African Journal of Business Management - 7 January 2013 Issue by Academic Journals

African Journal of

Business Management Volume 7 Number 1 7 January, 2013 ISSN 1993-8233

ABOUT AJBM The African Journal of Business Management (AJBM) is published weekly (one volume per year) by Academic Journals. African Journal of Business Management (AJBM) is an open access journal that publishes research analysis and inquiry into issues of importance to the business community. Articles in AJBM examine emerging trends and concerns in the areas of general management, business law, public responsibility and ethics, marketing theory and applications, business finance and investment, general business research, business and economics education, production/operations management, organizational behaviour and theory, strategic management policy, social issues and public policy, management organization, statistics and econometrics, personnel and industrial relations, technology and innovation, case studies, and management information systems. The goal of AJBM is to broaden the knowledge of business professionals and academicians by promoting free access and providing valuable insight to business-related information, research and ideas. AJBM is a weekly publication and all articles are peer-reviewed.

Submission of Manuscript Submit manuscripts as e-mail attachment to the Editorial Office at: ajbm@acadjournals.org. A manuscript number will be mailed to the corresponding author shortly after submission. The African Journal of Business Management will only accept manuscripts submitted as e-mail attachments. Please read the Instructions for Authors before submitting your manuscript. The manuscript files should be given the last name of the first author.

Editors Prof. Wilfred Isioma Ukpere Department of Industrial Psychology and People Management, Faculty of Management, University of Johannesburg, South Africa. Prof. Gazi Mahabubul Alam Department of Educational Management, Planning and Policy, Faculty of Education Building, University of Malaya, 50603 Kuala Lumpur, Malaysia. Dr. Olawale Olufunso Fatoki University of Fort Hare Department of Business Management, University of Fort Hare, x1314, Alice, 5700, Eastern Cape, South Africa. Dr. Amran Awang Faculty of Business Management, 02600 Arau, Perlis, Malaysia Dr. Giurca Vasilescu Laura University of Craiova, Romania 13, A.I. Cuza, 200585, Craiova, Dolj, Romania. Prof. Himanshu Tandon VIT Business School, VIT University, Vellore 632014 (India) Dr. Ilse Botha University of Johannesburg APK Campus PO Box 524 Aucklandpark 2006 South Africa. Dr. Howard Qi Michigan Technological University 1400 Townsend Dr., Houghton, MI 49931, U.S.A. Dr. Aktham AlMaghaireh United Arab Emirates University Department of Economics & Finance United Arab Emirates. Dr. Haretsebe Manwa University of Botswana Faculty of Business University of Botswana P.O. Box UB 70478 Gaborone Botswana.

Dr. Reza Gharoie Ahangar Islamic Azad University of Babol, Iran Dr. Sérgio Dominique Ferreira Polytechnic Institute of Cavado and Ave Campus IPCA, Lugar do Aldão, 4750-810. Vila Frescainha, Portugal. Dr. Ravinder Rena Polytechnic of Namibia, Private Bag:13388 Harold Pupkewitz Graduate School of Business; Windhoek, Namibia. Dr. Shun-Chung Lee Taiwan Institute of Economic Research No. 16-8, Dehuei Street, Jhongshan District, Taipei City 104, Taiwan. Dr. Kuo-Chung Chu National Taipei University of Nursing and Health Sciences No. 365, Min-Te Road, Taipei, Taiwan. Dr. Gregory J. Davids University of the Western Cape Private Bag x17, Bellville 7535, South Africa. Prof. Victor Dragotă Bucharest Academy of Economic Studies, Department of Finance Bucharest, Sector 1, Piata Romana no. 6, Room 1104, Romania Dr. Ling-Yun HE College of Economics and Management, China Agricultural University (East Campus), Qinghua Donglu street, Haidian district, Beijing 100083, China Dr. Maurice Oscar Dassah School of Management, IT and Governance University of KwaZulu-Natal Post Office Box X54001 Durban 4000 South Africa

Editorial Board Dr. Peide Liu Business Administration School, Shandong Economic University, China Dr. Marwan Mustafa Shammot King Saud University, P.O.Box 28095 , Riyadh 11437 Kingdom of Saudi Arabia.

Dr. Mario Javier Donate-Manzanares Facultad de Derecho y Ciencias Sociales Ronda de Toledo, s/n 13071 Ciudad Real Spain Dr. Mohamed Abd El Naby Mohamed Sallam Faculty of Commerce University of Kafr El-Sheikh Egypt

Dr. Hela Miniaoui University of Wollongong in Dubai, Knowledge Village, Block 15 PoBox 20183,Dubai UAE Dr. Suhanya Aravamudhan 6965 Cumberland Gap Pkwy, Harrogate, TN USA

Dr. Guowei Hua NO. 3 Shangyuancun, Haidian District, Beijing 100044, School of Economics and Management, Beijing Jiaotong University, China.

Dr. Hooman Attar Amirkabir University of Technology Iran Prof. Luis Antonio Fonseca Mendes University of Beira Interior – Business and Economics Department Estrada do Sineiro – Polo IV – 6200-209 Covilhã Portugal

Dr. Mehdi Toloo No. 136, Forsate Shirazi st., Islamic Azad University, Central Tehran Branch, Tehran, P. O. Box 13185.768. Iran. Dr. Surendar Singh Department of Management Studies, Invertis University Invertis village, Bareilly - Lucknow Highway, N.H.-24, Bareilly (U.P.) 243 123 India.

Dr. Wu, Hung-Yi Department of Business Administration Graduate Institute of Business Administration National Chiayi University No.580, Xinmin Rd., Chiayi City 60054, Taiwan (R.O.C.)

Dr. Nebojsa Pavlovic High school “Djura Jaksic” Trska bb, 34210 Raca, Serbia.

Dr. Shu-Fang Luo No.28, Da-Ye S. Road, Lin-Hai Industrial Park, Hsiao-Kang, 812, Kaohsiung City Taiwan

Dr. Colin J. Butler University of Greenwich Business School, University of Greenwich, Greenwich, SE10 9LS, London, UK.

Dr. Ahmad.M.A.Ahmad Zamil King Saud University, P.O.Box 28095 , Riyadh 11437 Kingdom of Saudi Arabia Dr. Paloma Bernal Turnes Universidad Rey Juan Carlos Dpto. Economía de la Empresa Pº de los Artilleros s/n Edif. Departamental, Desp. 2101 28032 Madrid, España

Prof. Dev Tewari School of Economics and Finance Westville Campus University of Kwa-Zulu Natal (UKZN) Durban, 4001 South Africa. Dr. Olof Wahlberg Mid Sweden University, 851 70 Sundsvall Sweden

Instructions for Author Electronic submission of manuscripts is strongly encouraged, provided that the text, tables, and figures are included in a single Microsoft Word file (preferably in Arial font). The cover letter should include the corresponding author's full address and telephone/fax numbers and should be in an e-mail message sent to the Editor, with the file, whose name should begin with the first author's surname, as an attachment. Article Types Three types of manuscripts may be submitted: Regular articles: These should describe new and carefully confirmed findings, and experimental procedures should be given in sufficient detail for others to verify the work. The length of a full paper should be the minimum required to describe and interpret the work clearly. Short Communications: A Short Communication is suitable for recording the results of complete small investigations or giving details of new models or hypotheses, innovative methods, techniques or apparatus. The style of main sections need not conform to that of full-length papers. Short communications are 2 to 4 printed pages (about 6 to 12 manuscript pages) in length. Reviews: Submissions of reviews and perspectives covering topics of current interest are welcome and encouraged. Reviews should be concise and no longer than 4-6 printed pages (about 12 to 18 manuscript pages). Reviews are also peer-reviewed. Review Process All manuscripts are reviewed by an editor and members of the Editorial Board or qualified outside reviewers. Authors cannot nominate reviewers. Only reviewers randomly selected from our database with specialization in the subject area will be contacted to evaluate the manuscripts. The process will be blind review. Decisions will be made as rapidly as possible, and the journal strives to return reviewersâ&#x20AC;&#x2122; comments to authors as fast as possible. The editorial board will re-review manuscripts that are accepted pending revision. It is the goal of the AJBM to publish manuscripts within weeks after submission.

Regular articles All portions of the manuscript must be typed doublespaced and all pages numbered starting from the title page. The Title should be a brief phrase describing the contents of the paper. The Title Page should include the authors' full names and affiliations, the name of the corresponding author along with phone, fax and E-mail information. Present addresses of authors should appear as a footnote. The Abstract should be informative and completely selfexplanatory, briefly present the topic, state the scope of the experiments, indicate significant data, and point out major findings and conclusions. The Abstract should be 100 to 200 words in length.. Complete sentences, active verbs, and the third person should be used, and the abstract should be written in the past tense. Standard nomenclature should be used and abbreviations should be avoided. No literature should be cited. Following the abstract, about 3 to 10 key words that will provide indexing references should be listed. A list of non-standard Abbreviations should be added. In general, non-standard abbreviations should be used only when the full term is very long and used often. Each abbreviation should be spelled out and introduced in parentheses the first time it is used in the text. The Introduction should provide a clear statement of the problem, the relevant literature on the subject, and the proposed approach or solution. It should be understandable to colleagues from a broad range of scientific disciplines.

Materials and methods should be complete enough to allow experiments to be reproduced. However, only truly new procedures should be described in detail; previously published procedures should be cited, and important modifications of published procedures should be mentioned briefly. Capitalize trade names and include the manufacturer's name and address. Subheadings should be used. Methods in general use need not be described in detail.

Results should be presented with clarity and precision. The results should be written in the past tense when describing findings in the authors' experiments. Previously published findings should be written in the present tense. Results should be explained, but largely without referring to the literature. Discussion, speculation and detailed interpretation of data should not be included in the Results but should be put into the Discussion section. The Discussion should interpret the findings in view of the results obtained in this and in past studies on this topic. State the conclusions in a few sentences at the end of the paper. The Results and Discussion sections can include subheadings, and when appropriate, both sections can be combined. The Acknowledgments of people, grants, funds, etc should be brief. Tables should be kept to a minimum and be designed to be as simple as possible. Tables are to be typed doublespaced throughout, including headings and footnotes. Each table should be on a separate page, numbered consecutively in Arabic numerals and supplied with a heading and a legend. Tables should be self-explanatory without reference to the text. The details of the methods used in the experiments should preferably be described in the legend instead of in the text. The same data should not be presented in both table and graph form or repeated in the text.

1987a,b; Tijani, 1993,1995), (Kumasi et al., 2001) References should be listed at the end of the paper in alphabetical order. Articles in preparation or articles submitted for publication, unpublished observations, personal communications, etc. should not be included in the reference list but should only be mentioned in the article text (e.g., A. Kingori, University of Nairobi, Kenya, personal communication). Journal names are abbreviated according to Chemical Abstracts. Authors are fully responsible for the accuracy of the references. Examples: Papadogonas TA (2007). The financial performance of large and small firms: evidence from Greece. Int. J. Financ. Serv. Manage. 2(1/2): 14 – 20. Mihiotis AN, Konidaris NF (2007). Internal auditing: an essential tool for adding value and improving the operations of financial institutions and organizations. Int. J. Financ. Serv. Manage. 2(1/2): 75 – 81. Gurau C (2006). Multi-channel banking in Romania: a comparative study of the strategic approach adopted by domestic and foreign banks Afr. J. Financ. Servic. Manage. 1(4): 381 – 399. Yoon CY, Leem CS (2004).Development of an evaluation system of personal e-business competency and maturity levels Int. J. Electron. Bus. 2(4): 404 – 437.

Short Communications Figure legends should be typed in numerical order on a separate sheet. Graphics should be prepared using applications capable of generating high resolution GIF, TIFF, JPEG or Powerpoint before pasting in the Microsoft Word manuscript file. Tables should be prepared in Microsoft Word. Use Arabic numerals to designate figures and upper case letters for their parts (Figure 1). Begin each legend with a title and include sufficient description so that the figure is understandable without reading the text of the manuscript. Information given in legends should not be repeated in the text. References: In the text, a reference identified by means of an author‘s name should be followed by the date of the reference in parentheses. When there are more than two authors, only the first author‘s name should be mentioned, followed by ’et al‘. In the event that an author cited has had two or more works published during the same year, the reference, both in the text and in the reference list, should be identified by a lower case letter like ’a‘ and ’b‘ after the date to distinguish the works. Examples: Abayomi (2000), Agindotan et al. (2003), (Kelebeni, 1983), (Usman and Smith, 1992), (Chege, 1998;

Short Communications are limited to a maximum of two figures and one table. They should present a complete study that is more limited in scope than is found in full-length papers. The items of manuscript preparation listed above apply to Short Communications with the following differences: (1) Abstracts are limited to 100 words; (2) instead of a separate Materials and Methods section, experimental procedures may be incorporated into Figure Legends and Table footnotes; (3) Results and Discussion should be combined into a single section. Proofs and Reprints: Electronic proofs will be sent (email attachment) to the corresponding author as a PDF file. Page proofs are considered to be the final version of the manuscript. With the exception of typographical or minor clerical errors, no changes will be made in the manuscript at the proof stage.

Fees and Charges: Authors are required to pay a $550 handling fee. Publication of an article in the African Journal of Business Management is not contingent upon the author's ability to pay the charges. Neither is acceptance to pay the handling fee a guarantee that the paper will be accepted for publication. Authors may still request (in advance) that the editorial office waive some of the handling fee under special circumstances.. Copyright: ÂŠ 2013, Academic Journals. All rights Reserved. In accessing this journal, you agree that you will access the contents for your own personal use But not for any commercial use. Any use and or copies of this Journal in whole or in part must include the customary Bibliographic citation, including author attribution, date and article title. Submission of a manuscript implies: that the work described has not been published before (except in the form of an Abstract or as part of a published lecture, or thesis) that it is not under consideration for publication elsewhere; that if and when the manuscript is accepted for publication, the authors agree to automatic transfer of the copyright to the Publisher.. Disclaimer of Warranties In no event shall Academic Journals be liable for any special, incidental, indirect, or consequential damages of any kind arising out of or in connection with the use of the articles or other material derived from the AJBM, whether or not advised of the possibility of damage, and on any theory of liability. This publication is provided "as is" without warranty of any kind, either expressed or implied, including, but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement. Descriptions of, or references to, products or publications does not imply endorsement of that product or publication. While every effort is made by Academic Journals to see that no inaccurate or misleading data, opinion or statements appear in this publication, they wish to make it clear that the data and opinions appearing in the articles and advertisements herein are the responsibility of the contributor or advertiser concerned. Academic Journals makes no warranty of any kind, either express or implied, regarding the quality, accuracy, availability, or validity of the data or information in this publication or of any other publication to which it may be linked..

African Journal of Business Management Table of Contents:

Volume 7

Number 1

7 January, 2013

ARTICLES Review

A literature review on shared services Rohith Ramphal

Research Articles Designing the conceptual model of social responsibility of the Azad University by public relation role Mohammad Reza Karimi

Evaluation of suppliers in the process of buying and supplying using analytic hierarchy process s Alireza Shahraki, Meysam Kazemi E. and Seyyed Ali Banihashemi

Factors influencing the adoption of cell phone banking by South African students

Richard Shambare Product variety management: A synthesis of existing research Augusto da Cunha Reis, Luiz Felipe Scavarda and Beatriz Moreira Pancieri Some perspectives of staff perceptions regarding leadership decision-making: A higher education view Ngambi H. C. and Nthoesane M. G.

Establishment of indicators for early warning system on tilapia trade Zhang Peng, Yuan Yong-ming and Kpundeh Mathew Didlyn

Being affected from crisis: Case of furniture industry in Turkey Mehmet Colak

Review

A literature review on shared services Rohith Ramphal Department of Business Management, University of South Africa, South Africa. Email: Ramphrr@unisa.ac.za Accepted 5 December 2012

The shared services approach has been spreading quite rapidly since the late 1990s and has become a popular organisational change approach to managers who are dissatisfied with their current organisational performance and has subsequently become a subject of interest to academic scholars. The objective of this paper is to present a brief literature review on shared services since this concept is still a relatively new concept with limited academic literature and is gaining research interests from academics. This review is developed from a number of articles written by practitioners and a limited number of books on shared services that has been provoked by a doctoral study on shared services. This contribution will assist scholars engaged in shared services research. This article includes definitions, characteristics, configurations, advantages, key success factors, problems and quality criteria of shared services Keywords: shared services, services, organisational change, organisational structures, Service performance, service structures, service quality. INTRODUCTION Shared services organisational structures have become a point of interest to academics especially in the field of research. This review is developed from a number of articles written by practitioners and a limited number of books on shared services that has been provoked by a doctoral study on shared services. This contribution will assist scholars engaged in shared services research. Alvarez et al. (1999) describe the evolution of shared services as an organisation that gained currency in the 1990s when many corporations recognised that escalating overhead costs and redundant support service operations did not enhance shareholder value. By creating the shared services business unit and laying down business-oriented principles, many organisations realised huge gains in efficiency, professionalism and productivity of support services. Shared services centres have thus become a “silver bullet” of sorts for many corporations. The shared services concept, as explained by Ulrich (2006), is still a relatively new concept with the understanding that shared services is basically about optimising corporate resources and processes into a new organisational entity and that its definition still remains unclear. The attractiveness of this concept lies in the need for cost reduction, improving service quality,

process simplification, sharing best practices, knowledge transfer and greater alignment to business requirements (Redman et al., 2007). In other words, it is a structure that should increase the bottom line. Shared services refers to the practice of business units, operating companies and organisations deciding to share a common set of services rather than having a series of duplicated services (Quinn et al., 2000). These common services are normally administrative functions that are combined jointly or cooperatively in some way for the improvement of the services, obtaining better economies of scale and getting all participating parties to be accountable in the sharing transactions. The circles represent the different business units and the inner rectangle represents a shared services centre Figure 1. A shared services centre houses services that can be provided to one or more business units within the same organisation. For example, if payroll is a shared services function, it then means that one or more of the business units can request their payroll functions to be provided by the shared services centre. The shared services centre will interact with the various business units regarding the provisioning of services to them. In this relationship, the shared service resources are termed “providers” and the consumers of the products and

Afr. J. Bus. Manage.

Figure 1. An organisation with a shared services structure (source: own).

services of these resources are termed “internal customers”. These internal customers are the people employed in the business units and involved with the core business functions. The resources provided are used to satisfy the service demands of the different business units. These resources can have different forms such as people, equipment, data, best practices, equipment, standards, and enabling technologies such as enterprise resource planning systems. Ramphal (2011a) reports that the most common services provided to business units include human resources services, financial services, information technology, computer services, procurement and supply chain services. WHAT IS A SHARED SERVICE? The Collins English dictionary and thesaurus (2006) defines “shared” as the “use or benefit jointly with others”hence a shared service is a service that is used for joint benefits with others. The others referred to in this case are other business units in a particular organisation. It is a service that is made available to all business units, with contractual agreements with each business unit specifying how the service should be rendered. These types of services may be transaction based and/or advisory based. Transactional services are administrative and repetitive, while advisory services are used to provide a consultancy service. Various authors such as (Mercer, 2008; Grant et al, 2007; Webster, 2007; Bergeron, 2003; Schulman et al.,1999) have provided definitions of shared services which is summarised by Ramphal (2011a) as firstly, as a collection and concentration of duplicated noncore and nonvalue-adding activities from the various business

units of an organisation into a separate business unit (shared services centre) whose task is to provide and manage these services as value-adding activities and after consolidation and concentration of these activities, the relative processes can be standardised and optimised in order to promote efficiencies, cost reduction, quality improvement and value in the multiple business units. Some of the key benefits of shared services are cost reduction, improving service quality, process simplification, sharing best practices, knowledge transfer, increased productivity, better economies of scale, leveraged technology, improved span of control, and greater alignment to business requirements (Redman et al., 2007; Schulman et al., 1999). In other words, it is a structure that should increase the bottom line. Intangible benefits include enhanced customer satisfaction, standardised processes, a more focused approach on value adding and improved accuracy of information and better leverage of the learning curve (Schulman et al, 1999). Characteristics of shared services Ulrich (2006) discusses the following characteristics of shared services: 1. Shared services operate as a stand-alone unit and in most cases is an independent entity. They should run as a business and should be considered an internal outsourcing partner. They help to create a flatter organisational structure, a step towards globalisation and towards outsourcing. 2. They can be geographically separated from headquarters by virtue of having adequate information and

Ramphal

Figure 2. Shared service departments in larger shared service centre.

communication technology. 3. Shared services are process oriented and focus on specific activities that are nonstrategic and business supporting. 4. They are driven by market competitiveness, with the services as the organisationâ&#x20AC;&#x2122;s â&#x20AC;&#x153;product.â&#x20AC;? These services should be provided at a low cost by virtue of concentrated efforts and economies of scale. The relatively lower service costs and higher quality levels should be such that it is more attractive option than to seek services from the shared services centre than from external providers. 5. Shared services leverage technological investments and because of their concentration can demand better prices and discounts. Shared services can justify the purchase of enabling technology. Typically, a business unit will not be able to afford leading-edge technology by itself. By pooling resources with other divisions, the purchase of technology such as enterprise resource software programs can be justified in terms of cost. 6. They focus on services and support to business units which go beyond even the traditional notion of customer service or client support. The basis is the creation of an increased level of internal supplier-internal customer service relationships driven towards partnerships. 7. They focus on continuous improvement. Shared services configurations There are three popular configurations of shared services as indicated in the Corporate Leadership Council Report (2006). Figure 2 shows a shared services department housed in a larger group of many other service departments (shared services centre), which ensures greater cost efficiency benefits because all policies and instructions stem from one source. Figure 3 shows a free-standing shared services department. This structure promotes more autonomy

between the various shared services centres and each can optimise its strategy individually and independently. However, this structure may be more expensive and less efficient if the sharing of resources and technology between centres is problematic. Figure 4 represents an outsourced shared services centre. In this structure, the services are provided by an external organisation. Requests from internal customers and services to internal customers are channelled through a vendor agent. A case in point would be the outsourcing of payroll administration. Any requests from internal customers would be forwarded to the vendor agent who, in turn, will forward them to the appropriate outsourced party. Feedback from the outsourced party will go back to the vendor agent, who will subsequently communicate such feedback to the internal customer Advantages of a shared service structure The advantages of shared services are summarised as follows in the Corporate Leadership Council Report (2006) and an article by Ulrich (2006): 1. There is a reduction in administrative expenses and improvement of efficiency by capitalising on economies of scale, consolidation, standardisation and automation of processes while improving service quality. 2. More time is created for staff and senior management from the business units to focus and direct their attention to strategic issues and the needs of their customers. 3. A critical mass of services is created, that can be used to justify technological improvements and service staff development. This critical mass also facilitates services engaging in strategic goals. For example, a human resources shared services centre can focus on improving services by concentrating on strategically improving organisational performance. 4. There is an accumulation of intellectual and capital

Afr. J. Bus. Manage.

Figure 3. Free standing shared services centre.

Figure 4. Outsourced shared service centre.

assets, which facilitates a large number of affordable experts on hand to deal with complex issues. 5. There is an opportunity to deploy new technology which can be afforded through cost sharing by the multiple business units, thus decreasing unit costs. 6. It is possible to do work more quickly and efficiently because experts and specialists engage in a narrow and more focused spread of work. KEY SUCCESS FACTORS Key success factors are those ingredients necessary for the success of shared services. These include general predictors, shared service employees, communication, governance, performance management and service flexibility. These are discussed below.

Governance Bergeron (2003) suggests that effective leadership comprises of senior managers with entrepreneurial spirit, positive outlook, excellent communication skills, flexibility, tolerance for ambiguity, clarity of purpose, an ability to clearly articulate a vision for the company, competence with analytical tools and experience with change management. Strong governance in shared services is essential. It includes having a strong mandate from senior management, having adequate resources, appointing experienced change agents, having stakeholder management plans, clear demonstrations of urgency and importance and having clear escalation routes, clear decision-making processes and strong communication (Shared Services Advisory Group, 2006). According to Janssen et al. (2007), there should be a common vision

Ramphal

about shared services among all stakeholders.

Shared services employees Bergeron (2003:244) suggests that the availability of highly skilled workers, supportive business culture, high level of employee morale and open employee communications are necessary for a shared services environment. A â&#x20AC;&#x153;people management strategyâ&#x20AC;? which documents the road map to developing and enhancing an efficient and effective shared services structure is necessary (Shared Services Advisory Group, 2006). This takes into account consultation, training, development, redeployment and recruitment. The further employees who have moved into shared services may feel that their roles have changed from a player in a large corporation to a second-class citizen now working for employees of that corporation (Bergeron, 2003). These employees have to accept a flatter organisation with fewer promotional prospects (Shah, 1998). This behaviour may cause resistance to change, and it would sometimes be better to replace them with others who can embrace the requirements of a shared services philosophy. A shared services environment typically requires a transformation of people (Shah, 1998). In a traditional organisation, employees have a departmental relationship with other business units. In shared services environments, employees must develop a customer-service or business-partner relationship with other business units. The employees rendering services in the shared services unit need to become customer focused and responsive to the needs of the business unit (Bergeron, 2003). These employees should have the freedom to respond to the business unit instead of being tightly controlled by the parent corporation. They should also receive training in the quality of customer service principles. Because shared services employees have limited scope for promotion, they need to be retained and motivated with other intangible rewards such as informal and formalised career paths, flexible work arrangements and nonmonetary recognition and reward programmes (Deloitte and Touche, 2005). Enhancing the creativity of employees who provide shared services can improve the quality of services and thus also customer satisfaction (Reponen, 2003). Couto et al. (2000) indicate the roles of shared services managers and shared services business unit representatives shown in table 1. Key client relationship roles should be established and defined, effective communication should flow and customer expectations should be managed accordingly.

Communication Colman (2006) indicates that developing two-way communication between service provider and user is an essential driver of shared services. Communication in a

shared services environment means keeping all stakeholders informed about service implementation, soliciting feedback on new ideas, and alerting them when things change (Galeb, 2008). Some methods of communication include newsletters, discussion forums, meetings and the use of the intranet. According to the Amherst Group Limited (1997), the understanding and importance of shared services are contingent upon the degree of effective communication by all levels of management to their respective employees. Operating model The operating model should be clearly explored during the vision and feasibility stage, which should encompass the shared services framework. Each service should have a functional operating model identifying the mix and use of employee self-service and services centres (Shared Services Advisory Group, 2006). There should be a strong culture of performance management that ensures efficiency, effectiveness and continuous improvement and encourages the delivery of service level agreements, service contracts, resource planning and performance reporting processes. It is necessary to have a set of metrics to measure the benefits of shared services. People manage what they can measure and what they are measured against, and the company needs to know what to improve and how to measure whether or not improvement is taking place (Schulman et al., 1999). Hence appropriate metrics are an essential ingredient of an effective and efficient shared services environment. All investment should be supported by cost-benefit analyses and have clear timelines, milestones and supporting benchmarking data (Shared Services Advisory Group, 2006). Service costs should be visibly reduced. These reductions should be measured and reported to the organisation. Triplett and Sheumann (2000) indicate the following three cost-related questions to promote an understanding of costs and its impact: 1. What causes cost and how can it be managed? 2. How are charges to customers determined for the services provided to them? 3. How does the cost compare with that of outside providers? In addition, after conducting research, David (2005) concluded that the users of shared services desire transparency on how service pricing is determined and reviewing the financial statements of shared services. Bergeron (2003) also indicates that a model should promote operational excellence with superior technology. Problem areas in shared services The following problem areas have been identified from

Afr. J. Bus. Manage.

the literature review on shared services: 1. Lack of top management attention. Despite their importance, shared services in most companies receive much less senior executive attention than business units because of the logic: “business units generate profits, and that is where top management should focus its time” (Mergy and Records, 2001). This implies that problems and complaints of quality, cost and performance that occur in shared services lack top management attention, and shared services managers formulate their own set of objectives that do not always support the objectives of business units. 2. Lack of focus on improvement. It is rare for internal service providers to spend time focusing on improvements in service quality to customers. They spend more time on the processes and the functional expertise relative to their own service unit (Acumen Alliance, 2001). 3. Technology. Over-reliance on technology may not only be expensive in capital investment, but may lead to depersonalised services that disconcert internal customers. For example, human resources may eradicate the “human touch” from its distinctive functions if it believes in being completely technology driven (Reilly, 2000). Reilly (2007) also reports that this may be overcome by means of continual appropriate restructuring of services. 4. Lack of costing systems. There is much disparity and inequities in the way charge-backs are calculated, essentially because of the lack of effective cost accounting systems in shared services (David, 2005). 5. Measurement of success. Schulman et al. (1999) indicate that it is extremely difficult to measure the success of shared services for the following reasons: 6. Shared services are an integral part of the organisation but are not necessarily considered a strategic operation. 7. The relationship between the shared services organisation and business units should be a partnership and not a customer-supplier relationship. 8. Appropriate metrics are traditionally functional based as opposed to process based. 9. Continuous improvement is not always seen as a natural embedded process. 10. Kearney (2005) indicates that ineffectual leadership, lofty visions, poor scope, ineffective communication and training and unstable technology are common problem areas in shared services. 11. Ulrich (2006) indicates that business relations and location are still major issues. In terms of business relations, employees who used to work in the business units may not adjust to a services culture if they are transferred to the shared services centre. The shared services centre itself has to decide what is good for the business unit and at the same time implement what would work for the corporate. Location is an issue prevalent in multinational corporations where there are a large number of alternatives for locating shared services centres, that is, locally, regionally or globally, and the selected location may still not be suitable for the

business. Quality Performance criteria Recent published research (Ramphal, 2011b) asserts that the quality of shared service centres depends on the quality of service level agreements, quality of the contact centres, quality of the communication between the shared service centers and the business units, quality of the shared service products offered, quality of the shared service employees and quality of the provision of services. Further it is discussed that to embed quality in a shared services centre the following ingredients are required; a good culture of quality, a system of documents and procedures, support from the shared services employees, leadership and commitment from the shared services senior staff, customer focused, quality incorporating frequent audits and programs for continual quality improvement and high quality service processes. CONCLUSION The shared services approach has been spreading quite rapidly since the late 1990s and has become a popular organisational change approach to managers who are dissatisfied with their current organisational performance. The reported success of these structures has generated curiosity by academic scholars. Presently shared services are moving into the arena of academic interest and literature sources in this field are sparse and limited. Hence, the intention of the author is to provide a one stop source and insight into shared services for academic researchers, practitioners and senior staff of organisations. This article contributes to the field of organisational management with literature on defining, describing configurations, advantages, key success factors, current problems and quality criteria for the understanding of shared services. There are many challenges in shared services that can provoke interesting research on such topics on the perception of shared services employees, the personal profiles of shared services managers and costing structures of shared services. REFERENCES Acumen Alliance (2001). Shared services – What is shared services [online]. Available at: http://www.acumen.com.au/sharedservices. Date accessed: 10 October 2006. Alvarez E, Blansett T, Counto V, Dunn M, Nielson G, Niekirk D (1999). Beyond shared services: e-enabled service delivery. Booz-Allen & Hamilton Incoporated Report. Amherst Group Limited (1997). Shared Services Q & A. Shared Services Insights (1):1-8. Bergeron B (2003). Essentials of shared Services. Upper Saddle River, New Jersey: Wiley. Collins English Dictionary and thesaurus (2006). Edinburgh: Harper Collins

Ramphal

Colman R (2006). Service level agreement: a shared service cornerstone. CMA Manage pp.37-39. Corporate Leadership Council Report (2006). HR shared services: determining the scope, scale and structure. Corporate Executive Board: (catalogue no. CLC15GXNSI)1-9. Couto V, Dunn M, Hyde P, Kocourek P, Lambert F (2000). Getting shared services right: capturing the promise. Booz Allen & Hamilton Viewpoint pp.1-8. David IT (2005). Financial management shared services: a guide for federal users. J. Gov. Finc. Manage 54(4):55-59. Deloitte, Touche (2005). Shared services in a global economy. A Deloitte & Touche Publication pp.1-12. Galeb M (2008). Building on client satisfaction as an organisational pillar. Shared Services News, September: 13-14. Grant G, McKnight S, Uruthirapathy A, Brown A (2007). Designing governance for shared services organizations in the public service. Gov. Info. Quart. pp.522-539. Janssen M, Joha A, Weerakkody V (2007). Exploring relationships of shared service arrangements in local governments. Transforming Government People, Process and Policy 1(3):271-284. Kearney AT (2005). Shared services in government. [online]. Available at: http://www.akearney.com. Date accessed: 28 May 2009. Mercer (2008). Finding your place on the HR continuum. [online]. Available at: http://www.mercer.com. Date accessed: 28 May 2009. Mergy L, Records P (2001). Unlocking shareholder value from shared services. Strategy Leadersh. 29(3):19-22. Quinn B, Cooke R, Kris A (2000). Shared services: mining for corporate gold. London: Prentice Hall. Ramphal RR (2011a).The performance of South African shared services. S.A. J. Ind. Eng., 22(1):45-54

Ramphal RR (2011b). A quality framework for services in shared service environments, J. Contemporary Manage., 8(21): 223-238 Redman T, Snap E, Wass J, Hamilton P (2007). Evaluating the human resources shared services model. Int. J. HR. Manage.18(8):14861506. Reilly P (2000). Making HR Shared Services work. J. Eur. Ind. Train. 29(9):527-528. Reilly P (2007). HR Transformation: facing up to the facts. People Manage. pp.42-45. Reponen T (2003). Information technology-enabled global customer service. London: Idea Group. Schulman DS, Dunleavy JR, Harmer MJ, Lusk JS (1999). Shared services, adding value to business units. Torento: Wiley. Shah B (1998). Shared services: is it for you? Ind. Manage. 40(5):4-8. Shared Services Advisory Group (2006). Shared Services in the Public Sector: a compendium of best practice [online]. Available at: http://www.buyitnet.org. Date accessed: Accessed 10 October 2010. Triplett A, Scheumann J (2000). Managing shared services with ABM. Strat. Finc. pp.40-45. Ulrich B (2006): The Cosmopolitan Vision, trans. by Ciaran Cronin, Cambridge: Polity Press Webster DW (2007). Financial and shared services. J. Gov. Finc. Manage. 56(2):39-42.

