of social work system reform in Romania.
Given the necessity of restructuration of the system of social benefits and services, the reform proj-
ect outlines the responsibilities of the social actors in providing welfare and proposes a block of measures
aimed to contribute at reducing social sector spending according to the austerity measures imposed by the
economic crisis. The new management vision focused on reducing costs does not seem to provide suitable
solutions for institutions functioning as it enables the harmonization of the economic efficiency with the
social one.
Received with scepticism by the public opinion and profoundly contested by the academic world, the
reform project only partially succeeds in reaching proposed objectives of modernizing the social assistance
system and supporting the people in need.
Key words: law of social assistance, welfare system, social services, social assistance , social
benefits.

Mutual relations between the economic social progress determine, support and stim-
groth and social development are particu- ulate each other. Nevertheless, the results of
larly complex. Development in the social economic growth is not automatically trans-
sphere is strongly influenced by the charac- ferred to the social field, since a prosperous
teristics and dynamics of economic environ- economy is a necessary but not a sufficient
ment. Long-term economic development and condition for individual and social welfare. It
No. 17 ~ 2013
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255
takes political will and vision to consistently protection under the circumstances of the
lead a reform of the welfare distribution pro- economic crisis and limited financial resourc-
cess so that the adopted decisions will allow es? Increasing social protection expenditure
not only reducing economic and social im- can become a brake on economic develop-
balances due to the transition period , bu also ment? How to reshape the social assistance
improving the quality of life for as many of system under the context of austerity, so that
citizens. Reaching this overall objective can social protection can turn itself from a ten-
be made only by a strong will of construction sion factor in a growth stimulating factor?
and development doubled by a performant Formulating a response to these chal-
social management. lenges has been the objective of social as-
Recent evolution of the socio-economic sistance reform outlined by the new law on
situation brings to reality the alarming social- social assistance.
human cost problems that the Romanian soci- Deeply contested by the academic
ety will be confrunted with, wich are caused world because of the proposed reform mea-
not only by the economy failure, but also by sures and received with scepticism by the
the lack of vision or organization refering to public, the Law no. 292/2011 brings impor-
the social work system being permanently in tant changes in the social work system vision
a process of construction and and reforming. and conception .
Since the relationship between social securi- Further on we ‘ ll analyze and present
ty and the national economy is determined some of the main modification.
by two types of factors having contradictory The reform of the social work system in
influences and evolutions, respectively in- our country was started to meet the nation-
crease of the social protection need due to al target assumed to decrease the number
deterioration of the economic situation and of individuals being in risk of poverty and
reducing spending and taxes with the view social exclusion with 580,000 ( namely with
on the economic revigoration, the problem of about about 15%) up to 2020, related to year
financing social work comes back to reality 2008. To achieve these results, it is necessary
accompanied by the numerous controversies to implement administrative measures to al-
generated by the the current economic, so- low greater focus towards vulnerable groups
cial, political and moral crisis. alongside with a most efficient use of exist-
Solving this dilemma lies at the interfer- ing resources.
ence betwen the economic option and politi- To this end was adopted the new law of
cal decision and is significantly influenced by social work no.292/2011, as a keystone of the
the quality of political leadership that must reform. Subsequently there were also worked
establish priorities and emergencies and out the comprehensive reform strategy in the
identify new approaches in order to maintain social field and national reform plan for the
the rithm of changes without compromising year 2011-2013 as elements of the ample proj-
the social balance. ect of the modernization of social wellfare
In this context we can ask the follow- system of protection and assistance, financed
ing questions: What are the reform direc- by the loan agreement between Romania
tions necessary to achieve effective social and International Bank for Reconstruction

No. 17 ~ 2013
 Change and Leadership
256
and Development1. Made to order, under includes allowances of all kinds, mainte-
the pressure of political and electoral emer- nance aids, tickets, coupons, vouchers, al-
gencies, subject to budgetary constraints and lowances, gratuities, food aid, tax breaks and
only partially adapted to the concrete social many exceptions to all sorts of forms of so-
realities which aims to modify, this ambi- cial contributions or insurance funds, health
tious reform is unlikely to succeed and may or unemployment. In comparison with other
even compromise the most important ob- countries, aid is very much in terms of num-
jective namely reducing poverty and social bers but at the same time ridiculous or down-
exclusion. It is true that modernization was right miserable. No grant system does not
necessary, but it is not assumed to fulfill elec- work effectively in many cases, assistance is
toral and political targets or conditional loan given on a suspect in the complicated pro-
agreement, but to correct existing deficien- cedures and laws are not followed up and
cies that did not allow the system to work assignment.
properly,such as underfunding, fragmenta- The social services do not present a bet-
tion, lack of efficiency, errors and fraud in the ter situation either. Social services infrastruc-
system. The extent to which these important ture does not provide minimal conditions
issues will be resolved through administra- of rendering social services because many
tive reforms and increasing control is closely buildings are in an advanced state of decay
related to subsequent changes in secondary due to lack of investment required. Isolated
legislation, while substitution underfunding and overcrowded centres completes the pic-
with administrative measures and manage- ture of an underdeveloped social assistance
ment remains a challenge. which has not adequately fulfilled the duties
We develop these ideas in parallel with of support, although it has been reformed
the presentation of the most relevant aspects several times. Social services as means of in-
promoted by the new Law of social tervention offeres only institutionalizing op-
In order to reduce fragmentation and to tions and thus isolation, without a vocation
insure a better focus interventions, the new for prevention or providing alternative sup-
law governing social assistance benefits and port for keeping people in the community.
services proposes a package of interrelated A sad picture, a prerequisite for ineffi-
measures and suggests new simplified ways ciency and an urgent need for change.
for accessing social rights. The measure is In this context, legislative initiatives re-
useful in the context of the Romanian state garding the reglementation of social benefits
grants not less than 202 forms of social as- through the reorganization and simplifica-
sistance. These forms of support, some paid tion of procedures and checks are welcome
from the state budget, others from social and can lead to increase administrative ef-
insurance budget or local budgets, are ac- ficiency and reduce fraud in the system. To
tually a long string of electoral measures ac- achieve the objectives, the law promotes a
cumulated from year to year and from one series of reform-oriented measures, among
election to another. The list is very long and which:
• reporting social assistance benefits
1
The loan agreement worth 500 million euros was to the social reference indicator (ISR) by
ratified by Law nr.68/2012
No. 17 ~ 2013
 Change and Leadership
257
applying a social insertion index (ISI) since responsibility, the family and the communi-
2012 ty responsability for the own welfare, while
• establishing a single form for request- the state points in the alternative intervention
ing social assistance benefits financed from only in time of crisis situations and subsidi-
the state budget, arily3. This approach expresses the philoso-
• granting the social assistance benefits phy of the new vision and spirit of reform,
by the payment of the taxes to the state bud- to restrict the safety net represented by social
get and local budget assistance, is intensely contested by academ-
• establishment of maximum limits for ics because it results in reducing the state’s
welfare benefits that a person or family can role in ensuring the welfare of its citizens.
have, Criticism, correct in our view, is referred to
• Providing tax incentives or other fis- the way of dealing with the social problems
cal facilities for the employers who employ and with their assumption that aims to ex-
persons receiving social assistance. plain how social problems faced by people in
• unification of disability evaluation need are rooted in their own inability to cap-
system with invalidity evaluation system italize on the opportunities offered by soci-
and establishing common criteria, in accor- ety. Records contradict this hypothesis since
dance with the International Classification of many of the difficulties faced by individuals
Functioning, Disability and Health promoted asking for social welfare due to social and
by the World Health Organization economic imperfect contexts that even gov-
Changing these technical aspects, un- ernments are responsible and not to the per-
deniably necessary, is complemented and sonal lack of capabilities. Therefore solving
supported by important reforms of the in- these problems cannot be limited to the in-
stitution construction by abolishing the local creasing of individual competences, either
departments of labor and replacing them by familiar or group and it is also necessary for
local agencies for social payments and inspec- state intervention and the implementation of
tion . Justified by the need to reduce system social policy measures designed to correct
management costs and eliminate duplication failures market and government.
of activities, this creates a conflict of inter- ’’ In the context of the withdrawal of the
est, given the role of the Social Inspection to welfare of the classical functions of the state,
control, measure and monitor the actors in- promoting individual responsibility to en-
volved in the provision of benefits and social sure their own welfare (including innovative
services “Does not ever appear a conflict of means of entering the labor market and social
interests ,taking into account that the social economy) and the tendency to reduce social
payments agencies should be just some of the spending, one of the major problems welfare
controlled operators ?”2 . system configuration option is the social ori-
Besides these technical aspects, the entation of system integration opportunities
most important element of reform that the in the labor market. “4
new law regulates is however the individual
3
Social Assistance Law nr.292/2011,art.3
2 4
Stanescu, M.S, .Dragotoiu, A., Marinoiu A., Soci- Stanescu, M.S, .Dragotoiu, A., Marinoiu A., Soci-
al benefits administered by the Ministry of Labo- al benefits administered by the Ministry of Labo-
ur, Family and Social Protection, Quality of Life ur, Family and Social Protection, Quality of Life
XXIII, No. 3/2012,p.249 XXIII, No. 3/2012,p.240
No. 17 ~ 2013
 Change and Leadership
258
Promoting the philosophy of minimal temporary measure to reduce public funding
state proposed by reform program a very and not as a permanent one. The proposed
important thing is ignored, that the state is program is therefore more ambitious than
not only a consumer of resources, it is also a the crisis: reform of the welfare state in all
welfare supplier by its services in education, its components, and this means dismantling
health or social care provided free of charge. the welfare state. “7 And finally the failure
’’ Social expenditures have specific func- of the entire construction of adaptation and
tions in society and probably their reduc- modernization of the social security system
tion would be dangerous if we don’t know to cope with the social problems of globaliza-
where and with what consequences “5 be- tion and their multiplication.
ing possible affecing social peace. Academic Finally, it should be noted that the prin-
research conducted in recent years, among ciple of economic efficiency and the obses-
which Romania Study on Quality of Life in sion absolutization to reduce costs seriously
2010 converge on this conclusion and reveals affect the quality of social services and, para-
a disappointing situation that, after approx. doxically perhaps, even effectiveness of so-
20 years of the revolution, the Romanian so- cial interventions that can no longer achieve
ciety continues to be rather one involving the goal of being an active partner of public
conflicts, especially in the political and social policies in the fight which in mid-twentieth
conflicts in the vertical (poor-rich, manage- century, Lord Beveridge name the five gi-
ment - employees) ”6 . ants’’: deprivation, disease, ignorance, mis-
This fragile context, aggravated by re- ery and inactivity. “8 .
strictions imposed by the contemporary eco- The most vulnerable point of the pro-
nomic crisis and the increasing interest in posed reform, which may endanger the
the European Union for assistance and social entire structure, is ignoring the basic prin-
protection justify a different approach to wel- ciples of social and political management.
’’Increasingly interested in politics is not for
fare reform in Romania. From this perspec-
’’who gets what, when and how’’, but for
tive the solution adopted has not scored in
values, each of which is considered some-
European trend.
thing absolutely. Regarding economic inter-
Reform ignores any concrete social re- ests compromise can be made, which is the
alities such as the high degree of vulnerabil- biggest advantage of the policy reasons based
ity of the population and the high potential on economic interests. Half a loaf means any-
for conflict, which is why social reform pro- way having bread. But, half a child,’’ as they
moted by the social law nr.292/2011 is not say in the biblical story of Solomon, does not
saving, but deeply disappointing because, by mean half of a child, it means a dead body or
promote state ideology produces a minimal just a hunk of meat’’9
shift in emphasis from the goal of achiev- 7
C.Zamfir (coord.) Romania : Responses to the
ing budget balance, which could be seen as a
crisis, Bucharest , ICCV, 2011, P.15
5
C.Zamfir (coord.) Romania : Responses to the 8
Buzducea Doru , Modern Sosial Work Systems,
crisis, Bucharest , ICCV, 2011, p.21 Ed.Polirom, Iași, 2009, p.17
6
Mărginean I. and Precupețu I. (coord),, Quality 9
P.Drucker, The Essential Drucker, Ed.Meteor
of Life in Romania 2010, Bucharest, ICCV, 2010,p.7 Press, Bucuresti,2010,p 270
No. 17 ~ 2013
 Change and Leadership
259
The challenges of this century are par- more and more numerous. ,, In this insecure
ticularly numerous, being generated by the high-tech world, the personal, familial and
development of science and technology, glo- communitary problems exist as never be-
balization and the crisis of values. The world fore.’’ 10
today is a fascinating world full of contrasts 10
Fairley O.W. ;Smith.L.L ;Boyle.S.W.,Introducti-
and controversies. Opulence and poverty co- on to Social Work, ed.a XI-a, Pearson Education,
exist while vulnerable groups are becoming Inc. 2009, N.Y., p.2