African Journal of Business Management Vol. 7(1), pp. 8-21, 7 January, 2013 Available online at http://www.academicjournals.org/AJBM DOI: 10.5897/AJBM11.1919 ISSN 1993-8233 ÂŠ2013 Academic Journals

Full Length Research Paper

Designing the conceptual model of social responsibility of the Azad University by public relation role Mohammad Reza Karimi Science and Research Branch, Islamic Azad University (IAU), Department of Media management, Tehran, Iran. E-mail: mohammadrezakarimi@ymail.com. Tel: +982122588121. Fax: +982122760172. Accepted 17 August, 2011

This research has been designed and compiled to create proper ground to identify the role of the Islamic Azad University (IAU) public relation to achieve its responsibility goals. The main purpose of this research was to identify the role of the IAU public relation to achieve its responsibility goals. Also, the role of the IAU public relation in social responsibility is related to university manpower, business, social, governmental and environmental factors. The statistical society of this research includes managers and employees of public relation of 30 units of IAU, professors, and students of communication and media major in big units of Tehran. This research method is co-relational method because it identifies the relation between public relation of IAU as an independent variable and social responsibility as dependent variable, and identifies the size and extent of it. The research findings indicated that, public relation of IAU has relations with indexes such as personal experience, managerial challenges, financial sources, conceptual and attitudinal challenges, environmental factors, and technological changes and has a direct role in presenting information to internal and external organization audience in regard to social responsibility of IAU. Encouraging audience to partake beneficial activities that IAU provides such as presenting proper educational services, evaluating the needs of addressees, presenting beneficial services to audience of the society and Public relation of the Azad University by utilizing active responding mechanisms to addressees, has an influential role in distributing social responsibility culture, increasing social cooperation, creating mechanized systems for searching requests, preserving the environment, natural resources and energy management, and also has positive role in performing responsibilities and goals of IAU in regard to man power, social, governmental-environmental factors, and factors which are related to business. Key words: Social responsibility of organization, public relation, Islamic Azad University, audience.

INTRODUCTION Basically, an organization is created according to general and social needs. This need can be felt by public or a specific group, or presented by organization founders. What is obvious is that the basis of founding an organization requires the production of goods or providing services to the society with this view that goods or ser-

Abbreviations: CSR, Corporate social responsibility; KLD, Kinder Lydenberg Domini; SRI, socially responsible investing; SR, social responsibility; UNESCO, United Nations Educational, Scientific and Cultural Organization.

vices have public demands, and organization gains a result and outcome by producing them. On the other hand, a society has different needs, and is ready to secure them by paying prices. Spending these sums could be a stimulus for organizations that are inside the society (or even outside it) to gain income and secure these needs. If the social needs are bigger and deeper, the possibility of income increase and organizations expansion would be greater. This happens only when organizations that want to achieve their goals, had to connect with different groups of society, and oblige themselves to provide their needs.

Karimi

In this case, we can say that in fact neither organization can separate itself from society, nor society can live without organization. What is obvious is the rate of big organizations influence on society, and this fact that they have greater influence on small organizations. In addition, Public relation is one of the most important factors of social communication. Participation in social life is a historic phenomenon, and it exists from the creation of the society. But this issue was not as important as today's world. So in this regard: 1. As Dorkim says, today's world is the world of participation. People today act in a coordinated member1 world. 2. Participation is an essential factor, not even in social life, but in cultural and political life of today's world. New researches confirmed that in one part, higher participation leads to more satisfaction. On the other hand, participation is an inevitable necessity of human life to build society. 3. Public relation from one part by providing productive and distributive justice leads to better and more understanding of organization. On the other hand, transferring information and paying attention to its correct consumption, leads to manifestation and concurrence. Concurrence is known as substituting ones potential by others. The condition for its achievement is related to understanding the problems of organization or group, understanding issues, accepting them and transferring acceptance from wisdom realm to emotional domain. We knew that Dorkim differentiated two kinds of coordination from each other mechanical and organic. In member coordination or organically coordination, human beings are completing each other. The expert period has begun, and the need to participate is one of the important factors of human participation. If one group does not participate, it will lead to the paralysis of all systems. Without public participation, no organization or system will be successful. It pays attention to correctness and speed of information production, and information data will lead to social confidence (valid and possible data gathered), then social participation will be created as an essential characteristic of new society by means of public relation. In order to achieve social goals, and utilize social responsibilities of public relation, secrecy, the necessity principle, imitation and justification principles exist, and they should be recognized by public relation. It appears that public relation and its officials remember the mythical parable of Hermes. Hermes is a mystical figure that is full of life, and distributes knowledge. He transfers Message and moves it to deep masses so he can distribute brightness and creates knowledge. Public relation officials are like a bridge between organizations and people. They are knowledge distributors who can free people from ignorance and darkness.

Knowledge in Hegel is considered as freedom. So, in this point of view, public relation officials can free people from darkness, ignorance, in fraud thoughts, knowledge is similar to cure. When someone can open unconscious part of wisdom, and access to conscious part of wisdom, he is moving in cure path. Also they bring with themselves a lot of social participation and satisfaction. Wherever knowledge is people participate in it and with the help of knowledge there would be more satisfaction (Sarookhani, 2006). The Islamic Azad University (IAU) is an innovative research-centered university which helps students to employ. It is progressive in economical, social and cultural growth and expansion. IAU is an advanced university in science, theory, and thought throughout the world. IAU is equipped with advanced research and technology centers according to international standards. It is responsive to new expectations of society, and influential in valid international assemblies. The graduates of IAU are the future human investments who can build the society. The main mission of the IAU is expanding the boundaries of knowledge, expertise and research of experienced forces, which are innovative, thoughtful, and obliged in different aspects of science and technology, innovative and wise to increase the quality of university life and expand the great Islamic culture and religious values. The IAU is committed to: Distribute the moral values to preserve human generosity, social justice, present thoughts according to Islamic perspective, regulation, conscience, honesty in doing tasks, innovation and creativity in training, wisdom, responsive to shareholders expectations, free thoughts, and criticism and problem solving, emphasis on increasing the quality of educational process, learning with the aspect of organizational learning. Scientific acceptability in national and international arenas, continual exploits from best consumption and preserve the environment. One of the influential and main sections in the IAU is public relation. The information and public relation center of IAU with the goal of presenting information to all sections of the university has structures and instructions; public relation struggles to have a positive role to achieve social responsibility goals by beneficial utilization of financial sources, experienced man power, attitudinal, percep-tional, and environmental challenges. This article tries to answer the question: â&#x20AC;&#x153;what is role of IAU in achieving of its social responsibility? Is negative or positive role? At the end, it has been that public relation has positive role in social responsibility of University with use of, priorities of individual experience, management challenge, technologies changes, attitude challenge, environmental factors and financial factors. LITERATURE REVIEW Corporate social responsibility (CSR) has permeated

Afr. J. Bus. Manage.

management practice and theory to a point where CSR can be referred to as the latest management fad (Guthey and Langer, 2006), However so far CSR integration into business processes has been very uneven. (Hockerts 2008) for example, finds that most firms conceptualize CSR as a tool to reduce risks and operational cost. Many authors try to clarify social responsibility; Lee (2003) in her research (A new method for evaluating the quality of corporate social responsibility codes of conduct) with use of behavioral codes has presented two theories about social responsibility of organization. The first theory is the primary beneficial theory. This theory deals with beneficial activities that their strategy is helping the others or beneficial funds with the goal of gaining reputation for the organization. The second theory is social responsibility theory. This theory deals with beneficial and voluntary activities in the society, too. Its strategy is to reduce external factors, and with the goal of reducing the risk of policy change. By paying attention to the dominant theories in these models, the researcher thought about these models to design the conceptual public relation and social responsibility model, and the dominant theory in combination with research. Langat (1997) in a research with the title "Strategies of university public relation" presented the backgrounds of public relation and theory and concept frameworks of it. Also, he made complete evaluation about activities of public relation in that university, and this research is a very proper principle for study. Barnea and Rubin (2005) in his research (Essay on corporate social responsibility), has examined KLD11. Kinder Lydenberg Domini (KLD) is a source for organizations that expand different social responsibility strategies in the society. The word "KLD" is an original source, because it consists of a system of different organizations that have a role in activities related to social responsibility in a vast scale. In fact, it identifies the rank of organizations according to the extent of their role in social responsibility. He believes that KLD presents different kinds of social responsibility variables of organizations as a format to identify theories of social responsibility strategies. The first paper explores the role of socially responsible investing (SRI), making investment decisions according to both financial and ethical criteria. We analyze the effect of SRI on the investment decisions of firms that fail the screen (’polluting’ firms) and on their decisions to adopt a CSR- approved technology. The second paper further explores the role of SRI in a richer theoretical framework. In fact, a 2007 survey by food services company Aramark found that, 83% of customers wanted nutritional information in the restaurants they dined at. The restaurant industry looks at the difficulty of meeting these expectations and argues that customers will not order the healthy choices they say they want. Instead of taking the lead and working with customers to reinforce their stated values, these businesses run the risk of continued hostile scrutiny and regulation.

On the other hand, if a company clearly pledges to enforce standards, openly sets goals to improve upon its current abilities, while inviting and involving customers another stakeholders, then transparency actually improves relationships that were once adversarial. We model a capital market in which some investors get direct utility form owning firms that spend on CSR. We also assume different categories of firms: those with good CSR fundamentals and those with poor CSR fundamentals. The third paper argues that insiders (managers and large block holders) who are affiliated with the firm may want to over-invest in CSR for their private benefit since it improves their reputation. We test this hypothesis by investigating the relation between firms’ CSR ratings and their ownership and capital structure. We employ a unique dataset that sorts’ 3,000 US corporations according to their social record. We find that insiders’ ownership and leverage are negatively related to the social rating of firms, while institutional ownership is uncorrelated with it. These results support the hypothesis that CSR is a source of conflict between different shareholders. Labord (2005) with the title of "Corporate public relations practitioners' perceptions of program evaluation and encroachment effects" in communication faculty of Florida public university in USA. The results of his researches showed that practitioners who do not measure their results, do not act according to their decision making or advising roles. Also, in order to protect in front of encroachment effects, practitioners of communicative organizations should recognize this issue that how they can measure their activities effectively, and prove their bosses that they are valuable. Heath and Ryan (1989) in University of Houston worked on one issue "Public relations role in defining corporate social responsibility" said that, modern corporate executives often find themselves caught in dilemma that business titans of the past seldom faced. Corporate leaders during the 19 and early 20th centuries had one obligation: to maximize profits. Today’s managers must maximize profit, but they must act responsibly often find specialinterest group advocates and regulators ready to force compliance with demanding ethical standards, the most recent of which is required notification of plant closing. Corporate executives who must earn profits and maintain harmony with their environments have three options: They can try to create the appearance of behaving in a socially responsible manner through image building, which typically implies more than substance: they can strive for moral rectitude, which assumes that a set of universal standards can be stated and implemented (a lofty, but perhaps too idealistic, goal): or they can try to indentify various public’s interest and then develop and implement policies consistent with those interests. Social responsibility (SR) is best defined by Khurram Naayab who states that corporate social responsibility is the concept that an organization is accountable for its impact on all relevant stakeholders. It is the continuing

Karimi

commitment by business to behave fairly and responsibly and contribute to economic development while improving the quality of life of work force and their families as well as of local community and society at large"(Ward et al., 2002). This definition most accurately defines CSR because it limits the boundaries of CSR to an organizations impacts, it specifies relevant stakeholders meaning that not all groups in society are considered stakeholders, and describes it as a commitment to both services development and quality of life, which must both be considered, otherwise organizations cannot effectively engage in CSR. To ensure long term survival, organizations must re-define their role in society. Organizations must re-contextualize themselves within a broader framework that includes governments and public. Organizations specifically need to be responsible for their impacts of services and goods they produce, the processes used to create the services and all intended and non intended consequences of their operations. They must also be responsible to allocate and use appropriate resources to mitigate the impact that their activities have both inside and outside of organization (Wilson, 2002). CSR is a concept that is gaining more credence in the eyes of corporations, government and public. Although this concept is not new, the way it is articulated changes with the dynamic relationships of these three sectors in society. It is concept of corporate values, which affects actions, impacts and expectations that change depending on context (Schuh, 2002) SCR is very high on corporationâ&#x20AC;&#x2122;s agenda in recent years. CSR means different things to different stakeholders but generally refers to serving people, communities and the environment in a way that goes beyond what is legally required of a firm (Barnea and Rubin, 2005). "Derek French" and "Hiner sawerd" in the "management culture" book in regard to social responsibility wrote: social responsibility is a duty which is related to private institutes. That means they should not have a negative effect on the social life that they live in. The extent of this responsibility has not been defined, but it consists of duties like: untainted, indiscriminate employment, eliminating the immoral behaviors, and informing the consumer from the quality of products. Also, it is a responsibility based on positive cooperation among people in society (Bamey, 1992). Robinson in this regard states: "Social responsibility is one of the respon-sibilities and obligations of organization to benefit the society to the extent that the primary goal of maximizing profit will be elevated. Keith Davis believes that: social responsibility is a kind of sense of obligation by the managers of private commercial organizations, and they should decide wisely so that after gaining profit for the institute, the level of overall social welfare will be increased (Davis and Fredrick, 1984). Many of processes required to effectively engage in CSR are already in place within corporations. They key processes are strategic planning/decision making, policy creation, reporting, communications systems (including risk

communication), monitoring and auditing and verifications. These processes may require some modification to include additional consideration, but the process would likely remain similar. Therefore, the actual day-to-day operational changes required to engage in CSR may be minor, as the changes necessary to the process that determine day-to-day operations may also be minor. David Schilling notes that, for independent monitoring to work, corporations will need to give up some degree of control. This is the single most difficult challenge for companies who want to control monitoring (Schilling, 2000). Although, Schilling refers specially to monitoring, the same is true of key processes required for CSR to work within a corporation. The non-profit research and consulting organization business for social responsibility, has listed the major drivers for CSR. (1) Improved financial performance, (2) reduced operating costs, (3) enhanced brand image and reputation (4) increased sales and customer loyalty, (5) increased productivity and quality (6) increased ability to attract and retain employee, (7) reduced regulatory oversight, (7) reduced regulatory oversight and (8) access to capital (business for social responsibility). Also, governments can encourage corporations to engage in social responsible practices. The UK Cabinet Office has created a table showing the variety of approaches available to governments in encouraging corporations to voluntary become more socially responsible. Table 1 (Bondy, 2003) includes both incentive and disincentive mechanisms for encouraging corporations to engage in voluntary initiatives for CSR. The issue of government involvement in voluntary initiatives has been explored in detail by the UK Cabinet Office, and although some of the examples used to highlight the different policy interventions are specific to the UK, the information in the Table 1 is applicable to any democratic nation with a free market economy. These groups have differential impacts on corporations and the decisions made about them. For instance, Group 3 pressures/drivers are important in terms of the operating condition of the corporation; however, the corporation has more flexibility to determine whether to respond to the pressure/driver and to what degree. Therefore, they are not bound by Group 3 pressures/ drivers in the same way as they are by Group 1 pressures/drivers. Group 1 /drivers have a direct and very influential impact on the day to day operations of the corporation (Fombrun, 2002). The organization responsibilities should not just be effective, and their responsibilities should do service to the society that they operate in (Mitchell, 2004). So we can say that in fact neither organization can separate itself from the society, nor the society can live without organization. Investigating organization interactions with society enable us to define enormous network of people and organizations which have direct role on people's lives. The above mentioned effect causes all people in society

Afr. J. Bus. Manage.

Table1. Spectrum of policy Intervention (Bondy, 2003).

Group 1 – hands-off approach Safeguards only

Guarding against misleading claims, for example, dETR’s green claims code Raising public awareness about VIs [ voluntary initiatives ] without direct support for individual schemes

General awareness-raising Group 2 – Enabling framework Work to ensure supportive environment

international

Improving the legal regime, securing buy-in particularly from developing countries, promoting mutual recognition or harmonization

Highlighting and advising in best practice

Providing advice and highlighting best practice, for example, DEID support for Resource Center for Socially Responsible Business: DTI’s support for PWBLF’s INSIGHT scheme

Standard-setting

Government participation in defining voluntary standards, for example, EU eco-labeling scheme, DTI’s participation in SIGMA scheme with BSI

Providing grants or loans

Support via grants or loans, for example, DFID funding for the eti

Leading by example

Such as through government procurement

Group 3 – Strong intervention Mandatory reporting

Requiring companies to report on performance in relation to SHE outcome and/or label their products, for example, EU Energy label

Requiring adherence to process guidelines in Vis

Government requires adherence to process guidelines, for example, requiring independent verification of codes

Signaling Vis to be used as evidence of compliance with general statutory obligations

For example, voluntary codes used to demonstrate compliance with health and safety obligations

Threatening alternative measures

Government threatens more binding measures if participation in a VI is not forthcoming

Direct financial incentives to adopt specific standards

Government provides tax and other financial incentives for participation (including withholding privileges, export credits, participation in trade missions)

consider themselves as part of organization and ask for its responsibilities (Griffin, 1988). Groups of society and organization need it because of its missions and goals (Stoner and Freeman, 1992). Primary interactions of organization with society includes all direct communications that are necessary to organization for performing primary goals to present products or services to society. Combination of primary and secondary interactions of organization with society creates the interactional model of organization with society. According to Figure 1, the primary interactions that operate in market, depicted in the left part and secondary interactions that do not operate in market depicted in the right part. What can be concluded in this interactional model are: (1) Organization: in decision making, it divides the energy among these groups whether primary or secondary. All organizations whether big or small, have similar perfor-

mance in this regard, but the difference is that the extent of influence of each different entity of society on organization, and the extent of their influence from organization is different from each other. (2) Acception of organization from society (its legitimate activity and existence) depends on the performance of organization in the scope of primary and secondary interaction with society. The interactional model of organization and society, expresses the overall and principal role of organization in society. The abovementioned model emphasizes this issue that the decision makers of organization should act wisely to sustain and improve public welfare of society with their benefits. The main effect of this paper will be the increase of life quality in each person in vast scope. One of important department of each organization that can interact well with society is public relation department. Public relations increases organizational effectiveness and practitioners regularly evaluate results of their divisions’ work

Karimi

Customers Suppliers

Shareholders

Public

Competitors

opinion

Supporting Groups

Creditors

Organiza tion Media Groups

Staff

Active groups in society

Whole sellers

Foreign

Retailers

governments

Government

Society

Figure 1. The interactional model of organization and society relation (Ricky, 1993).

(Ferguson, 1998). Public relation consists of: 1. Information which is given to people 2. Encouraging efforts to change attitudes and people's behavior 3. Struggle to coordinate attitudes and activities of one institute with audience and, on the other hand attitudes and audience activities with an institute. As it was illustrated in figure 1, the first interactions which take place in bazaar depicted in the left, and the second interactions that do not occur in bazaar depicted in the right. What can be deducted form this interactional model is: 1. Organization: In decision making moments, divides its energy among all of these groups-whether primary or secondary. 2. Manegers of manufacture or commercial companies: To that extent that they should have necessary experience in economical and financial interactions, they should have social and political expertise, because no one of this expertise is enough when it is considered alone. 3. Acceptance of the organization by society (legitimacy of its activity and existence) depends on the organization activity in the scope of primary and secondary interactions. A car maker company by providing suitable

and profitable price may be considered a successful company, but if its manufactured cars are lower standards it will be faced with public discontent. Allen Biro presents public relation activities according to these cases: 1. Presents information which should be given to people and inform them about social activities of mentioned company 2. Struggles to give information to public so that change in people's behavior and understandings occurs 3. Or it includes all efforts that is aimed at coordinating behaviors and activities of one unit or party and people that are related to that unit or party. So, public relation is a very complex element. Public relation complexity in one aspect is related to its multidimensionality, and on the other hand with its different internal obligations. From another view point, public relation is known as managing the relationship between internal and external elements of an organization (Sarookhani, 2006). A number of theories have thus resulted to explain the practice. Dyson (1987) Teleological Theories, view public relations in universities as directed towards a general social purpose. The theories argue that, public relations is spurred on by the political aim of making academics accountable for use of

Afr. J. Bus. Manage.

large resources which they are entrusted, and for the quality of their teaching and research. Instrumental theories contrary to Teleological Theories of University public relations, Dyson (1987) states that instrumental theories (also known as capture theory) view public relations in universities as the instrument of some narrow social group pursuing its own interests rather than pursuing a public purpose. Public choice theory, this theory further pushes the notion of academic dominance. It portrays university public relations as a juggling of power relations among academicians. The proponents of this theory regard departments and individuals who have both the incentive and the capacity to dominate as benefiting at the expense of the others. Administrative theories, these theories according to Dyson (1987) stems from the notion that public relations involves the development and implementation of strategies, procedures, rules, and conducted by bureaucratic structures, and has to solve a variety of problems for public relations to succeed. Evaluation that proves public relations value and is acceptable to senior management can be expected to define against or discouraged encroachment onto the public relations function. Encroachment within a company is the assignment of non-public personnel to manage the public relations function or the takeover of public relations tasks by non-public relations departments (lauzen, 1991, 1992). Broadly, systems theory promotes an understanding of how interrelated corporate subsystems constitute a whole system or company that is a changing environment (Broom and Dozier, 1990; Cutlip et al., 1985). The distinguishing characteristic of a system according to Almaney (1974) is the structure and pattern of interaction (or communication) between a systemâ&#x20AC;&#x2122;s subunits and the resultant interdependence among them? In other words, wherever two subsystems meet in a company, communication must occur for these subsystems to cooperate with one another (Wiio et al., 1980). Almaney (1974) considers a system ultimately to be "communication network". Public relations make communication happen in a system. This communication is vital to the "smooth operation of the total system" because it integrates all subsystems, maintains the internal stability of the total system (that is, company) with the external environment (Almaney, 1974). Thus, public relations heavily influences how well the overall system functions (Almaney, 1974; Broom et al., 1997; Creeden, 1993). As a basis for understanding the manner of practices in organizations and in universities in particular, it is apparent that one examines the various model that have been employed by practitioners over a period of time. A model as defined by Grunig and Grunig (1992) refers to a "pattern of behavior that characterize the approach taken by a Public relations department or individual practitioner to all programs, or in some cases, to specific programs or

campaigns". These models reflect the interpretation and perceived communication roles of public relations practitioners (Sweep et al., 1997; Barney and Black, 1994). Grunig and Grunig (1992) states that, different times in history stressed different aspect of models based on their perceived role of public relations, the Grunig models are comprised of, (i) The press a gentry/publicity model, (ii) the public information modeled, (iii) the two way asymmetrical model and (iv) the two way symmetrical. Public relations scholars who have studied university phenomenon have acknowledged existence of complexities arising from their uniqueness as opposed to other formal organizations and business enterprise. Public relation and social responsibility, by paying attention to the importance of public relations, many people emphasize its pivotal role. According to their thought, public relation is not created at the sidelines of an office, or any organization. Public relations interfere in producing or providing services, and order the organization how to produce, and when to produce, and which damage to remove. So, public relations are the honest factors in transferring thoughts from organization to people and from people to organization. In this case, Dr. Majid Notghi writes: public relation is in the context, and it is not marginalized. It is a necessity not a luxury, and it is inside management not outside of it. So, we have the right to say that each management deserves the public relation it possess. On the other hand, we can rightfully say that without considering the thought and opinion of public relation practitioners, no planning would be possible. So, we can accept that public relations are an art, because it depends on strong intuition of practitioner, and it is a science because it is founded on the grounds of scientific data. Also, public relation is an experience, because it requires the accumulation of experimental expertise. Based on the above review and study of literature, this study presents a conceptual model in which the relationship between components of public relations and their role in creating the appropriate framework for achieving social responsibility has been investigated (Figure 2). As can be seen in figure 2, this model reviews the direct relation and effect of public relation and its dimension that collectively shaping the outcome of public relations, on organization (Azad university) social responsibility and its components such as: social factors, business factor, manpower factor and governmental and environmental factor. Looking at the conceptual model and description of its components in the study, operational model and research variables are presented in Table 2. Research Method In this research, the researcher deals with the role of the IAU to achieve its social responsibility goals in a special way. In this case, by using structural equations model, the researcher can clarify the

Karimi

Financial Resource

Govermental&E nvironmental Factors

nvironemtalnt

Social Factors Business Factors

Management challenge Social Responsibility

Public Relation Dimension

Manpower SR

Perceptual &Attitude Challenge Technological Change Individual Experience

Figure2. Research conceptual model (Karimi, 2011).

impact of public relations to social responsibility. By paying attention to this fact that the goal of this research is to identify the role of the IAU to create proper ground to achieve social responsibility goals, this research method is co-relative. The sampling method is random sampling and which is society accessible. As figure 3 shows, the study statistical populations are: 1) Staff and officials of public relation sector of 30 very big units according to central organization rating, 2) Faculty members, professions and opinion holders in Tehran big branches, and 3) Students of communication and media management in Tehran big branches. The measurement tool for this research is two questionnaire that identified by experts of kronbakh Alpha and interview method is open and closed. According to the compilation method, the information in this research is descriptive and co-relative study (corelative matrix), and is possible according to structural equation model research. On the other hand, the IAU was established when Iran had many problems in higher education, so it is now considered as a turning point to increase the educational levels of young students. This university without any governmental budget has around 1.6 million students, 3.7 million graduates, more than 30 thousands faculty members, 33 thousands personnel, 400 branches and university centers, and 20 million square meters educational ground, and it could solve many problems and obstacles in the higher education sector of Iran. The IAU focuses its efforts to respect students and opposes to those who are against increasing welfare of professors and personnel, and paying loans to students. These efforts are considered as good chances to increase social responsibility. Public relation section of the IAU can explain and illustrate the university services to the society and inform them these achievements, so officials, professors, and personnel, students, and graduates of this university with good information, and increased social responsibility and mutual respect can have influential role to clarify public opinion and learn social responsibility. The method of this research is applicative according to the set goal in the research of (Bazargan et al., 2008) because it deals with the role of the IAU public relation center to achieve its social responsibility goals. The information compilation method of this research is descriptive and correlation study (correlation matrix) which is based on modeling structural equations and analyses.

So the stages of this research follow like this: 1. First the researcher studies the literature which is related to public relation and dimensions of influential public relations, and extracts all dimensions of it which shape public relation and use it as a questionnaire to measure the role of public relations. 2. In the second stage, the researcher studies social responsibility and after extracting dimensions, prepares these indexes as a questionnaire. 3. In the third stage, the questionnaire distributed among experts so that they express their point of view about credibility and veracity of the questionnaires. 4. After applying all of the experts' points of view and making necessary corrections in the questionnaire, an initial sample created and its veracity and credibility examined according to the Alfa Kronbach method. Later the credibility of this research studied through explorative and confirmative examination. 5. At the end, after the credibility and value of the questionnaire was confirmed, the researcher uses the structural equation model making method to study the hypothesis of the research (the mentioned model will be provided in the course of this work), so that he can study the role of the IAU public relations to its social responsibility and dimensions. 6. Because the goal of this research is to study the role and dimensions of the IAU public relations to its social responsibility, so we should examine the cause and effect relations between variables and use structural equations model and analyze the way of doing this research. Structural equations model is a comprehensive statistical way to test the hypotheses about relation between observable variables and unobservable variables. So in this research the impact of an independent variable on multiple dependant variables studied, using the structural equation model considered necessary. According to coordinates of statistical society of researcher, we can identify the number of these floors separately. So the statistical society of research is limited, the below formula and Random sampling method is used. The statistical society is heterogeneous; the researcher first distributes its questionnaire in each statistical society and identified the trust and validity of instruments. After that he uses the samples for necessary analysis. Finally 330 from this population selected

Afr. J. Bus. Manage.

Table 2. Pressure/Drives for corporations to engage in CSR (Aaronson,2001,P 14).

Group 1 Internal operating environment • personal ethics of management • Decentralized management responsibility( as distinct from decentralized management • Corporate scandals • Shareholder / investor pressures • Consumer pressures • Demands for increased disclosure • Corporate governance • Supply chain • Corporate Survival Group 2 internal operating Environment Specific to Individual Corporations • Improving business as a whole • Laws and regulations • Increasing competition • Technological changes • Environmental challenges / sustainability • Competitive labor markets • Shift from industrial to knowledge based economy Group 3 General eternal operating environment • Globalization • Demographic changes • Changing expectations of society • Shrinking role of government • Emerging ethical issues Group 4 Response strategies • Reputation management • Public relations considerations (for example, brand image) • Societal license to operate • Cooperation in development

Statistical society in research

Staff and officials of public relation sector of 30 very big units according to central organization rating

Faculty members, professors and opinion holders in Tehran big branches

Figure 3. Research statistical population model (Karimi, 2011).