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1. Buzducea D, Modern Social Work Systems, Ed.Polirom, Iaşi, 2009
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and Social Protection, Quality of Life XXIII, No. 3/2012,
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8. Social Assistance Law nr.292/2011

No. 17 ~ 2013
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steve Jobs And Modern leadership

~ Ph. D. sorin-george toma (Faculty of Administration and Business, University

of Bucharest, Romania)
E-mail: [email protected]
~ Ph. D. Paul Marinescu (Faculty of Administration and Business, University of
Bucharest, Romania)
E-mail: [email protected]

Abstract: During the time, especially in the last fifty years, leadership has increasingly become a
major subject in the management literature, a subject of much thought, writing and teaching. While the
importance of leadership is generally accepted all over the world, there are as many definitions of it as there
are organizations. In spite of the fact that the business literature on leadership is so voluminous, there is
not an agreed-upon definition of the concept of leadership. Leadership is not only intensely studied, but
also practiced in different organizations. How to lead effectively an organization depends on many factors
such as the organizational culture, the behavior of the followers, and the personal traits of the leader. The
vast majority of successful leaders are multi-dimensional individuals. The aims of our paper are to pres-
ent a short biography of Steve Jobs and to highlight his contribution to modern leadership. Our research is
based on a literature review. The S. Jobs example illustrates how a transformational leader as him can be a
key factor in successfully turning round the fortunes of a company as Apple. The paper facilitates a better
understanding of modern leadership, emphasizing the case of S. Jobs, and provides a platform on which to
build further studies on the same subject.
Key words: leadership, Steve Jobs, leader, Apple
Jel Classification: M1, M19

No. 17 ~ 2013
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261
introduction features of leadership. The second part of the
paper renders in brief the biography of S.
As leadership constitutes a universal
Jobs. The third part deals with the connection
phenomenon, it is often discussed and anal-
between Jobs and modern leadership. This is
ysed in various environments (e.g., business,
followed by conclusions.
academic). Leadership is not only intensely
studied, but also practiced in different orga-
1. what is leadership ?
nizations. Formal organizations embodies
“at least two distinctive, yet complementary The concept of leadership is not an easy
aspects of the phenomenon of leadership: subject to define and explain. Leadership
(1) the structure of organization institution- scholars have studied leadership in one or
alizes the leadership process into a network several academic fields such as social psy-
of roles, often in an overconcretized and de- chology, anthropology, human resources, so-
humanizing form; (2) mediating or interper- ciology, political science, education, theology
sonal leadership- what is most evident as and business. Most of these scholars belong
leadership in action, operationalizes the prin- to business schools.
ciples of leadership as an emergent process Many studies were devoted to the dif-
within the context of the former” (Smircich ference between management and lead-
and Morgan, 1982, p. 260). Also, leadership in ership. In this respect, “if one wishes to
organizations involves three different levels: distinguish leadership from management
team, operational and strategic (Adair, 2002). or administration, one can argue that lead-
During the time, especially in the last fif- ership creates and changes cultures, while
ty years, leadership has increasingly become management and administration act within
a major subject in the management literature, a culture” (Schein, 2004, p. 11). That is why
a subject of much thought, writing and teach- there are differences between the actions and
ing. In the beginning, the study of leadership behaviours of leaders and managers (Table
was anchored in a single disciplinary view 1). Also, a clear distinction has been made in
for most for the last century. Since the devel- the management literature between the two
opment of big business organizations such as leadership models within the capitalist eco-
the multinational and transnational corpora- nomic system (Table 2). On the one hand,
tions, leadership has been described through there is the Anglo/US model and, on the oth-
multi-faceted approaches. In today’s contin- er hand, there is the Rhineland model (Avery,
uously changing environment, “leadership 2005). The two forms of capitalism influence
can and does make a meaningful difference in a high degree the way organizations are
in every aspect of organizations” (Hickman, led.
1998, p. xiii).
The aims of our paper are to present a
short biography of Steve Jobs and to high-
light his contribution to modern leadership.
Our research is based on a literature review.
The paper is structured as follows. In
section one, we present some definitions and
No. 17 ~ 2013
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262
Table 1. The Manager and the Leader: a comparison

The Manager The Leader

Administers Innovates
Is a copy Is an original
Maintains existing patterns Explores new territory
Maintains Develops
Avoids risks Takes risks
Focuses on systems Focuses on people
Relies on control Inspires trust
Short-range view Long-range view
Makes plans and budgets Formulates vision
Asks how and when Asks what and why
Eye on the bottom line Eye on the horizon
Imitates Originates
Accepts the status quo Challenges the status quo
Stabilizes Initiates change
Transacts Transforms
Invokes rationality Invokes passion
Obeys orders without question Obeys when appropriate but thinks
Does things right Does the right things
Is trained Learns
Controls Empowers
Enforces uniformity Encourages diversity
Acts amorally Acts morally
Operates within the culture Creates the culture
Source: Allio, 2009, p. 6; Hopper and Potter, 2000, p. 61

Leadership has a full range of defini- achievement, role differentiation, reinforce-

tions. During the time, the definitions of lead- ment, initiation of structure, and perceived
ership have shown a progression of thought attributions of behavior that are consistent
related to this topic. In the beginning, the with what the perceivers believe leadership
definitions identified leadership as “a focus to be” (Bass and Bass, 2008, p. 24).
of group process and movement- personal- While the importance of leadership is
ity in action. The next definitions considered generally accepted all over the world, there
it the art of inducing compliance” and “the are as many definitions of it as there are orga-
more recent definitions conceive of leader- nizations. In spite of the fact that the business
ship in terms of influence relationships, pow- literature on leadership is so voluminous,
er differentials, persuasion, influence on goal there is not an agreed-upon definition of the

No. 17 ~ 2013
 Change and Leadership
263
concept of leadership. Since the 1990s it has Hoover, 2002, p. 5).
been said that a major problem with both • Leadership involves initiating, and
leadership studies and with the people who represents both a highly creative and an in-
practice leadership is that “neither the schol- trinsically interpersonal activity (Landsberg,
ars nor the practitioners have been able to 2000).
define leadership with precision, accuracy, • Leadership is “the ability to lead”
and conciseness so that people are able to la- (Davidson, Seaton and Simpson, 1998, p.
bel it correctly when they see it happening 548).
or when they engage in it” (Rost, 1993, p. 6). In essence, the working definitions of
However, most of the definitions were pro- leadership belong to one of the following
vided by American and British researchers groups:
and authors as follows: • “The early simplistic paradigm (lead-
• Leadership represents “the activity of ership is good management).
influencing people to pursue a certain course • The semantic description (leadership
“ (Adair, 2002, p. 61). is the process of leading).
• Leadership means “authority, con- • The transactional definition (leader-
trol, direction, guidance, initiative, influ- ship is a social exchange between leaders and
ence” (Lindberg, 2002, p. 424). followers).
• “Some of the many definitions in- • The situational notion (leadership is
clude: to guide, to direct, to begin, to be chief, a phenomenon that precedes and facilitates
to influence, to command, to be the first, to go decisions and actions).
ahead of, to create a path, to show the way, to • The esthetic concept (leadership is an
control actions, to cause progress” (Cox and art or a craft).” (Allio, 2013, p. 4)

Table 2. A comparison between the Anglo/US and Rhineland leadership models

No. Element Anglo/US model Rhineland model

1. Chief Executive Officer (CEO) concept Decision maker, hero Top team speaker
2. Decision making Manager-centered Consensual
3. Ethical behavior Ambivalent An explicit value
4. Financial markets Follow them Challenge team
5. Innovation A challenge Strong
6. Knowledge management A challenge Shared
7. Long-term perspective No Yes
8. Management development Import managers Grow their own
9. Organizational culture A challenge Strong
10. People priority Lip-service Strong
11. Quality Difficult to deliver High is a given
12. Retaining staff Weak Strong
13. Skilled workforce Challenged Strong
14. Social responsibility Underdeveloped Strong

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264

15. Environmental responsibility Underdeveloped Strong

16. Stakeholders Shareholders Broad focus
17. Teams Manager-centered Self-governing
18. Uncertainty and change Fast adjustment Considered process
19. Union-management relations Conflict Cooperation
Source: Avery, 2005, p. 30

The above mentioned definitions show young Syrian muslim immigrant, and Joanne
that the concept of leadership means dif- Carole Schieble, a German-American. As
ferent things to different people. However, Schieble’s conservative Christian family
these definitions lead to the following fea- did not accept her marrying Jandali, Joanne
tures of the concept: Carole took the decision to move from
• Leadership is a multidimension- Wisconsin to the more liberal San Francisco
al concept which has many facets and in order to have her child. Steve Jobs was ad-
dimensions. opted by Clara and Paul Jobs, a middle-class
• Leadership is universal. San Francisco couple, who later moved to the
• Leadership is close to management, suburban city of Mountain View.
but not identical. In the early 1950s, the Santa Clara coun-
• Leadership implies various interper- ty became known as Silicon Valley after the
sonal activities such as influencing people or sprouting of a myriad of semi-conductor
guiding them. companies. So, Steve lived in his childhood
• The concepts of leadership and lead- in the neighborhood of electronic industry.
er are strongly interconnected. This hi-tech environment shaped his inter-
How to lead effectively an organization est in the field as he grew up. At age 13, Jobs
depends on many factors such as the orga- met one of the most important persons in his
nizational culture, the behavior of the fol- life: Stephen Wozniak, older than him with 5
lowers, and the personal traits of the leader years. An electronics wiz kid, Wozniak spent
(Simmons and Sower, 2012; Allio, 2009). The many hours building various electronics proj-
vast majority of successful leaders are multi- ects. He also was regularly attending meet-
dimensional individuals. They excel in many ings of a group of early computer hobbyists
dimensions of leadership, being flexible, sen- called the Homebrew Computer Club, a fore-
sitive, directive, empathetic, charismatic, mo- runner of personal computing. In the same
tivators, persuasive or self-confident. In this year, Jobs called up Bill Hewlett and got a
respect, a valuable example is S. Jobs, the summer job at the Hewlett-Packard (HP) fac-
founder of Apple. tory. Later, Wozniak himself started working
for HP, designing calculator circuits.
2. steve Jobs: a short biography Jobs and Wozniak had two main
things in common: electronics and pranks.
Steven Paul Jobs (Steve Jobs) was born on Jobs grew up listening to the Beatles, but
24 February 1955 in San Francisco, California. Wozniak turned him into Bob Dylan whose
His parents were Abdul Fattah Jandali, a
No. 17 ~ 2013
 Change and Leadership
265
music carried greater resonance for them. of Zen Buddhism. At that time, Wozniak suc-
Jobs highly appreciated Dylan because he ceeded in building his own computer board
composed songs based on what the musician and Jobs quickly understood that his friend’s
saw and thought. Living in a California open invention could be a gold mine.
to so many possibilities, Steve embraced the On April 1, 1976, Steve Jobs, Stephen
hippie culture. He ate seeds, took LSD, wore Wozniak and Ronald G. Wayne founded a
long hair and became interested in Indian company called Apple Computer. In the fol-
spiritualism. lowing months they assembled boards of
When he was 18, Jobs reached college Apple I computers in the Jobses’ garage, and
age and enrolled in Reed College, an expen- sold them to independent computer dealers
sive private liberal-arts college in Portland. in the area. Wozniak was a genius in comput-
Jobs saw the college as “a chance to reinvent ers, but he could not market their product,
himself far away from home” (Dormehl, raise money, or operate a business the way
2012, p. 51). He met Dan Kottke there. They Jobs could. It was a perfect combination of
both enjoyed reading books, being attracted skills of the two Steves.
by the psychedelic experience. They often As Wozniak had started work on a much
discussed about yoga, meditation and Zen, better computer, the Apple II, that support-
subjects treated especially in spiritual books ed color graphics, Jobs sought venture capi-
such as ‘Be Here Now’ by Baba Ram Dass, tal. He convinced Mike Markkula, a former
‘Zen Mind, Beginner’s Mind’ by Shunryu Intel executive, to invest $92,000 in Apple. In
Suzuki or ‘Autobiography of a Yogi’ by January 1977, Jobs and Markkula hired Mike
Paramahansa Yogananda. Moreover, Jobs Scott as CEO, bringing professional manage-
and Kottke worked as volunteers at a 220-cre ment from Intel. Step by step, Apple became
apple farm, located forty miles away from a symbol of the PC revolution, a company
Portland. Influenced by the book ‘Diet for a that challenged the so-called “possibilities”
Small Planet’ by Frances Moore Lappe, they of a young American computer industry.
made the decision to become vegetarians. By constantly redefining the standards
Throughout the rest of his life, Jobs embraced for its products, the company made Apple II
the diets based on fresh fruits. into the first mass-market PC with impres-
Jobs spent only one semester at Reed, sive sales around the USA. The company’s
then dropped out, and returned home where sales had surged from $2.7 million in 1977 to
he looked for work. In the San Jose Mercury $200 million in 1980, with an expected $600
newspaper he found an advertisement of the million by the end of 1982. Starting with
video-game manufacturer Atari: “Have fun, 1981, Jobs appeared on the cover of many
make money”, which sounded promising to well-known publications (e.g., Time, Inc.).
him. In a short period of time, he was hired In the early 1983, John Sculley, a former
at the Atari and used his wages to make a trip PepsiCo CEO, became Apple’s CEO after hav-
to India in 1974, in order to ‘seek enlighten- ing been wooed by Jobs for several months.
ment’. Jobs returned home came back a little Two years later, Apple’s board strips Jobs off
disillusioned, but he wore traditional Indian all executive duties. He resigned from Apple
clothing and remained a serious practitioner and launched a new company called NeXT

No. 17 ~ 2013
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266
with five other refugees from Apple. In 1986 valuable company.
he decided to buy the computer division of • designed the first windows platform
George Lucas’ ILM for $10 million and in- with the Mac.
corporated it as Pixar. Pixar widely benefit- • created the mouse and made it
ed from the Disney marketing machine and popular.
made a hit with Toy Story. In the late 1980s, • funded Pixar which became the larg-
Jobs was named ‘Entrepreneur of the decade‘ est animator in history.
by Inc. magazine. • beat cancer for a long period of time.
In December 1996, Jobs was back at the • in spite of a long list of failures, was
company he founded after Apple bought back on top.
NeXT for $400 million. In less than one year, • created many blockbuster movies in
he accepted to become Apple’s interim CEO. a row, etc.
In 2011, Jobs designed and developed Apple’s A genius and a visionary, Jobs was a
Digital Hub Strategy at Macworld: the Mac is complex leader. His distinctive personality
to become the center of consumers’ emerging represented a key factor in explaining the
digital lifestyles. As a consequence, iPod, the way he led Apple. Some of his main personal
first digital music player that people loved, traits are worth to be emphasised such as:
was a huge business success from the day it • passionate,
debuted. • flexible,
During the period 2005-2011 the big • impulsive,
Apple was finally built. In 2011, Jobs re- • overly critical,
signed as CEO of Apple and died on October • obsessive perfectionist,
5 at home, surrounded by his family. • highly intuitive,
• charismatic,
3. steve Jobs, a leader in modern times • egotist,
• free-spirit innovator,
For many management experts and • open-minded,
researchers, Jobs is supposed “to have had • persuasive,
the insight into the future of personal com- • inspiring, etc.
puters, a vision of genius” and represents “a A company like Apple has to sustain ex-
perfect example of the Sillicon Valley entre- cellence “not only through its processes”, but
preneur: individualistic, quirky, obsessed by also “in its leadership, namely, in its CEO”
a product design that combines functional (Moore and Knickle, 2012, p. 67). Jobs built a
performance and a pleasing aesthetic” which strong and successful corporate culture that
“implemented an aggressive and demanding
facilitated Apple employees to “know one
style of management” (Godelier, 2007, p. 5).
when they see one”.
He truly knew what he wanted and succeed-
The DNA of Apple was the DNA of
ed in transforming his dreams into realities.
His life philosophy was the philosophy of a Jobs. The company was “profoundly influ-
winner who: enced by its founder and still bears today the
• promoted the Apple II, making Apple characteristics associated with an organiza-
the first computer giant and the world’s most tion that favours the type of logic and modes

No. 17 ~ 2013
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267
of justification that come from the logic of • He provided intellectual challenges
inspiration” (Boivin and Roch, 2006, p. 415). and stimulation to the Apple people.
Jobs had always inspired his people and cus- • Jobs had the ability to create small
tomers with his stories: “business world will teams of top talents and to express ideas to
always remember Steve Jobs as one-of-a-kind the team for their realization.
storyteller” (Kuran, 2013, p. 121). Apple’s In short, Jobs proved to be a highly suc-
greatness has been built on its inspirational cessful leader in an intensely competitive in-
logic that pushed the company to continu- dustry. He constitutes the valuable example
ously seeking for perfectionism. of a transformational leader able to inspire
Jobs belongs in the pantheon of his people to do great things they had never
America’s great modern leaders. This state- done before.
ment is based on several fundamental ele-
ments as follows (Isaacson, 2012; Isaacson, Conclusions
2011; Davenport, 2011): Leadership represents one of the most
• His personality was integral to his observed and debated phenomena on earth
way of doing business. in the last decades. As a multidimensional
• In spite of his tendency to be rough on concept, leadership is essential in every as-
people, Jobs was surrounded by an intensely pect of today’s organizations.
loyal cadre of colleagues who had been in- The S. Jobs example illustrates how a
spired by him for along period of time. transformational leader as him can be a key
• As a perfectionist, he never gave up factor in successfully turning round the for-
and steadfastly pursued his dreams. tunes of a company. The dominant logic of
• Jobs made Apple an enduring com- Apple was strongly determined by its found-
pany through the implementation of a er. Jobs offered a vision of the future that
creative strategy at Apple, based on entre- was both inspiring and attractive for Apple
preneurship, leadership, organization and people. Unlike many leaders who appear to
innovation. succeed only once, he constantly repeated his
• Focus was ingrained in his business success.
philosophy and had been honed by his Zen Our paper facilitates a better under-
training: “Deciding what not to do is as im- standing of Jobs’ contribution to modern
portant as deciding what to do”. leadership and provides a platform on which
• Jobs promoted simplicity in order to to build further studies on the same subject.
achieve the ultimate sophistication.
• He always took responsibility end to
end.
• Jobs had always put products before
profits.
• He possessed the famous ability to
push Apple people to do the impossible.
• Jobs was a strong believer in face-to-
face meetings with people.

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No. 17 ~ 2013
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leadership in the inter-war period

Case study: nicolae malaxa

„It was the man and the engineer who had the boldness, skill and patriotic feel-
ing to show the world the industrial vocation of the Romanians, who foreign-
ers considered them only ploughmen and shepherds.”
Former collaborator of Nicolae Malaxa

~ Ph. D. Candidate ionuț Constantin (Faculty of Administration and Business, Uni-

versity of Bucharest, Romania)
E-mail: [email protected]

Abstract: The interwar period was called the Golden Age of Romania. From a certain point of view
it was. Cultural effervescence of the time, the economic boom due by the development of the industry has
brought Romania to the attention of Western Europe.
Many industries in the late ‘30 had advanced enough to be able to satisfy almost all domestic needs.
Regarding technology, most romanian plants were behind those in the West. In heavy industry, only Ma-
laxa and the Steelworks Resita were the best in Western Europe.
In retrospect of these events I have considered appropriate to study this issue closely, to be fascinated
by a controversial but destined to lead character, a character that has go down in history because of his pio-
neering leadership actions.
Key words: leadership, interwar period, Malaxa plants, economic development, entrepre-
neur
No. 17 ~ 2013
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271
In the book “The Frontiers of young Nicolae makes his complete studies in
Management” (1986), Peter Drucker says that Iasi, and then go to Germany, where he turns
leadership means “vision to bring people to a back with the engineering degree. Ambitious
higher level, to increase their performance to and with entrepreneurial qualities, Nicolae
a higher standard” and Ordway Tead defines has the courage to make significant invest-
leadership as “the art of influencing people ments in the Romanian industry.
to enable them to participate in the realiza- Immediately after World War I, Nicolae
tion of a goal that arrive to consider it desir- Malaxa senses what we now call a “niche”
able “. profile: production of rolling stock in a coun-
Nicholas Malaxa was a true leader. try with incomplete infrastructure and, above
Leader in the economic development of the all, badly damaged by war.
country, one of the leading businessmen of In this context, he obtained a modest
the time, a leader of the industry as a pioneer land near the capital, where in August 3, 1921
- the beginning of a “phenomenon”, as many establish a workshop for the manufacture
have said of everything that Nicolae Malaxa rolling stock, locomotives and cars for repair.
designed, a leading in politics and a leader in The primary basis of the workshop
relation to his workers. was small iron foundry – area in which he
Nicolae Malaxa romanian engineer and had specialized - designed controls for the
entrepreneur, was one of the most impor- brake blocks railways. It was the time when
tant industrialists in interwar period from Romania was not producing quality iron and
Romania, but also a controversial figure be- ordering this blocks often mean stagnation of
cause of his political sympathies. Evolution the transport abroad.
of the Malaxa plants was the most spectac- This manufactory offered Malaxa op-
ular economic and technological phenom- erative receipt of the orders and prompt de-
enon in Romania at that time, in less than 20 livery of the blocks from railway at a price
years, the workshop became an industrial gi- worth accepted, not to block transport.
ant, but a very important pillar for the entire Railways escape of the heavy import
Romanian economy in the interwar period. obsession, understood that Nicolae Malaxa
Nicolae Malaxa had all the qualities to is the solution for transport continuity and
be a good leader. He managed to create a vi- Malaxa long understood that nothing makes
sion and also urged the workers to aspire to you more prosperous business than ensuring
that vision. To translate the vision into real- a steady customer and payer, as is the state.
ity, Nicolae Malaxa appealed to different The collaboration was perfect and the
means to motivate employees and to target colaboration was sealed with a mutual trust
systems and processes to increase produc- relationship. On this basis, he gets a field
tion. This, offered higher salaries than other near the railway station Titan during 1923-
1927 were he builds a factory of rolling stock,
factories, social and health assistance, work
line railway tracks and he ends an agreement
equipment and lunch services.
to not only repair, but also for the production
Malaxa Nicolae was born in 1884 into a
of locomotives of Romanian design.
family of Greeks came to Moldova in the early
Based on the contract, he received an
nineteenth century. With the family support,
important advance in the railways, and loans

No. 17 ~ 2013
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272
from several banks. It was enough to equip quickly change the industrial production
the plant with 82 machine tools bought in series, thus achieving production capacity
Germany and Malaxa to become the most of industrial equipment, machinery for the
powerful rolling mill in Europe at that time. chemical, oil and others.
Further, he hired 180 skilled German Malaxa initiated and implemented in
workers to begin work manufacturing lo- Romania industry: rolling stock switchgear
comotives, and that German workers begin (1939-1943), diesel engines (1935) Mechanical
training the Romanian workers who were to transmission units, including control systems
take place. (1936-1937) seamless steel tubes (in 1937 af-
In 1928, the first steam locomotive made ter procedure Stiefel) Diesel locomotives for
in Malaxa manufactory was delivered to rail- CFR (1938) optical equipment (1938).
road, and in 1931 had began the manufactur- In 1937 in Belgrade and then in 1940
ing of the railcars Diesel traction - a European in Milan, Nicholas Malaxa present this lat-
rarity at that time. est Romanian railcar types, competitive in
In 1933, during the european crisis, Europe, although the industry had been es-
Malaxa Plants were delivering locomotive tablished only in 1934.
no. 100. Press, shows that 151 001 series lo- In 1945, it was made in Resita a
comotives of Romanian design were among Romanian car Malaxa named by Romanian
the strongest in Europe and experienced industrialist Nicolae Malaxa factories, whose
a resounding commercial success at the name it bears. It was designed by engineer
International Fair in Milan in 1940. Peter Carp and was equipped with a three-
Since 1930, Romania has never import- cylinder radial engine, air cooled, 30 hp
ed any locomotive, all made from Malaxa which reached 120 km / hour, with six pas-
plants, or those in Resita. sengers at a rate of 11 liters per 100 km. A
Due to his entrepreneurial spirit, beautiful performance, considering the age
Nicholas Malaxa builds and other facto- and country roads.
ries: factory seamless steel pipe (current The body of the car was mounted on the
plant Republic), applying for the first time chassis with rubber buffers of 10 cm thick,
in thecontinent the american rolling process which gave him comfort unmatched by other
“Stiefel”. manufacturers in motion. There were about
Between 1937-1938, Malaxa built the 800 cars per year, between 1945 and 1947.
factory of ammunition and artillery weapons The sudden end of this car was in Sofia,
in the factory rolling stock. Malaxa produced Bulgaria in December 1947 when a former
on the basis of a general national defense plan military political commissar, second, under
artillery ammunition, weapons and tanks de- the command of the first politruk, Nikita
Khrushchev (1894-1971) from yhe Ukrainian
signed after Romanian conception.
front, both under General Malinovsky
In only 12 years (1928-1939) Malaxa
Radion, (1898-1967) was commissioned to
Plants evolved from a rolling repair shop to
form policy frameworks Bulgarian Army.
the size of a first class industrial concern in The name of Major General was Leonid
Europe. The plant organized by Malaxa af- Brezhnev (1906-1982) accompanied by
ter his own plans, was designed so that could Colonel Vladimir Semiciastnii (1924-2001).