Students of communication and media management in Tehran big branches

Karimi

Figure 4. Measuring the role of IAU public relation to create proper ground to achieve its social responsibilities model (Karimi, 2011).

that were 20 staff of public relation, 10 professors and 300 students of communications and media course.

Research findings As mentioned, for data analysis and test hypotheses were used structural equation methods. Figure 4 shows the results of the test based on the Lisrel software. Based on the results of structural equation method, Table 3 shows the criteria for proper research and observing figure 4 amounts. Analysis is a confirmation factor for role of the Islamic Azad University public relation to create proper ground to achieve its social responsibilities. After discussing how to calculate the results of elements, and before entering in to the stage of

hypotheses tests, we should recognize correctness of the role of the Islamic Azad University public relation to create proper ground to achieve its social responsibilities model. Figure 4: It is necessary to see if the role of public relation model to create proper ground to achieve social responsibility goals is correct or not. So the measuring models of this variable presents, and this work is done by educational structural model. The main question which presented here is that whether this measuring model is suitable or not? In order to answer this question the statistics and other measures for of model should be investigated. According to Lisrel output, the measured amount will be 1653.66, and it shows that if the amount is lower, the presented model is suitable. Tables 4-8 includes all information

Afr. J. Bus. Manage.

Table 3. Criteria for proper research and observing figure 4 amounts (Karimi, 2011).

Index 2 Ď&#x2021; (square k) Df degree Free) 2 Ď&#x2021; /df p-value RMSE (error square) GFI (good fitness Index) AGFI (the adjusted good fitness index)

Evaluating criterion The smaller the better Bigger than zero Smaller than Smaller than 0.08 Bigger than 0.9 Bigger than 0.9

Current situation 1653.66 1464 1.129 0.32244 0.042 0.94 0.95

Table 4. Obtained parameters of public relation role results in social responsibility (Table of final path research model karimi, 2011).

The direct relation of variables in the model Attitudinal challenge Technological changes Personal experience Public relation Financial sources Environmental factors Managerial factors

Public relation with social responsibility indexes

Meaningful amount 0.71 0.78 0.89 0.64 0.81 0.83

T amount 0.1 0.1 0.1 0.1 0.1 0.89

Standard mistake 0.66 0.78 0.87 0.60 0.75 0.89

Standardized amount 0.01<P 0.01<P 0.01<P 0.01<P 0.01<P 0.01<P

Final amount 30.12 32.17 35.27 29.31 32.14 24.33

0.67

0.1

0.65

0.01<P

30.15

0.56

0.1

0.50

0.01<P

25.71

0.71 0.52

0.1 0.1

0.67 0.47

0.01<P 0.01<P

31.18 24.81

Man power Governmental and environmental factors Social factors Business

Table 5. The co-relative Pearson test between public relation role and social responsibility goals (Karimi, 2011).

The names of variables public relation role and social responsibility goals

co-relative factors

Significant amount(sig)

Significant relation

0.68

0.001

exists

Table 6: Summarized stages of statistical testing of research hypothesis (karimi, 2011).

hypothesis

direct

Standardized amount

Significant level

T amount

result

Subsidiary hypothesis 1: IAU public relation has a positive and direct role in social responsibility related to staff, professors and students

direct

0,65

0,01<P

30,15

confirm

Subsidiary hypothesis 2: IAU public relation has a positive and direct role in social responsibility in regard to governmental and environmental factors

direct

0,50

0,01<P

25,71

confirm

Subsidiary hypothesis 3: IAU public relation has a positive and direct role in social factors related to social responsibility

direct

0,67

0,01<P

31,18

confirm

Subsidiary hypothesis 4: IAU public relation has a positive and direct role in social responsibility related to business and users of university services

direct

0,47

0,01<P

24,87

confirm

Karimi

Table 7. Rating average of public relation factors in Freedman test.

Row 1 2 3 4 5 6

Variable Individual experience Management challenges Technologies changes Attitude challenges Environmental factors Financial factors

Variable Social factors Social responsibility about manpower Governmental and environmental factors Business factors

Significant (sig) is smaller than 0.01 and near zero (sig <0.01>) that is smaller than meaningful level )α=5%, So,

H 0 : ρ = 0 hypothesis is not confirmed in confidence

Rate 4.15 3.83 3.80 3.17 2.99 2.87

Table 8. The priorities of social responsibility factors on the base of Freedman test are: rating average of social responsibility factors in Freedman test.

Row 1 2 3 4

Rate 3.80 3.67 2.97 2.66

regarding suitable and worthy variables. So, at the following measuring models, this variable will be presented at society, and this task will be done by structural equation models. By paying attention to the above model, it can be deducted that all of the factors are meaningful because the result of each meaningful exam is higher than 2 and lower than -2, the abovementioned model, is the final model of research. The next outlet shows meaningful parts of factors and parameters of outcomes model, and results of the role of public relation in university social responsibility. In this part, all research hypotheses will be tested by proper statistical exams. The original and subsidiary hypotheses of this research include: The original hypothesis of research; IAU public relation has directed and positive role to achieve university social responsibility goals. Designing H hypothesis Opposite claim: IAU public relation does not have directed and positive role to achieve university social responsibility goals.

H0 : ρ = 0 Designing H1 hypothesis Claim: IAU public relation has directed and positive role to achieve university social responsibility goals.

H1 : ρ ≠ 0 By paying attention to SPSS, Pearson co-relative coefficient for these variables is 0.68, the amount of

level 95%, this means that there is a meaningful relationship between these 2 variables. By paying attention to the fact that the co-relative coefficient between these two variables is positive, we can say that these two indexes are in the same direction. As can deduct from results of Table 6, all 4 subsidiary hypotheses are confirmed, because the significant level is less than 0.05. Table 6: In the indirect hypothesis no 1, the role of the Islamic Azad University public relation in social responsibility is checked. The statistical results of it shows that by paying attention that the meaningful level is lower than 0/05 there is a direct relationship between independent variables (public relation) and dependant (social responsibility related with public relation staff, professors, and students of communication and media management). This situation shows that in the Islamic Azad University the activities of public relation have positive role in IAU social responsibility. In the indirect hypothesis no 2 the public relation of in the Islamic Azad University has a positive role in social responsibility in regard to public and environment factors. By paying attention that public-environmental factors has positive and negative impacts on each organization, the exterior environment has a strong impact on the activity of IAU and distrust phenomenon that the manager is faced with. Complexity and change of environmental factors have very important impact on the Islamic Azad University. We can say that the source of more activities, decisions, and results of the IAU is external and internal environment. Islamic Azad University public relation has positive role in regard to social factors related to social responsibility. In this indirect hypothesis, the social responsibility of the Islamic Azad University in regard to social factors and role of public relation to perform these responsibilities has tested. The statistical results of this hypothesis shows that by paying attention to this case that the meaningful level is lower than 5%, the direct relationship between independent variables (public relation) and dependent (social responsibility of the Islamic Azad University in regard to social factors of education and train addressee, informing the problems in the society such as: poverty, dissertation, addiction, corruption and…) exists. In the indirect hypothesis no 4the role of the IAU public relation in social responsibility in regard to the working factors has been tested. The statistical results show that by paying attention that the meaningful level is lower than 0/.5, there is a direct and positive relation between independent variables (public relation) and dependent (social responsibility related to activities of IAU). By paying attention that the existence philosophy of the

Afr. J. Bus. Manage.

Islamic Azad University and its mission is to expand the boundaries of knowledge, expertise of experienced forces that are obliged in different arenas, the quality of university life has been increased and the Islamic culture and religious values expanded. The IAU has increased the quality of services, new educational and cultural technology for national and international purposes and its beneficiaries. In the main hypothesis of the research, the statistical results of the role of public relation in social responsibility shows that the meaningful level is below %5 and has direct relation and positive between independent variables (public relation) and dependent (social responsibility related to work and IAU). The overall results about indirect research hypothesis indicates that public relation of the Islamic Azad University has a positive role to achieve social responsibility of the Islamic Azad University for (employees, professors, students) public and environmental factors, social factors and the related factors with university activities that includes information making, creating inward and outward communications, encouraging addresses in each part of the university to do social obligations with the role of financial resources, insight challenges in university, to expand the role of public relation to achieve social responsibilities of the university and transferring these responsibilities to inward and outward addresses. CONCLUSION AND DISCUSSION Successful and effective public relation depends on many factors. There is a direct and meaningful relation among financial sources, personal experience of public relation staffs, managerial challenges, technological changes and environmental factors and the role of public relation to create proper ground to achieve IAU social responsibility goals. What can be included from the results of this research is that, IAU public relation as one of the biggest personal universities of the world, has an important role in presenting information to 3 million and seven hundred thousand graduates of the IAU to create small business units, and introducing graduates to entrepreneurs, and expanding employment funds. Also by holding direct answer and response between university and faculty officials, it has an important role to improve overall confidence and distributing culture of students. Informing effective international organizations and assemblies like United Nations Educational, Scientific and Cultural Organization (UNESCO) about the number of graduates, and the issue right is that, half of one million and six hundred thousand students of the IAU consists of girls and IAU has an important role to train educated women and educate expert forces in Iran and creates the ground to improve their social participation in

political, cultural, economical and social arenas. IAU public relation has suggested the foundation of social responsibility department in communication and media management faculty to stabilize the culture of responding and commitment of university officials to social responsibility. Also, IAU public relation has an important role in conserving environment, expanding green spaces, beautifying 400 units of IAU in a 20 millionsquare meters ground, using clean energy and increasing the university participation to do beneficial activities. The results of research hypotheses in mistake level is smaller than 0.05 and this show that IAU public relation with use of financial sources, personal experiences, technological changes, positive influence of environmental factors, and managerial challenges has a positive and direct role in social responsibility of university in regard to man power, governmental-environmental factors, social and business factors. It is obvious that theses direct roles are possible with informing, proper responding, inspiring managers, staff, professors, and university students to do social responsibility related with social factors, business and governmental-environmental factors. One of the important results of this research is that IAU public relation has a direct role in reducing negative impact of governmental media, branding and building image for university in society, gaining the trust of audience, encouraging audience and shareholders of university to do beneficial activities, cooperation with government in charity activities, informing students about social problems, encouraging university audience for job making, utilizing innovative technologies in advertisement, encouraging women audience to participate in charity work, informing the audience about conserving the environment, and reducing energy consumption, and keeping university reputation in society. Moreover, public relation of the IAU by using beliefs and values of the pervious public relations, innovative technologies to respond properly to audience, personal experience of staffs and managers of public relation, top university management support, and by using blogs, internet sites and special digital media, has a direct and positive role to achieve social responsibility goals of IAU in regard to its man power, governmentalenvironmental factors, social factors, and business factors. However, IAU public relations can select managers and staffs who are faithful to social responsibility, and its obligations. It can also hold face to face meetings among university officials with professors, students, and staffs to support their rights and solve their problems. Create jubilant environment in university to pay attention to social values and stabilizing social responsibility, holding training workshops to facilitate and improve social responsibility in university, creating proper structures to turn students, professors, and staffs thoughts to positive image, transferring some responsibilities to students, learning how to consume new energies, photolytic, geo-

Karimi

thermal, wind, water energy, and reducing environmental polluters, informing about paying taxes to government, proper and active cooperation with media, improving communication by influential media like television, radio, news agencies, press, and news sites to audience can reflect better image from IAU to society public opinion. To achieving social responsibility goals, we focused on different public relation functions suitable for social responsibility based on (individual experience, management challenge, technologies changes, attitude challenge, environmental factors, and financial factors). Among them, the priorities of public relation factors on the base of Freedman test are as shown in Tables 7 and 8. As can realize from results of tables, in the sample of under study, social factors is most priorities and business factor has little priorities. This means that IAU functions are more focus on Social factors. And this is duty of public relation that is submitting information about this to audience. ACKNOWLEDGEMENTS Author appreciates all public relation and social responsibility practitioners who earnestly cooperate in this research. REFERENCES Aaronson SA (2001). Voluntary Global Codes or Strategic, No National or International Government Role, National Policy Association, Almaney (1974). Communication and theory of organization systems. J. Bus. Communicat. 12(1):35-43. Bamey G (1992). The management of organization, NJ Houston Mifflin Co. Barnea A, Rubin A (2005). “Corporate Social Responsibility as a Conflict Between Owners,” Working Paper, Univ. Brit. Columbia. Barney R, Black J (1994). Ethics and professional persuasive communications. Public Relat. Rev. 20(3):233-248. Bazargan HA, Sarmad Z, Hejazi E (2008). Research Methodology in Behavioral Sciences, AGAH Publishing: Tehran. Broom G, Dozier D (1990). Using research in public relations. Upper Saddle River, NJ: Prentice Hall. Broom GM, Casey S, Ritchey J (1997). Toward a concept and theory of organizationpublic relationships. J. Public Relat. Res., 9(2):83-98. Creedon PJ (1993). Acknowledging the infrasystem: A critical feminist analysis of systems theory. Public Relat. Rev. 19(2):157-166. Cutlip S, Center A, Broom G (1985). Effective Public Relations. Englewood Cliffs, New Jersey: Prentice Hall Davis K, William CF (1984). Business and Society, New York: McGraw Hill 1984, pp.4- 13. Dyson K (1987). managing university public relations: Theory and practice. Higher education review 21:21-40. Fombrun CJ (2002). Corporate reputations as economic assets. In M. Hitt, R. Freeman and J. Harrison (eds.). Handbook strat. manage. Oxford: Blackwell Grunig JE, Grunig LA (1992). Public relations research annual, Hillsdale NJ, Lawrence Erlbaum Associates. Guthey E, Langer R (2006). Corporate social responsibility is a Management fashion. So what? In M. Morsing, & S. Beckmann (Eds.), Strategic CSR communications: 39-60. Copenhagen: DJOF Publishing.

Heath LR, Ryan M (1989). Public Relations Role in Defining Corporate Social Responsibility, journal of mass media ethics, university of Houston. Hockerts K (2008). Managerial Perceptions of the Business case for Corporate Social Responsibility. James AFS, Edward RF (1992). Management, New Delhi: Prentice Hall p.101. Karimi M (2011). Designing the conceptual model of social responsibility of the Azad University by public relation role, A thesis submitted to the department of media management design in partial fulfillment of the requirements for the degree of PhD of media management, faculty of communication science and media management, research and science branch, Islamic Azad University (IAU). Labord JE (2005). Corporate Public relations Practitioners Perceptions of Program Evaluations Perceptions of Program Evaluation and Encroachment Effect. A Thesis submitted to the Department of Communication in partial fulfillment of the requirements for the degree of Doctor of Science, College of Communication. Langat KN (1997). Strategies of university public relation presented the backgrounds of public relation and theory and concept frameworks of it, University of Alberta. A case study submitted in partial fulfillment of the requirements for the degree of Master of Education in Administration of Postsecondary Education. Lee Bondy Krista(2003).A new method for evaluating the quality of corporate social responsibility codes of conduct ,Atheses submitted to the department of environmental design ipartial fulfillment of the requirement for the degree of masteof environmental science, faculty of environmental design, Calghary,Alberta university. Lauzen MM (1991). Imperialism and encroachment in public relations. Pub. Rel. Rev. 17:245–255. Lauzen MM (1992). Public relations, intraorganizational power and encroachment. J. Pub. Rel. Res. 4(2):61-80. Mitchell RH (2004). “Corporate Loss of Innocence for the Sake of Accountability,” J. Soc. Philos. 35(3):406 Ricky W Griffin (1993). Management, N.J: Houghton Mifflin Co (1987) p.817. Sarookhani B (2006). "Communication Sociology and Information", Etelaat Pub. Vol. 5 Autumn. Schilling DM (2000). Making Codes of Conduct Credible: The Role of Independent Monitoring IN Global Codes of Conduct: An Idea Who's Time Has Come, Williams Oliver F Ed (2000), University of Notre Dame Press, Notre Dame, India. Schuh C (2003). Personal communication. The role of external stakeholders for member identification, Business Ethics: Euro. Rev. 15:171-182. Stoner JAF, Freeman RE (1992). “Management”. Fifth Edition, PrenticeHall International, USA. Sweep D, Cameron GT, Lariscy RW (1997). Rethinking Constraints on Public Relations Practice. Public Relat. Rev. 20(4):319-331 Wilson Mel (2002). Environmental Reporting in Thompson Dixon Ed, Tools for environmental Management. A practical Introduction and Guide, New Society Publishers, British Columbia, Canada p.209. Wiio OA, Goldhaber GM, Yates MP (1980). Organizational communication research: Time for reflection: Some conclusions from audit and network studies in different countries. In: Nimmo D (Ed.) (1980). Communication yearbook 4 (pp. 83-97). New Brunswick, N.J.: Transaction Books. www.iied.org 33 corporate citizenship retrieved July 2(2002). www.multinational guidelines.org/csr/june%2011%20conf/appendix 3%20start.htm, www.multinationalguidelines.org/oecd/Document/booklet.htm. www.nzbr.org.nz/, documents and publications (2001), misguided virtue (2002).

African Journal of Business Management Vol.7(1), pp. 22-29, 7 January, 2013 Available online at http://www.academicjournals.org/AJBM DOI: 10.5897/AJBM11.2589 ISSN 1993-8233 ÂŠ2013 Academic Journals

Full Length Research Paper

Evaluation of suppliers in the process of buying and supplying using analytic hierarchy process Alireza Shahraki1, Meysam Kazemi E.2 and Seyyed Ali Banihashemi3* 1

Departement of Industrial Engineering, University of Sistan and Baluchestan, Zahedan, Iran. 2 Departement of Industrial Engineering, Islamic Azad University, Zahedan Branch, Zahedan, Iran. 3 Departement of Industrial Engineering, Young Researchers Club, Islamic Azad University, Zahedan Branch, Zahedan, Iran. Accepted 15 March, 2012

Supply chain has absorbed many researchers and industrialists in recent years. Producers do not only try to change the inner situation better in this competitive bazar, but also choose the best bazar and prioritize their programs especially with the phenomenon of globalization and best producers. Choosing the best choices in every decision needs analyzing some factors. As a result, organizations are faced with multi- criteria decision issues. On the other hand, usages of hierarchal analysis technique in relation with choosing criteria have been mentioned in various management and operating issues in several editorials with utopian planning. Several goals can be chosen in the range of priority. In this editorial, trials are based on one scientific, reliable and safer method for choosing active and best suppliers in cultural method to show hierarchal analysis model. This editorial is investigated in three main parts. At first, an overview of the process of hierarchal analysis model is investigated and its properties are mentioned. After that, current method is used to choose famous suppliers and will be mentioned at the end, combining it with the new hierarchal analysis. Key words: Analytic hierarchy process, evaluating and choosing suppliers, heat recovery boilers. INTRODUCTION With the appearance of supply chain, attention of many industrialists and service units has changed to output and the analysis of upper and lower part of supply chain. Nowadays, industrial and service units understand in developed country that their long-term profits are hidden in balanced and proper functioning of component and supply change integration. The other policies of choosing suppliers based on recommended price cannot be remedial. Opportunities and threats, evaluation of competitors, quality and price are factors that produce a complicated mystery among managers. The most important point is that it may not be a place for trial and error. This is because failure may lead to bankruptcy and losses. Choosing suppliers is not based on recom-

*Corresponding author. E-mail: a.banihashemi@iauzah.ac.ir.

mended price. Suppliers understand perfectly that quality assurance is useful for entering materials and component, and also investigation of commodity entered is not applied. In this type, factors interfere with choosing directly things like time of order, quality, guarantee, experience of cooperation etc. The technique of analytical hierarchy process was first recommended by Saati in 1980 (Tracey, 2011). This technique is introduced as a powerful and flexible tool in multi-criteria for solving complicated problem in deciding international association in science. AHP has three main concepts: 1, Organize complicated decision problem in the form of hierarchy of goal and criteria. 2, Compare every level of hierarchy with each criterion from previous level. 3, Integrate the different levels of hierarchy vertically

Shahraki et al

(Rad et al., 2011). Nowadays, the analytical hierarchy process has been developed theoretically and practically. Saati (1980) explained in an audit that several auditors have published in the field of theory of analytical hierarchal process from the beginning of its existence. So, large numbers of auditors have published in it generally. Nowadays, the centers of making decision as seen in traditional method and cheapest prices are needed to have non-scientific choices in industrial and service organizations. Suppliers are chosen based on the popularity of the suppliers and other parameters like situation of machines and physical space of workshops. In buying, relevant formalities are tracked as well as the basis of technical studies and price of last suppliers. Surely, this method of choosing has a lot of errors and the best choice would not be taken. Because choosing criteria and evaluation techniques are very important, discussion and confidence need to be configured (Ghodsi, 2005). Referring to researches done, one of the basic steps in managing the supply chain of supplier is to decrease suppliers (Monczka et al., 1995). This action can have the following benefits for producers: 1. Decreasing the total cost of products 2. Buying best suppliers 3. Using all supplierâ&#x20AC;&#x2122;s facilities 4. Less cost of supplierâ&#x20AC;&#x2122;s management and ability to perform advanced purchase policies 5. Ability to develop suppliers 6. Different models are designed to reach the above goals. The works that have been performed till date can be categorized into two: choosing criteria and types of techniques and evaluating suppliers to be studied. From the most primary models, one can point categorized models in choosing supplier based on Timmerman (1986)â&#x20AC;&#x2122;s explanation. These models were based on the experience of suppliers relevant to series of criteria. A method used by suppliers was weight-linear method that tried to categorize method better by weighing criterion. Finally, suppliers were ranked by calculating the final score of performance. Grando and Sianesi (1996) recommended a non-compensatory model. This model makes the decider doubtful because it cannot combine the relevant points of different criteria. Another model used mathematical programming to choose suppliers and simultaneously using weight models. Current and Weber (1994) has used mathematical programming facilities to choose suppliers. Another mathematical model relevant to choosing supplier can be found in the research of Buffa and Jackson (1983), Chaudhry et al. (1993) and Das and Tyagi (1994). Several mathematical models have limitations in term

of quality, services and delivery. Several mathematical models were used in the research of Arianejad (2003), Degraeve and Roodhooft (2000), PaIij (1989) and Sadrian and Yoon (1998). Another models emphasized the basis of performing actions and technique of calculating paid expenses (total costs relevant to buying, giving services, quality and return items, technology) (Ellram, 1993). Main fact relevant to mathematical models is emphasizing on quantity items; quality criteria do not have a big role. We can refer to statistics model from another model used by Ronen and Trietsch (1988) or simulation model of Thompson (1990). These models are less practical in choosing suppliers because of the complicated methods. Few actions are taken to develop this. Masella and Rangone (2000) studied and emphasized on choosing supplier based on logistics and strategic integration between suppliers and buyers. He mentioned the method of hierarchy analysis as tools for making integration between different criteria. Other researchers that mentioned AHP technique include Razmi et al (1997), Ghodsi Poor (2005), Barbarosoglu and Yazgac (1997), Handfield and Nichols (1999) and Narasimhan (1983). These researchers lay emphasis on multi-criteria. Compared to multi-goals, their analyses are only limited in quality and are less. Lee et al. (2011) have used AHP method to solve technological issues of hydrogen energy. Fuzzy scales are used instead of final numbers to solve decision problem in AHP method (Table 1). LITERATURE REVIEW The process of hierarchal analysis The process of hierarchal analysis is a good model with several properties. Some of its properties are: its unity and uniqueness, compatibility, repetition of the process, judgment and collective agreement etc. Table 1 shows the preferred values in the process of hierarchal analysis. The classic view varies and different factors are presented by different articles of authors for evaluating and choosing action of suppliers presented. Most of these criteria are based on experience of buyers in relation to suppliers (Monczka et al., 1981). In the first studies performed by Dickson (1966), 23 separated criteria are presented to decide what is relevant to suppliers. These factors are separated from types of products and are shown in Table 2; after that, Weber and Desai (1996) showed that the problems of choosing suppliers are multi-goal. More than one criterion can cause evaluation success and choosing of supplier. Spikman (1988) has emphasized on the relationship between buyer and supplier in reaching strong competitive success. It is also emphasized on making cooperation and short relationship with a supplier instead of

Afr. J. Bus. Manage.

Table 1. Fuzzy preference and Preference values paired comparisons.

Value Perfect preference, more important or more suitable Preference or important or very idealistic Preference or important or idealistic Less preference, important or idealistic Same preference or important or suitable Preference between above cases

Fuzzy numbers (7/4,3,9/2) (5/3,3,7/2) (3/2,2,5/2) (2/1,3,3/2) (1,1,1) -

Verbal preference 9 7 5 3 1 2,4,6,8

Table 2. Dicksonâ&#x20AC;&#x2122;s criterion (1966).

Row 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Influential factor in the evaluation of supplier Pure costs (included discount and transportation costs) that are determined by every supplier Ability is that every supplier reaches qualitative property Services given after selling Ability of every supplier to take the time of delivery Geographic location of each supplier Financial position of each supplier Manufacturing facilities and capacity that every supplier has Time experience that every supplier has Technical capacity (note of simplification for research and improvement) that each supplier has Management and organization of each supplier Future purchases that company may buy supplier Information system (information under processing) with supplier Operational control (including reporting, quality control and inventory control systems) from supplier Relevant situation to each industry (including leader and credit) for every supplier Experience in relation with relevant people to each supplier Relevant Organizational behavior to each supplier Amount of supplierâ&#x20AC;&#x2122;s business corporation interest with purchaser company Policies to guarantee and interlocutors for each supplier Ability of each supplier for reaching product packing requirements Bottom of Form Effects related to the contract with the supplier in relation to other contracts Availability of education assistance for product from supplier Accepting process and instructions to the purchaser company Performance history relevant to supplier

short relationship with several suppliers (Nydick and Hilt, 1992). In other words, complete and new criteria are prioritized over traditional criteria to make strategic relationship between supply chain members. Criteria presented are relevant to suppliers by Ellram (1987), who tried to gain strategic members. These criteria are in Tables 2-4. Spikman (1988) lays emphasis on quality criterion, amount of confidence to deliver and raise performance of product in choosing suppliers; and in addition, Spekman (1988) determines the plan of continues improvement and product design teams to improve the relationship with supplies. Min and Galle (1994) emphasize other criteria. Searching for suppliers of components of buyers, specifying quality and quantity criteria and giving

suppliersâ&#x20AC;&#x2122; properties are categorized as important factors in choosing suppliers in three types of management of information system between organization, risk management and quality management system. Quality management system standards ISO 9001 2000 By developing relevant concepts to quality management, we can say this system guarantees last and first component of each order that has the same property. Configuring the quality management system is important in business world today in different companies with suppliers considering concepts like continuous improvement and perspective process of this system. As

Shahraki et al

Table 3. Elram’s criterion (1987).

Criterion finance Strategy culture

Detailed criterion Economic performance and financial stability and

corporate

Issues related technology

Another factors

Feeling of openness with suppliers Management relevant to behavior and view of organization Suitable strategy for senior management to cope with the conditions Consistent performance levels between supplier and buyer companies Organization structure of company The allocation of capacity and facilities The allocation of capacity building for the structure design capability of suppliers Development rate of suppliers History of provider reliable and business reference considered as a basis for the customer

Table 4. Min and Gal’s criterion (1994).

Criterion financial

Detailed criterion Penalty fees Type of paying

Quality assurance

Teams quality control and audit quality control

Predictive risk

Political stability Personnel and labor issues Doing interlocutor under low payment control

Service performance

Delivery on time and technical assistance

Relationship between purchaser supplier

Financial stability and chatting between them

Relevant Barriers to culture and communication

Cultural similarities Cultural standards Relevant capacity to send data electronically

Trade restrictions

Tariff and number of customs and transactions

Stevenson and Barnes (2002) said, suppliers can be in the searching of competitive advantages to reach bazars and gain customer satisfaction by configuring quality management system. Famous companies force the first level suppliers of supply chain to have quality management system certification such as Crysler and General Motor. In this standard model, amount of reaching supplier company was evaluated by standard iso 9000 2000 quality management system. Situation of standards relevant to supplier companies’ gains in the format of ISO 9000 – 2000 can be analyzed randomly in each period or part time.

Management of risk relevant to supplier This criterion shows important cases in decreasing and controlling risk. This case tries to control risk management relevant to order from suppliers; and finally reaches to deliver the last product. This item is very important because it can give the highest weight. It includes: 1. Guarantee 2. Situation of industry/technology 3. Experience of corporation 4. Amount of producers to total order of the buyers

Afr. J. Bus. Manage.

5. Delivering the commodity on time Information system management of organizations In the last decade, Yu (2001) and Ball and Ma (2002) have researched on the advantages of sharing information and science. Supply chain causes competitive advantages as follows: A. Decreasing the time of cycle B. Configuring redesign of practical process C. Using more opportunities of buying D. Controlling customers’ supply chain by members (Handfield and Walton, 2002). As information has a role in supply chain, most companies are based on information systems that work better, that is, performing higher than the border of organizations. In fact, all the members of supply chain can gain information and based on the ability of sharing information, they can use information technology better and cause manager and decider to reach each part of the information chain. Holland (1995) and Williams (1997) are researchers that perform a lot of researches on properties of information system. We can say if information has new and clear properties about members’ properties of information system, decisions of supply chain will be successful. CASE STUDY (RECYCLING PLANT BOILERS)

THERMAL

POWER

This part consists of how to use analytical hierarchy in power industry and in the field of plant’s boilers of heat recovery in a special manner. About boiler, heat recovery plant or HRSG, process of buying commodity and services are performed specially with attention to instruction and construction of boiler. These are divided into 5 chapters: 1. Raw materials 2. Semi-manufactured materials 3. Equipment 4. Machinery and equipment manufacturing 5. Technical services (including designing and producing services like construction of different parts of boiler). The point is that special criterion is considered in different types of commodity. In referring to tables in choosing types of criteria, structure and property of boiler, it is recommended to use Dickson’s table to determine criterion. So after getting statistics, some of these criteria use some items. And also the above cases decrease from 5 – 4, as shown in Table 5. To gain relevant weight,

business managers and engineering designer were interviewed based on criterion, bazars and evaluation. The method of this research is descriptive and scaling. Description can be used for anything that attends to situation, general belief and current process. 1. Dickson’s parameter in purchase of raw and semimanufactured material: Gaining of raw material as the main item of production has special importance. Quality, quantity and last profit gained from commodity are important. 2. Dickson’s theory in selling equipment: Works of important mechanism are very important in selling needed equipment, that are relevant to companies’ goal, added value and gathering of equipment in the process of producing commodity. Because of this, operation of some parameters can affect the goals of company. 3. Dickson’s theory in giving services: Giving services is from new science and technology of boilers in this organization. So, technical science is bought from Asian and European country. And special cases should be considered in choosing parameters. The process of hierarchy analysis This part concentrates on the scientific method for raw and semi-manufactured material and the table of criterion value that competent people could gain at the time of preparing this audit. In the process of hierarchy analysis, each level is compared with the same case in the upper level and in paired manner. And also their weight is calculated. These weights are called relative weight. Therefore, final weight is calculated by combining relative weight, called absolute weight. At first, suppliers consider criteria as matrix of paired comparisons and finally absolute weight of choices is calculated. And lastly suppliers will be chosen (Ghodsi, 2005). Calculating the relative weight of three suppliers based on criterion 1, pure price (including discount and costs of transportation) This is presented in Table 6. Now, we calculate relative weight by arithmetic average method (Table 7). Preference vector shows preferences of suppliers 1, 2, 3 based on pure price of criterion: (0/656,0/265,0/080). Calculating another relative weights Nowadays, weight of supplier (ability of each supplier to gain quality property and time of delivery) involves calculating weight of tables with final weight as seen in Tables 8-10.

Shahraki et al

Table 5. Clarifying the type of purchases in MAPNA boiler.

Item number 1,2 3,4 5

Group purchasing Raw materials and semi-manufactured Project equipment and systems and producing machine Technical services

criterion 1–2–4-6 1–2–3–4–6–9 1 – 4 – 8 – 12 - 16

Table 6. Paired comparison matrix for the three suppliers based on pure price criterion (First type of MAPNA boiler buying - raw material and semimanufactured).

Supplier 1 1 1/3 1/7

Supplier 1 Supplier 2 Supplier 3

Supplier 2 3 1 1/4

Supplier 3 7 4 1

Table 7. The results of average rows (First type of Mapna boiler buying - raw material and semi-manufactured).

Supplier 1 Supplier 2 Supplier 3

Supplier 1 0/68 0/23 0/10

Supplier 2 0/71 0/24 0/06

Table 8. Paired comparison matrix for the three suppliers in quality property (First type of Mapna boiler buying - raw material and semimanufactured).

Supplier 1 Supplier 2 Supplier 3

Supplier 1 1 1/3 1/5

Supplier 2 3 1 1/4

Supplier 3 5 4 1

Table 9. Paired comparison matrix for the three suppliers in delivery time (First type of Mapna boiler buying - raw material and semi-manufactured).

Supplier 1 Supplier 2 Supplier 3

Supplier 1 1 1/4 1/4

Supplier 2 4 1 1/6

Supplier 3 4 6 1

Table 10. Paired comparison matrix for the three suppliers in supplier’s financial situation (First type of Mapna boiler buying raw material and semi-manufactured).

Supplier 1 Supplier 2 Supplier 3

Supplier 1 1 1/3 1/4

Supplier 2 3 1 1/3

Supplier 3 4 3 1

We calculate weight of suppliers in each criterion by

Supplier 3 0/58 0/33 0/08

Row average 0/656 0/265 0/080

using arithmetic average method. Generally a lot of softwares are available to solve problems like making excellent choice, because of complication of analytical hierarchy; and thus needs to be calculated with high volume. Now, tables of paired comparison are shown for calculating criteria weight (Table 11). We calculate weight of suppliers in each criterion by using arithmetic average method (Table 12). Calculating final weight of supplier Final weight of each supplier can be got from weight of total product to weight of relevant choice. Table 13 shows weight of suppliers’ criterion. Then final weight of each choice is gained by using relative calculated weight (Table 14). As seen in the table, supplier 1 is the best choice. In this part, in summary we are showing only weight of table for each group of buyers. Steps for solving and choosing suppliers are enough like solved method. Second group (project equipment and machinery) This is presented in Table 15a. Third group (Engineering services) One of the advantages of the process of analytical hierarchy is that it is compatible in judging and deter-

Afr. J. Bus. Manage.

Table 11. Paired comparison matrix of criterion (first type of Mapna boiler buying - raw material and semi-manufactured).

Price 1 1/6 1/2 1/6

price quality time Financial position

Quality 3 1 2 1/4

Time 2 1/2 1 1/5

Financial position 6 4 5 1

Table12. Criterion weight (first type of Mapna boiler buying - raw material and semimanufactured).

Pure price (including discount and the prices of transportation) Ability of each supplier to reach quality property Ability of each supplier to reach delivery schedule Financial position of each supplier

0/474 0/178 0/288 0/060

Table 13. Supplierâ&#x20AC;&#x2122;s weight criterion (first type of Mapna boiler buying - raw material and semi-manufactured).

Price 0/656 0/265 0/080

Supplier 1 Supplier 2 Supplier 3

Quality 0/619 0/284 0/096

Time 0/601 0/302 0/097

Financial position 0/608 0/272 0/120

Table 14. The final priority suppliers (first type of Mapna boiler buying - raw material and semi-manufactured).

The final weight of Supplier 1 The final weight of Supplier 2 The final weight of Supplier 3

(0/474*0/656)+(0/178*0/619)+(0/288*0/601)+(0/06*0/608)=0/631 (0/474*0/265)+(0/178*0/284)+(0/288*0/302)+(0/06*0/272)=0/279 (0/474*0/080)+(0/178*0/096)+(0/288*0/097)+(0/06*0/120)=0/090

Table 15a. Paired comparison matrix criterion (Second group of Mapna boiler buying - project equipment and machinery).

(1) (2) (3) (4) (6) (9)

(1)

(2)

(4)

(6)

(9)

1 1/3 1/2 1/6 1/3 1/4

3 1 3 1/4 5 1/2

2 1/3 1 1/5 5 1/3

6 4 5 1 4 3

5 3 4 1/4 1 4

4 2 3 1/3 1/4 1

Table 15b. Paired comparison matrix criterion (third group-Engineering).

(1) (4) (8) (12) (16)

(1) 1 1/6 1/4 1/4 1/5

(4) 6 1 5 5 3

(8) 4 1/5 1 1/2 1/2

(12) 4 1/5 2 1 1/4

(16) 5 1/3 3 4 1

mining important coefficient of criteria. Saati spotted compatibility in judging calculation of coefficient called incompatibility coefficient. Analysis of compatibility is performed. These criteria should be less than 0.1. Using this coefficient helps the analysis before making final choice. Incompatibility of criterion consists of raw and semi-manufactured materials that can give us high and reliable power for deciding. RESULTS AND SUGGESTIONS Multi-criteria deciding model is shown to evaluate and choose supplier in this auditing. As seen above, the process of choosing supplier is a dynamic process (unlike previous model that chose supplier once for all of the periods). This model can divide them into different situations like buying workshop and representing special criterion for each group. Due to its importance to organizations, we can choose best supplier with high assurance coefficient using model of hierarchy analysis. Consistency and

Shahraki et al

productivity can be improved this way. We evaluated the process of buying using the process of hierarchy in the Mapna boiler in this survey-descriptive research. The result of this research shows the best choice for buying that helps managers and decider of company, and also determines paired comparison matrix for the criteria of second and third group; it also shows how to make best choice with suppliers and decrease next concerns of managers and deciders. It shows the reliability of customers to represent high quality production and cheaper organization, by using the best buying equipment and services. With this research and reaching the above reasonable result, it is recommended to use new and advanced way to increase performance and influence decision. Technical usage in the process of hierarchy analysis can spot several goals based on criterion. These two techniques can make a model to spot different goals by considering different criteria. REFERENCES Arianejad MBGh (2003). Integrated model of decision to choose and improve supplier, Amir Kabir University Publication. Ball M, Ma M (2002). Supply chain infrastructures: system integration and information sharing, J. Sigmod Record 31(1):61-66. Barbarosoglu G, Yazgac T (1997). An application of the analytic hierarchy process to the supplier selection problem, J. Prod. Inventory Manag. 38(1):14-21. Buffa FP, Jackson W M (1983). A goal programming model for purchase planning, J. Purch. Mater. Manag. 19(3):27-34. Chaudhry SS, Forst FG, Zydiak JL (1993). Vendor selection with price breaks, Eur. J. Oper. Res. 70(1):52-66. Current J, W eber C (1994). Application of facility location modeling constructs to vendor selection problems, Eur. J. Oper. Res. 76(3):387-392. Das C, Tyagi R (1994). W holesaler: a decision support s ystem for wholesale procurement and distribution, Int. J. Phy. Dist. Log. Manag. 24(10):4-12. Degraeve Z, Roodhooft F (2000). A mathematical programming approach for procurement using activity based costing, J. Bus. Financ. Accout. 27(6):69-98. Dickson GW (1966). An analysis of vendor s election s ystems and decisions, J. Purch. 2(1):28-41. Ellram LM (1987). The supplier s election decision in strategic partnerships, J. Purch. Mater. Manag. 26(3):8-14. Ellram LM (1993). Total cost of ownership: Elements and implementation, Int. J. Purch. Mater. Manag. 29(2):3-11. Ghodsi Poor SH (2005). Analytical Hierachy Process, Tehran, Amir Kabir Technical University. Grando A, Sianesi A (1996). Supply management: a vendor rating assessment, CEMS Bus. Rev. 1:199-212. Handfield RB, Nichols EL (1999). Introduction to Supply Chain Management. Prentice Hall Publishing. Handfield R, Walton SV (2002). Applying environmental criteria to supplier assessment: a study in the application of the analytical hierarchy proc ess, Eur. J. Oper. Res. 141(1):70-87. Holland CP (1995). Cooperative supply chain management: the impact of interorganizational information systems, J. Strateg. Infor. Syst. 4(2):317-133. Lee S, Mogi G, Kim J (2011). Prioritizing the weights of hydrogen energy technologies in the sector of the hydrogen economy by using a fuzzy AHP approach, Int. J. Hydrogen Energy 36:1897-1902. Masella C, Rangone A (2000). A c ontingent approach to the design of vendor selection systems for different types of co operative customer/supplier relationships, Int. J. Oper. Prod. Manag. 20(1): 76-84.

Min H, Galle W P (1994). International supplier selection, Phys. Distrib. Logis. Manag. 2(5):24-33. Monczka R, Giunipero L, Reck R (1981). Perceived importance of supplier information, Int. J. Purch. Mater. Manag. 17(1):21-29. Monczka R, Trent R, Handfield R (1995). Purchasing and Supply Chain Management, South Western College Publishing. Narasimhan R (1983). An analytic approach to supplier selection, Int. J. Purch. Mater. Manag. 19(1):27-32. Nydick RL, Hilt RP (1992). Using the analytic hierarchy process to structure the supplier selection procedure, Int. J. Purch. Mater. Manag. 28(2):31-36. PaIij AC (1989). Allocation of order quantities among suppliers, Int. J. Purch. Mater. Manag. 25(2):36 39. Rad A, Naderi B, Soltani M (2011). Clustering and ranking university majors using data mining and AHP algorithms: A case study in Iran, J. Exp. Syst. Appl. 38:755-763. Razmi H, Rahnejat H, Khan MK (1997). Usage of Analytical Hierarchy in categorizing killing system for production planning, Int. J. Prod. Oper. 11:1134-1151. Razmi J, Rahmani L, Rezaei K, Karbasian S (2005). Providing a decision support model to evaluate and planning and choosing supplier, J. Fac. Eng. 38:693-708. Ronen B, Trietsch D (1988). A decision support system for purchasing anagement of large projects, Int. J. Oper. Res. 36(6):882-890. Saati TL (1980). The analytic hierarchy proc ess. Mc -Graw Hill. Sadrian AA, Yoon YS (1998). A procurement decision supp ort system in business volume discount environments, Int. J. Oper. Res. 42(1):14-23. Spekman R (1988). Strategic supplier selection:understanding longterm buyer relationships, Bus. Horizon 31(4):75-81. Stevenson H, Barnes FC (2002). What industrial marketers need to know now about ISO 9000 certification: A review, update, and integration with marketing, Int. J. Purch. Mater. Manag. 31(8): 695-703. Thomps on K (1990). Vendor profile analysis, Int. J. Purch. Mater. Manag. 26(1):11-18. Timmerman E (1986). An approach to vendor performance evaluation, Int. J. Purch. Mater. Manag. 22(4):2-8. Tracey M (2001). Empiric al analysis of supplier selection and involvement, Int. J. Purch. Mater. Manag. 6(4):174-188. W eber CA, Desai A (1996). Determination of paths to ven dor market effciency using parallel co-ordinates representation: a negotiation tool for buyers, Eur. J. Oper. Res. 9(1):142-155. Williams T (1997). Interorganisational information systems: Issues affecting interorganisational cooperation, J. Strateg. Inform. Syst. 6:231-250. Yu Y (2001). Benefits of information sharing with supply chain partnerships, Ind. Manag. Syst. 101(3):114-119.

Full Length Research Paper

Factors influencing the adoption of cell phone banking by South African students Richard Shambare Tshwane University of Technology, South Africa. E-mail: shambarar@tut.ac.za. Accepted 5 December 2012

Technology has transformed banking beyond the bricks and mortar bank concept. The modern bank can now be represented by innovations such as cell phone banking. These technologies, when adopted, present a win-win situation for both financial institutions and customers. Increased revenues and cost savings for banks; cheaper and more convenient forms of banking for customers. Although globally cell phone banking (CPB) is among the fastest growing remote banking innovations, in South Africa adoption levels are still very low. Against this background, this study investigates the perceived attributes of cell phone banking and their influence on its adoption, as well as the marketing implications of such. A survey, in which a sample of 282 university students from a South African university participated, was conducted. Statistical techniques were applied to analyse the data. Results suggest self-efficacy, complexity, and relative advantage as being the important factors influencing adoption. Specific marketing interventions tailored to the student market segment are discussed. Key words: Cell phones, cell phone banking, South Africa, students. INTRODUCTION Students represent a market of strategic importance for financial institutions (Barclays, 2012), especially when it comes to the introduction and marketing of new banking products. This is because, firstly, the student market increases at the beginning of each academic year as new students enrol in universities. As Barclays (2012:2) reports, this is particularly important for financial institutions because “it is an annual opportunity to target new student customers who need an account who might have not yet chosen a bank” and specific banking products. As such, students represent a market which new banking technologies including CPB (cell phone banking) can be marketed effectively. Secondly, satisfied students generally have the potential to become life-long custommers and provide an opportunity for long-term relationship with a bank. Thirdly, through their influence on peers‟ and parents‟ choice behaviour (Schiffman and Kanuk, 2004), students who are customers of a financial institution are more likely to influence patronage of the particular institution and also recommend the use of innovative products such as cell phone banking. Fourthly, students tend to be highly innovative in that they are among the segments that adopt new innovations earliest

(Hooper and Zhou, 2007). While this alone provides enough justification for banks to concentrate on this important market, the student market is also substantially large enough to warrant specific marketing strategies for new innovative products such as CPB. This is especially true in countries like South Africa, where CPB has not performed as expected. Consequently, banking institutions are grappling with the question of how best to market this product in a way that increases its patronage and the institutions' bottom line. Despite the many advantages of CPB (e.g., convenience, any time-anywhere banking, privacy, and time-saving) that are welldocumented in the literature (Brown et al., 2003; Devlin and Yeung, 2003), adoption levels in South Africa remain depressed. While the extant literature on banking innovations presents a plethora of factors influencing adoption of new products, most of these studies emanate and report on experiences from the West and other developed nations. There is a general paucity of lessons from developing nations. Thus without scientific research to explain the phenomenon, bank marketers in developing nations such as South Africa are often faced with challenges when

Shambare

designing actionable marketing strategies that encourage adoption as well as profiling their customers with respect to remote banking services such as CPB. Research objectives Against this background, the purpose of this study is to establish the reasons behind the adoption of CPB in South Africa. More specifically, the study objectives are to: (1) investigate factors influencing the adoption and usage of CPB. (2) Provide actionable strategies for bank marketers to encourage uptake of CPB, especially among the student market segment. In keeping with these objectives, the following research question was formulated: What are the most important factors affecting cell phone banking adoption among university students in South Africa? To answer this question, the remainder of the paper is structured as follows: existing literature on CPB is discussed, and how this culminates into the CPB adoption framework. Following on, the research methodology applied in this research is described. Thereafter, research findings and discussion of results are presented. Finally, the paper presents implications for theory and research. LITERATURE REVIEW Cell phone banking CPB is a channel through with banking customers can access their personal bank accounts and perform various transactions via their cell phones (Gu et al., 2009). In order to use CPB services, a customer typically registers her cell phone number with the bank. After which a set of secure passwords allows the consumer access to her accounts through a mobile device. With the exception of cash deposits and withdrawals, CPB supports most banking functions available in the bank branch, such as checking balances, inter-account transfers, paying beneficiaries, and applying for loans. A clear advantage of this form of banking is that, because the CPB platform is fully automated, banking services are significantly cheaper than traditional banking. Another key advantage is the convenience of any time and anywhere banking, without restrictions of having to visit a branch during specific business hours. Over and above CPB allowing customers‟ access to cheaper alternatives to banking, it also leverages banks‟ ability to provide customised and convenient services to customers (Devlin and Yeung, 2003). Jayamaha (2008) terms this aspect 'modern banking', which transcends the traditional confines of banking services located within four walls and a roof. The modern bank can be considered to

reside conveniently within consumers‟ pockets in the form of ATM cards, credit cards, or cell phones. Thus, by changing the standard means of accessing banking services by customers from branches to self-service channels, financial institutions are set to benefit immensely in terms of not only cost savings, but also a more satisfied clientèle. This therefore implies that banks‟ marketing strategy need to satisfy customers‟ needs through remote banking channels, including CPB. CPB is a very important banking channel, to develop through marketing, in developing countries, as usage of cell phones is increasing rapidly, especially within the student community (Mendes et al., 2007). Cell phone banking in South Africa South African banks, in particular the „Big Four‟ banks (ABSA, FNB, Nedbank, and Standard Bank), which account for 90% of the market share in the country, provide CPB services. Unlike earlier CPB offerings that were dependent on the type and functionalities of cell phones and therefore were slightly prohibitive and costly (Brown et al., 2003), current technologies are compatible on almost all makes of cell phones ((Van, 2009). Thus, the service is almost universally accessible to any banking customer with a cell phone. Estimates of CPB usage derive mostly from industry reports with a few empirical studies, such as that by Brown et al. (2003). In 2002, it was estimated that some 780,000 (approximately 6% of South Africa‟s 13 million cell phone subscribers) used CPB services. By the end of 2010, FNB stated that 1.29 million South Africans use CPB (Pienaar, 2009). While this is almost double the 2002 figure, it represents only about 3% of the 49 million cell phone subscribers in 2010. The most recent statistics reveal that at least 37% of banking customers use CPB services (Mansfield, 2011). These figures reveal that, overall, the sector has experienced growth in terms of CPB clients within the last decade, yet despite the increase in CPB patronage, this growth rate is not comparable to that of cell phone usage (CIA, 2010; ITU, 2011). It stands out that the numbers of CPB customers are yet to reach a critical mass of consumers (Brown et al., 2003); this alone warrants further research into the adoption and current usage patterns of CPB. However, there is a paucity of research in this area, which this research tries to remedy by studying the adoption of CPB in South Africa. Adoption of cell phone banking Past studies consistently show that, although new innovations present numerous benefits for both retailers and customers, these advantages remain unrealised unless

Afr. J. Bus. Manage.

consumers actually adopt and commit to using these products. From a marketing point of view, banks should endeavour to understand reasons why consumers adopt or reject new products, including CPB. The literature provides a wide array of conceptual frames explaining the adoption processes. Several predictor variables influencing adoption of innovations are presented. Within the context of retail banking services, consumer perceptions of product features, as hypothesised by Rogers (1995) is one such prominent conceptual frame that models adoption of banking innovations. Rogers (1995:16) describes that the perceived characteristics of the product influence its rate of adoption. The more favourable the attributes are perceived by a consumer, the more likely that individual will adopt the product. Researcher such as Agarwal and Prasad (1998), Brown et al. (2003), Rugimbana and Iversen (1994), Shih and Fang (2004), and Meuter et al. (2005) have found that Rogers‟ (1995) perceptual variables are stable predictors of adoption behaviour in the financial services marketing discipline. For that reason, Rogers‟ innovation diffusion theory (IDT) forms the basis for a framework explaining adoption of CPB, supplemented by additional variables shown to influence adoption of innovative services. Cell phone banking adoption framework The IDT framework posits that the adoption of CPB is influenced by consumers‟ perceptions towards the innovation. These perceptions are formed around five key characteristics of the innovation, namely relative advantage, complexity, compatibility, observability, and trialability. More specifically, Rogers (1995) explains that innovations that are perceived by individuals as having greater relative advantage, compatibility, trialability, and less complexity will be adopted more rapidly. In addition to these five core attributes as proposed by Rogers, recent studies indicate further predictors of adoption, being perceived risk, self-efficacy, and facilitating conditions, which are also incorporated in the conceptual framework. These attributes are briefly discussed as follows. Relative advantage Agarwal and Prasad (1998) demonstrate that the advantage an innovation has relative to another method is positively related to its rate of adoption. CPB will only be adopted if consumers perceive it to be more advantageous than traditional modes of banking. Clearly, the attribute of mobility presents itself as one of its key advantages. This makes particular sense for students, who are generally more mobile that other consumer segments. Throughout the academic year, students travel

extensively from home to school to work. With CPB, access to banking services is not affected by time and geography. In this sense therefore, CPB is convenient in that it facilitates anytime-anywhere banking, saves time and costs. More importantly, CPB is a relatively cheaper product, which now can support numerous functions including money transfer and m-insurance. Accordingly, the following hypothesis relating to relative advantage and CPB adoption is formulated: H1: the greater the perceived relative advantage of using CPB, the more likely that it will be adopted. Perceived compatibility Compatibility refers to how well a technology fits with an individual‟s self-concept, lifestyle, values, and needs (Rogers, 1995). In the context of CPB, compatibility is the extent to which consumers‟ lifestyle fits with cell phone usage. In other words, if cell phones are extensively used by a consumer, that consumer would feel a greater sense of connection with cell phones, be more willing to utilise them in various ways in the course of their daily lives, and more willing to adopt add-on features and functions to cell phones at a faster rate than non-users (Hooper and Zhou, 2007). In contrast, if a consumer does not see a connection with cell phones, she will be less likely to adopt cell phones and other appendages such as CPB. In agreement, Brown et al. (2003) argue that individuals with relatively more cell phone experience tend to develop a greater sense of compatibility, which in turn promotes adoption of CPB. Consequently, remote banking services will most likely be adopted by consumers for whom such services are more compatible with their lifestyle. This informs the second hypothesis relating to compatibility and adoption: H2: the greater the perceived compatibility of CPB, the more likely that it will be adopted. Perceived complexity Complexity or the perceived level of difficulty of using an innovation is inversely related to its adoption (Meuter et al., 2005; Taylor and Todd, 1995). The more difficult a product is perceived to use, the less likely consumers would be willing to use the product. It is therefore sensible to suggest that CPB will only be adopted by clients who perceive the use of cell phones and CPB as easy to use. The notion of CPB complexity is somewhat related to compatibility in that, as subscribers use CPB services, their proficiency improves and it is expected that the perceived sense of complexity recedes. In summary, the study hypothesises that the greater the perceived complexity of remote banking services, the

Shambare

less likely they will be adopted. H3: the greater the perceived complexity of CPB, the less likely that it will be adopted.

H6: the greater the perceived self-efficacy of using CPB, the more likely that it will be adopted. Facilitating conditions (technology support)

Trialability Trialability is the extent to which consumers are afforded the opportunity to try out new innovations before purchasing them. A classic example is trying out a new brand of cell phone in a shop before committing to its purchase. Potential adopters who are allowed to experiment with the innovation before purchase are likely to evaluate its performance beforehand, and thus are more likely to adopt it (Agarwal and Prasad, 1998; Tan and Teo, 2000). Thus, the adoption of CPB is more likely if it is demonstrated to customers. Trialability is most applicable to first time users, who usually need extra assurance in their abilities. Thus the formation of hypothesis four: H4: the greater the perceived trialability of CPB, the more likely that it will be adopted. Perceived risk One of the major influencing factors around the establishment and use of new technologies for financial transactions is that of security and trust (Brown et al., 2003; Pienaar, 2009). The need for security of personal details and financial information is therefore critical to the success of CPB. A key security issue related to remote banking services on the part of consumers is the fear of losing their money. Comparatively, internet banking, as provided by some banks in South Africa, appears to be more secure than CPB in that users have passwords and also utilise „one-time passwords‟ (OTP) sent through cell phones or emails (Standard Bank, 2012). However, with CPB there is no system for OTPs, which tends to create an impression of risk. As a result, the lower the perception of risk involved in using CPB, the more likely that it will be adopted. H5: the greater the perceived risk of using CPB, the more likely that it will be adopted. Self-efficacy This refers to the confidence potential adopters have in their ability to use a specific technology (Taylor and Todd, 1995). Specifically, Brown et al. (2003) indicate that extensive experience with cell phones is associated with a greater sense of self-efficacy for cell phone and CPB usage. Therefore, the higher the individuals‟ skill-level with equivalent technology, the higher the chances the technology will be adopted.

This characteristic is interpreted to include support for the service from both the mobile phone service providers and from the banks (Brown et al., 2003). Some new users of technology may become fearful and cautious when it comes to using a technology. Therefore, these consumers need assurance that reliable support will always be available should they need it. Cell phone banking is more likely to be adopted if there are better facilitating conditions. In this regard, banking institutions and cell phone providers could proactively advertise and showcase CPB. Therein, showcasing functionalities as well as providing reassurance of their commitment to ensuring the reliability and safety of CPB. H7: the greater the facilitating conditions of pertaining to CPB, the more likely that it will be adopted. The listed characteristics variables for this study.

constitute

the

predictor

RESEARCH METHODOLOGY A cross-section survey method was used (Blumberg et al., 2011). Data were collected using a self-completion survey from students at a South African university. Each of the predictor variables were measured using an attitudinal 5-point Likert Scale (1 = Strongly Disagree; 5 = Strongly Agree). Sample The study sought to investigate factors influencing adoption of CPB among students. Accordingly, the sample for the study was drawn from Tshwane University of Technology (TUT). Researchers distributed question-naires to respondents on campus, after securing permission from their lecturers. The questionnaires were collected at the end of each class period. Out of the 350 questionnaires distributed, only 282 responses were fully completed and usable for analysis.

RESULTS The results of the data analysis are presented in the following format. First, the demographic profile of research participants is presented. Second, respondents‟ banking profiles are discussed. Lastly, the investigation of the latent variables through factor analysis is presented. Demographic profile of research participants The demographic profile of the research participants is summarised in Table 1.

Afr. J. Bus. Manage.

Table 1. Demographic profile.

Demographic characteristic Male Gender Female

Age

< 20 years 21 - 24 years 25+ years

9 50 41

Education

Undergraduate Postgraduate

82 18

Monthly income

< R5,000 >R 5,000

54 46

Employment

Part-time student (employed) Full-time student

40 60

Table 2a. Types of bank accounts used.

Bank Savings Account Current Account Car/ Home Loan Personal Loan Fixed-Deposit Other Account

Percentage 45 55

Count 249 89 31 18 15 10

Table 2b. Remote banking channel preference.

Percentage 90.5 32.4 11.3 6.5 5.5 3.6

Respondents’ banking profile The respondents‟ banking profile is summarised in Tables 2a and 2b. From Table 2a, savings accounts followed by current accounts were the preferred type of accounts held by the sample. It was also important to ascertain the extent to which the different banking distribution channels were used. ATMs, by far, proved to be most popular with almost 91% of respondents using this mode of banking. Related to ATMs is the electronic funds transfer point of sale (EFTPoS), in which consumers swipe their ATM or debit cards in retail outlets to make purchases. 71% of respondents used EFTPoS. Interestingly, CPB usage was the second least popular means of banking. Further investigation of those that use CPB revealed that the most preferred function was checking account balances, followed by buying airtime and getting a mini statement from the bank, as shown in Figure 1. Scale measurement and factor analysis To establish the construct validity as well as the factors

ATM Bank branch Store/shop (EFTPoS) Internet banking Cell phone banking Telephone

Count 258 210 200 192 190 162

Percentage 91 74 71 68 67 57

influencing the adoption of CPB, factor analysis was conducted (Field, 2009). Principal components analysis (PCA) was performed on the 20-item scale measuring the seven predictor variables. The factorability statistics were 2 satisfactory (KMO = 0.649; Bartlett‟s test of sphericity X = 1101.3; p < 0.000) (Tabachnick and Fidell, 2007). A seven-factor solution with eigenvalues greater than 1, explaining 73% of the variance was extracted, as illustrated in Table 3. Tests of model and hypotheses To test the model and hypotheses, logistic regression was applied (Pallant, 2010). The model contained seven independent variables (That is, risk, complexity, selfefficacy, trialability, compatibility, facilitating conditions, and relative advantage). These construct validity of these predictors (or variables) was tested by means of factor analysis. The model was significant, with a Goodness of 2 Fit (X = 33.976; df = 13; p < .0005) and the Hosmer and 2 Lemeshow test yielded non-significant results (X = 9.498; p = .302), further suggesting that the model is acceptable. These diagnostic tests indicated that the

Shambare

Figure 1. CPB functions.

model was able to distinguish between respondents who reported to have adopted CPB from those who did not, with a classification accuracy of approximately 70%. Of the seven predictor variables, three made significant contribution to the model. These were: complexity, selfefficacy, and relative advantage as shown in Table 4. The three significant predictors were further analysed by means of t-tests to determine whether the means for each of the predictor variables identified in the model differed significantly between the trial (adopters) and nontrial (non-adopters) groups. The Levene‟s test for homogeneity of variances for all the variables (complexity, selfefficacy, and relative advantage) confirmed that indeed the variances for the two groups of consumers were approximately equal (p > 0.05), hence satisfying the assumptions of the t-test. Results shown in Table 5 provide support for the logistic regressions, indicating that, indeed, complexity, relative advantage, and selfefficacy were the factors influencing adoption. DISCUSSION Of the seven predictor variables tested, only three (complexity, relative advantage, and self-efficacy) provided statistically significant results relating to adoption. These results are not surprising, especially with respect to selfefficacy related to cell phone usage; given the nature of the student sample, which on the most part is already highly committed to cell phone usage (Hooper and Zhou, 2007). Overall, this suggests that complexity, self-efficacy, and relative advantage are most important predictors. This confirms findings in past studies that relative advantage and complexity are among the important

determinants of adoption (Agarwal and Prasad, 1998; Black et al., 2001; Rogers, 1995). The reason why compatibility, in the present study, might not have been a significant predictor instead of self-efficacy could be explained by the nature of the sample. In the study, the majority (59 per cent) of the sample was younger than 25 years old, a segment that has been referred to as the 'Google Generation' (Nicholas et al., 2011). This market tends to be more experienced than other generations when it comes to the use of technologies, including cell phones. In fact, Nicholas et al. (2011)‟s findings are consistent with Hooper and Zhou (2007), who posit that cell phone usage among students is compulsive, habitual, and addictive in that students are always on their cell phones experimenting and always on the look-out for new features and functions. It is therefore arguable that, because the 'Google Generation' places more emphasis on their abilities and confidence in cell phone usage, therefore self-efficacy becomes a more dominant concern and predictor rather than the notion of compatibility as explained by Rogers (1995). According to Rogers (1995:249), compatibility is the extent to which consumers assess a “technology in comparison to existing practices.” It is important to note that this is a simple evaluation on the perceived impact of the innovation on one‟s lifestyle, which can be made before or after using the product. Whereas, self-efficacy deals with a technology that consumers are already familiar with and comfortable in using. The latter appears to corroborate findings by Brown et al. (2003) that increased diversity of cell phones improves CPB adoption levels. Another important finding relates to relative advantage. Figure 1 indicates that the most frequently used functions

Afr. J. Bus. Manage.

Table 3. The 7-factor solution of predictors of adoption of cell phone banking.