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273
Bulgarian General Stoico Blagoev (1921 good relations Malaxa had with the Royal
- 2000) led the Soviet senior guests with a car Household, particularly with Charles II.
Malaxa 1946. General Brezhnev was so im- To illustrate these relationships I am re-
pressed by that car that he called Kremlin lating a story which has the main character
on the phone and asked to move plant from Maxala, Auschnitt and Carol the II.
Resita Malaxa to Podgorye the Urals. So The two - Malaxa and Auschnitt - have
proposed to co-interest Carol, giving it a
Malaxa car died.
substantial amount of money. Operation
Also, Malaxa was shareholder of the
seemed risky as its predecessors - Carol I and
plants Astra Arad, Satu Mare Unio, IOR
Ferdinand - were famous for their accuracy
Bucharest (Romanian Optics Industry) Iron and rigidity in matters of business, so no one
Works and areas of Resita (UDR). In the late dared to bribe.
‘30s, the concern Malaxa belonged, among Auschnitt and Malaxa have “tried their
others, the current plant Faur, factories luck” in June 1931, when was the first anni-
Republic, United Tohan Zarnesti and black- versary of the “restoration”. The day before
smith shops Galaţi. the anniversary, June 7th, they presented the
Also Nicolae Malaxa demonstrate their palace to congratulate the sovereign, then sat
leadership qualities and takes care of the so- on his desk a massive bag: “Your Majesty,
cial problems of the workers, giving them heavy industry is deeply grateful to you for
higher salaries than other factories, social as- everything you have done and pray you re-
sistance, health assistance, work equipment ceive this hundred million lei, as a modest
contribution to social works of the Palace
and lunch services. The construction Malaxa,
“ . Charles II not only refused the gift, but
took as associate the architect Horia Creanga
thanked him and even decorated for their
so the plants constructed after Malaxa indi-
role in national economic development. Since
cationsi is an important contribution to the that time, the gifts have become established,
application of modern architecture in the especially birthdays, when Carol and Elena
construction industry. Lupescu (Duduia) receive jewelry, automo-
biles, paintings, historical documents, horses,
nicholas malaxa a controversial per- stables, cottages etc.
son at the time Nicolae Malaxa was a sympathizer of
the Legionary movement and financier of
Also Nicole Malaxa was a good diplo- most political parties, including the Iron
mat and he knew that he had to attract col- Guard and Romanian Communist Party. His
laborators as strong as him, being one of the friendship with philosopher Nae Ionescu as-
laws of leadership - Law magnetism. sured relations in the Legion, and the prox-
It is said that Nicholas Malaxa has en- imity of German political circles. Malaxa
riched through Government support in the puts Nae Ionescu to negotiate iron imports, a
form of loans and state orders. Through fact transaction completed on favorable terms for
Romanian industrialist, for which he paid the
that the Government grant credit, advance
house from Baneasa to the philosopher.
capital them and then buy them requested
During the Second World War, more
output, ensuring its substantial profits. It
precisely in 1941, Malaxa is accused of collab-
seems that all these state orders were due the
orating with the Legionnaires and therefore

No. 17 ~ 2013
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274
they seized factories. Later, with the com- - Be able to think creatively to provide a
ing to the power of the communist regime, vision for the company and solve problems;
Malaxa gain favors and sympathy of the - Be calm under pressure and make
Communists because he had been persecuted clear decisions;
by the Antonescu regime. - Have the desire to achieve great things;
- Be well informed and have knowledge
At the industrial nationalization since
about things related to your business.
1948, have been taken by the state and the
This qualities were possessed also by
rest of the property, plants Malaxa, being re-
Nicolae Malaxa. Nicolae Malaxa managed to
named “August 23 plants” that communists impose his new and innovative style at a time
have turned into a symbol of the workers’ when the economy is focused on agriculture,
struggle against the exploiters. The commu- he managed to put bases on modernizing the
nist government keeps him as specialist con- Romanian economy by its innovative style.
sultant, and in 1948, with the participation of His style was characterized as demo-
a trade delegation to Vienna, he emigrated to cratic but with authoritarian style influences.
the U.S. and settle in New York. So he knew Thus, Nicolae Malaxa trust his employ-
how to act when opportunity appeard. He ees and motivate them based on their level
had the intelligence and flair to anticipate of involvement. Nicolae Malaxa communi-
times when he had to make a decision. He cate directly without detours and always
said what he thought. It also gave attention
knew that to lead is as important as knowing
to the social needs of its employees and was
what to do and where to get.
interested if employees were happy in that
Malaxa was sentenced to death by the
environment.
regime for war crimes, as wartime produc- Regarding the authoritative part,
tion of weapons was found in favor of fight- Nicolae Malaxa take the most important deci-
ing against the USSR, and also accused of sions and work closely controling employees.
cooperation with the Legionnaires. Like the type of manager, Nicolae
Nicolae Malaxa requires permanent res- Malaxa fits the style maximalist aimed main-
idence in the United States, and in 1948, the ly on tasks. On this line, he adapt every situ-
future U.S. President, in that time Republican ation being a good colaborator both those in
senator, Richard Nixon, tried to introduce power and with other business people of the
a bill in Congress that would enable him time. Business climate he would prefer was
to obtain the right to reside in the U.S., but the demanding, sometimes harsh one.
Due to his entrepreneurial spirit and
Congress opposes. But shortly obtain U.S.
leadership qualities, Nicolae Malaxa will
citizenship and begin to develop new busi-
become a symbol of the interwar period, a
ness, but without having success before the
figure of modern industrialism in an era in
war. After learning of its past policy, the U.S. which population growth could be absorbed
will try to expel, but in vain, mixer died in by industry.
1965 in New Jersey. Nicolae Malaxa offered a new vision
of the modalities on economic growth, he
Conclusions: brought new knowledge to build a new era
in Romanian industry.
Some qualities that a great leader must
posses are:
No. 17 ~ 2013
 Change and Leadership
275
reFereNCes:
1. Aurel sasu, Breviter, Limes Publishing House, Cluj, 2004;
2. ioan scurtu, Istoria romanilor în timpul celor patru regi, vol III: Carol II, Editura Enciclopedică Publishing
House, Bucharest, 2010;
3. Petre Țurlea, Carol al II-lea și camarila regală, SEMNE Publishing House, Bucharest, 2010
4. Peter f. Drucker, The Frontiers of Management, PENGUIN Publishing House, 1986
5. henry holban, Pagini de istorie. Uzinele Malaxa - 23 August – Faur, CD - PRESS Publishing House, Bu-
charest, 2007;
6. http://www.evz.ro/detalii/stiri/malaxa-faur-sau-pasarea-phoenix-a-industriei-romanesti-video-858138.
html:
7. http://www.historia.ro/exclusiv_web/general/articol/razboiul-nababilor-malaxa-vs-auschnitt

No. 17 ~ 2013
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276

Processes, Forms of sport Management

system

~ Ph. D. Gheorghe Jinga (Bucharest Economic Studies Academy)

E-mail: [email protected]

Abstract: The process of instructing the sportsmen has always been a complex and thorough activity,
that requests profundity, professional sensitivity and bonding.
The main characters in this process are played by managers, coaches, trainers, methodists, psycholo-
gists, sociologists, technicians who establish and hand over theoretical knowledge, abilitiesand skills for
the sportsmen.
In this way is being created the environment for instructing and highlighting the physical, technical,
tactical and psychic potential of the participants in competitions.
The training process of the sportsmen is more and more headed towards the integral and deep inter-
nalization of the instructive components, based on the interconnections between the elements of modern
sport science.
Key words: managerial system, structural elements, evaluation, transforming processes.
Jel classification: I. Health, Education, and Welfare – I.21, I.25

1. introduction personal values and opponents, without

monitoring, analysis, forecasts, and especial-
Medals and titles of today are based on
ly undocumented planning, programming,
scientific data obtained inside and outside
management and evaluation.
of the training process. The work cannot be
Training athletes should be linear and
done without a model, comparisons with
concentric. Linear action involves successive

No. 17 ~ 2013
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277
formation, depending on the age of athletes, complex application. (Epuran, 1998, Bompa,
their theoretical and practical skills, fitness, 2000, Dragnea & Bota, 1999).
or as desirable to share the value of creativ-
ity. The second type of influence is felt in 2. the managerial approach
different periods, limited mainly included,
basic training structures and pre-competi- Sport is a process carried out accord-
tive with previous experiences support both ing to a model proposed by society and in-
the athletes and the coach. The value can be ternational environment, task driven, depth,
expressed numerically and graphically by a developing and maturing fundamental phys-
curve describing the oscillations, which can ical and physiological (moral, aesthetic, cog-
be expressed inclusive in sports domain. nitive, affective and volitional) human side.
(Jinga Gh.-2010, Leonte I – 2010). Sport means “becoming” and
Training athletes and their adaptation also the result of becoming (Epuran M 1968,
to pre-competitive and competitive applica- Vinţanu N.-2001, Leonte I - 2005, Cârstea
tions requires a thorough training program, Gh -1993). It is influenced by a managerial
planned and executed in full, not rigid, but system, being actually a complex system.
flexible, with a view on the health and mood, Without structural elements, there is no per-
environment, equipment features, and facil- formance, level regardless (Bompa TO - 2000,
ities used in preparation at a time. (Bompa Boroi G. - 2006).
T.O 2000, Dragnea A., Teodorescu S. 2002). Fundaments of sport as a system
As a social phenomenon, the sport are structured by nature, succession and their
evolved over time. (Dragnea A 1999, Bompa interference. Endpoints and training, the
T.O. 2000) It was performed and evaluated value of each element, demanding and rig-
in different ways resulting various explana- orous programming, planning and carrying
tions and interpretations according to dif- out transformative processes, evidenced by
ferent theoretical positions and orientations. regular evaluations and competition are de-
Sport is an open system, characterized by fining performance. (Dragnea, 1996, Bompa,
dynamism, renewal occurs according to the 2000). Size of each item, gives value to the
imperatives of human and social reality. entire system (Jinga Gh, Pop - 2007, Leonte
(Colibaba Ev. 1998, Dragnea A., Teodorescu I. - 2010).
S.2002. Leonte I. 2010). The system entries, the expectations
Each leap in the history of sport has been and the theoretical and practical results (out-
so many milestones to rethink the notion that put), represent the science of training, where
designates it. (Jinga Gh.- 2010, Leonte Ion - we find reflection of management art and sci-
2011). Thus remaining an open performance ence. Analyzing structural elements of sport
area classifications and systematic theoreti- management system (Fig. 1) we find that this
cal foundation, the notion of sport has con- is a complex phenomenon: pedagogy, biolog-
tinuously enriched and specified its content, ical and psychological, held in a profoundly
and expanded the scope and approaches, social framework.
getting new meanings and most important- Sports training, by harnessing human
ly, increasing their levels of intensive and factors, educational, informational, material,