Factor 1: Self-efficacy .892 .870 .794

SE 2 SE 1 SE 3 TRIAL 2 TRIAL 3 TRIAL 1 RISK 2 RISK 3 RISK 1 COMP 2 COMP 3 COMP 1 COMPLX 2 COMPLX 1 COMPLX 3 TECHSUPP 2 TECHSUPP 1 REL. ADV 2 REL. ADV 1 REL. ADV 3

Factor 2: Trialability

Factor 3: Risk

Factor 4 Compatibility

Factor 5: Complexity

Factor 6: Tech. Supp

Factor: 7 Rel. Adv

.892 .824 .758 .834 .823 .816 .832 .831 .721 .776 .766 .710 .887 .859 .786 .710 .508

Eigenvalues % of variance Cronbach’s alpha (α)

4.932 24.659 0.876

2.661 13.303 0.847

1.685 8.427 0.810

1.554 7.769 0.749

1.356 6.779 0.669

1.232 6.159 0.797

1.110 5.552 0.647

Commonalities 0.855 0.802 0.768 0.819 0.731 0.739 0.737 0.755 0.748 0.775 0.797 0.568 0.759 0.665 0.641 0.845 0.831 0.724 0.620 0.333 (Total) 72.648

Table 4. Summary of logistic regression results.

Predictor Complexity Self-efficacy Relative advantage

B -.611 .511 .397

SE .201 .222 .199

of CPB are checking balances and airtime purchases. The importance of these CPB functions are that because of CPB‟s mobility advantage, customers can conveniently check their balances at almost anywhere and anytime, without restrictions to normal banking hours. Not only does this save customers travelling costs to the banking, this tends to save customers time as well as and provides them with greater control in managing their finances. With regard to airtime purchase, cell phone banking acts can become an online airtime store, which customers can access on demand and do not necessarily have to visit a separate vendor to purchase airtime. Overall, there is a considerable cost and time saving associated with checking balances and airtime purchase making it sensible for students to use CPB. This is expected in that students generally are heavy users of cell phones, a behaviour which many authors posit as habitual,

Wald 9.253 6.144 3.967

Odds ratio .543 1.734 1.487

p-Value .002 .013 .046

addictive, and compulsive (Hooper and Zhou, 2007). Therefore, purchasing airtime on cell phones to continue using one‟s cell phones is a reasonable assumption. The implication therefore is that students might be a receptive market for CPB services. The concept of complexity or ease of use is best understood in the context of Davis‟ (1995) Technology Acceptance Model (TAM). The author posits that, if a technology is not complicated to use (or is easy to use), such a technology gains utility for the consumer. As in the case of purchasing airtime, CPB is relatively simple to use and therefore consumers would be motivated to use it. Financial institutions therefore need to clearly understand the needs of their clients as well as understanding how and why their current clients are using CPB (Mansfield, 2011). In terms of trial ability and perceived risk, these factors

Shambare

Table 5. The 7-factor solution of predictors of adoption of cell phone banking.

Predictor Complexity Relative advantage Self-efficacy

Mean (1 = Strongly disagree; 5 = Strongly agree) Adopters Non-Adopters 2.206 2.619 3.986 3.604 4.060 3.633

were observed as not being significantly related to CPB adoption. In other words, these features seem to be the ones that decelerate the rate of adoption. Current practices appear not to provide customers with adequate opportunity to try out these technologies. Trialability might benefit first time users in equipping them with the muchneeded confidence and self-efficacy needed to successfully conduct banking through cell phones. On the other hand, the perception of safety appears not to be considered by banks. A key security issue related to CPB on the part of consumers is the possibility of losing their money. Comparatively, internet banking appears to be more secure than CPB in that users have passwords and also utilise â&#x20AC;&#x17E;one-time passwordsâ&#x20AC;&#x; sent through cell phones or emails. The security measures in place for CPB need to be demonstrated to customers through education on the product's safety features. LIMITATIONS AND FUTURE RESEARCH This study had limitations. Firstly, the conceptual model adapted from Rogersâ&#x20AC;&#x; (1995) on the adoption of CPB was not exhaustive. Other models such as the Technology Acceptance Model, Theory of Planned Behaviour or Theory of Reasoned Action could provide additional explanatory insights. Secondly, the sample utilised was restricted to university students. Drawing a sample from a more diverse segment may provide different results. Future studies could also consider different sample groups, including the elderly and working individuals. Comparative studies examining adoption processes among the different remote banking channels, such as between Internet, telephone, and ATMs, may also provide better understanding of CPB. Conclusion Given that South African banking institutions have invested significantly in developing CPB channels, it is important for these institutions to get a return on investment. Therefore, understanding factors influencing CPB adoption is likely to provide important strategic intelligence to financial institutions. Perceptions towards risk and security concerns and trialability appear to slow the adoption rate. While banking institutions have done a

t-value

p-Value

3.853 -3.760 -3.709

.000 .000 .000

lot to launch CPB, focussing attention on promoting CPB through customer demonstrations may further improve adoption rate. Demonstrations are especially important for two reasons. Firstly, consumers need assurance from their banks that CPB is safe as it is difficult for some consumers to grasp how CPB can be safe and secure. There is substantial ignorance of how CPB functions, with common misconceptions including that it is equivalent to SMS technology, and that access to another's cell phone can lead to accessing of accounts or even transferring money without permission. Banks need to allay these fears through obligation-free demonstrations. A good example of trialability is Capitec Bank's1 promotion of the use of ATMs in its branches. Most Capitec ATMs are located inside the branches, and there is always a bank employee located close to the ATM to assist customers should there be a need. Having the ATMs in the branch and a stand-by attendant provides comfort and stability for customers. However, demonstrations for CPB in branches, at least at the time of this study in South Africa, were non-existent, and something that banks should investigate. Given the popularity of cell phones and the explosive growth of cell phone users in South Africa (Business Wire, 2010; CIA, 2010), it is sensible to assume that uptake of CPB should out-perform all other remote banking channels (Brown et al., 2003). Surprisingly, our findings suggest otherwise; CPB, as found in previous studies in South Africa, is not the preferred mode of banking compared to ATMs and telephone banking (Brown et al., 2003; Shambare and Rugimbana, 2011). Special emphasis was placed on the student and young consumer segments, for two reasons. Firstly, the young adult market is considered by many authors as being highly innovative, in that they are among the first to adopt technological innovations (Meuter et al., 2005: Robertson, 1967). Hence, studying this segment may provide valuable insights into the adoption and diffusion processes of remote banking channels. Secondly, students represent a very important consumer segment for banks. If banks capture this market they have a good chance of having them as customers-for-life.

1. Capitec Banks is a South African bank that specialises in the low-income market segments

Afr. J. Bus. Manage.

REFERENCES Agarwal R, Prasad J (1998). A conceptual and operational definition of personal innovativeness in the domain of information technology. Inform. Syst. Res. 9(2):204-215. Barclays (2012). Discovering Customer needs through research. [Online]. Available atâ&#x20AC;? http://www.thetimes100.co.uk/downloads/barclays/barclays_15_full.p df [Accessed 24 September 2012]. Brown I, Cajee Z, Davies D, Stroebel S (2003). Cell phone banking: predictors of adoption in South Africa â&#x20AC;&#x201C; an exploratory study. Int. J. Inform. Manag. 23:381-394. Business Wire (2010). The number of total subscribers in South Africa will increase from 42.4 million in 2007 to 48.5 million in 2010. [Online]. Available at: http://www.allbusiness.com/mediatelecommunications/telecommunications/ 7312555-1.html CIA (2010). World Factbook: South Africa. https://www.cia.gov/library/publications/the-worldfactbook/geos/sf.html [Accessed 22 June 2010]. Devlin J, Yeung MCH (2003). Insights into Customer Motivations for Switching to Internet Banking, The International Review of Retail, Distribution and Consumer Research 13(4):375-392. Field A (2009). Discovering Statistics using SPSS. London: Sage Publications. Gu J, Lee S, Suh Y (2009). Determinants of behavioral intention to mobile banking. Expert Syst. Appl. 36:11605-11616 Hooper V, Zhou Y (2007). Addictive, dependent, compulsive? A study of th mobile phone usage. 20 Bled eConference eMergence: Merging and Emerging Technologies, Processes, and Institutions Bled, Slovenia, June 4-6. ITU (2011). ICT Data and Statistics. [Online], Available at: http://www.itu.int/ITU-D/ict/statistics/ [Accessed 12 January 2011]. Jayamaha R (2008). The Impact of IT in the Banking Sector. [Online] Available at: http://www.bis.org. Mansfield I (2011). Cell phone banking usage jumps in South Africa. Cellular News. [Online]. Available at: http://www.cellularnews.com/story/47727.php [Accessed 1 September 2011]. Mendes S, Alampay E, Soriano E, Soriano C (2007). The Innovative use of mobile applications in the Phillipines-lessons for Africa. SIDA. Meuter ML, Bitner MJ, Ostrom AL, Brown SW (2005). Choosing among Alternative Service Delivery Modes: An Investigation of Customer Trial of Self-Service Technologies. J. Market. 69(2):61-83. Nicholas D, Rowlands I, Clark D, Williams P (2011). Google Generation II: web behaviour experiments with BBC. Aslib Proceedings: New Information Perspectives, 63(1):28-45.

Pallant J (2010). SPSS Survival Manual: A step by step guide to data analysis using SPSS. Open University Press. Pienaar L (2009). FNB Mobile and Transact Solutions FNB. Len Pienaar GMSA Workshop 15 April 2009. Rogers E (1995). Diffusion of Innovations. 4th The Free Press: New York Robertson TS (1967). The Process of Innovation and the Diffusion of Innovation. J. Market. 31(1):14-19. Rugimbana R, Iversen P (1994). Perceived Attributes of ATMs and their Marketing Implications, Int. J. Bank Market. 12(2):30. th Schiffman LG, Kanuk LL (2004). Consumer behaviour, 8 edition. Upper Saddle River, NJ, Prentice Hall. Shambare R, Rugimbana R (2011). Marketing implications of perceived th attributes of mobile banking in South Africa. 5 IBC Conference, Mauritius. 26-30 September 2011. Shih Y-Y, Fang K (2004). The use of a decomposed theory of planned behavior to study Internet banking in Taiwan. Internet Res. 14(3):213223 SouthAfrica.info. (2009). Cell phone banking on the increase. [Online]. Available at: http://www.southafrica.info/business/trends/newbusiness/cell171109.htm. [23 June 2010]. Standard Bank (2012). One Time Password. [Online]. Available at: http://www.standardbank.co.za/portal/site/standardbank/menuitem.de 435aa54d374eb6fcb695665c9006a0/?vgnextoid=0544f8bc8f35b210 VgnVCM100000c509600aRCRD. [25 September 25, 2012]. th Tabachnick BG, Fidell LS (2007). Using multivariate statistics, 5 ed. Boston: Pearson Tan M, Teo T (2000). Factors influencing the adoption of Internet banking. J. Assoc. Inform. Syst. 1(5):1-42. Taylor S, Todd P (1995). Decomposition and crossover effects in the theory of planned behaviour: A study of consumer adoption intentions. Int. J. Res. Market. 12(1995):137-155. Van L (2009). Use of USSD Technology in mobile banking. [Online]. Available at: http://mobile-financial.com/blogs/use-ussd-technologymobile-banking [Accessed 2 September 2011].

Full Length Research Paper

Product variety management: A synthesis of existing research Augusto da Cunha Reis1,2*, Luiz Felipe Scavarda1 and Beatriz Moreira Pancieri1,3 1

Industrial Engineering Department, PUC-Rio, Brazil. Industrial Engineering Department,CEFET-RJ UnED Nova Iguaçu, Brazil. 3 Industrial Engineering Department, UNAMA, Pará, Brazil.

Accepted 3 September, 2012

This article presents a systematic review of the literature on product variety management (PVM). The review examines publications between 2005 and 2010 found in the Elsevier electronic database. The review emphasises various internal and external pressures that encourage companies to increase or reduce the variety of products that they offer (that is, PVM input), different ways of dealing with these different pressures (that is, structure and processing), and the expected results of good management practices (that is, outputs). The framework also includes a fourth dimension that highlights the context in which the studies are grounded. The results highlight the main themes in PVM research, identify the key issues addressed in this research, and emphasise remaining gaps that deserve special attention in future research. Key words: Supply chain, business processes, information technology, mitigation strategies, metrics. INTRODUCTION Systematic literature reviews are a means of providing an objective theoretical evaluation of a particular topic (Hopayian, 2001). A systematic literature review facilitates the identification, evaluation, and interpretation of studies in a given area by examining existing concepts, practices, and theories and ultimately summarising the state of the reproducible research in a specific area (Rowley and Slack, 2004; Seuring and Müller, 2008). Thus, the use of literature reviews is necessary for those seeking to better understand the issues associated with a topic of research (Burgess et al., 2006) and to provide direction for future studies that can address existing knowledge gaps. Several concepts and themes related to industrial engineering have been analysed by means of systemic reviews. These include supply chain management (Croom et al., 2000; Burgess et al., 2006; Seuring and Müller, 2008), customer relationship management

*Corresponding author. E-mail: beatriz.pancieri@unama.br.

(Nagai et al., 2009), electronic commerce (Nagai et al., 2002), and logistics (Marasco, 2008; Pokharel and Mutha, 2009). However, despite the importance of product variety management (PVM) and the large number of published studies on this subject, the academic literature lacks a systematic review of PVM research. Product variety is one of the traditional competitive priorities in manufacturing, and thus, it is associated with operational trade-offs (Hayes and Pisano, 1996; Mapes et al., 1997; da Silveira and Slack, 2001). Today, the increasing variety of products offered to customers has emerged as a major trend (Scavarda et al., 2010; Stäblein et al., 2011), and great academic interest has developed in the effects and consequences of product variety on production systems. Balakrishnan and Chakravarty (2008), Vaagen and Wallace (2008), Murthy et al. (2009), and Zhang and Huang (2010) reported that product variety refers to variations in product attributes and/or characteristics that allow for different product configurations. Escobar-Saldívar et al. (2008) characterised product variety as the number of existing

Afr. J. Bus. Manage.

Figure 1. Audi`s product variety.

product lines and the number of products offered in each line. Winkler (2000) conducted a study of the dynamic range of product variety at Audi (early 1980s to early 2000s). During the early 1980s, this Vehicle Assembler offered the market just two models (Audi 80 and Audi 100) whereas in the early 2000s it offered more than 20 vehicle models to the market, divided into 5 segments, as shown in Figure 1. Furthermore, there was an expansion in the number of body types offered by the automaker. In in early 1980s, it offered only a sedan body type, while in early 2000s it offered many different types (for example, sedan, hatchback, wagon and coupe). Elmaraghy et al. (2009) highlighted the difficulty of balancing the customer and company viewpoints on variety, offering sufficient variety to the customer while also considering the effect of that variety on production systems. This problem is especially challenging for firms because of the dearth of models and tools that they can use to achieve an appropriate balance between the positive and negative aspects of product variety. According to the authors, this lack of models and tools constitutes a significant gap in the literature. Elmaraghy et al. (2009) noted that managing variety at all levels of production and support is one of the most important priorities for companies in the current dynamic environment. The management of product variety makes it possible to offer customers a variety of products while simultaneously maintaining high levels of quality, responsiveness, and adaptation to change, thereby generating profits. In this context, the objective of this study is to conduct a systematic review of the existing literature by reporting findings from published papers on PVM, highlighting the state of the art and identifying any gaps that could be

addressed in future research. This paper is subdivided as follows: This paper was first introduced, after which the framework used to guide the systematic review was presented. This is followed by a description of the research methodology used, after which the analysis and results were presented. Finally, the study was concluded. FRAMEWORK FOR A SYSTEMATIC REVIEW A research framework indicates how researchersâ&#x20AC;&#x2122; understanding of a particular theme has developed (Rowley and Slack, 2004). Research frameworks are carefully tailored to address the fundamental aspects of the theme under study. In other words, at the end of the research process, such conceptual frameworks must be useful for other researchers interested in the same theme (Seuring and MĂźller, 2008). The key dimensions of PVM are shown in the framework depicted in Figure 2. The construction of this figure was guided by a review of the existing frameworks used in the literature review content analysis. The framework draws particularly on Marasco (2008) and Pokharel and Mutha (2009), adopting the categories for analysis designated by those authors. The proposed framework includes four dimensions: context, inputs, structure and processing, and outputs. Context includes the characteristics of the studies contained in the literature review and the backdrop against which they were developed, as outlined in Burgess et al. (2006). This dimension includes the characteristics highlighted in Rowley and Slack (2004), such as the journal in which a study was published, the year of publication, and the sectors on which the study was focused (for example, the manufacturing or service

Reis et al.

CONTEXT

Journal name

Industry sector (manufacturing or service)

Year of publication

INPUT

Theoretical and/or empirical

Descreptive or prescreptive

STRUCTURE AND PROCESSING

OUTPUT

Relationships and participants External pressures that influence the number of product variety

Business Process

Information Technology

Internal pressures that influence the number of product variety

Objectives aimed to be achieved as a result of efficient PVM

Mitigation Strategies

Metrics

Figure 2. The content analysis framework.

industry). In addition, this dimension includes the characteristics highlighted by Croom et al. (2000), whether a study is theoretical or empirical and whether its contribution is descriptive and/or prescriptive. Inputs in this case are pressures that influence the increase or decrease in the variety of products offered to customers, whether internal or external to the companyâ&#x20AC;&#x2122;s power to control its stock. Structure and processing characteristics are the means that organisations use to deal with these pressures. These resources can be grouped into the following categories: (i) relationships and participants, which can be considered from both the intra-organisational perspective (when the focus is departments or areas internal to departments; Shapiro, 1977; Bowersox et al., 2000; Malhotra and Sharma, 2002) and the interorganisational viewpoint (when the focus is the various members of a supply chain; Croom et al., 2000; Lambert and Cooper, 2000); (ii) business processes (Davenport,

1990, Lambert and Cooper, 2000, Lambert, 2004); (iii) information technology (Croom et al., 2000); (iv) mitigation strategies (Pil and Holweg, 2004; Scavarda et al., 2010); and (v) metrics (Gunasekaran et al., 2004; Nudurupati et al., 2011). Finally, outputs are the objectives that companies hope to achieve as a result of efficient PVM (da Silveira, 1998). RESEARCH METHODS Li and Cavusgil (1995) classified existing literature reviews intended to summarise the state of the art in specific areas by distinguishing between reviews that employ the Delphi method, those that use meta-analysis, and those that employ content analysis. The present study used content analysis. According to the GAO (1996), content analysis allows researchers to select, filter, and summarise large volumes of data, thereby facilitating data analysis. Holsti (1969) suggests that this technique facilitates objective and systematic inference, making it possible to identify the relevant features of a

Afr. J. Bus. Manage.

particular subject, especially those isolated by multiple researchers. Moreover, content analysis is a systematic technique that is replicable by other researchers because it is based on explicit rules (Weber, 1990). The methodological approach adopted in this research was based on the studies carried out by Rowley and Slack (2004) and Kirca and Yaprak (2010). First, the criteria for the selection and inclusion of the studies were defined. Then, based on the framework presented, the collected data were organised, after which the results were analysed. This made it possible for the conclusions of this paper to be presented. The data from the review were gathered exclusively from scientific journals. This limitation is justified because academics and professionals generally use such journals to acquire knowledge and disseminate new results. Thus, these journals represent the highest level of research (Nord and Nord, 1995; Ngai and Wat, 2002, Ngai et al., 2009). As Rowley and Slack (2004) have indicated, online databases are an important tool in the selection of articles from scientific journals. Science Direct was the database used in this research. This means that the present study is non-exhaustive because other databases may contain additional relevant studies on the subject. Furthermore, the only journals included were those that publish articles in the following areas of study: “Business, Management and Accounting”, “Computer Science”, “Decision Sciences”, “Economics, Econometrics and Finance”, “Engineering”, and “Social Sciences”. To select articles, an advanced search was performed using Boolean expressions ("AND" and "OR") that combined keywords to best approximate specific terms, as advocated in Rowley and Slack (2004). The research procedure included an initial filter created by searching for the expression "product AND variety" in the article abstracts, keywords, and titles. In spite of the high amount of articles published on this subject, it was observed that only a small part of the authors conceptualized product variety (Balakrishnan and Chakravarty, 2008; Vaagen and Wallace, 2008; Murthy et al., 2009; Zhang and Huang, 2010). However, the term “Product Variety” is widely adopted and configures a good expression to cover the vocabulary knowledge in this field. The “AND” Boolean expression was used, as these terms do not always come together. Other key words such variations, variants, product line were not used in inclusion criteria as they normally come together within the terms mentioned before. Even so, the expression “managing OR management” was used as a second filter to retrieve some papers that do not directly address in their abstracts, key words, and titles the terms “product” and “variety”. The research analysis also only included articles from 2005 to 2010. Nevertheless, this six-year scope is sufficient to cover the relevant and current references, thereby making it possible to analyse the current state of the art of PVM. The first phase yielded 285 articles for possible inclusion in the systematic review. To ensure a focus on the topic of product variety, additional filtering was performed through analyses of the article abstracts and then of entire articles. It is noteworthy that the three researchers involved in this study read the abstracts. During this step, each researcher classified the studies in binary form, assigning a value of zero (0) to articles unrelated to PVM and a value of one (1) to related articles. The next step was to compile the values assigned to the abstracts in a Microsoft Excel® spreadsheet. Any instances of disagreement were addressed by the three researchers so that they might reach a consensus regarding the inclusion or exclusion of the article in question. After this step had been completed, the number of articles included in the study decreased to 73. Next, the three researchers each read each of these 73 articles in its entirety. Based on this review process, only 60 articles were selected for the systematic literature review. The data from these 60 articles were organised in Microsoft Excel® spread sheets based on

the framework described previously. After selection, the units of analysis were sorted. These units included words, sentences, and paragraphs of the text, as recommended by Unerman (2000).

PRESENTATION AND ANALYSIS OF RESULTS This section presents and analyses the results obtained from the systematic review of PVM research, organised according to the four dimensions presented in Figure 3. Context The 60 articles selected for review are listed and numbered in Table 1. These numbers will be used to refer to the studies throughout this section. The columns group the studies according to publication year. The last row of the table shows the total number of studies published each year. Figure 3 shows the distribution of studies by journal. It is notable that PVM studies are published mainly in journals that emphasise operations and manufacturing management, although journals focused on finance/ economics and marketing are also represented in the table. These results indicate the interdisciplinary nature of the subject. Table 2 presents combined data on the sector or sectors under study in particular articles (manufacturing, services, or both) and the types of studies presented (theoretical, empirical, or both). Many of the articles analysed (that is, 80.0% of articles) are focused on the manufacturing sector in industries such as the automobile, mobile phone, computer, textile, paper, and coffee industries. Within the service sector, the retail sector was the most common focus, with studies addressing problems such as product variety assortment, shelf allocation (Morales et al., 2005; Chen and Lin, 2007; Hariga et al., 2007), and product recommendation systems for online retailers (Albadvi and Shabazi, 2009). These results suggest that researchers should further explore the nature of the service sector given its increasing importance in industrial engineering. The data indicate that 48.3% of articles are theoretical: they seek general solutions that may be useful to other companies in the same industry or sector or that may be applicable to more than one type of industry or sector. The remaining articles are purely empirical (38.3%) or both empirical and theoretical (13.4%), proposing methodologies and testing them empirically. Empirical studies are predominantly focused on manufacturing. This further emphasises the need for more empirical studies on the service sector. Sixty percent of the articles analysed are prescriptive, and they mostly propose practices for adoption by companies. Prescriptive and combined descriptiveprescriptive studies together account for 85% of the total articles; only 15% of the studies are purely descriptive.

Reis et al.

1321

Tourism Management

Systems Engineering - Theory and Practice

Reliability Engineering and System Safety

Omega - The International Journal of Management Science

Journal of Retailing and Consumer Service

Journal of Retailing

Journal of Materials Processing Technology

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Journal of International Money and Finance

Journal of International Economics

Journal of Economic Theory

Journal of Consumer Psycology

International Journal of Research in Marketing

Information Processing and Management

Computers & Industrial Engeneering

Advanced Engineering Informatics

Technovation

Robotics and Computer-Integrated Manufacturing

Journal of Operations Management

Journal of Manufacturing Systems

International Journal Production Economics Expert Systems with Applications European Journal of Operational Research International Journal of Industrial Organization Annals of the CIRP CIRP Annals - Manufacturing Technology Computer-Aided Design Computers & Operations Research Computers in Industry Decision Support Systems Journal of Manufacturing Systems Journal of Operations Management Robotics and Computer-Integrated Manufacturing Technovation Advanced Engineering Informatics Computers & Industrial Engeneering Information Processing and Management International Journal of Research in Marketing Journal of Consumer Psycology Journal of Economic Theory Journal of International Economics Journal of International Money and Finance Journal of Materials Processing Technology Journal of Retailing Journal of Retailing and Consumer Service Omega - The International Journal of Management Science Reliability Engineering and System Safety Systems Engineering - Theory and Practice Tourism Management Decision Support Systems

Computers in Industry

Computers & Operations Research

Computer-Aided Design

CIRP Annals - Manufacturing Technology

Distribution of studies by publication journal

Annals of the CIRP

9 6 4 4 3 3 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

International Journal of Industrial Organization

European Journal of Operational Research

Expert Systems with Applications

International Journal Production Economics

Distribution of studies by publication journal

Figure 3. Distribution of studies by publication journal.

Inputs Inputs are factors that drive the adoption of PVM; they include both external and internal pressures on firms. Table 3 presents the main pressures identified in the literature review and related references together with the direction of the impact pressure on PVM. The main responsibility of companies is their need to meet and satisfy the diverse needs of customers by increasing the variety of products that they offer, introducing new products (Kim et al., 2005; Aramand, 2008), and adding new

features or functions to existing products (Chen and Lin, 2007). Globalisation has contributed to the proliferation of variety because geographically dispersed demand increases the need to offer products that are appropriate for different cultures and meet the demands of a diverse customer base. Example of this dispersion is offering tourism packages with wide range of options for the traveller (local transportation, lodging, etc...) due to the easy access to different geographic areas (Weng and Yang, 2007). In addition to the customization needs by final customers, pressures to increase the variety of

products can also be made by intermediary customers. Retailers, for example, want greater variety to prevent the transformation of the products offered in its sales outlets in commodities subject to price competition (Johnson and Kirchain, 2009). Another example is the industry of high-technology products, characterized by products with short life cycle due to technological developments, such as software products and services. According to Aramand (2008), this industry needs to meet the demand for variety in accordance with the changing requirements of clients represented by other

Afr. J. Bus. Manage.

Table 1. Studies selected for analysis and their distribution from 2005 to 2010.

Year 2005

Number 1 2 3 4 5 6 7 8 9 10

References Allanson and Montagna, 2005 Chen and Wu, 2005 Hsiao and Liu, 2005 Jiao and Zhang, 2005 Kim et al., 2005 Kimura and Nielsen, 2005 Lee and Lee, 2005 Morales et al., 2005 Moshirian et al., 2005 Nepal et al., 2005

Total 10

11 12 13 14

Hashmi, 2006 Uffmann and Sihn, 2006 Nagarjuna et al., 2006 Fernandes and Carmo-Silva, 2006 Brabazon and MacCarthy, 2006 Sered and Reich, 2006

2007

17 18 19 20 21 22 23 24 25 26 27

Sholz-Reiter and Freitag, 2007 Bryan et al., 2007 Chen and Li, 2007 Wang and Che, 2007 Hariga et al., 2007 Jiao et al., 2007a Jiao et al., 2007b Meredith and Akinc, 2007 Erkal, 2007 Weng and Yang, 2007 Wu et al., 2007

2008

28 29 30 31 32 33

Aramand, 2008 Escobar-Sald铆var et al., 2008 Hu et al., 2008 Tseng et al., 2008 Wang et al., 2008 Balakrishnan and Chakravarty, 2008 Innes, 2008 Chauhan et al., 2008 Sen, 2008 Morgan and Fathi, 2008 Spulber, 2008 Vaagen and Wallace, 2008

Lambertini and Mantovani, 2009 Albadvi and Shahbazi, 2009 Cebeci, 2009 Murthy et al., 2009

2006

34 35 36 37 38 39 2009

40 41 42 43

Table 1. Contd.

2010

44 45 46 47 48

Elmaraghy et al., 2009 Brambilla, 2009 Matsubayashi et al., 2009 Johnson and Kirchain, 2009 Shiue, 2009

49 50 51 52 53 54 55 56 57 58 59 60

C么te et al., 2010 Rabinovich et al., 2010 Zhang and Huang, 2010 Lim et al., 2010a Lim et al., 2010b Kucuk and Maddux, 2010 Xu, 2010 Nazarian et al., 2010 Foubert and Gijsbrechts, 2010 Puligada et al., 2010 Lin et al., 2010 Faure and Natter, 2010

industries (telecommun-ications, electronics etc.), and end users. These intermediate customers of the company responsible for producing the variety can be first-tier (direct downstream in the chain), but not necessarily the ultimate customers in the supply chain, they can be second-tier customers (customers of your client). Increased competition may result in the implementation of personalisation strategies and in product diversification (Uffmann and Sihn, 2006; Bryan et al., 2007; Wang et al., 2008; Elmaraghy et al., 2009) as necessary to achieve market differentiation and attract more customers. These efforts, in turn, can involve increasing product variety. However, product quality can diminish as a result of such increases in variety (Hashmi, 2006; Matsubayashi et al., 2009), generating resistance against the latter. Market requirements are dynamic, often shortening the product lifecycle (Uffmann and Sihn, 2006; Aramand, 2008). This reduction in lifecycle may also be affected by technological change, leading companies to develop new products more rapidly (Bryan et al., 2007). A short product lifecycle creates a greater range of new products offered over time (Uffmann and Sihn, 2006). The issue of environmental responsibility is an increasing focus and is regarded as an external pressure that reduces variety (Tseng et al., 2008). Environmental responsibility is also discussed in Cebeci (2009) in which the demand for environmentally friendly products is shown to often be determined by legal and technical regulations, which in turn affect the variety of products offered on the market. To counteract the negative consequences of the proliferation of product variety, companies should make sure that their offerings are not so extensive as to cause

Reis et al.

Table 2. Distribution of articles by sector and type of study.