No. 17 ~ 2013
 Change and Leadership
278
actually relate regular (fixed term of sporting structure fragmented and unconnected lin-
calendar, world championships and Olympic ear algorithmic value of preparation content
cycles) to the inputs and outputs of the sys- and transmission to younger athletes and dif-
tem, whose performance dimensions to give ferent values without increasing complexity
differences that where tended to. (Boroi G.- inevitably leads to a poor assimilation and
2006, Colibaba Ev. -1998, Leonte I - 2011). formation driving conditions not always
Management system emphasizes the high value. The numerical, technical or phys-
synthesis, quality and quantity assimilation ical performance sometimes is incompatible
of accommodation, adaptation and integra- with the club or world and Olympic competi-
tion of athletes in training and competition tions level (Boroi G. 2006).
environments in which they are going to We believe that one of the main factors
participate. is the lack of effective discipline mismatch
This embodiment (integration) which sports content the physical, physiological
is both cultural and sports content is reflect- and mental athlete with the environment and
ed in the training program and competitive training in relation to major sporting events.
through quality physical, technical, tacti- Setting goals that concern the trans-
cal, physiological, and psychological theory forming process is a technique with its own
(Epuran M -1968, Dragnea A., Teodorescu S, particularities that can also be used by the
2002, Jinga Gh-2010). trainer (teacher) to perform and even maxi-
As shown, athletic training is a broad mize its performance. Experts have identified
issue, complex and demanding. It requires four mechanisms by which goals seem to in-
systematization and interpretation of data fluence (affect) the performance:
relating to practical and methodological is- • Objectives direct attention, intention
sues, organizational and prospective results and action (Locke and Byrom, 1969);
of long experience and scientific studies. • Objectives adjusts the amount mobi-
(Dragnea A.1968, Epuran M., 1968, Colibaba lized effort that an athlete is
Ev. 1998). • ready to submit to achieve a given
Thus, there must be a gradual accumu- task;
lation of knowledge, notions, concepts, prin- • Objectives increase perseverance, be-
ciples, methods, rules, and skillful technique cause the effort continues to
for athletes at all levels and their training. • be provided to the objective or
While understanding that regardless sub-objective;
of the amount of knowledge, expertise and • Achieve a target tracking favors devel-
their quality, if they are applied singular, opment of alternative strategies, understand-
they don’t have an expected effect. (Bompa, ing and behavior modification between coach
2000, Dragnea A., Teodorescu S 2002, Jinga and athlete if there are issues of inefficiency.
Gh.,2010, Leonte I. 2010 ). Because these four mechanisms ex-
Following the completion of observa- pressed motivated behaviors, setting an ob-
tion protocols and performance indicators jective appears to operate indirectly through
based on periodic checks of some sports motivational processes. We say that a tar-
training parameters, it was found that the get should be considered as representing

No. 17 ~ 2013
 Change and Leadership
279
an action and not just as a stimulus that, in feeling seems to be an underlying cogni-
some way, control behavior (Epuran M-1968, tive mediator for the behavior. We must un-
Dragnea A.-1996, Manno R - 1996). Human derstand that the motivational value of the
activity in motivation theory, implicitly in objective is not the athlete supports selec-
sport, is controlled and regulated by the re- tive unless prescribed standard, acquiring
sult to be achieved, namely a cognitive pur- it (Boroi G.-2006, Jinga Gh.- 2010, Leonte I
pose now. What initiates and regulates the -2010).
conduct is setting goals, standards, objec- Premises effectiveness of sport manage-
tives, prioritized and with an appropriate ment system:
value. • Identify structural elements;
Requiring certain goals do not involve • Increased value of each item;
straight and certainly action. While specific • Requirement objectives of the training
objective is not achieved, the athlete per- course and final;
ceives a maladjustment which will try to re- • Relationship support some elements
duce by a selection and implementation of an over others,
adaptive behavior (Manno R -1996). • Quality and nature of collaboration
In practice, coaches with outstanding coaches, methodologists, sociologists, psy-
preparation workflows argue that the moti- chologists, physicians,
vation of an athlete focused on achieving a • Linear interference coaches (teachers)
goal is affected by three variables: to acquire theoretical knowledge and skills
- Hope in a performance that is likely to training in sports disciplines;
achieve a goal subjective; • During the preparation and imple-
- Subjective probability that the target mentation of specialized information.
will have a result, even a reward; Quality of education is reflected in the
-Valence dimension expressing personal competition results and management means
values assigned performance or its outcome. are helpful to identify structural elements,
These theories demonstrate that com- their value in aims achieving.
mitment into action requires, first, accep-
tance of three questions from athletes and
even coach:
- Are they able to accomplish the re-
quested action and get the result set? ;
- Obtaining the result will certainly trig-
ger compensation?;
- The stake represents an interest or is
real value? (Dragnea A.-1996, Boroi G.-2006).
Objectives are related to the athlete con-
cern. If he thinks more successfully to meet
the desired result, the probability that he
chooses to perform the task and they will be
persevered in achieving greater. Self-efficacy

No. 17 ~ 2013
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280
Fig. 1 Management system in sport

3. Conclusions Starring in this process is played by

managers, coaches, trainers, methodologists,
The training of athletes has always
psychologists, sociologists, technicians who
been a complex and laborious task, requiring
establish and transmit theoretical knowl-
depth, sensitive approach and a networking
edge forming abilities and physical skills to
process.
athletes.

No. 17 ~ 2013
 Change and Leadership
281
This team creates a proper training and as desirable to share the value of creativity.
recovery environment to increase the physi- The second type of influence is felt in differ-
cal, technical, tactical and psychological ent periods, limited mainly included basic
sportsmen potential. training structures and pre-competitive stag-
The preparation of athletes is increas- es with previous experiences support both
ingly direct towards acquiring full and the athletes and the coach. The value can be
lasting educational components, based on expressed numerically and graphically by a
modern sports training methodologies. curve describing the values oscillations dur-
The high performances cannot be ob- ing a season or longer. (Jinga, 2010, Leonte,
tain without a model, without comparisons 2010).
between personal values and opponents, Training athletes and their adaptation
without monitoring, analysis, forecasts, and to the pre-competitive stage requires a thor-
especially without a documented planning, ough training program, planned and execut-
programming, management and assessment. ed in full, not rigid, but flexible, depending
Preparing athletes should be linear and often on health and mood, environment,
concentrated. The action involves successive equipment features, and facilities used in
formation, depending on the athletes age, the trainig at a time (Bompa, 2000, Dragnea A.,
theoretical and practical skills, to training, or Teodorescu S. -2002).

reFereNCes:
1. Bompa, t.o., 2000. Antrenament sportiv-periodizare. Bucureşti, Editura Printech
2. Cârstea, Gh., 1993. Programarea şi planificarea în educaţie fizică şi sport. Editura Univers.
3. Colibaba, ev., 1998. Modelul şi modelarea pregătirii, Stiinţa sportului 13 /1998.
4. Boroi, G., 2006.Managementul şi evaluarea antrenorilor. Sesiune de comunicări ştiinţifice I.N.C.S.
5. Dragnea, A, 1996. Antrenamentul sportiv. Bucureşti, Editura Didactică şi Pedagogică.
6. Dragnea, A, Bota, A., 1999. Teoria activităţilor motrice, Bucureşti, Editura Didactică şi Pedagogică R.A.
7. Dragnea, a, teodorescu, s., 2002.- Teoria sportului , Bucureşti, Editura Fest.
8. epuran, M., 1968. Psihologia sportului, Bucureşti, Editura A.N.E.F.S
9. Jinga, Gh., Pop, C., 2007. Didactica educaţiei fizice în învăţământul superior. București, Editura A.S.E.
10. Jinga, Gh., 2010. Interdisciplinaritatea în educaţie fizică şi sport, București Editura ASE.
11. leonte, i., 2010. Didactica disciplinelor montane, Bucureşti, Editura Moroşan.
12. leonte, i., 2011. Sport şi comunicare managerială, Bucureşti, Editura Moroşan.
13. Manno, r., 1996. Less bases de l’entrainement sportif, Bucureşti, C.C.P.S.
14. vințanu n., 2001. Educaţia universitară. Bucureşti, Editura Aramis.

No. 17 ~ 2013
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282

Potential Beneficiaries of Cloud Account-

ing technology: small or large Companies?

~ Ph. D. Professor Bogdan ştefan ionescu (The Bucharest University of Economic

Studies)
E-mail: [email protected]
~ Ph. D. Student Cristina Prichici (The Bucharest University of Economic Studies)
E-mail: [email protected]

Abstract: The article addresses the issue of Cloud Computing concept from the perspective of its im-
plications on the business environment. In this respect we have analyzed the changes brought by the new
technology which come to connect the discontinuities between the IT solutions adopted by small and me-
dium organizations and those adopted by large corporations. The article analyzes the benefits and limita-
tions of cloud both in terms of small companies and in terms of more developed entities. Whatever the size
and type of organization but especially for SMEs Cloud provides a competitive advantage by providing ac-
cess to affordable, reliable and flexible IT solutions that allows them to operate more efficiently among their
competitors in the market.
Key words: cloud, small companies, corporations, benefits, challenges

introduction activities of the companies, particularly in an

environment of intense and global competi-
The importance of technology for the
tion. Technology often provides saving solu-
economic development is widely recog-
tions in downward economic cycles because
nized considering the impact it can have on
it allows the creation of more effective busi-
the success, survival or failure of business
ness models and ecosystems. Paradoxically,
No. 17 ~ 2013
 Change and Leadership
283
sometimes creates a level playing field but literature review
there are also times when engenders the
According to a study undertaken by
creation of an “unfair” advantage for some
Vanson Bourne for Microsoft with the con-
countries or companies. One such phenom-
tribution of 2199 managers and entrepre-
enon is the Cloud that sets in motion the in-
neurs from 21 European countries including
terest and investment in many parts of the
Romania, 55% of the respondents consider
world. The future belongs to those who will
that information technology is a key factor
truly understand the implications of the new
for the success of their business. One of two
technology, will control risks and adopt an
entrepreneurs consider that cloud resources
innovative vision to create a new order.
will become the new way of normality and
the main named advantages are:

Figure 1: Cloud technology benefits (according to the Vanson Bourne study results

As there is concluded in the above men- to different categories of customers or have

tioned study, we also consider that the cost reduced the number of services / products
reduction through exploitation of Cloud so- offered and focused only on the cash they
lutions is one of the top benefits made possi- could bring to the company. Regardless
ble by the Cloud. However a proper attention of the plan followed the general trend is to
should be paid to other significant benefits adapt the business to the new technological
such as work efficiency/productivity and mo- framework in recognition of the positive ef-
bility. Cloud solutions could be regarded as a fects of the changes engendered by the Cloud
promoter of employee mobility through full solutions.
availability given the territorial spread, opti- As stated by Marius Georgescu, Cloud
mization of time, the possibility of accessing Lead, Microsoft Romania business solu-
data in and out of the workspace. tions based on Cloud Computing minifies
Currently there are many studies that the capital cost and substantially decreases
the operational expenses and in this way en-
bring to the fore the many benefits of the
trepreneurs have access to the best technol-
cloud technology in the business environ-
ogy at an affordable price through a model
ment as well as its limitations. Provided the
„pay-as-you-go”.
current economic background, cloud solu-
Although we recognize the importance
tions represent a competitive differentiator and nature of Cloud technology benefits, we
for companies of all sizes. In recent years intend to approach this concept in terms of
of crisis, entrepreneurs focused on finding companies’ size: who are the real beneficia-
new areas of profit. If some of them have re- ries of Cloud technology and who is applied
invented their business, others have turned to, small organizations or corporations?
No. 17 ~ 2013
 Change and Leadership
284
what small companies have to gain? qualitative infrastructure without the need to
purchase, deploy and manage it. In this way
Cloud concept has a quite low interest
are released resources that can be focused on
within large companies who own the infra-
business innovation needs. Moreover these
structure, local or international data centers
companies will be able to use multiple data
and IT professionals but it represents a topic
centers located in different parts of the world
of significant interest for small companies,
which meet the requirements of data recovery
more swift-handed, that need solutions to
in case of disaster and business continuity.
help them to better organize the business and
One of the main changes brought by
ultimately increase their results.
data migration into the cloud is represented
Small companies have to settle with
by the payment method which is subscrip-
modest IT budgets in order to be able to
tion-based, depending on consumption. Due
meet the demands of their business and to
to the affordable startup costs, small organi-
be able to use efficient IT systems. Many of
zations are able to manage in more efficiently
them cannot afford to support multiple data
manner its available funds and thus have the
centers to assure the protection against
ability to launch products and services on
possible disasters and business continuity.
market in a shorter timeframe.
The biggest challenge is finding enough re-
Also Cloud technology meets the needs
sources to drive generation of revenue. Such
of small organizations in respect of produc-
companies have to compromise in terms of
tivity which is substantially improved by
technological modernization, architectural
the availability of Cloud resources. As long
decisions and investments in infrastructure.
as there is an Internet connection employees
In the current economic background the year
can easily work from anywhere in the world.
to year trend encourages “to do more with
This fact will lead in time to an increase in ef-
less money” and therefore the embraced so-
ficiency, business cost reduction and will fa-
lutions are just “good enough” because there
cilitate the collaboration within the company
are no resources to develop applications to
in a timely manner.
engender the expected results.
In terms of data security, it is among the
Following our research we consider that
first concerns both for small and especially
Cloud technology reduces the gap between
for more developed companies that seem to
SMEs and large organizations. Unlike tradi-
tional IT systems, Cloud systems require low hesitate to embrace the possibility of com-
investment in terms of equipment and licens- plete migration into the Cloud. However
es. If in the past small and medium compa- professional service providers have imple-
nies did not afford expensive IT systems like mented various layers of security to ensure
customer relationship management (“CRM”) data privacy and to maintain the reliability
or enterprise resource planning systems and validity of the information. Nevertheless
(“ERP”) now are able to run their internal there should be considered the fact that the
processes and operations using the same IT protection of critical data depends largely on
systems employed by their more developed the ability of employees to protect their per-
competitors. sonal access information.
Through Cloud Computing SMEs Big corporations are turning to cloud
have an immediate advantage to benefit of a
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285
resources because they help to improve the medium companies increasing from 28% as it
operations flexibility and targets setting. If was recorded in the first half of 2011.
developed entities are making remarkable Cloud Computing technology provides
progress in Cloud, small companies are also innovating opportunities for companies of
capable of such progress using the same various types and sizes. Obviously small
economic and production infrastructure. A and medium companies opt for adopting
prime example of an application for SMEs cloud resources in order to avoid difficul-
benefit is e-mail which is widely available. ties and costs of deploying an IT infrastruc-
Companies that make the transition are able ture to support their business and respond
to manage a large number of users and on- to their customer needs. Corporations can
line storage paying only for what they are also benefit from such resources through an
consuming. opportunity to experience new technologies
For a small business the process of out- without having to invest in the purchase and
sourcing the IT resources into the Cloud re- implementation process. In the second half of
duces the need for specialist skills and allows 2012 Information Systems Audit and Control
management to focus on the most important Association (ISACA) conducted a study re-
aspects of a business. It may have a slight- garding Cloud Computing market maturi-
ly higher cost than in-house IT services but ty and innovation attended by 252 users of
are usually compensated since they allow a Cloud resources. Regarding the penetration
small company to adopt a large entity’s ap- of Cloud technology into a potential market
proach in resolving the problems they face. the survey respondents consider that large
A study that has been undertaken by companies (more than 1,000 employees) have
Spiceworks reveals the fact that Cloud ser- a higher demand for innovative products and
vices are currently used by 48% of small and services as compared to small businesses.

figure 2: Cloud spread on market segments based on its benefits and innovation demand (source:
isaCa, “Cloud Computing market maturity study Results”, 2012)

As asserted in the figure above small companies usually focus more on an internal
companies do not have a high interest in perspective than an outsourced approach. As
the means of using Cloud as a measure for far as concerns the internal prospect of Cloud
change in the way technology is deployed and it represents a mechanism through which
therefore it is not apprehended as a strategic new technologies can be experienced and
tool. We believe that this happens because provides users improved services to increase

No. 17 ~ 2013
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286
staff efficiency and effectiveness. Goals set in what big companies have to gain?
an external approach such as launch of new
On the other hand, large companies that
products on the market or assuring a top rat-
have substantial IT budgets do not face the
ing are less considered.
difficulties encountered by small and medi-
Cloud implications for small and me-
um companies. Many of these organizations
dium companies can bring as well limita-
are waiting and looking from the sidelines
tions that must be considered and analyzed
how this technology matures but consider
in terms of the company’s ability to pre-
that it is too risky to join. Corporations that
vent them or find solutions in this regard.
adopt Cloud Computing will gain competi-
Undoubtedly the security issue remains one
tive advantage.
of the main concerns when taking into consid-
A study undertaken by Jeanne G. Harris
eration the migration to this new technology.
and Allan E. Alter for Accenture reveals that
Besides this, other aspects that can cause dif-
top executives of developed companies re-
ficulties in adopting Cloud solutions should
alize how Cloud services can provide new
be discussed. One of the matters is Internet
ways to compete but also feel threatened by
connection. Cloud makes the SMEs business
new potential competitors that may enter on
to be dependent on a reliable connection to
the market. However on the whole leaders
the Internet. This can result in a performance
of key players in the market recognize the
risk due to lack of Internet speed, reliability of
strategic potential of Cloud technology and
the network or data transfer. Also there may
almost more than half states with confidence
be a problem due to the fact that the com-
that cloud services can ensure a competitive
pany is too dependent on the Cloud service
advantage. Further we have presented part
provider. Other problems set within the legal
of the Accenture study results regarding ex-
framework since there is a need of establish-
ecutives thoughts in what concerns the pos-
ing regulations in what concerns the national
sible changes brought by the Cloud.
limits and conditions for data transfer.
Figure 3: Responses to possible Cloud outcomes (source: Accenture study regarding the competitive advantage
brought by Cloud Computing technology)

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287
Each industry has its own reasons for adopting Cloud technology. The balance of Cloud
deployment by industry is as follows:

Figure 4: Spread of Cloud by industries (source: Accenture study regarding the competitive advantage brought by
Cloud Computing technology)

As shown in the figure above high tech- these resources. IT companies are often bur-
nology and communication industry detain a dened by the provision of highly developed
large share in the use of Cloud. A percentage IT infrastructure and this has led the sector to
of 94% of organizations in the industry are be among the first to find solutions to reduce
using or experimenting some form of cloud, IT maintenance costs. These companies ex-
especially private clouds. These companies ploit the volatile nature of Cloud technology
show an interest above average in using finding use in several ways:

Figure 5: Cloud services in high technology and communication industry

No. 17 ~ 2013
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288
Also, the finance sector is among the applications (41%). In a ratio of 4 out of 10
industries with a fast pace in the process of manufacturing companies recognize as a re-
adopting Cloud technology. Bankers and sult of adopting Cloud technology the im-
brokers easily understood that these services provement of the decision making process
can lead to a substantial increase in revenue in the next 5 years. It is likely to use the cloud
by launching new financial products and ser- to run websites that involve social media and
vices. Firms with a financial background use mobile applications1 , 40% of the companies
Cloud also for data analysis (72%). Managers planing to use them in the next 18 months.
in this area can not deny the potential of this Among the companies with the lowest
technology to improve their operations. A probability of using Cloud technology are
percent of 75% states that these resources can included those that provide utilities servic-
be the foundation for an efficient and stan- es, energy, chemical and natural resources
dardized business. More than 70% declare which allocate a small portion of the bud-
that cloud services put in motion processes get for IT infrastructure spending. However
that otherwise would not be cost-effective or to the extent to which IT platforms are used
feasible. there is an opening to the Cloud migration
Another area interested in Cloud is that in order to create a flexible and scalable IT
of health and public services. Nearly 83% of infrastructure. Also Cloud services are used
the organizations in this industry are current- to manage a large volume of data generated
ly using Cloud services. Government entities in the normal course of operations. The top
hold huge volumes of data to be processed benefits resulting from the use of Cloud in
and analyzed starting from economic fore- this sector are avoiding IT maintenance costs
casts and moving up to crime prevention and (73%) and the development of new or im-
collection of taxes. The prime ways of using proved products in a shorter time (69%).
Cloud are data backup (47%), data analysis As we have showed above in what re-
(41%) and research and development (38%). gards large companies the benefits of Cloud
However this is also the sector with the big- technology are many and varied stretching
gest concerns regarding security and privacy over a wide range of business sectors. Besides
of data. A percentage of 78% of those who these advantages we want to bring into dis-
have executive responsibilities are worried cussion the implication of Cloud over energy
or very worried about this aspect. costs and the possibility of future orientation
On the other hand, manufacturing towards a “Green IT”. A report released by
firms, retailers, consumers, manufacturers of the Carbon Disclosure Project (CDP) in 2011
industrial goods are not upholders of a showed how virtualization of services may
rapid adoption of Cloud technology but be- lead to substantial savings in energy costs
hold it as a perspective of future innovation for large corporations while avoiding the re-
that will become a basic need of the business. lease of millions of tons of greenhouse gases.
Some ways of using cloud systems include 1
Olteanu Cosmin, „New Ways of Developing
the availability of a working platform which Public Institutions Web Sites in Context of Using
ease the connection with other organizations Social Plugins and Mobile Devices”, “Manager”
(43%) and running CRM, ERP or supply nr. XVI, p.90-97, Bucharest University Publishing
House, 2012, ISSN: 1453-0503
No. 17 ~ 2013
 Change and Leadership
289
Cloud computing can help save 12.3 billion and sponsored by AT & A, which included 11
a year by 2020. This translates into 85.7 mil- companies with revenues of $ 1 billion and
lion metric tons of carbon emissions that that have used Cloud Computing for at least
could be avoided annually if these corpora- 2 years. Further we have presented the pre-
tions increase their spending from 10% to dicted model regarding the energy savings as
69% for IT resources as is revealed in a re- it is highlighted in Verdantix study.
port prepared by Verdantix on behalf of CDP

Figure 6: Energy savings 2011-2020

Figure 7: Forecast scenario: increase of CO2 gases compared with non-adoption of Cloud technology

Regardless of company size and IT bud- to make investments in a complex infrastruc-

get, Cloud Computing offers a number of ad- ture unlike corporations that are owners of
vantages that cannot be ignored. However, substantial resources and IT assets.
given the facts mentioned above, at the mo- At the opposite there are also disadvan-
ment small and medium companies are key tages brought along by Cloud technology
targets of Cloud technology since it is un- which are basically the same as those men-
likely that they have the monetary resources tioned in the case of the small and medium
No. 17 ~ 2013
 Change and Leadership
290
companies. In addition to this we consider Further we have presented a summary
that has to be added the risk of losing valu- of the main drivers and challenges of Cloud
able IT skills. As a result of IT support out- technology and the implication on both SMEs
sourcing companies can lose valuable skills and large corporations.
and also may face resistance from the IT de-
partment towards organizational changes.
Figure 6: Drivers and challenges of Cloud Computing technology and its implications based on company size

After putting in balance both advantag- overcome through a proper strategy and re-
es and disadvantages of Cloud Computing sponsibility of companies executives.
we conclude that companies should embrace
the new technology and deploy its data into Conclusions
the Cloud as the many benefits could signifi-
cantly change the business towards a better, Undoubtedly, the emergence of Cloud
more efficient economic approach. However organizations finds themselves at a crossroad
the limitations mentioned above may be in terms of technological options. Adopting

No. 17 ~ 2013
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291
Cloud solutions can provide companies However, regardless of the size of the
with an opportunity to transform their companies Cloud migration also requires a
business and gain competitive advantage. strategy planning because as well it involves
Organizations can focus on core competen- limitations regarding data security, main-
cies by transferring responsibility for IT man- taining the privacy of information, disaster
agement to Cloud services providers. recovery. Also, it is felt the need for a legal
In terms of company size the implica- framework to clarify the possible situations
tions of Cloud Computing technology are re- that can occur while transferring data into
flected both in the big corporations that look the Cloud in what concerns data rights and
to the Cloud through an external perspective information security.
based on strategy and innovation and small Considering all these aspects, on the
and medium companies that adopt an inter- whole the scalable and flexible nature of
nal perspective concerning the increase in the cloud is a guarantee for organizations not
staff efficiency and effectiveness. Moreover, only for the change in the way they man-
Cloud provides to small and medium com- age IT resources but also for the transforma-
panies a significant take-off by benefiting tion of businesses. Cloud is not just a phase,
with a low cost and effort of the same sophis- but a reality that has just begun to realize its
ticated technology used by their more devel- potential.
oped competitors.