Sector Manufacturing

Theoretical [1], [6], [11], [12], [13], [14], [15], [17], [18], [25], [30], [32], [33], [34], [39], [40], [48], [49], [51], [56], [57]

Type of study Empirical [3], [4], [5], [7], [10], [20], [22], [24], [27], [29], [31], [36], [37], [42], [44], [47], [50], [54], [58]

Both [16], [23], [35], [45], [52], [53], [59], [60]

TOTAL (nº / %) 48 / 80.0

Service

[2], [8], [43], [21], [26], [38], [46]

[9], [19], [41], [55]

11 / 18.3

Both

[28]

1 / 1.7

TOTAL (nº / %)

29 / 48.3

23 / 38.3

8 / 13.4

60 / 100

[1], Albadvi and Shahbazi , 2009; [2], Allanson and Montagna, 2005; [3], Aramand, 2008; [4], Balakrishnan and Chakravarty, 2008; [5], Bowersox et al., 2000; [6], Brabazon and Maccarthy, 2006; [7], Brambilla, 2009; [8], Bryan et al., 2007; [9], Burgess et al., 2006; [10], Cebeci , 2009; [11], Chauhan et al., 2008; [12], Chen and LIN, 2007; [13], Chen and Wu, 2005; [14], Côté et al., 2010; [15], Brabazon and MacCarthy, 2000; [16], Da Silveira, 1998; [17], Da Silveira and Slack, 2001; [18], Davenport , 1990; [19], Elmaraghy et al., 2009; [20], Erkal, 2007; [21], Escobar-Saldívar et al., 2008; [22], Faure and Natter, 2010; [23], Fernandes and Carmo-Silva, 2006; [24], Foubert and Gijsbrechts, 2010; [25], GAO , 1996; [26], Gunasekaran et al., 2004; [27], Hariga et al.,2007; [28], Hashmi, 2006; [29], Hayes and Pisano, 1996; [30], Holsti, 1969; [31], Hopayian, 2001; [32], Hsiao and Liu, 2005; [33], Hu et al., 2008; [34], Innes, 2008; [35], Jiao et al., 2007a; [36], Jiao et al., 2007b; [37], Jiao and Zhang, 2005; [38], Johnson and Kirchain, 2009; [39], Kim et al., 2005; [40], Kimura and Nielsen, 2005; [41], Kirca and Yaprak, 2010; [42], Kucuk and Maddux, 2010; [43], Lacity et al., 2009; [44], Lambert, 2004; [45], Lambertini and Mantovani , 2009; [46], Lee and Lee, 2005; [47] Li and Cavusgil, 1995; [48], Lim et al., 2010a; [49], Lim et al., 2010b; [50], Lin et al., 2010; [51], Malhotra and Sharma, 2002; [52], Mapes et al., 1997; [53], Marasco, 2008; [54], Matsubayashi et al., 2009; [55], Mendelson and Parlaktürk, 2008; [56], Meredith and Akinc, 2007; [57], Morales et al., 2005; [58], Morgan and Fathi, 2008; [59], Moshirian et al., 2005; [60], Murthy et al., 2009.

confusion in the customer decision-making process, otherwise known as "mass confusion" (Jiao et al., 2007b). In the presence of many options, a customer may take too long to make purchasing decisions, may not be able to determine the best alternative (Matsubayashi et al., 2009), or may even make mistakes during the selection process. This will result in a high rate of product returns (Rabinovich et al., 2010). Many studies highlight that significant increases in product variety can compromise operational efficiency by complicating manufacturing (Jiao et al., 2007b; Tseng et al., 2008; Chauhan et al., 2008; Elmaraghy et al., 2009), distribution (Jiao et al., 2007; Vaagen and Wallace, 2008), and supply processes in production systems and in the entire supply chain (Hu et al., 2008; Sen, 2008). Moreover, increased product variety can increase the complexity of administrative management (EscobarSaldívar, 2008). Increased product variety can also raise costs (Jiao et al., 2007b). The main types of costs include investments made to install production systems and/or increase their efficiency (Wang and Che, 2007; Wu et al., 2007); the costs associated with supplying a greater variety of products in smaller quantities (Sen, 2008; Vaagen and Wallace, 2008); manufacturing costs (Allanson and Montagna, 2005; Hsiao and Liu, 2005; Jiao and Zhang, 2005; Nepal et al., 2005; Meredith and Akinc, 2007; Balakrishnan and Chakravarty, 2008; Morgan and Fathi, 2008; Johnson and Kirchain, 2009); product-specific costs (Hsiao and Liu, 2005; Nepal et al., 2005; Jiao et al., 2007a); market brokerage costs (Wu et al., 2007; Sen, 2008); the cost of transport and distribution (Weng and

Yang, 2007; Allanson and Montagna, 2005; Sen, 2008); set-up costs (Escobar-Saldívar et al., 2008); inventory costs (Hariga et al., 2007; Escobar-Saldívar et al., 2008; Sen, 2008); costs associated with product storage and display (Tseng et al., 2008); and quality requirements and maintenance costs (Wu et al., 2007). The major challenge highlighted in the literature is the requirement that firms to offer greater product variety at a lower cost. As such, analyses of cost relative to variety should be performed during the product development phase (Johnson and Kirchain, 2009). Industries characterised by a wide variety of products must work with different production set-ups. The higher is the set-up time; the lower is the production efficiency (Escobar-Saldívar et al., 2008). Another important consideration is the required stock level, which can cause management problems and require additional warehouse space (Hariga et al., 2007; Escobar-Saldívar et al., 2008) when inventory is too high. Issues such as limited capacity and resources are also cited as encouraging a decrease in variety. Capacity limitations may include inventory limitations (for example, the available shelf space can restrict the range of products provided by a supplier; Chen and Lin, 2007; Hariga et al., 2007), limitations on the capacity of warehouses to allocate products (Jiao et al., 2007b), production and/or assembly limitations (Brabazon and MacCarthy, 2006; Bryan et al., 2007; Escobar-Saldívar et al., 2008; Sen, 2008), and limitations on labour force capacity (for example, restrictions related to overtime and subcontracting; Meredith and Akinc, 2007). Even the resources available for production can create

Afr. J. Bus. Manage.

Table 3. Internal and external pressures that influence PVM. Internal and external pressures that influence PVM

Predominantly Positive

Negative

Support for and/or responsiveness to the diverse needs of clients (customised)

Both

Total of references

References [3],

[4],

[5],

[6],

[7],

[11],

[12],

[14],

[15],

[16],

[17],

[18],

[19],

[20],

[21],

[22],

[23],

[24],

[26],

[28],

[30],

[31],

[33],

[35],

[38],

[39],

[41],

[44],

[47],

[48],

[50],

[51],

[53],

[54],

[55],

[56],

[58],

[59]

[3], [46], [6], [12], [4], [7], [15], [4], [20], [23],

[4], [47], [11], [13], [5], [8], [18], [13], [25], [29],

[6], [50], [12], [18], [12], [19], [19], [23], [31], [39],

[10], [53], [22], [20], [18], [23], [21], [26], [36], [50],

[11], [56] [23], [28], [25], [41], [23], [44], [44], [54]

[16],

[20],

[21],

[22],

[23],

[24],

[26],

[27],

[29],

[33],

[36],

[37],

[39],

[27], [31], [28], [46], [24], [45], [48]

[29], [32], [32], [50], [29], [50]

[30], [36], [33], [54], [36],

[31], [39], [39], [58], [44]

[35], [48] [42], [59]

[36], [53], [46],

[39], [54] [54]

[44],

[48],

[50],

[53],

[57]

X X X X X

[1], [45], [4], [10], [3], [4], [4], [1], [6], [21],

[22],

[25],

[33],

[50],

[58]

X X

[11], [11], [12], [29],

[12], [31], [28], [44],

[46], [42], [38] [56]

[54] [44]

[10], [6], [2], [22],

5 5 4 4

[11],

[36],

[42]

Miscellaneous costs

Operational complexity Product lifecycle Differentiation from competitors Customer choice process Capacity limitations Economies of scale Resource limitations Stock levels Management of the number of components that comprise the finished product Customer quality needs Environmental responsibility Evolution of technology Time and/or number of setups Compliance with technical and legal regulations

X X X

38 25 18 13 13 11 10 8 7 6

[1], Albadvi and Shahbazi , 2009; [2], Allanson and Montagna, 2005; [3], Aramand, 2008; [4], Balakrishnan and Chakravarty, 2008; [5], Bowersox et al., 2000; [6], Brabazon and Maccarthy, 2006; [7], Brambilla, 2009; [8], Bryan et al., 2007; [9], Burgess et al., 2006; [10], Cebeci , 2009; [11], Chauhan et al., 2008; [12], Chen and LIN, 2007; [13], Chen and Wu, 2005; [14], Côté et al., 2010; [15], Brabazon and MacCarthy, 2000; [16], Da Silveira, 1998; [17], Da Silveira and Slack, 2001; [18], Davenport , 1990; [19], Elmaraghy et al., 2009; [20], Erkal, 2007; [21], Escobar-Saldívar et al., 2008; [22],Faure and Natter, 2010; [23], Fernandes and Carmo-Silva, 2006; [24], Foubert and Gijsbrechts, 2010; [25], GAO , 1996; [26], Gunasekaran et al., 2004; [27], Hariga et al.,2007; [28], Hashmi, 2006; [29], Hayes and Pisano, 1996; [30], Holsti, 1969; [31], Hopayian, 2001; [32], Hsiao and Liu, 2005; [33], Hu et al., 2008; [34], Innes, 2008; [35], Jiao et al., 2007a; [36], Jiao et al., 2007b; [37], Jiao and Zhang, 2005; [38], Johnson and Kirchain, 2009; [39], Kim et al., 2005; [40], Kimura and Nielsen, 2005; [41], Kirca and Yaprak, 2010; [42], Kucuk and Maddux, 2010; [43], Lacity et al., 2009; [44], Lambert, 2004; [45], Lambertini and Mantovani , 2009; [46], Lee and Lee, 2005; [47] Li and Cavusgil, 1995; [48], Lim et al., 2010a; [49], Lim et al., 2010b; [50], Lin et al., 2010; [51], Malhotra and Sharma, 2002; [52], Mapes et al., 1997; [53], Marasco, 2008; [54], Matsubayashi et al., 2009; [55], Mendelson and Parlaktürk, 2008; [56], Meredith and Akinc, 2007; [57], Morales et al., 2005; [58], Morgan and Fathi, 2008; [59], Moshirian et al., 2005; [60], Murthy et al., 2009.

limitations, for instance, if natural resources (Tseng et al., 2008) or other types of raw materials (Erkal, 2007) are not sufficiently available. The last pressure identified is the production of Different (especially smaller) lot sizes due to

product proliferation, which can negatively affect economies of scale (Elmaraghy et al., 2009). Overall, the pressures identified as increasing or decreasing product variety emphasises the importance of PVM in promoting a balance between the positive and negative factors at play.

Subsequently, the PVM structures and processes are explained. PVM structures and processes The results in this category are presented and

Reis et al.

Table 4. Intra- and inter-organisational perspectives in PVM.

Intra-organisational Horizontal integration Vertical integration Inter-organisational Supply chain integration

[3], [4],

[2],

[4], [23],

[4],

[5], [36],

[17],

[12], [42],

[20],

[21], [49]

[25],

[23],

[24],

References [44], [53]

Total 9 5

[27],

References [28], [30], [33],

Total 15

[36],

[38],

[39],

[42],

[51],

[59]

[2], Allanson and Montagna, 2005; [3], Aramand, 2008; [4], Balakrishnan and Chakravarty, 2008; [5], Bowersox et al., 2000; [12], Chen and LIN, 2007; [17], Da Silveira and Slack, 2001; [20], Erkal, 2007; [21], Escobar-Sald铆var et al., 2008; [23], Fernandes and Carmo-Silva, 2006; [24], Foubert and Gijsbrechts, 2010; [25], GAO, 1996; [27], Hariga et al.,2007; [28], Hashmi, 2006; [30], Holsti, 1969; [33], Hu et al., 2008; [36], Jiao et al., 2007b; [38], Johnson and Kirchain, 2009; [39], Kim et al., 2005; [42], Kucuk and Maddux, 2010; [44], Lambert, 2004; [49], Lim et al., 2010b; [51], Malhotra and Sharma, 2002; [53], Marasco, 2008; [59], Moshirian et al., 2005.

analysed using the following categories: relationships and participants, business processes, information technology (IT), mitigation strategies, and metrics. Relationships and participants Table 4 summarises the results related to this item and related studies. It is evident that many researchers emphasised both intra- and inter-organisational perspectives. The results highlight the need for companies to internally coordinate their supply and demand capacity in seeking product variety; in this way, they can avoid creating conflicts between departments. There should be strong intra-organisational relationships between the departments involved in the marketing and design of products (Hsiao and Liu, 2005) and between those involved in the marketing, production and/or engineering processes (Jiao and Zhang, 2005; Meredith and Akinc, 2007). Those operational activities that are necessary for product variety should be consistent with the strategic objectives of the firm (C么te et al., 2010). Thus, the involvement of top-level management is a necessity (Jiao and Zhang, 2005; Cebeci, 2009). To ensure inter-organisational coordination, the work of individual companies should be synchronised with that of other important members of the supply chain (Wu et al., 2007; Hu et al., 2008; Sen, 2008). Wang and Che (2007), Aramand (2008), and Cebeci (2009) highlight the need for communication channels between buyers and sellers throughout the supply chain, which will strengthen the relationship between the supply chain links and make it possible to control and manage both the suppliers themselves and all externally produced items. Moreover, Jiao and Zhang (2005) and Wu et al. (2007) add that aligning the information exchanged between companies and their suppliers requires an understanding of the needs of the supply chain endpoint (that is, the consumer) and of the limitations of the whole chain, (that is, the functional requirements that must be fulfilled to manufacture a variety of products). In particular, Chen

and Wu (2005) state that companies need to develop key links with distributors and customers. The links, both upstream and downstream the supply chain, can be managed in the medium and long term as partnerships between affiliates or between companies (Sen, 2008; Brambilla, 2009), which allows knowledge access about specific processes production towards achieving greater flexibility in the offer of the range of products requested. Other types of relations that aid the PVM may be merges and acquisitions (Uffmann, 2006). These closer types of relationships allow companies to control the flow of materials and especially the necessary information to each participant. Thus, this systematic review indicates that modern companies must now refine their processes at the supply chain level. These efforts require the integration of participants internal to companies (that is, intra-organisational integration) and of external participants (that is, inter-organisational integration). Business processes PVM can involve business processes. Table 5 presents the business processes identified in the review, and grouped following the study of Lambert (2004). Most studies addressing the theme of PVM business processes analyse them with a particular emphasis on the manufacturing flow management. For example, Hu et al. (2008) address the need to consider the impact of adding variants when planning the assembly sequence in a multi-stage system, where complexity spreads from one workstation to another. Fernandes and Carmo-Silva (2006) describes a system for controlling production and the flow of materials to improve performance and reduce delivery time, whereas Jiao et al. (2007a) propose a system for identifying similarities between materials, resources, and processes. It is suggested that firms can gain competitive advantage by exploiting these similarities and thereby increasing PVM effectiveness. Chen and Lin (2007) highlight the use of point-of-sale (POS) transactions to collect data on consumers and

Afr. J. Bus. Manage.

Table 5. Business Processes under PVM.

Business process Manufacturing flow management Demand management Product development and commercialization Customer service management Order fulfillment Procurement Customer relationship management Returns

[11], [15], [12], [15], [15], [20], [59] [50]

[12], [19], [47], [54], [37], [51]

[14], [35], [49], [58], [49]

References [22], [30], [32], [36], [57] [52], [53] [59]

[44],

[48],

[56]

Total 9 5 5 4 3 2 1 1

[11], Chauhan et al., 2008; [12], Chen and LIN, 2007; [14], C么t茅 et al., 2010; [15], Brabazon and MacCarthy, 2000; [19], Elmaraghy et al., 2009; [20], Erkal, 2007; [22], Faure and Natter, 2010; [30], Holsti, 1969; [32], Hsiao and Liu, 2005; [35], Jiao et al., 2007a; [36], Jiao et al., 2007b; [37], Jiao and Zhang, 2005; [44], Lambert, 2004; [47], Li and Cavusgil, 1995; [48], Lim et al., 2010a; [49], Lim et al., 2010b; [50], Lin et al., 2010; [51], Malhotra and Sharma, 2002; [52], Mapes et al., 1997; [54], Matsubayashi et al., 2009; [56], Meredith and Akinc, 2007; [57], Morales et al., 2005; [58], Morgan and Fathi, 2008; [59], Moshirian et al., 2005.

Table 6. Information Technology under PVM.

Information Technology E-Commerce Other softwares Manufacturing Technologies Enterprise Resource Planning - ERP Eletronic Data Interchange - EDI

References [15], [19], [28], [4], [13], [22], [16], [17], [36], [17], [42] [36]

[41] [29]

Total 4 4 3 2 1

[4], Balakrishnan and Chakravarty, 2008; [15], Brabazon and MacCarthy, 2000; [16], Da Silveira, 1998; [17], Da Silveira and Slack, 2001; [36], Jiao et al., 2007b; [28], Hashmi, 2006; [42], Kucuk and Maddux, 2010; [41], Kirca and Yaprak, 2010; [22], Faure and Natter, 2010; [19], Elmaraghy et al., 2009; [13], Chen and Wu, 2005; [29], Hayes and Pisano, 1996;

thus develop demand management that can reduce supply uncertainty while facilitating product sorting and shelf allocation. Sen (2008) states that most large retailers use demand management to analyse and address customer demand for product variety. Uffmann and Sihn (2006) show that in the process of developing new products, firms must consider failure rates. C么te et al. (2010) highlight the importance of returning to previous projects to develop new product varieties. Brabazon and MacCarthy (2006) address customer service management in the automotive industry by monitoring demand through information systems in which customers can access real-time information on product variety. To effectively comply with customer requests, dealers can share information with automakers about the products available so that customers can purchase cars with their desired configuration of features. Kucuk and Maddux (2010) describe this process in electronic retailing. Wang and Che (2007) highlight the importance of supplier selection in addressing the management of supplier relationships (procurement). Lin et al. (2010) address customer relationship management in electronic

retailing, highlighting the importance of one-to-one marketing. Rabinovich et al. (2010) analyse returns in Internet retail, suggesting that companies experience a large number of returned products resulting from poor choices by end customers, which in turn are theorised to be due to excess product variety. Information technology The use of IT in business can be analysed from different perspectives. Table 6 summarizes the IT covered in the systematic review of the literature on PVM. From the standpoint of internal organisation, IT has a key role in ensuring the fluidity of and control over operations. Sen (2008), C么te et al. (2010) and Lim et al. (2010a, b) address product development, suggesting that technologies such as computer-aided design (CAD) can accelerate product development and that store data can also be used to support future modifications. This is very important in environments that require wide variety and short product lifecycles (Sen, 2008; Lim et al., 2010a). In these types of environments, Nagarjuna et al. (2006)

Reis et al.

suggest that the material handling systems (MHSs) can be used to facilitate material flow. Component variety may also be better managed using support systems for manufacturing, such as computerintegrated manufacturing (CIM) (Sered and Reich, 2006; Scholz-Reiter and Freitag, 2007) and computer-aided manufacturing (CAM) (Sen, 2008). Also focusing on production, Jiao et al. (2007a) emphasise the use of data mining and text mining to analyse the historical evolution of product and process variations. It is suggested that this information can be used to create processing platforms for efficiently managing the variety and production of customised products. Other areas of firms that require information technology include purchasing (EscobarSaldívar et al., 2008; Sen, 2008) and sales (EscobarSaldívar et al., 2008). More generally, Scholz-Reiter and Freitag (2007) and Cebeci (2009) suggest that enterprise resource planning (ERP) can assist in PVM by integrating information across all company areas and departments. Within the supply chain, Chen and Lin (2007) and Lin et al. (2010) propose that companies implement systems for collecting information about client preferences and use data mining to analyse buying behaviour in electronic retail markets, thereby facilitating PVM. Albadvi and Shahbazi (2009), Rabinovich et al. (2010), and Lin et al. (2010) suggest that information systems can also assist clients in searching for and selecting their desired merchandise, particularly when they are faced with an enormous variety of products. Such systems have already been implemented in large electronic retail networks such as Amazon.com and web banking. Virtual-build-to-order (VBTO) systems merge these two perspectives by aligning client demand with available products by, for example, by aligning customer demand regarding car colours and options with the cars that are in dealer lots, in transit, or currently being produced by the carmaker (Brabazon and MacCarthy, 2006). Scholz-Reiter and Freitag (2007) highlight the use of radio frequency identification device (RFID) technology and Sen (2008) electronic data interchange (EDI) to assist in the handling of a wide variety of products along the supply chain. Mitigation strategies Mitigation strategies are used to alleviate the negative effects of increased product variety. Table 7 lists the strategies mentioned in the literature. The mitigation strategy most often cited is the adoption of common components in the production process. The use of common components to make a variety of products facilitates cost reduction (Balakrishnan and Chakravarty, 2008; Johnson and Kirchain, 2009). For instance, common platforms can be developed for different products, as has commonly occurred in the automotive industry (Erkal, 2007).

Common platforms allow companies to reduce their investments in research and development and introduce new products more quickly (Sered and Reich, 2006). Another particular case is that of modularisation, which increases the agility of the manufacturing process (Nepal et al., 2005) and allows for increases in product variety through the sharing of modules across different product lines. A third similar strategy is that of organising products with similar features and attributes into families (Bryan et al., 2007; Jiao et al., 2007a, b; Elmaraghy et al., 2009; Johnson and Kirchain, 2009), which reduces the complexity associated with producing a variety of products. Elmaraghy et al. (2009), Zhang and Huang (2010), and Lim et al. (2010) suggest that long-term planning for product families be focused on enabling both the sharing of components and platforms and modularisation, as this will facilitate PVM. Offering products that can be grouped into packages facilitates the management of a large variety of products. Working in this vein, Weng and Yang (2007) examine the case of tour packages. The mass customization is another mitigation strategy that can increase the product variety with low impact on costs (Jiao et al., 2007a). Lee and Lee (2005) exemplify this strategy in the computer industry where by offering standard models, the client can customize products by adding other attributes with a relatively low cost. Jiao et al. (2007a) and Balakrishnan and Chakravarty (2008) see the use of common processes as a mitigation strategy that can help firms to avoid experiencing dramatic increases in production costs as a result of their variety offering level and/or introducing new and different products. Côte et al. (2010) indicate the need to draw from previous projects in developing new product varieties. The mitigation strategies outlined in these studies also address production processes. The related strategies include lean production (Fernandes and Carmo-Silva, 2006; Escobar-Saldívar et al., 2008) and the use of cellular manufacturing systems (Scholz-Reiter and Freitag, 2007). The use of postponement is also associated with PVM. In postponement, part of product production is transferred downstream in the supply chain to a point closer to the end customer to allow the company to adapt more easily to the particular needs of its clients (Meredith and Akinc, 2007; Elmaraghy et al., 2009). The importance of flexible manufacturing systems is widely discussed in the context of PVM. For instance, Fernandes and Carmo-Silva (2006) cite the importance of quick response manufacturing (QRM) as a competitive strategy for companies that work on a make-to-order (MTO) or engineering-to-order (ETO) basis, indicating that such systems enable firms to produce a wide variety of products and meet variable demand. The selection of a production strategy suitable to the level of product variety offered is also discussed in the literature. Meredith and

Afr. J. Bus. Manage.

Table 7. Product variety mitigation strategies.

Mitigation strategies Use of common components Mass customisation Product families Flexible manufacturing Production strategies Use of common processes Postponement Option bundling Lean Manufacturing Cellular manufacturing

References [3], [4], [5], [10], [16], [17], [18], [22], [25], [27], [28], [30], [31], [32], [33], [36], [43], [44], [47], [49], [51], [52], [53], [56] [4], [5], [7], [20], [22], [24], [28], [3], [5], [6], [18], [22], [23], [44], [47], [49], [52], [53] [13], [14], [17], [27], [29], [32], [34], [14], [15], [24], [35], [49] [22], [29], [33], [49] [15], [26], [14], [17]

[24], [57] [29]

[44]

[30], [56]

[31],

[44],

[51],

[52],

[53],

[58]

Total 24 14 11 8 5 4 3 2 2 1

* Caso especial de uso de componentes comuns. [1], Albadvi and Shahbazi , 2009; [2], Allanson and Montagna, 2005; [3], Aramand, 2008; [4], Balakrishnan and Chakravarty, 2008; [5], Bowersox et al., 2000; [6], Brabazon and Maccarthy, 2006; [7], Brambilla, 2009; [8], Bryan et al., 2007; [9], Burgess et al., 2006; [10], Cebeci , 2009; [11], Chauhan et al., 2008; [12], Chen and LIN, 2007; [13], Chen and Wu, 2005; [14], Côté et al., 2010; [15], Brabazon and MacCarthy, 2000; [16], Da Silveira, 1998; [17], Da Silveira and Slack, 2001; [18], Davenport , 1990; [19], Elmaraghy et al., 2009; [20], Erkal, 2007; [21], Escobar-Saldívar et al., 2008; [22], Faure and Natter, 2010; [23], Fernandes and Carmo-Silva, 2006; [24], Foubert and Gijsbrechts, 2010; [25], GAO , 1996; [26], Gunasekaran et al., 2004; [27], Hariga et al.,2007; [28], Hashmi, 2006; [29], Hayes and Pisano, 1996; [30], Holsti, 1969; [31], Hopayian, 2001; [32], Hsiao and Liu, 2005; [33], Hu et al., 2008; [34], Innes, 2008; [35], Jiao et al., 2007a; [36], Jiao et al., 2007b; [37], Jiao and Zhang, 2005; [38], Johnson and Kirchain, 2009; [39], Kim et al., 2005; [40], Kimura and Nielsen, 2005; [41], Kirca and Yaprak, 2010; [42], Kucuk and Maddux, 2010; [43], Lacity et al., 2009; [44], Lambert, 2004; [45], Lambertini and Mantovani , 2009; [46], Lee and Lee, 2005; [47] Li and Cavusgil, 1995; [48], Lim et al., 2010a; [49], Lim et al., 2010b; [50], Lin et al., 2010; [51], Malhotra and Sharma, 2002; [52], Mapes et al., 1997; [53], Marasco, 2008; [54], Matsubayashi et al., 2009; [55], Mendelson and Parlaktürk, 2008; [56], Meredith and Akinc, 2007; [57], Morales et al., 2005; [58], Morgan and Fathi, 2008; [59], Moshirian et al., 2005; [60], Murthy et al., 2009.

Akinc (2007) and Chauhan et al. (2008) highlight the MTO and assembly-to-order (ATO) strategies. Côte et al. (2010) underscore the advantages of ETO as compared to MTO and ATO when a firm offers an undefined number of variations (that is, open product variety). Whereas Brabazon and MacCarthy (2006) analyse VBTO in the automotive sector, Meredith and Akinc (2007) addresses make-to-forecast (MTF) systems, which combine the make-to-stock (MTS) and MTO strategies to deliver customised products quickly without increasing costs. Mass customisation is another strategy highlighted in the literature (Lee and Lee, 2005; Jiao et al., 2007). Metrics Table 8 presents the metrics mentioned in studies that assess the PVM processes adopted by companies. Brabazon and MacCarthy (2006) and Meredith and Akinc (2007) suggest using a metric to monitor order fulfilment and evaluate the production system with respect to the number of product varieties offered. Different papers mention metrics that can be used to evaluate the efficiency of production processes, whether analysing the variety of items produced or the customer service offered. Toward this end, metrics for different temporal intervals are suggested. These include production cycle time (Jiao et al., 2007b; Uffmann and Sihn, 2006) and set-up time (Uffmann and Sihn, 2006; Bryan et al., 2007). Compe-

titiveness can be achieved by lowering these indices and thus increasing productivity. Related financial considerations include production costs (Nepal et al., 2005; Wu et al., 2007), set-up costs (Bryan et al., 2007), net product contribution (Meredith and Akinc, 2007), and product returns (Rabinovich et al., 2010). Wu et al. (2007) and Bryan et al. (2007) refer to metrics that measure the complexity of the product variety offered by a company, including the number of components and products. These metrics also indicate the rate of reuse for system elements used for product reconfiguration relative to that of the overall system of elements. Kim et al. (2005) and Lim et al. (2010a) emphasise the relationship between product variety and product family commonalities. Kim et al. (2005) propose that the number of models and brands that share a common platform be used as an indication of company strategy regarding product variety. Meredith and Akinc (2007) and Uffmann and Sihn (2006) emphasise concerns regarding possible decreases in product quality due to increased variety, suggesting that firms determine what percentage of units produced have not met quality requirements guidelines. Puligadda et al. (2010) use end customer satisfaction regarding production variety to assess PVM. Lin et al. (2010) present a metric that can be used to evaluate variety recommendation systems employed in electronic retail, determining the type of relationship between the

Reis et al.

Table 8. Metrics used to assess PVM.

Metrics Order fulfillment Production quality failures Production cycle time Set-up time Production costs Rate of reuse Cycle time for consumer requests Set-up cost Average rate and net contribution Product return rate Number of components and products Number of products and/or platform variants Number of models or brands offered by the company Customer satisfaction regarding product variety Relationship between the configuration recommended and the configuration sold

References [15], [12] [12], [24] [12], [23] [12], [18] [10], [27] [18] [15] [18] [24] [50] [27] [5] [5] [58] [59]

Total 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1

[5], Kim et al., 2005; [10], Nepal et al., 2005; [12], Uffmann and Sihn, 2006; [15], Brabazon and MacCarthy, 2006; [18],Bryan et al., 2007; [23],Jiao et al., 2007b; [24],Meredith and Akinc, 2007; [27], Wu et al., 2007; [50], Rabinovich et al.,2010; [58], Puligada et al., 2010; [59],Lin et al., 2010.

configuration recommended by the system and that sold to the customer. Although metrics were highlighted in many papers as being very important, none of the papers worked directly with metrics aimed at measuring the PVM itself. The identified metrics have different scopes looking into specific and particular aspects of PVM. As for the description of PVM, measurement issues were highly dispersed and metrics varied widely among authors with no common classification. Future research on this topic is suggested. Outputs Outputs are the results sought by companies adopting PVM. Table 9 presents the main outputs identified in the literature. Increased profitability is the output related to PVM that is most discussed in these studies. This increase can be achieved by highlighting those products offered in retail outlets that have higher profit margins (Chen and Lin, 2007). According to Vaagen and Wallace (2008), increases in profitability should occur if a firm determines the optimal level of variety for each market (which is itself another output that is widely cited in the literature). Chauhan et al. (2008) point out that improving customer service is also a major objective of PVM. Weng and Yang (2007), Balakrishnan and Chakravarty (2008), and Vaagen and Wallace (2008) indicate that increases in both profitability and market share are the main goals of PVM. Nepal et al. (2005) emphasise the importance of offering a wide variety of products to increase market share, and Brambilla (2009) emphasises that to increase

market share, the time needed to introduce new products to the market should be decreased. According to Cebeci (2009) and Brambilla (2009), PVM has improved the brand value of firms and increased their market share by providing them access to new markets. Cost reduction is another output associated with PVM. The main costs to be reduced are those associated with product development projects (C么te et al., 2010), purchasing (Balakrishnan and Chakravarty, 2008; Cebeci, 2009); inventory (Chauhan et al., 2008), and production (Nepal et al., 2005; Morgan and Fathi, 2008). In addition to focusing on cost reduction, Balakrishnan and Chakravarty (2008) cite increases in revenue and profitability as PVM outputs. Finally, Hu et al. (2008) and Morgan and Fathi (2008) cite the minimisation of production complexity as goals of PVM. Such a reduction in complexity should influence both assembly lines (Hu et al., 2008) and production systems (Morgan and Fathi, 2008). Another output identified in the review is the improvement or maintenance of customer loyalty (Cebeci, 2009). Conclusions This paper presents a systematic literature review of PVM research published from 2006 to 2010, being the first paper to do so. The review is based on a content analysis that integrates the main findings related to this topic and highlights the current state of the art. PVM is an interdisciplinary topic of interest not only for researchers in the areas of operations and manufacturing management but

Afr. J. Bus. Manage.

Table 9. Results sought by companies adopting PVM.

Output Increased profitability Cost reduction Increased market share Analyses of the optimal level of variety to be offered Improved customer service Reductions in time-to-market required for product introduction Increased revenue Improved brand image Reduced production system complexity Maintenance of customer loyalty

[3], [2], [4], [4], [8], [16], [4], [42], [30], [42]

[5], [7], [5], [23], [35], [40], [33], [45] [37]

[18], [10], [10], [39], [48], [45] [57] [57]

[19], [11], [26], [42], [49]

[21], [16], [27], [43],

References [24], [26], [27], [33], [35], [37], [33], [39], [42], [50]

[29], [40], [45],

[33], [42], [48]

[35], [49],

[39], [56]

[44] [56]

Total 13 13 10 6 4 3 3 3 2 1

[2], Allanson and Montagna, 2005; [3], Aramand, 2008; [4], Balakrishnan and Chakravarty, 2008; [5], Kim et al., 2005; [7], Brambilla, 2009; [8], Bryan et al., 2007; [10], Nepal et al., 2005; [11], Chauhan et al., 2008; [16], Da Silveira, 1998; [18], Davenport , 1990; [19], Elmaraghy et al., 2009; [21], Escobar-SaldĂvar et al., 2008; [23], Jiao et al., 2007b; [24],Meredith and Akinc, 2007; [26], Gunasekaran et al., 2004; [27], Wu et al., 2007; [29], Hayes and Pisano, 1996; [30], Holsti, 1969; [33], Hu et al., 2008; [35], Jiao et al., 2007a; [37], Jiao and Zhang, 2005; [39], Kim et al., 2005; [40], Kimura and Nielsen, 2005; [42], Kucuk and Maddux, 2010; [43], Lacity et al., 2009; [44], Lambert, 2004; [45], Lambertini and Mantovani , 2009; [48], Lim et al., 2010a; [49], Lim et al., 2010b; [50], Rabinovich et al.,2010; [56], Meredith and Akinc, 2007;[57], Morales et al., 2005;

also for scholars working on finance, economics, and marketing. The interdisciplinary nature of this topic is reflected in the large number of related studies published in journals of different areas. The results indicate the increased focus of research on manufacturing companies; there are fewer studies of service companies. Therefore, future studies might address the issue of variety in the service sector. It would also be helpful for future studies to draw more heavily on the practical experiences of companies, as this research strategy would enrich the debates on PVM and increase the impact of empirical PVM research PVM should be used to balance the positive and negative effects of increasing product variety. Based on the results of this study, it appears that cost is the most important factor causing decreases in product variety, whereas the greatest positive influence on product variety is customer needs.

The studies examined also emphasise the roles of various actors, both within and outside companies, in implementing PVM. These studies highlight the need for internal integration (that is, intra-organisational integration). This type of integration can occur horizontally across functional areas including R&D, purchasing, production, distribution, and marketing; it can also occur vertically across hierarchical levels. In addition, the external integration of a firm with its suppliers and customers in the supply chain (that is, inter-organisational integration) has also been identified as a pertinent issue. The topic of integrated business processes is discussed in some studies. A major concern raised in most of these studies is the management of production flow. Other business processes, such as those related to marketing, are also discussed in the literature. This corroborates the interdisciplinary nature of PVM. The management and operation of

these business processes given a wide variety of inputs and existing products is made possible using IT. IT also helps firms to integrate and share information throughout their companies and throughout the entire supply chain, facilitating relation-ships within and between organisations. Strategies for mitigating the negative effects of product variety are also discussed in these studies. The most prominent strategy involves the use of common components, including common platforms and modules. In general, mitigation strategies are targeted toward the product, for example, by ensuring that products include common parts across different product categories and production processes and through the use of flexible systems, lean manufacturing, or postponed production. The main objective is to offer a wide variety of products to the customer while keeping the production of these products manageable from the companyâ&#x20AC;&#x2122;s perspective. Metrics

Reis et al.

for evaluating PVM are still not widely discussed in the literature; there are few studies that mention such metrics. Moreover, the metrics discussed vary, and there is no consensus regarding how they can be adapted for use in different organisations. Thus, future research should focus on indicators and performance measurement systems for environments with high product variety. Finally, the main objectives of companies that adopt PVM may include improved financial results (e.g., increased profitability, cost reduction, or revenue increases) and market-related improvements (such as increased market share, improved service level, and better brand value). Although this article is not exhaustive, the 60 selected studies constitute a significant and representative portion on the scientific research carried out on PVM. Thus, this analysis provides a reliable view of the state of the art of PVM research. Because it is impossible to cover every available study on any given subject, this research has its limitations. As this study involved the exclusive use of one electronic database, relevant studies may have been omitted if they are only indexed in other databases. Additionally, the use of Boolean expressions in the selection process may have caused the researchers to omit studies that address this theme using other words or terms. The six-year period examined also constitutes a limitation because important related concepts could have been disseminated in other years. Thus, future research should address these limitations. ACKNOWLEDGEMENTS The authors would like to thank the Brazilian research agencies CNPq (projects numbers: 590030/2010-8) and CAPES (BRAGECRIM 010/09) for their support as well as the two anonymous reviewers for their indispensable input that improved the paper significantly. REFERENCES Albadvi A, Shahbazi M (2009). A hybrid recommendation technique based on product category attributes. Experts Systems with Applications 36:11480-11488. Allanson P, Montagna C (2005). Multiproduct firms and market structure: and explorative application to the product life cycle. Int. J. Ind. Organ. 23:587-597. Aramand M (2008). Softwares products and services are high tech? New product development strategy for software products and services. Technovati 28:154-160. Balakrishnan NR, Chakravarty AK (2008). Product design with multiple suppliers for component variants. Int. J. Prod. Econ. 112:723-741. Bowersox DJ, Closs DJ, Stank TP, Keller SB (2000). How supply chain competency leads to business success. Supply Chain Management Review. September/October p67-83 Brabazon PG, Maccarthy B (2006). Fundamental behavior of virtualbuild-to-order systems. Int. J. Prod. Econ. 104:514-524. Brambilla I (2009). Multinationals, technology, and the introduction of varieties of goods. J. Int. Econ. 79:89-101. Bryan A, Ko J, Hu SJ, Koren Y (2007). Co-evolution of product

families and assembly systems. Annals CIRP 56:41-44. Burgess K, Singh PJ, Koroglu R. (2006). Supply chain management: a structured literature review and implications for future research. Int.J. Oper. Prod. Manage. 26(7):703-729. Cebeci U (2009). Fuzzy AHP-based decision support system for selecting ERP systems in textile industry by using balanced scorecard. Expert Systems with Applications 36:8900-8909. Chauhan SS, Martel A, D`Amour S (2008). Roll assortment optimization in a paper mill: an integer programming approach. Comput. Oper. Res. 35:14-627. Chen MC, LIN CP (2007). A data mining approach to product assortment and shelf space allocation. Expert Systems with Applications 32:976-986. Chen MC, Wu HP (2005). An association-based clustering approach to order batching considering customer demand patterns. Omega – Int. J. Manage. Sci. 33:333-343. Côté AB, Rivest L, Desrochers A (2010). Adaptative generic product structure modelling for design reuse in engineer-to-order products. Computers in Industry 61:53-65. Croom S, Romano P, Giannakis M (2000). Supply chain management: an analytical framework for a critical literature. Eur. J. Purch. Supply Manage. 6:67-83. Da Silveira G (1998). A framework for the management of product variety. Int. J. Oper. Prod. Manage.1 8(3):271-285. Da Silveira G, Slack, N. (2001). Exploring the trade-off concept, Int. J.Operat.Prod.Manage. 21(7): 949-964. Davenport TH (1990). The New Industrial Engineering. Sloan Manage. Rev. 31(4):11-27. Elmaraghy H, Azab A, Schuh G, Pulz C (2009). Managing variations in products, processes and manufacturing systems. CIRP Annals – Manufact.Technol. 58: 441-446. Erkal, N. (2007). Buyer-supplier interaction, asset specificity, and product choice. Int. J. Indust. Organ. 25:988-1010. Escobar-Saldívar LJ, Smith NR, González-Velarde JL (2008). An approach to product variety management in the painted sheet metal industry. Comput. Ind. Eng. 54:474-483. Faure C, Natter M (2010). New metrics for evaluating preference maps. Int. J. Res.Mark. 27:261-270. Fernandes NO, Carmo-Silva SD (2006). Generic POLCA – A production and materials flow control mechanism for quick response manufacturing. Int. J. Prod. Econ. 104:74-84. Foubert B, Gijsbrechts E (2010). Please or squeeze? Brand performance implications of constrained and unconstrained multi-item promotions. Eur. J. Oper. Res. 202: 880-892. GAO (1996). United States General Accountability Office. Content analysis: a methodology for structuring and analyzing written material. Available: http://archive.gao.gov/f0102/157490.pdf. Acess: 10 jan 2011. Gunasekaran A, Patel C, Mcgaughey RE (2004). A framework for supply chain performance measurement. Int.J. Prod Econ. 87(3):333347. Hariga MA, Al-Ahmari A, Mohamed ARA (2007). A joint optimisation model for inventory replenishment, product assortment, shelf space and display área allocation decisions. Eur. J. Oper. Res. 181:239251. Hashmi MSJ (2006). Aspects of tube and pipe manufacturing processes: meter to nanometer diameter. J. Mater. Proc. Technol. 179:5-10. Hayes RH, Pisano GP (1996). Manufacturing strategy: at the intersection of two paradigm shifts. Prod. Oper. Manage. 5(1):25-41. Holsti OR (1969). Content Analysis for the Social Sciences and Humanities, Addison-Wesley, Reader, MA. Hopayian K (2001). The need for caution in interpreting high quality systematic reviews. Education and Debate 323:681-684. Hsiao SW, Liu E (2005). A structural component-based approach for designing product family. Computers in Industry 56:13-28. Hu SJ, Zhu X, Wang H, Koren Y (2008). Product variety and manufacturing complexity in assembly systems and supply chains. CIRP Annals – Manufact. Technol. 57:45-48. Innes R (2008). Entry for merger with flexible manufacturing: implications for competition policy. Int. J. Ind. Organ. 26:266-287. Jiao JR, Zhang LL, Pokharel S, He Z (2007a). Identifying generic

Afr. J. Bus. Manage.

routings for product families based on text mining and tree matching. Decision Support Systems 43:866-883. Jiao JR, Zhang LL, Wang Y (2007b). A heuristic genetic algorithm for product portfolio planning. Comput. Oper. Res. 34:1777-1799. Jiao JR, Zhang LL (2005). Product portfolio identification based on association rule mining. Computer-Aided Design. 37:149-172. Johnson MD, Kirchain RE (2009). Quantifying the effects of product family decisions on material selection: A process-based costing approach. Int. J. Prod. Econ. 120:653-668. Kim JH, Wong V, Weng TY (2005). Product variety strategy for improving new product development proficiencies. Technovat 25:1001-1015. Kimura F, Nielsen J (2005). A design method for product family under manufacturing resource constraints. CIRP Annals. Manuf..Technol. 54:139-142. Kirca AH, Yaprak A (2010). The use of meta-analysis in international business research: Its current status and suggestions for better practice. Int. Bus. Rev. 19(3):306-314. Kucuk SU, Maddux RC (2010). The role of the internet on free-ridding: An exploratory study of the wallpaper industry. J. Retail. Cons. Serv.. 17:313-320. Lambert DM (2004).The eight essential supply chain management processes. Supply Chain Manage. Rev. 8(6):18-26. Lambert DM, Cooper MC (2000). Issues in supply chain management. Ind. Mark. Manage. 29:65-83. Lambertini L, Mantovani A (2009). Process and product innovation by a multiproduct monopolist: a dynamic approach. Int. J. Ind. Organ. 27:508-518. Lee HJ, Lee JK (2005). An effective customization procedure with configurable standard models. Decision Support.Syst. 41:262-278. Li TS, Cavusgil T (1995). A classification and assessment of research streams in International Marketing. Int.Bus. Rev. 4(3):251-277. Lim SCJ, Liu Y, Lee WB (2010a). A methodology for building a semantically annoted multi-faced ontology for product family ontology. Advan. Eng. Informat. 25(2):147-165. Lim SCJ, Liu Y, Lee WB (2010b). Multi-faced product information search and retrieval using semantically annotated product family ontology. Inform. Proc. Manage.46: 479-493. Lin CT, Hong WC, Chen YC, Dong Y (2010). Application of salesmanlike recommendation system in 3G mobile phone online shopping decision support. Expert Systems with Application 37:8065-8078. Malhotra MK, Sharma S (2002). Spanning the continuum between marketing and operations. J. Oper. Manage. 20:209–219. Mapes J, New C, Szwejczewski M. (1997) Performance trade-offs in manufacturing plants, International J. Oper. Prod. Manage. 17(10):1020-1033. Marasco A (2008). Third-party logistics: A literature review. Int. J. Prod. Econ. 113 :127-147. Matsubayashi N, Ishii Y, Watanabe K, Yamada Y (2009). Full-line or specialization strategy? The negative effect of product variety on product line strategy. Eur. J. Oper. Res. 196:795-807. Meredith J, Akinc U (2007). Characterizing and structuring a new maketo-forecast production strategy. J. Oper. Manage. 25:623-642. Morales A, Kahn BE, Mcalister L, Broniarczyk SM (2005). Perceptions of assortment variety: the effects of congruency between consumers` internal and retailers’ external organization. J. Retail. 81:159-169. Morgan SD, Fathi Y (2008). Algorithms for the q-model clustering problem with application in switching cabinet manufacturing. Eur. J. Oper. Res.189:939-951. Moshirian F, Li D, Sim A-B (2005). Intra-industry trade in financial services. J. Int. Money Financ. 24:1090-1107. Murthy DNP, Hagmark PE, Virtanen S (2009). Product variety and reliability. Reliability Engineering and System Safety 94: 1601-1608. Nagarjuna N, Mahesh O, Rajagopal K. (2006). A heuristic based on multi-stage programming approach for machine-loading problem in a flexible manufacturing system. Robotics and Computer-Integrated Manufacturing 22:342-352. Nazarian E, Ko J, Wang H (2010). Design of multi-product manufacturing lines with the consideration of product change dependent inter-task times, reduced changeover and machine flexibility. J. Manuf. Syst. 29:35-46 Nepal B, Monplaisir L, Singh N (2005). Integrated fuzzy logic-based

model for product modularization during concept development phase. Int. J. Prod. Econ. 96: 157-174. Ngai EWT, Wat FKT (2002). A literature review and classification of electronic commerce research. Inform. Manage. 39: 415-429. Ngai EWT, Xiu L, Chau DCK (2009). Application of data mining techniques in customer relationship management: A literature review and classification. Expert Systems with Applications 36:2592-2602. Nord JH, Nord GD (1995). MIS Research: J. Status. Assess Anal. Inf. Manag. 29: 29-42. Novak S, Eppinger SD (2001). Sourcing by decision: Product complexity and the supply chain. Management Science. 47(1):189204. Nudurupati SS, Bititci US, Kumar V, Chan FTS (2011). State of the art literature review on performance measurement. Comput. Indust. Eng. 60(2): 279-290. Pil F, Holweg M. (2004). Linking Product Variety to Order-Fulfillment Strategies. Interfaces 34(5): 394-403. Pokharel S, Mutha A. (2009). Perspectives in reverse logistics: A review. Resources, Conserv. Recycl. 53:175-182. Puligadda S, Grewal R, Rangaswamy A, Kardes F (2010). The role of idiosyncratic attribute evaluation in mass customization. J. Cons. Psychol. 20: 369-380. Rabinovich E, Sinha R, Laseter T (2011).Unlimited shelf space in internet supply chains: treasure trove or wasteland? J. Oper. Manage. 29(4):305-317. Rowley J, Slack F (2004). Conducting a literature review. Manage Res. News. 27(6):31-39. Scavarda LF, Reichhart A, Hamacher S, Holweg M (2010). Managing product variety in emerging markets. Int. J. Oper. Prod. Manage. 30(2): 205-224. Scholz-Reiter B, Freitag M (2007). Autonomus Processes in Assembly Systems. Annals CIRP 56:712-729. Sen A (2008). The US fashion industry: A supply chain review. Int. J. Prod. Econ. 114: 571-593. Sered Y, Reich Y (2006). Standardization and modularization driven by minimizing overall process effort. Computer-Aided Design 38:405416. Seuring S, Müller M (2008). From a literature review to a conceptual framework for sustainable supply chain management. J.Cleaner. Prod. 16:1699-1710. Shapiro BP (1977). Can marketing and manufacturing co-exist? Harvard Bus. Rev. 55:104-114. Shiue YR (2009). Development of two-level decision tree-based realtime scheduling system under product mix variety environment. Robotics Computer-Integr. Manuf. 25:709-720. Spulber DF (2008). Innovation and international trade in technology. J. Econ. Theory. 138:1-20. Stäblein T, Holweg M, Miemczyk J (2011). Theoretical versus actual product variety, how much customization do customers really demand. Int. J. Operat. Prod.Manage. 31:350-370. Tseng HE, Chang CC, Li JD (2008). Modular design to support green life-cycle engineering. Expert Systems with Applications 34:25242537. Uffmann J, Sihn W (2006). A concept for knowledge transfer between new product projects in the automotive industry. CIRP Annals – Manuf. Technol. 55:461-464. Unerman J (2000). Methodological issues - Reflections on quantification in corporate social reporting content analysis. Account. Aud. Accountab. J. 13:667-681. Vaagen H, Wallace SW (2008). Product variety arising from hedging in the fashion supply chains. Int. J. Prod. Econ. 114:431-455. Wang HS, Che ZH (2007). An integrated model for supplier selection decisions in configuration changes. Expert Systems with Applications 32:1132-1140. Wang L, Keshavarzmanesh S, Feng H-Y (2008). Design of adaptive function blocks for dynamic assembly planning and control. J. Manuf. Syst. 27:45-51. Weber RP (1990). Basic Content Analysis – Series: Quantitative applications in the social sciences. 49(2) California: Sage Publications. Weng J, Yang KZ (2007). Spatial structure of tourism system: spatial model for monopolistic competition with asymmetry. Syst. Eng.

Reis et al.

Theor. Pratice 27:76-82. Winkler H (2000). Vorschungs Project 체ber Complexit채t. Fraunhofer IPA, Stuttgart, Germany, 2000. Wu Y, Frizelle G, Efstathiou J (2007). A study on the cost of operational complexity in customer-supplier systems. Int. J. Prod. Econ. 106:217229. Xu JB (2010). Perceptions of tourism products. Tourism. Manage. 31:607-610.

Zhang X, Huang GQ (2010). Game-theoretic approach to simultaneous configuration of platform products and supply chains with one manufacturing firm and multiple cooperative suppliers. Int. J. Prod. Econ. 124: 121-136.

Full Length Research Paper

Some perspectives of staff perceptions regarding leadership decision-making: A higher education view Ngambi H. C. and Nthoesane M. G.* College of Economic and Management Sciences, UNISA, Pretoria, South Africa. Corporate Services, Centre for Business Management, UNISA, Pretoria, South Africa. Accepted 13 July, 2012

Higher education is by nature a knowledge institution that requires the knowledge, skills and abilities of more than one person if it is to be successful. Achieving this success cannot be a function of a single individual; it requires team or shared leadership that will provide exceptional and excellent organisational governance. The research on which this article is based explored staff perceptions on the need or desire for shared leadership in a university; and their perception of college leadership as being inclusive. To achieve this, a web-based survey was conducted among all University of South Africa College of Economic and Management Sciences staff. A 42.1% response rate (n=254) was achieved. This approach allowed for index construction methodology, which supports longitudinal analysis whereby changes in performance ratings can be monitored over time. Such an approach is also ideal to measure the effect of corrective actions following from previous measurement periods. The results showed that staff perceived leadership to promote inclusivity and that there were elements of shared leadership through consultative processes (index: 50 to 74). However, further research need to be conducted to establish the depth of this staff involvement and to ascertain the benefits that can result from such a symbiotic leadership relationship. Key words: Higher education, decision making, shared leadership, staff participation. INTRODUCTION Can leadership be shared? The complexities and demands of higher education institutions (HEIs) and the emergence of the open distance learning (ODL) system present a challenge to HEI leadership. The ODL system in particular has become a driving force in addressing the fundamental issue of access to quality higher education globally, and the system‟s success is dependent on its leadership. In countries like South Africa where there are high levels of social injustices (such as illiteracy and unemployment), this mode of education is pivotal in addressing these injustices brought about by the apartheid system of the past. The ODL system of education meets the educational needs of many capable adults who missed the opportunity to benefit from conventional university education (Siaciwena, 2006). In

*Corresponding author. E-mail: Nthoemg@unisa.ac.za.

addition, it contributes to the development of human resources, and widens the access to university education to many, who for various reasons cannot attend a university full-time. In order to remain relevant and competitive, institutions need to realise the complexity of leadership that is required to provide governance to these institutions. Both Glatter and Kydd (2003) and Kulati (2000) provide an insight into challenges that face HEIs, and specifically emphasise the importance of leadership inclusiveness in order to address these challenges. This notion of inclusive and shared leadership is further reported and supported by other authors, including Boland (2005) and Möller (2006). The questions have often been asked whether there is a need for shared leadership, and whether there is any recognised value in advocating for shared leadership. Since research has shown that there are recognisable benefits to shared leadership (Boland, 2005; Coughlin et al., 2007; Kovač et al., 2003; Lumby,

Ngambi and Nthoesane

2003; Menon, 2005; Möller, 2006) it is clearly important for HEIs to have shared leadership if they are to realise their responsibilities. The inclusivity of leadership within HEIs is attracting increasing attention. However, the role of staff in this context is often not given prominence. This observation is supported by Kovač et al. (2003), who assert that evidence of employee inclusion in issues of leadership is limited. As a result, if this notion of shared and inclusive leadership is not given necessary attention, then HEIs are underutilising their potential, and they risk institutions failing to deliver optimally on their responsibilities. It is in this light that employee participation in a shared system of leadership and governance deserves greater attention, both in practice and in principle. The purpose of this article is to report on research that was undertaken to explore employee perceptions of the leadership of an HEI as being inclusive and to reveal the attitudes of staff with regard to being involved in decision making and teamwork as an indication of their desire for shared governance and shared leadership. This will provide a platform for institutional leadership to adapt their leadership in order to leverage the benefits inherent in inclusive leadership. To achieve the aim of the research, a web-based survey was conducted among the employees of the University of South Africa‟s College of Economic and Management Sciences (CEMS). The article continues with a review of the literature on higher education and leadership, followed by an explanation of the research methodology. A questionnaire consisting of both closed and open-ended questions was applied to generate data. This is followed by a presentation and discussion of the results. Finally, the conclusions and recommendations are presented and the potential limitations acknowledged. LITERATURE REVIEW This section reviews literature on the importance of shared leadership, governance of HEIs and how to improve participation of all the stakeholders involved. Subsequently, the challenges facing HEIs are taken into consideration. In conclusion, staff participation in shared governance is highlighted as the gap that was addressed through this research. Governance and leadership of higher education institutions The term „governance‟ is approached and used differently by various countries and scholars. Both Moses (2006) and the University of Oxford (2006) define governance as the processes of decision-making within an institution, which enable an institution to set its policies and objectives, to achieve them, and to monitor its progress

towards their achievement. It also refers to the mechanisms whereby those who have been given the responsibility and authority to pursue those policies and objectives are held to account (Simplicio, 2006). The ability to account can therefore be enhanced by sharing and distributing leadership responsibilities, of which governance forms part. Gayle et al. (2004) argue that effective governance is not easy to achieve. They point out that there are a number of challenges to effective governance in higher education which include (i) too many constituencies at the academic table with conflicting agendas and mandates like identifying who the client is or who should ultimately be given the power to decide; (ii) differing philosophical views on the extent of inclusiveness and depth of consultation with employees; and (iii) differences in perspectives between students, staff, trustees and administration. In order to overcome these challenges AFT Higher Education (2010) and Olson (2009) suggest that HEIs should adopt a shared system of governance, where all the stakeholders can have a guaranteed voice in decision-making but not ultimate authority. This voice could enable institutions to develop the culture of shared responsibilities (Schuetz, 1999) and could capitalise on institutional collective intelligence (University of Arizona Shared Governance Review Committee, 2008) in achieving institutional objectives. Furthermore, having this voice could also strengthen the democratic principle (Miller and Pope, 2000; Wood, 1993) in the institution and create an environment of responsiveness, effectiveness and efficiency (Larsen et al., 2009) in leading HEIs. Shared governance aims to ensure that there is a balance between staff participation in planning and decision making and an administrative accountability in institutions (Darden, 2009; Olson, 2009). Darden (2009) and Olson (2009) also emphasise that “shared” means everyone has a role; however, it does not mean that every constituency gets to participate at every stage, but certain constituencies are given primary responsibility over decision making in certain areas. In addition, Simplicio (2006) argues that in shared governance one group cannot claim dominance and that all groups are equally critical to the success of the institution. Miller et al. (2000) assert that shared governance has proven to be both creative and beneficial in the institutions because it leads to greater personal investment by staff. Furthermore, it promotes greater organisational commitment; provides for wider selection of options; leads to creative communication among all stakeholders and enhances stronger dedication to the institution (Miller et al., 2000). These benefits can then be translated into the best practices, namely creating an atmosphere that fosters trust; developing a collaborative attitude and participatory processes; enhancing extensive communication channels; encouraging informed participation and training; focusing on effective and efficient processes

Afr. J. Bus. Manage.

and subjects and allowing for flexibility in shared governance structures (University of Arizona Shared Governance Review Committee, 2008). Finally, shared leadership can be viewed as a decision-making culture and a decision-making tool (Miller and Pope, 2000). The importance of shared leadership in university governance HEIs are highly complex institutions with complex governance structures. These institutions need to stay in touch with the realities of today while developing leaders and visions for tomorrow. The ability to run these institutions successfully requires a leadership beyond an individual and a position; it requires shared leadership. Pearce et al. (2009: 234) view shared leadership as leadership that involves “broadly sharing power and influence among a set of individuals (management, staff and students) rather than centralising it in the hands of a single individual who acts in the clear role of dominant superior”. Shared leadership is defined by Lumby (2003: 287) as the leadership that is “created partly by the conscious delegation or ad hoc dispersal of responsibility for task”. It follows from these observations that shared leadership engages all the stakeholders in the attainment of leadership objectives and responsibilities within an organisation. The latter refers to providing governance and decision-making. This act of sharing leadership demonstrates the value attached to inclusivity and participation for all concerned in the organisation. University of Wisconsin River Fall (n.d. 4) defines inclusivity as “the integrity of social conscience and process by which each and every voice is heard and participatory in the decision-making process of the campus and its external stakeholders […]”. This is the leadership that can realise the aspirations of HEIs and leverage a broader talent in order to provide for better and shared governance. This system of leadership consists of cooperative, team-oriented, collaborative, transparent, fair and contextual. This is the leadership that values the ideas and views of the broader team, in order to broaden the richness of decision making in institutions. Beaty (2007) says that this is a kind of leadership that aims to achieve optimum worker productivity, combine risk-taking and innovation, foster participation of employees and empower the workforce. Accordingly, it is the kind of leadership that promotes learning in institutions (Van der Heide, 2007), bolsters leadership development (Charan, 2005) and excels in tapping into the needs and fears of staff (Buckingham, 2005). Therefore, shared leadership provides an environment of growth and promotes commitment from the staff by enhancing their personal abilities. In addition, it puts employees at ease because it is sensitive, recognises and rewards talents, is operationally aware and active,

but is not micromanaging (Dicocco, 2007). Shared leadership is therefore the leadership that sets the vision and motivates staff to rally behind that vision; the leadership that creates organisational ownership among the staff; the leadership that values morals and integrity and respects cultural differences. Lumby (2003) concludes that it is a kind of leadership that is consciously distributed throughout an institution, spanning all levels and flowing both up and down hierarchies. It also ensures that governance is shared and embraced and is committed to shared responsibilities. This system of leadership is both relevant and necessary in countries like South Africa, given the challenges that are still prevalent in the higher education system. Challenges facing higher education The key developmental and leadership agenda that is facing South African higher education is that of transformation and addressing the inequalities caused by apartheid. The notion of inclusivity in leadership is reflected in two of the three critical higher education challenges that were identified by the Department of Higher Education (DoE) (1997). Interestingly, the same challenges are still prevalent to date as is noted by Fielden (2008). These challenges are briefly discussed subsequently. Increasing and broadening participation of staff in issues of leadership: Emphasis is especially placed on the participation of the previously disadvantaged individuals in matters that affect them. Previously disadvantaged individuals include women, Africans, Indians, coloureds and the disabled. The Department of Education (DoE) recognises the need to develop a policy that will be used as a tool to address patterns of fragmentation, inequality and inefficiency so prevalent in the HEI arena of South Africa (DoE, 1997). Responding to societal interests and needs: According to the DoE (1997), this aim can be achieved by restructuring the higher education system and its institutions to meet the needs of an increasingly technologically oriented economy. In itself, this is not a challenge that is directly linked with leadership; however, it addresses the ability to respond to societal needs required by institutions to engage with society and therefore to highlight the need for inclusivity in institutional leadership responsibilities to a certain extent. Encouraging cooperation and partnerships in governance and leadership: The DoE (1997) highlights the need to develop a policy that will re-conceptualise the relationship between higher education and both its internal and external stakeholders in order to promote inclusiveness in governance. It must also create an enabling institutional culture that is sensitive to values that affirm diversity and promote reconciliation. In addition, Higher Education South Africa (2010)

Ngambi and Nthoesane

highlights that other challenges entail shared responsibility among a variety of stakeholders and issues relating to power for institutional autonomy. Addressing these challenges requires not only a mindset shift but also a system of governance that is accommodative and leadership that is inclusive and shared in its approach.

to invite all CEMS staff to complete and return the staff leadership perception questionnaire within one week of receiving the e-mail invitation to participate. The e-mail invitation was accompanied by a letter of motivation from the Executive Dean to support and participate in the survey. The initial invitation to participate was supplemented by two solicitations to encourage late or nonrespondents to participate.

Staff participation in higher education institution leadership responsibilities

Research focus

Studies by Boland (2005) and Menon (2005, 2003) report the involvement and participation of students in matters relating to HEI leadership. However, the involvement and participation of staff in leadership matters remain elusive. To support this observation, a study by Kovač et al. (2003) highlights that staff involvement in decisionmaking processes at the university management level was non-existent and that staff‟s involvement was confined to operational and technical issues only, with no influence on issues of leadership at the strategic university level. Kovač et al. (2003) study confirms the findings of Miller (2001) who argue that college presidents regard shared governance as a system of checks and balances and not as an integral part of institutional decision making, and moreover do not blindly support the staff involvement in issues of leadership and governance. The same observation is echoed by Mok (2010) who reported that staff members felt less emancipated and empowered because they were never involved or even consulted with regard to issues of institutional leadership and governance. It is in the light of these findings that the research on which this article is based intends to establish the perceptions of staff with regard to their involvement in decision making together with the college leadership and how they perceive the college leadership at large. The hypothesis that the study aimed to explore, reads; H0: There is a perception that college staff is not involvement in matters relating to leadership decisionmaking responsibilities. RESEARCH DESIGN The College of Economic and Management Sciences (CEMS) at the University of South Africa (UNISA) is the largest in Africa with a student complement of over 200000. A census was conducted among all 604 CEMS permanent staff to measure their perception on the inclusivity of the college leadership in decision making. A self-administered web-based survey approach was used to collect information among all staff members. The research questionnaire for this research was designed by the Bureau of Market Research (BMR) of UNISA, with inputs from the CEMS Executive Dean. The questionnaire was uploaded on the Lime Survey software program and pilot tested prior to being implemented. Lists containing the e-mail addresses of all CEMS staff members were provided by the Office of the Executive Dean and UNISA Human Resources Department. These lists were merged and used

The questions in the CEMS leadership perception questionnaire largely used a 5-point closed-ended rating approach to capture staff‟s confidence levels regarding the staff perception of aspects of leadership inclusivity. The questionnaire concluded with an openended response option to allow staff to comment finally on aspects most liked and valued about CEMS leadership (which they regarded as strong pillars of the college), to identify future challenges to be addressed by CEMS leadership, and finally to identify perceived method(s) of attending to such challenges.