reFereNCes:
1. Ambrose McNevin, June 6, 2011, “Are big companies actually adopting Cloud Computin?”, DatacentrDy-
namics (available on: http://www.datacenterdynamics.com/focus/archive/2011/06/are-big-companies-
actually-adopting-cloud-computing);
2. Enlight Cloud, Nov. 2, 2012, “Advantages and disadvantages of cloud computing for SMEs” (available on:
http://cloudhostingplans.co.uk/sdsdsdsd/);
3. IDC Market Spotlight, Jan. 2013, “Cloud Computing in the midmarket: Assessing the options in 2013”, spon-
sored by IBM;
4. janet l. Kourik, “For Small and Medium Size Enterprises (SME) Deliberating Cloud Computing: A Proposed
Approach”, Mathematics and Computer Science Webster University, USA;
5. Jeanne G. Harris and Allan E. Alter, Nov. 2010, Cloudrise: Rewards and risks at the dawn of Cloud Comput-
ing”, Accenture reasearch report;
6. jiaqi Duan, Parwiz faker, alexander fesak and tim stuart, proceedings of the 2012-2013 course on
advanced resource planning, “Benefits and drawbacks of cloud-based versus traditional ERP systems”, Tilburg
University;
7. Kavis Technology Consulting, “Cloud Computing for companies of all sizes” (available on: http://www.kav-
istechnology.com/blog/cloud-computing-for-companies-of-all-sizes/);
8. Kumar Parakala and Pradeep udhas, 2011, “The Cloud: Changing the Business Ecosystem”, KPMG India
study;

No. 17 ~ 2013
 Change and Leadership
292
9. Maryalene laPonsie, March 11, 2013, “Can Cloud services improve small business profits?” (available on:
http://www.smallbusinesscomputing.com/tipsforsmallbusiness/can-cloud-services-improve-small-
business-profits.html);
10. mike foreman, April 01, 2013, “Small business awarness of the Cloud benefits is growing” (available on:
http://www.huffingtonpost.com/mike-foreman/small-business-cloud_b_2980087.html);
11. raymond Boggs, March 2012, “Worldwide Small and Medium-Sized Business 2012–2016 Forecast: IT Spend-
ing Changes by Size Category and Region for Hardware, Software, and Services”, Doc # 233740;
12. Verdantix, 2011, “Cloud Computing – The IT solution for the 21st Century”, Carbon Disclosure Project Study
2011.

No. 17 ~ 2013
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293

the economic impact of cloud computing

technology on new business and employment
in romania

~ Ph. D. Professor Bogdan ştefan ionescu (The Bucharest University of Economic

Studies)
E-mail: [email protected]
~ Ph. D. Assistant Professor iuliana ionescu (The Bucharest University of Economic
Studies)
E-mail: [email protected]
~ Ph. D. Student laura tudoran (The Bucharest University of Economic Studies)
E-mail: [email protected]

Due to the current global economic sit- the definition and the characteristics of the
uation, all the companies are now involved “cloud computing” concept, lies with both
in searching effective ways of improving ef- the high number of existing cloud provid-
ficiency and profitability (C. Christauskas ers that promise different capabilities and
and R. Miseviciene, 2012). Many research- the fact that terminology used and the frame-
ers like Gatautis et al., 2009, Melnikas, 2008, work of the cloud coincide with other fields,
Zavadskas et al., 2010 and C. Christauskas such as, Data Centre Clusters, Grids, High
and R. Miseviciene, 2012 claim that the dig- Performance Computing and Web Services
ital technologies are used to improve the as well.
decision making process for businesses. As Moreover, Expert Group (2012) sup-
shown by the recently published studies, ports the idea of establishing a common defi-
the latest trend in information technology is nition for the cloud which would separate
“cloud computing”. the concept and its characteristics of other
Expert Group (2012) considers that the fields. In the short term, this would enable
responsibility for the confusion regarding a better understanding of the cloud concept

No. 17 ~ 2013
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294
and, in the long term, the establishment of a) Infrastructure as a Service (IaaS or
recommendations for best practices. The Infrastructure as Service) - provides en-
current definitions of this concept reflect, in hanced virtualization capabilities. Resources
particular, the current status and capabilities may be provided by two types of service
without highlighting the long-term essential interface:
characteristics or their full potential in vari- • Date and Storage Clouds: allow re-
ous fields. liable access to data with dynamic potential
As Expert Group (2012) has stated, we size, balancing resource access or quality re-
can see that most definitions related to the quirements defined. (examples: Amazon S3,
“cloud computing” concept describe it as an- SQL Azure)
other means of providing services, resources • Compute Clouds: provide access to
or servers on the Internet. In this respect, a computing resources. (Examples: Amazon
suggestive example might be the Oxford EC2, Zimory, Elastichosts)
Dictionary definition of cloud computing:” b) Platform as a Service (PaaS or
the practice of using a network of remote Platform as Service) - provides computing re-
servers hosted on the Internet to store, man- sources via a platform on which applications
age, and process data, instead of using a local and services can be developed and hosted.
server or a personal computer.” Examples: Force.com (United States), Google
The most famous definition of “cloud App Engine, Windows Azure.
computing” is provided by the National c) Application as a service (Software as
Institute for Standards and Technology Service or SaaS) - provides implementations
(NIST) in 2009 and updated in 2011: “CLOUD of specific business functions and processes
computing is a model for enabling ubiqui- are provided with specific cloud capabilities.
tous, convenient, on demand network access Example: Google Docs, Salesforce CRM, SAP
to a shared pool of configurable computing Business by Design.
resources (e.g., networks, servers, storage, The deployment models of cloud archi-
applications, and services) that can be rap- tecture are the following:
idly provisioned and released with minimal a) Private cloud - is owned by a private
management effort or service provider in- or rented organization. Its functionality is not
teraction. This CLOUD model is composed exposed directly to the customer. Example:
of five essential characteristics, three service eBay.
models (Software / Platform / Infrastructure b) Public Cloud – the cloud infrastruc-
as a Service), and four deployment mod- ture is accessible to the general public or a
els, whereas the five characteristics are: on- large industry group and belongs to a cloud
demand self-service, broad network access, service provider (Zissis and Lekkas, 2010).
resource pooling, rapid elasticity, and mea- Examples: Amazon, Google Apps, Windows
sured service. The deployment models in- Azure.
clude private, community, public and hybrid c) Community Cloud - In this case, the
CLOUD”. cloud infrastructure is shared by several or-
Expert Group (2010) details the modali- ganizations and supports a specific com-
ties for providing cloud services, as follows: munity with common concerns (Zissis and

No. 17 ~ 2013
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295
Lekkas, 2010). creation of businesses and, therefore, job cre-
d) Hybrid Cloud – the cloud infrastruc- ation. The significance of such a mechanism
ture is made up of two or more clouds that is well-known in the economic policies, espe-
remain unique entities but are bound as the cially for Europe, where SMEs have a crucial
standard and proprietary technologies that role in the production structure. Etro (2009)
considers that, although SMEs demonstrate
enable data and application portability.
flexibility in adapting to the requirements
Etro (2009) states that the positive as-
of changing markets, their small size makes
sociation between innovation in IT&C and
them less able to cope with high input costs.
competition is well known and the decision
The majority of positive effects of the
makers recognize its double meaning of op- “cloud computing” technology are closely
eration: on one hand, the competitive fields related to the speed of adoption, this being
of activity have a tendency to adopt the in- practically a decision maker in promoting its
novations in IT&C earlier than other fields adoption.
and, therefore, become more productive, on A recent study of International Data
the other hand, the adopting of IT&C innova- Corporation (2008) analyzed the role of IT
tions by a field of activity specifically encour- cloud services on five major product seg-
ages the competition. Besides, Etro (2009) ments representing about two-thirds of a
provides as example an observation from company’s IT spending. The target segments
the e-Business Watch study of the European were business-type applications (SaaS), soft-
Commission in 2008, which reveals that, al- ware infrastructure, software for the de-
velopment and deployment of servers and
though there is an obvious causal relation-
storage. From a total of 383 billion dollars
ship between increasing level of competition
that companies have spent in 2008 for the
continuously and deployment and implic-
above mentioned IT services, only 4% (16.2
itly using the IT&C technologies by compa- billion dollars) can be classified as cloud ser-
nies, the opposite could also be possible. In vices. As concerns 2012, the total forecast was
this respect, Etro (2009) points out that the 494 billion dollars, from which the estimated
use of IT&C technologies and Internet has amount for cloud services was 42 billion, or
a strong impact on certain fields of activity 9% of total estimated costs. In fact, it is es-
(particularly on the banking sector), thus re- timated that the majority of cloud spending
shaping the competitive scenario for an age will remain allocated to business-type appli-
of Information. cations, with a slight increase of data storage
Many authors (including Etro, 2009) investments.
consider that one of the existing main snags The creation of new companies can be
in terms of entering a new market is the high performed with a fixed initial investment.
cost of entry, often associated with hardware Since this initial fixed investment is ex-
and software costs. The “cloud computing” pressed in terms of final products, it is obvi-
technology enables potential competitors that ous that it requires implicitly the use of labor,
want to enter on any market to achieve a fixed hardware and software resources1 , as well.
cost economy associated with hardware and/ 1
Olteanu Cosmin, „E-Mail Server and Traffic Con-
or software and the related initial investment
trol Management in 2012 ”, “Manager” nr. XVI,
in IT, by turning them into variable costs re-
p.122-129, Bucharest University Publishing Hou-
ducing barriers to entry and promoting the
se, 2012, ISSN: 1453-0503
No. 17 ~ 2013
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296
Once a new company enters the market, it Etro (2009) claims that the increasing
competes with a certain number of competi- the marginal cost of production is endog-
tors in order to choose the level of produc- enous and depends on the companies’ tech-
tion. In the Cournot - Nash equilibrium, the nological options that decide the amount of
global production is inversely proportional hardware and software resources used in
to the equilibrium price and it’s positively in- production according to their needs. The key
fluenced by the number of companies. factor for adopting the “cloud computing”
The costs of entry and the IT-related technology represents the generated cost
costs arise gradually as a result of the cre- savings. Authors, such as Dubey and Large
ation/extinction of companies and the in- (2007), estimate significant cost savings for
vestment/impairment process. Together they businesses that activate in the “services”
determine the structure and evolutionary dy- sector based on Carr’s statement (2003) that
namics of the market in terms of the number about half of companies’ capital expendi-
of active companies in the sector, the produc- tures are related to IT&C.
tion of each company and the point of equi- In 2006, the European Commission’s e–
librium for each sector, for each period. Business report highlights that 5% of the to-
Etro’s (2009) study was based on data tal costs are costs in IT. Etro (2009) supports
coming from the official statistics of EU and the idea that the average budget for IT&C ex-
focused on the following aggregated sectors: ceeds 5% of the total fixed costs of produc-
• Production tion. Of course that only part of the IT&C
• Wholesale and retail trade (WRT) cost represents fixed costs and that only part
• Hotels and restaurants (HR) of these costs will be reduced even after the
• Transport Storage and adoption of the “cloud computing” technol-
Communication (TSC) ogy as an alternative to existing solutions.
• Real estate renting and business ac-
tivities (REB)

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In Etro’s study (2009) it’s estimated that permanent in Etro’s (2009) vision and will
the introduction of the “cloud computing” tend to expand over time as more profound
technology could create, on average, about in countries where SMEs spread is stronger
one million additional jobs in Europe, mainly or if ICT adoption was rapid. Etro (2009) esti-
in countries like Britain, Germany, France, mated that in Italy over 81,000 new SME will
Italy, Poland and Spain. Certainly this growth be created under rapid adoption of the new
will decrease over time due to the fact that the ICT technologies, in Spain over 55 thousand
structural characteristics of the economy lead new SMEs will be created, in France over
to employment to the natural level, which is 48,000 new SMEs will be created, in Germany
affected to a lesser extent by reducing fixed over 39,000 new SMEs will be created, in the
costs. However, the short-term impact of the UK over 35,000 new SMEs will be created
crisis that has not yet been overcome can help and in Poland will be created over 32 thou-
limit the rising unemployment in a signifi- sand new SMEs.
cant way. Etro’s (2009) forecasts for reducing Romanian Ministry of Communication
unemployment in European countries due to and Information Society (MCSI) representa-
the introduction of the “cloud computing” tives asserted, as part of a Market Watch in-
technology are of 0.5% on the short-term and terview that took place in 2011, as a result
of 0.2-3% in the medium term. of the communications market analysis and
A gradual development of the “cloud development perspectives, that “Romania
computing” technologies reduces fixed costs is ready to migrate towards the cloud com-
required to enter a sector and also increases puting technology, mainly on the strength of
the incentives to enter, thereby increasing the high speed internet connection, the refur-
the competition in the sector and the level of bishment investments, as well as of the com-
production. The increased labor demand in- petent personnel, prepared to implement
duces an upward pressure on wages which and use cloud computing based services”.
forces employees to work harder. Current In another press release, the Ministry of
and expected production growth affects con- Communication and Information Society of-
sumption/economic behavior. In the short ficial claimed, in 2011, that “in 2-3 years, the
term, the demand for creation of new compa- cloud computing technology could be imple-
nies requires an increase in savings that can mented at a large scale, not only in Romania,
induce a temporary negative impact on con- but anywhere around the world”.
sumption, but in the medium and long term, The same precognition comes from
positive impact on production leads to an in- Yugo Neumorni, CIO Council president,
crease in consumption to a higher level than claiming that in 5-7 years, the cloud comput-
the steady state. ing technology could gain a large commercial
Etro (2009) estimated that an impact is utilization in Romania, detained, however,
expected to occur in aggregated sectors of by the problems caused by the European
wholesale and retail (plus 156 000 companies Union legislation, which could pose difficul-
in the medium term under fast adoption) ties for Romania in adopting this technology.
and estate and other business activities (plus The research and market analysis
144 thousands of new SMEs). This effect is company IDC Romania conducted a study

No. 17 ~ 2013
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298
upon the cloud computing Romanian mar- faster than the general IT market, the fast-
ket (“Romania Cloud Services 2011 – 2015 est growth being expected for PaaS services,
Forecast and 2010 Competitive Analysis”); while the lowest, for SaaS services.
the results show that the cloud market in In the short term, the situation in
Romania is expected to grow at least 5 times Romania is shown in the table below:

sMes created slow Adoption Fast Adoption

Manufacturing 251 1296
Wholesale and Retail Trade 877 4534
Transports, Storage and
137 706
Communication
Hotels and Restaurants 88 453
Real Estate and Business
358 1850
Activities
total 1710 8840

In the medium term, the situation in Romania is shown in the table below:

sMes created slow Adoption Fast Adoption

Manufacturing 286 1476
Wholesale and Retail Trade 1000 5161
Transports, Storage and
156 804
Communication
Hotels and Restaurants 100 516
Real Estate and Business
408 2105
Activities
total 1949 10061

In absolute terms, the biggest impact This change of market’s structure along with
will target the manufacturing sector and also a higher efficiency determines a re-allocation
hotels and restaurants, and this is not sur- of jobs, which does not increase by more than
prising, given the large number of employ- the number of employees.
ees in these aggregated sectors. Generally
speaking, the impact on employment is more research methodology
limited in comparison with the impact on
business creation for a simple reason. One Our research approach consisted in
of the main advantages of cloud computing checking the perception of both MSc students
technologies is the change taking place in the enrolled to research and professional mas-
market structure by founding multiple com- ters organized by the Faculty of Accounting
panies, as well as, increasing the competitive- and Management Information Systems and
ness level (along with a reducing the prices). teaching staff who is teaching Accounting

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299
in Academy of Economic Study as regards A. Understanding of the cloud comput-
the usefulness of adopting the “cloud com- ing concept of: 57.3% of respondents said
puting” technologies by more and more they are familiar with the concept of “cloud
Romanian companies. computing”, the remaining 42.7% saying
Thus, the questionnaire developed by they do not know this concept;
the research team and distributed in the pe- B. The field in which the respondents
riod November 2012 - February 2013 both are working: 18.3% of respondents are work-
electronically and in classic format aimed the ing in banking, 26.6% work in the accounting
following categories of respondents: field, 18.3% work in the IT field, 18.3% work
A. Graduates of Accounting; in services, and 18.5 % are not working at all;
B. Universities’ graduates without ac- C. The reduction of fixed costs following
counting profile; the adoption of the “cloud computing” tech-
C. Teachers who are teaching nology: 55.9% of respondents who know this
Accounting in ASE, as analysts, CECCAR concept believe that its adoption will signifi-
members and so on. cantly reduce fixed costs, while 44.1% believe
that its adoption will not affect fixed costs.
results achieved Over 50% of respondents that are working
in IT, services, accounting and banking agree
Following the initial processing of the that the adoption of this technology will re-
statistical data achieved by the interview duce fixed costs;
technique, 372 usable responses were ob- D. Usefulness of adopting the cloud
tained from the teaching staff of Faculty of computing technology by the Romanian com-
Accounting and Management, ASE Bucharest panies: 58.3% of respondents who know the
and the MSc students enrolled to research technology “cloud computing” believe that
and professional masters organized by the the adoption can be beneficial for Romanian
Faculty of Accounting and Management firms, while 44.1% believe that the adoption
Information Systems. The distribution of of this technology will adversely affect the
responses by category of respondents is as Romanian companies. Respondents working
follows: in IT (58.9%) and services (58.9%) appreci-
• The graduates with an “accounting” ate the utility of adopting this technology in
(category A) provided 109 usable responses, a significantly higher extent compared to re-
representing 29.3% of the total; spondents working in accounting (57%) or in
• The graduates without an “account- banking (57.5%);
ing” specialization (category B) provided 232 E. The impact of IT outsourcing on jobs
usable responses, representing 62.4% of the available: 49.5% of respondents who know
total. the “cloud computing” technology believes
• The teachers provided 31 usable re- that its adoption will have a negative impact
sponses, representing 8.3% of the total. on existing jobs, while 50.5% believe that the
As a result of processing the data ob- adoption this technology will create jobs, es-
tained by the questionnaire we could draw pecially in the short term. Respondents who
the following conclusions: are working in banking (52.5%) and those

No. 17 ~ 2013
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300
working in services (51.2%) think that the organized by the Faculty of Accounting and
adoption will impact negatively on exist- Management Information Systems and
ing jobs, while respondents working in ac- teaching staff who is teaching Accounting
counting (46.4%) and those working in the IT in Academy of Economic Study as regards
(46.1%) believe that the adoption of this tech- the usefulness of adopting the “cloud com-
nology will create jobs, at least, in the short puting” technologies by more and more
term. Romanian companies.
The study’ results pointed out that the
Conclusions majority of MSc student are really convinced
that adopting the “cloud computing” tech-
The main reason for adopting the “cloud nology by more and more Romanian com-
computing” technology as an alternative to panies could have a benefic impact in terms
the existing IT solutions is the cost savings of reducing the fixed costs, and at the same
generated. Our survey’s purpose consisted in time, a disturbing impact in terms of reduc-
checking the perception of both MSc students ing drastically the number of jobs in the
enrolled to research and professional masters long-term.

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13. European Commission, 2008, The European e-Business Report 2008. The Impact of ICT and ebusinesson
firms, sectors and the economy, 6th Synthesis Report of the Sectoral e-Business Watch, Brussels, European
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mimeo, October 8, http://blogs.idc.com/ie/?p = 224
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influencing average internet consumer’s

online behavior.
fact. fiction. Right. wrong.

~ Ph. D. Cosmin Cătălin olteanu (University of Bucharest, Faculty of Business and

Administration, Romania)
E-mail: [email protected]

Abstract: The main purpose of the paper is to illustrate how an average internet consumer is to be
provided with information that is most of the time generated only to him. In the era of WEB 3.0, where
some decisions are performed by software, information is generated based on some very strict rules about
a certain user.
Key words: Influencing online user behavior, WEB 3.0

Today is obvious that online users I have made a survey on a group of

tend to have similar attitude when they use 200 students with age from 18 to 24 and the
Internet services. result is astonishing.
Based on the devices they use (comput- In front of a computer or laptop con-
ers, laptops, tablets and smartphones) we can nected to internet almost 90% of them are
extrapolate some behavior that is common to doing the same things after the process of
all people. logging in.

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The steps are identical and are based • Second step: open facebook
on browsing like: • Third step: browse internet while they
• First step: open email (most of them still have email and facebook opened.
gmail or yahoo)

Fig. 1 http://igyaan.in/26746/expert-yahoo-password-theft-affect-gmail-facebook
http://www.bloggerhow.com/2012/02/import-contacts-facebook-gmail.html

If we are talking about tablets or smart- This way they have a gate open between
phone the similarities are even more aston- “big brothers” servers and them. By keeping
ishing. 96% of them have email and facebook that application opened, all you are doing on
apps installed on their devices with autosync Internet is recorded in database under your
function on. The only difference is made by username.
the mobile data service if is active or not.

Fig. 2 Mobile devices and buying behavior

http://www.baynote.com/wp-content/uploads/2013/01/baynote_back_to_future_holiday_retail5.lh_.png

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304
Like this you have to know that you al- to a musician and other to a computer pro-
ready have a history of browsing, of likes and grammer. On a simple search the returning
dislikes on the major Internet services pro- information is no use to the computer pro-
viders. They know important things about grammer if he is searching for computer key-
you and this is like gold for them. board and the information returned are for
Think a little bit of following scenario. keyboard let say piano. Or for a board search,
You are a powerful entrepreneur and the word mean something for engineer and
you like to sell a service or good to online something for a surf player. For engineer
consumer. What do you think that the re- the relevant returns should be about printed
sult will be if, somehow, you have access to electronic boards and for surf player abour
browsing history of users that searched that surf boards. Other ways the returns has no
service or good in the past 4-5 days and you relevance.
offer them by other e-marketing methods In order to do that, some software
your products. What will be the chance to sell should analyze very quickly your history,
that product in spite of other entrepreneur your likes and dislikes and take a decision
that only use traditional way of e-marketing. about the relevant information that should
Moreover, you have to realize that some be returned to you. This is what WEB 3.0
terms are relevant to you and others not. is doing today. Taking decisions and return
Here you have to see the relevance, for ex- what it think is good to you or predict what
ample, of word keyboard has some relevance are you really looking for.

Fig. 3 Customer behavior

http://www.consumerpsychologist.com/images/intro/consumer_behavior.png

The same thing is done for habits of They even provide commercials about the
purchasing online. Both google and face- things you are interested you in to have bet-
boook are keeping extended user’s history. ter market propagation.
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305
Fig. 4 Customer behavior
http://www.go2markets.com/wp-content/uploads/2012/04/customer_behavior_sm1.png

One thing that is for sure is we can be area. Again this is done by some software
victims of bad information or even to be in- that take a decision about the area we are in
fluenced by them. and what commercials are to be provided to
Another thing that is happening today our mobile phone. And this is done by hav-
is the fact that our smartphones can provide ing data service active on our phone and
very useful information about us and the some apps on auto synchronization mode.
places around us. For example, if we are in a Decision and other steps are made by power-
place with many restaurants, our phone can ful servers from the cloud environment.
provide us commercials about food from that
Fig. 5 Google cloud servers
http://www.looksfeelsworks.com/wp-content/uploads/2012/10/google-data-center-10182012-web.jpg

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306
Conclusions and implications I have to say that is just RIGHT to
take advantage of technology and to get what
In the era of WEB 3.0, where some deci-
we need, even that is provided and generat-
sions are performed by software, information
ed by software decisions. If all of that is done
is generated based on some very strict rules
just for making our lives easy everything is
about a certain user.
justified.
Today is a FACT that we get relevant in-
On the other hand, to have online
formation just for us and not for everybody.
history so elaborated could be WRONG if
Every user has a different behavior online
someone take the decision to hurt you by ex-
and his history is that thing that makes him
ploiting that information.
different from other online user.
Fig. 6 Average user history

reFereNCes:
1. http://www.consumerpsychologist.com/index.html
2. http://warrington.ufl.edu/departments/mkt/docs/janiszewski/avatarjm.pdf
3. http://en.wikipedia.org/wiki/Facebook
4. http://www.codegent.com/blog/2011/6/mobile_web_browsing

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