Research instrument design The questionnaire designed for the survey included ratings of staff on their perceptions of leadership inclusivity. More specifically, the Likert scale measurement method that was used to measure these perceptions used the following scale anchors: Perception ratings; very poor (1), poor (2), average (3), good(4) and excellent (5). The Likert format lends itself to a basic method of index construction. Since identical response categories were used for several items measuring leadership perception, each item was scored in a uniform manner. To illustrate the way in which the index method was used to construct index scores for each relevant research variable it should be noted, for example, that all „very poor‟ ratings were allotted a weight of 0, while poor, average, good and excellent ratings were weighted by 25, 50, 75 and 100, respectively. The index was constructed by weighing scores using percentiles, thus making the scores to range between 0 to 100, where positive code (5) was assigned the highest percentile. The recording occurred as follows: 1. Very dissatisfied = 0 2. Dissatisfied = 25 3. Neutral= 50 4. Satisfied = 75 5. Very satisfied = 100. The end-result returned an average index score for each variable, such that: 1. 0 to 20 (very poor) indicates that staff perceives leadership as not inclusive; that is the leadership take decisions unilaterally; 2. 21 to 40 (poor) indicates that there is an intention from leadership to be inclusive; however, it is reflected only in policies, college documents and the performance management system; 3. 41 to 60 (average) indicates that leadership promotes inclusivity and there are elements of sharing leadership through consultative processes; 4. 61 to 80 (good) indicates that shared leadership is institutionalised in the college; staff participate in providing input into college plans, service charter and other areas of decision making; 5. 81 to 100 (excellent) indicates that shared leadership is regarded as the college culture and the way of life in the college. This explanation also reflects the value of the index method when

Afr. J. Bus. Manage.

making relative comparisons between a set of selected variables. Regardless of whether all research variables return low or high shared leadership perception index scores, some variables will always reflect relatively higher or lower performance ratings when compared collectively. This methodology also supports a business approach towards identifying relatively lower performance rating index variables and towards focusing on these variables in support of corrective actions and higher staff productivity. Finally, the index method supports longitudinal analysis whereby changes in performance ratings could be monitored over time (Babbie, 2010; Lester et al., 2008). Such an approach could be appropriate to measure the effect of corrective actions following from previous measurement periods. With no repetitive studies conducted to date in the South African context, the baseline findings of this research might be useful as a benchmark for future studies.

Caucasian origin. Even though female whites are also classified as HDIs, in this research this classification was not considered. Of those staff members who indicated their population group, 63.8% fell into the non-HDI group, while the HDI group was 36.2%. A third (35.1 %) of the participants fell into the age group of 21 to 34 years, while approximately a quarter were in the 35 to 44 (26.8%) age group, a quarter in the 45 to 54 (26.0%) age group and finally 12.1% in the age group of 55 and above. The last construct relates to tenure, which refers to the number of years a staff member has been employed by the college. Those who had been with the college for two years or less accounted for 40.2%, then participants who had been with the college for 3 to 10 years accounted for 28.7% and finally those who had been in the college for 10 years and more made up the remaining 31.1% of the sample. Results according to each of these constructs are discussed subsequently.

Pilot research and ethical clearance

RESULTS

A total of 15 staff members were used to pilot test the research instrument and methodology used. The pre-test showed positive findings in terms of the research approach and participation of respondents, and featured very promising prospects in terms of research focus, relevance and accuracy. As the research involved engagement with humans, the research project was also ethically cleared by the CEMS ethics committee. Data editing, capturing and storing The web-based survey approach permitted the electronic capturing of data on submission of the survey. Senior BMR staff edited, verified and cleaned the captured data prior to storing and analysis. The analysis is presented later in this study. The data presentation and analysis section elaborates in more detail on the participation rate of CEMS staff, which indirectly reflects on the engagement of people currently employed at CEMS.

Data presentation and analysis This section presents the outcome of the CEMS staff leadership survey reflecting on the perceptions, reflections and leadership evaluation of 254 staff members regarding 29 leadership performance areas of CEMS. The discussions are presented according to selected research constructs, namely tenure, gender, designation and age. A description of the sample that participated in the research is presented as follows. These profiles support the aim to better contextualise the outcome of the research.

Sample A total of 254 staff members out of the total number of 604 participated in the CEMS staff leadership perception survey. This sample consisted of staff members from all the three schools (namely School of Accounting Sciences, School of Economic Science and School of Management Sciences) and centres and bureaux. The response rate was 42.1%, which is regarded as exceptional for a web-based survey which usually results in a response rate of below 35% (Baruch and Holtom, 2008). Of the total number of CEMS staff participants who indicated their gender, 42.1% are male while 57.9% are female. The other construct is that of population, one being the historically disadvantaged individuals (HDIs), the Africans, coloureds and Indians, and the other being the non-HDIs, the whites or those of

Appendices 1 to 4 present the results of the research. The results are presented by tenure, age, designation and gender. Tenure Results show that those respondents who had been with the college for two years or less perceive the leadership inclination towards being shared as good (64.03). These respondents seemed to believe that their input was valued and was utilised in areas of leadership decision making. However, those respondents who had been employed in the college for three years or more seemed to perceive the collegeâ&#x20AC;&#x;s shared leadership nature to be average (57.13), meaning that they believed that they were being consulted but their input was not necessarily being utilised by the leadership (Appendix 1). Age Results by age showed that on average the respondents perceived the leadership to be promoting inclusivity with an average index of 60.75. The perception of the age groups 21 to 34 (62.76), 35 to 44 (62.07) and 55 years and older (60.72) of leadership being shared was good, meaning that they believed that their input was utilised when decisions were made. However, the same cannot be said for the age group 45 to 54 years (56.56) who perceived the nature of leadership as being shared as just average. These respondents felt that they were just being consulted (Appendix 2). Designation The results show that the HDIs rated leadership to be average, with a rating of 58.72. These individuals seemed to believe that the leadership was inclusive and they were

Ngambi and Nthoesane

being consulted on issues of leadership, but that their input was not necessarily used when decisions are made. On the other hand, the non-HDI scored relatively higher (62.88) than the HDI. Their perception was that they were being consulted and that their participation contributed in the college planning and decision making (Appendix 3). Gender Appendix 4 presents the results for the gender construct. Both males‟ and females‟ perception on the inclusivity of leadership was good, with the ratings of 60.97 and 60.59, respectively. Gliem and Gliem (2003: 88) note that “when using Likert-type scales it is imperative to calculate and report Cronbach‟s alpha coefficient for internal consistency reliability for any scales or subscales one may be using”. Cronbach's alpha was calculated to measure the internal consistency, that is, how closely related the set of questions are as a measure of shared leadership perception. A value of 0.884 on 29 items was found, which indicates high reliability and provides evidence that the items measure the underlying construct. In order to provide evidence that the scale used is one-dimensional, factor analysis was performed. Factor analysis is one method of measuring dimensionality; accordingly, the factor loading analysis was conducted using the principal component analysis. Six components were extracted from the analysis. The factors loaded high on the first component, providing evidence that the items measured the perception on shared leadership and decision making. Since the questionnaire used is a perception questionnaire (as it relies on the perception of individuals), it only has to adhere to face validity. According to Babbie and Mouton (2007) face validity (or logical validity) refers to the degree that particular empirical measures may or may not conform to our common agreements and our mental images concerning a particular concept. The questions were presented to an expert in order to provide input in the items included in the questionnaire. This method ensured that the questionnaire included the items relating to leadership qualities and therefore adhered to the face validity of the instrument. Given the results provided in Appendices 1 to 4, the next logical question was to ascertain whether there are any differences within groups. To achieve this, a nonparametric Kruskal-Wallis test (this test is appropriate for testing more than two categories) was performed for age and tenure constructs and a non-parametric MannWhitney U test (this test is appropriate for testing two categories) for gender and population constructs. The significance level was set at 0.05. With regard to age (Appendix 6) six responses were found to be statistically significant, and the observed trend was that the age group 21 to 34 years ranked the highest with age group 45 to 54 years being the lowest. With regard to tenure in

all the significant responses, the two years or less category ranked the highest with the exception of perception regarding questions „You are involved in decision decision-making affecting your position‟ and „You participate in decision making‟ where the 10 years or more group ranked the highest. The non-HDIs ranked the highest in the four significant responses under population and the only significant response, namely ability to have an impact on decision making, ranked the highest by the male gender. DISCUSSION The results seem to suggest that staff members who had been with the college for three years or more perceived the college leadership to be inclusive and consultative, but they did not necessarily believe that their input was utilised in decision making. Given that the college executive leadership had been in that position for just over a year when the research was undertaken, and that the leadership was bringing about many changes, this might in part explain the feelings of these staff members with regard to whether their inputs were utilised or not. Similarly, those who had been in the college for less than two years did feel that they were included in leadership decision making and that leadership consulted them, and therefore they would have future inputs in issues of leadership. For example, they ranked the highest in response to „Your views and participation in management issues are valued‟ and „Opportunities for advancement in management‟. Surprisingly, the perception regarding „Opportunities for personal leadership development‟ was found to be not significant, even though one would have expected that in an environment where staff feel that leadership is shared, there will also be significance with regard to leadership development. These results seem to be in contrast with that of Mok (2010) and Schuetz (1999), in that there is positive perception of leadership‟s attempt at being inclusive and sharing responsibilities. It is interesting to note that the perception with regard to teamwork across departments consistently scored the lowest on the index, by white staff members, who had been with the college for more than three years and were over the age of 45 years. This finding was found to be statistically significant (Appendix 5) by age construct; accordingly it can be concluded that members of the college above the age of 45 years, perceived that there was a lack of teamwork across departments. This perception could be attributed to the fact that these members of staff might have been used to working on their own with less interaction with other departments, most probably in competition with other departments. This research also contradicts the findings of Kovač et al. (2003) that staff involvement in decision-making processes with regard to university management issues

Afr. J. Bus. Manage.

was non-existent. This contradiction is reflected by the positive and significant responses by the non-HDI group on the following questions: „that you are empowered to influence the quality of decisions in your work‟; „That you participate in problem solving‟; „that your manager ensures that you are recognised and appreciated for your efforts‟ and „that your views and participation in management issues are valued‟. However, this involvement in decisions seems to be dominated by a white group which brings about a question of equity and transformation in the college, calling for more sensitivity in this regard. It is commendable to have a significant and a positive perception towards having „an ability to have an impact in decision making‟, because it indicates the desire for employees and willingness of leadership to share power and allow all in the college to contribute, a concept supported by AFT Higher Education (2010) and Olson (2009). It however is worrisome to observe that males (even though in the minority) are dominant in having an impact on decision making. This raises questions with regard to the role of women in decision making in the college. It is interesting to note that two of the three most senior leadership positions in the college are held by women. Overall, it can be concluded that staff perceived the leadership to be promoting a shared leadership governance principle. However, it was also found that not all aspects of leadership responsibilities were considered to be shared; this is supported by Miller (2001) and Olson (2009). The staff generally perceived that the leadership of the college was inclusive, and they felt part of the college and contributed in matters of leadership and governance. A similar conclusion was reached by Miller and Pope (2000), Wood (1993) and Miller et al. (2000). The results also seem to suggest that staff members who had been with the college for 3 to 10 years perceived their involvement in decision making affecting their job to be just average. Firstly, this observation supports the findings of Kovač et al. (2003), and secondly, this should serve to prompt the college management to pay more attention in improving the involvement of this group in the decision-making processes given that this group contributes about a third of the workforce in the college. Furthermore, the same group perceived that they received average recognition for their contribution; this perception can be linked directly to the ability to address the challenge of encouraging cooperation in leadership (DoE, 1997). When people feel that they are valued and recognised for their efforts they tend to be more willing to engage in a meaningful partnership, rather than just being compliant. It has been argued in this article that promoting shared leadership is necessary in alleviating the fears of staff (Buckingham, 2005), and that it bolsters leadership development; however, respondents who were 55 years and over did not seem to perceive that their fears were alleviated, even though this perception is not statistically significant. It is important for management to pay

attention to perceptions of this nature given the institutional memory and wisdom that resides within this group (55 years and over), as the college might like to retain these individuals for the role they can play in developing the younger generation of staff in the college, among other things. It can also be concluded that in the college those staff members who were 44 years and less perceived that there were opportunities for them to advance in management, more so than those above the age of 45 years (Appendix 5), so the college management might want to take note of this observation when planning for management development initiatives and activities. The results of this research highlight that with regard to leadership issues in the college, tenure is the important construct that needs attention (Appendix 5). Even though other constructs (age, gender and designation) have some significant results, tenure stands out as the construct that needs much attention from the college management, based on the significance of the results extracted from this construct. Conclusions The aim of the study on which this article is based was to explore whether the leadership of the College of Economic and Management Sciences at UNISA was perceived by staff as inclusive. A further aim was to report on the attitudes of staff with regard to being involved in decision making and teamwork as an indication of their desire for shared leadership. The outcome of the research reflects a level of staff appreciation for the college leadership‟s intention to be inclusive, and this is reflected across gender, race, population designation and tenure in the institution. This suggests that the college leadership is responding to the increasing need for staff participation in leadership and decision making. Even though the staff indicated that they did not believe that the leadership was being fully shared in the institution, one can conclude from the results reported in this article that there was generally a positive mood and a feeling that the leadership was acknowledging and engaging staff in college leadership matters. The research has also revealed that there is a need to pay attention to differences in age, tenure and race in developing strategies to address issues of governance and leadership in the college. More so, the results of this research highlight that with regard to leadership issues in the college, attention should be paid to tenure and to staff members above the age of 45 years. Accordingly, this renders a „one size fits all‟ strategy ineffective. This research has provided some insights into to how leadership inclusivity is perceived by staff. The findings in the foregoing are in line with those of Bowlers and Cooper (2009) and Dye and Garman (2006).

Ngambi and Nthoesane

Based on the findings of this research conducted at UNISA, one of the mega universities and the largest in Africa, it can be recommended that HEIs should be proactive in addressing issues of leadership by ensuring the participation of staff in leadership decision making and leadership advancement activities. This might enable more staff members to be exposed to leadership issues that should result in the enhancement of staff leadership skills, thus increasing the skills and intelligence pool of HEIs. It is this broadened pool that could enhance the institutions‟ competitiveness and innovativeness in providing winning leadership. Furthermore, the research provides information that can be utilised for decision making and strategic leadership formulation at HEIs. It is recommended that HEIs pay attention to leadership skills and competencies when appointing managers. Those who lack managerial skills may put the benefits gained through inclusive leadership at risk. Such individuals might think that they know it all and therefore do not see the need to involve staff in leadership issues. Thus it is important to expose all managers and staff in HEIs to appropriate training and development to equip them with the requisite leadership understanding and skills, thus empowering them to be able to participate meaningfully in distributed leadership. HEIs should also take note of the differences in age, tenure and race when involving staff in leadership matters, because of the differences found between these groups. It is therefore likely that different approaches should be used when addressing matters of leadership within these groups. It is also recommended that further studies be conducted to establish the depth of staff involvement in matters of leadership and to determine the benefits that arise from this symbiotic leadership relationship. Since this was baseline research using a unique research design based on an index methodology, implemented in the higher education environment in a South African college of Economic and Management Sciences, it limits any comparisons. Despite this shortcoming, the research model presented a constructive design to identify constructs affecting staff leadership perceptions regarding inclusivity. However, the study reported in this article did not attend to the cause of differences in the stated constructs. In addition, the study also focused on the college leadership which might differ from that of university-wide leadership. Lastly, the study did not differentiate between permanent staff and contract-based staff; and did not differentiate between academic and administrative staff. This article is aimed to prompt discussion among leaders of HEIs about the importance and relevance of sharing leadership in their respective institutions. In higher education, in South Africa as well as elsewhere, the success of effective leading is in making consultation part of leadership and in sharing leadership. Leadership does not lie within one person or group; effective leadership can and must be shared.

REFERENCES AFT Higher Education (2010). Shared governance in colleges and universities. Retrieved September, 27, 2010 from http://facultysenate.tamu.edu/. th Babbie E (2010). The practice of social research. (12 ed.) Belmont, USA: Gengage Learning. Babbie E, Mouton J (2007). The practice of social research. South Africa: Oxford Univ. Press. Baruch Y, Holtom BC (2008). Survey response rate levels and trends in organizational research. Hum. Rel. 61(8):1139-1160. Beaty D (2007). Control of the people, for the people, by the people: The case for participative management. Convergence 8(3):16-18. Boland J (2005). Student participation in shared governance: A means of advancing democratic values. Team Perfor. Manage. 11:199-217. Buckingham M (2005). What great managers do? Harv. Bus. Rev. 82(3):70-79. Charan R (2005). Ending the CEO succession crisis. Harv. Bus. Rev. 83(2):72-81. Darden M (2009). Beyond 2020: Envisioning the future of universities in America. Plymouth, UK: Rowman and Littlefield Education. Department of Education (DoE) (1997). White Paper 3: A programme for the transformation of Higher Education. General Notice 1196 of 1997, Pretoria: Government Printers. Dicocco J (2007). Reel leader: Huntsberry thrives in the front row. Builders and Leaders Magazine, Boston Univ. Manage. Spring: 1519. Gayle D, Tewarie B, White A Jr (2004). Governance in the twenty-firstcentury university: Approaches to effective leadership and strategic management. ASHE-ERIC Higher Education Report, 30(1). Retrieved September, 27, 2010 from http://wiley.com/WileyCDA/WileyTitle/productCd-078797174X.html. Gliem JA, Gliem RR (2003). Calculating, interpreting, and reporting Cronbach‟s Alpha Reliability Coefficient for Likert-Type Scales. Retrieved June, 20, 2011 from www.alumniosu.org/midwest/.../Gliem%20&%20Gliem--Done.pdf. Higher Education South Africa. (2010). Transformation challenges in governance, leadership and management in higher education. Retrieved September, 27, 2010, from www.cepd.org.za/. Kovač V, Ledić J, Rafajac B (2003). Academic staff participation in university governance: Internal responses to external quality demands. Tert. Educ. Manage. 9:215-232. Larsen I, Maassen P, Stensaker B (2009). Four basic dilemmas in university governance reform. High. Educ. Manage. Pol. 21(3):41-58. Lester N, Moffat A, Zobel J (2008). Efficient online index construction for text databases. ACM Transac. Datab. Syst., 33(3):1-33. Lumby J (2003). Distributed leadership in colleges: Leading or misleading. Educ. Manage. Admin. Lead 3:283-293. Menon M (2003). Student involvement in university governance: A need for negotiated educational aims? Tert. Educ. Manage. 9(3):233-246. Menon M (2005). Students' views regarding their participation in university governance: Implications for distributed leadership in higher education. Tert. Educ. Manage. 11:167-182. Miller M (2001). The college president's perspective on faculty involvement in governance. Retrieved January, 09, 2012, from www.eric.ed.gov/ERICWebPortal/recordDetail?accno=ED457755. Miller MT, Pope ML (2000). The provost's view of the value of faculty led decision-making. Retrieved January, 09, 2012, from www.eric.ed.gov/ERICWebPortal/recordDetail?accno=ED46702. Miller MT, McCormack TF, Pope ML (2000). Sharing authority in higher education: Faculty involvement in governance. Retrieved January, 09, 2012, from www.eric.ed.gov/ERICWebPortal/ recordDetail?accno=ED447764. Moses I (2006). Global trends in university governance. Thai-Australian Workshop on University Governance. Bangkok, 22-23, June, 2006. Olson G (2009). Exactly what is 'shared governance'?. Retrieved September, 09, 2010, from http://chronicle.com. Pearce CL, Manz CC, Sims HP Jr (2009). Is shared leadership the key to team success? Organ. Dyn. 38(3):234-238. Schuetz P (1999). Shared governance in community colleges. Retrieved September, 09, 2010, from www.ericdigests.org/2000-

Afr. J. Bus. Manage.

2/shared.htm. Simplicio JSC (2006). Shared governance: An analysis of power on the modern university campus from the perspective of an administrator. Education 126(4):763-768. University of Arizona Shared Governance Review Committee (2008). Implementing shared governance at the university of Arizona. Prepared for University wide committee with Shared Governance participation, Tucson, Arizona, May 16. Retrieved September, 09, 2010, from http://facultygovernance.arizona.edu/sites/default/files/ShGovBestPractices-4-17-2003.pdf. University of Oxford (2006). White paper on university governance. Retrieved September, 09, 2010, from http://www.admin.ox.ac.uk/gwp/whitepaper.pdf.

University of Wisconsin River Fall. n/d (2011). Inclusivity, global literacy, and leadership. Retrieved September, 08, 2011, from http://www.uwrf.edu/Sustain/Inclusivity.cfm. Van der Heide A (2007). Learning and leadership development: "I learnt a lot". Conver. 8(3):24-27. Wood D (1993). Faculty, student, and support staff participation in College Governance: An evaluation. Paper presented at the Annual Conference of the Association of Canadian Community Colleges. Edmunton, Alberta, Canada, June 6-9.

Ngambi and Nthoesane

Appendix 1. Shared leadership perception averages by tenure.

Research focus area

Tenure 2 years or 10 years less 3-10 years or more Mean

Mean

Total Mean

That employees are treated equally and with respect

59.35

53.25

54.01

55.94

That equal career and leadership opportunities are provided for men and women That you are empowered to influence the quality of decisions in your work That you are involved in decision-making affecting your position/work That you have fair opportunities for leadership advancement in CEMS That you participate in problem solving

67.99

61.04

60.19

63.58

66.12

58.44

66.36

63.96

58.88

48.7

59.88

56.23

61.68

56.49

52.16

57.26

62.15

52.92

62.96

59.72

That you receive appropriate recognition of your contributions

64.72

55.86

57.74

That your manager/supervisor ensures that you are recognised and appreciated for your efforts That your views and participation in management issues are valued The team spirit in CEMS leadership

66.59

61.69

62.96

64.06

64.02

56.49

64.2

61.89

63.32

54.87

58.95

59.53

The team spirit in your direct work environment, including management related issues Your work responsibilities are reasonable

64.02

53.25

64.2

60.94

71.26

56.82

61.73

64.15

Ability to have an impact in decision making

62.38

56.49

57.72

59.25

Opportunities for advancement in management

61.45

52.6

48.15

54.81

Opportunities for personal leadership development

70.56

65.26

64.81

67.26

Receive feedback on issues of leadership and governance

62.15

52.27

54.94

57.08

Receive supervision for leadership development

66.12

54.22

61.42

61.23

Teamwork within CEMS

60.98

52.27

57.72

57.45

Teamwork within department

63.79

56.17

64.2

61.7

Teamwork across departments

52.1

44.48

47.53

48.49

Valuing diversity

61.21

55.52

55.56

57.83

CEMS cares about people

66.12

58.77

58.02

61.51

Males and females are provided with equal career opportunities at CEMS Caring about employees

63.79

63.31

56.79

61.51

65.19

59.09

56.17

60.66

Communication efficiency from CEMS leadership

65.19

52.92

52.16

57.64

Openness and honesty in leadership

64.02

56.17

56.48

59.43

Serving as ethical role model(s)

64.72

55.52

56.79

59.62

Setting direction and goals

71.26

62.99

61.73

65.94

Trustworthiness

65.65

58.77

59.26

61.7

AVERAGE (TOTAL)

64.03

55.89

58.38

59.93

Afr. J. Bus. Manage.

Appendix 2. Shared leadership perception averages by age.

Research focus area That employees are treated equally and with respect That equal career and leadership opportunities are provided for men and women That you are empowered to influence the quality of decisions in your work That you are involved in decision-making affecting your position/work That you have fair opportunities for leadership advancement in CEMS That you participate in problem solving That your manager/supervisor ensures that you are recognised and appreciated for your efforts That your views and participation in management issues are valued The team spirit in CEMS leadership The team spirit in your direct work environment, including management related issues. Your work responsibilities are reasonable Ability to have an impact in decision-making Opportunities for advancement in management Opportunities for personal leadership development Receive feedback on issues of leadership and governance Receive supervision for leadership development Teamwork within CEMS Teamwork within department Teamwork across departments Valuing diversity CEMS cares about people Males and females are provided with equal career opportunities at CEMS Caring about employees Communication efficiency from CEMS leadership Keeping you informed Openness and honesty in leadership Serving as ethical role model(s) Setting direction and goals Trustworthiness AVERAGE (TOTAL)

Age 45-54 55 years years or older Mean Mean 56.56 55.83

21-34 years Mean 56.76

35-44 years Mean 58.08

65.59

64.23

62.7

63.33

64.21

63.82

63.46

64.34

67.5

64.32

57.31

56.56

60.83

56.74

60.29

61.92

54.51

57.99

60.88 65.88

60.38 63.46

59.84 62.3

61.67 64.17

60.58 64.11

61.76

64.23

59.02

65.83

62.24

63.53 63.24

61.92 59.62

52.87 61.48

61.67 64.17

60.17 61.93

69.71 57.65 59.71

65 64.23 60

58.61 56.15 49.18

65 63.33 49.17

65.04 59.75 55.81

70.88

68.85

63.11

67.5

67.95

60.88

56.92

52.46

59.17

57.47

63.82

59.62

58.2

66.67

61.62

60 62.35 53.24 62.35 66.47 63.24

61.92 63.85 51.54 58.85 63.46 63.85

53.28 59.43 43.03 53.69 55.74 59.02

59.17 68.33 46.67 57.5 63.33 58.33

58.71 62.76 49.38 58.61 62.55 61.72

65.59 63.24

61.54 61.15

56.56 50.41

60.83 56.67

61.62 58.61

63.82 62.06 62.06 70.88 65.29 62.76

60.77 63.46 65.77 70 64.62 62.07

52.05 55.33 56.15 59.84 57.79 56.56

55.83 60.83 58.33 65.83 63.33 60.72

59.02 60.58 61.1 67.22 62.97 60.75

Total Mean 56.95

Ngambi and Nthoesane

Appendix 3. Shared leadership perception averages by designation.

Designation Research focus area That employees are treated equally and with respect

Non-HDI

HDI

Total

Mean

61.09

51.74

57.57

66.9

63.08

65.46

60.39

53.78

57.89

69.19

59.01

65.35

60.74

53.49

59.15

56.4

58.11

That you participate in problem solving

63.91

56.4

61.07

That you receive appropriate recognition of your contributions

61.44

54.36

58.77

That your manager/supervisor ensures that you are recognised and appreciated for your efforts That your views and participation in management issues are valued

67.43

58.72

64.14

66.73

56.98

63.05

The team spirit in CEMS in CEMS leadership

62.15

60.76

61.62

The team spirit in your direct work environment, including management related issues Your work responsibilities are reasonable

65.85

57.56

62.72

66.37

64.53

65.68

Ability to have an impact in decision making

59.68

63.95

61.29

54.4

58.14

55.81

Opportunities for personal leadership development

70.77

64.24

68.31

Receive feedback on issues of leadership and governance

59.68

57.27

58.77

Receive supervision for leadership development

64.08

59.88

62.5

Teamwork within CEMS

60.39

58.14

59.54

Teamwork within department

66.2

58.72

63.38

Teamwork across departments

49.82

51.16

50.33

Valuing diversity

60.56

57.27

59.32

Males and females are provided with equal career opportunities at CEMS Caring about employees

64.08

61.63

63.16

64.96

57.85

62.28

Communication efficiency from CEMS leadership

59.68

60.47

59.98

Openness and honesty in leadership

63.2

58.14

61.29

Serving as ethical role model(s)

61.8

60.76

61.4

Setting direction and goals

68.13

68.6

68.31

Trustworthiness

64.61

59.88

62.83

AVERAGE (TOTAL)

62.88

58.72

61.31

That equal career and leadership opportunities are provided for men and women That fair and equal opportunities are available to air grievances in a safe environment without fear of retribution That you are empowered to influence the quality of decisions in your work That you are involved in decision-making affecting your position/work That you have fair opportunities for leadership advancement in CEMS

Opportunities for advancement in management

Afr. J. Bus. Manage.

Appendix 4. Shared leadership perception averages by gender.

Ngambi and Nthoesane

Appendix 5. Kruskal Wallis statistical analysis for age and tenure.

Test Statistics a,b.cAge ** significance at 0.05 That employees are treated equally and with respect That equal career and leadership opportunities are provided for men and women That you are empowered to influence the quality of decisions in your work That you are involved in decision-making affecting your position/work That you have fair opportunities for leadership advancement in CEMS That you participate in problem solving That you receive appropriate recognition for your contributions That your manager/supervisor ensures that you are recognised and appreciated for your efforts That your views and participation in management issues are valued The team spirit in CEMS leadership The team spirit in your direct work environment, including management related issues Your work responsibilities are reasonable Ability to have an impact in decision making Opportunities for advancement in management Opportunities for personal leadership development Receive feedback on issues of leadership and governance. Receive supervision for leadership development Teamwork within CEMS Teamwork within department Teamwork across departments Valuing diversity CEMS cares about people Males and females are provided with equal career opportunities at CEMS Caring about employees Communication efficiency from CEMS leadership Openness and honesty in leadership Serving as ethical role model(s) Setting direction and goals Trustworthiness a. Kruskal Wallis test. b. Grouping variable: Age. c. Grouping variable: Tenure

Chisquare 0.199 0.592 1.146 1.156 7.421 0.186 3.031 1.310 2.492 11.485 0.839 10.897 4.916 10.893 4.904 6.041 6.455 5.893 2.439 9.130 7.054 7.365 2.389 6.057 11.177 4.291 6.022 8.775 5.804

df 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3

Asymp. Sig. 0.978 0.898 0.766 0.764 0.060 0.980 0.387 0.727 0.477 0.009** 0.840 0.012** 0.178 0.012** 0.179 0.110 0.091 0.117 0.486 0.028** 0.070 0.061 0.496 0.109 0.011** 0.232 0.111 0.032** 0.122

Tenure Chisquare 3.226 5.969 3.459 8.836 6.144 9.755 12.924 2.178 6.792 6.842 7.600 19.942 2.636 13.313 4.554 10.199 11.815 8.159 4.604 6.299 4.874 7.410 4.158 7.254 14.787 6.201 9.379 11.358 5.397

df 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Asymp. Sig. 0.199 0.051 0.177 0.012** 0.046** 0.008** 0.002** 0.336 0.034** 0.033** 0.022** 0.000** 0.268 0.001** 0.103 0.006** 0.003** 0.017** 0.100 0.043** 0.087 0.025** 0.125 0.027** 0.001** 0.045** 0.009** 0.003** 0.067

Afr. J. Bus. Manage.

Appendix 6. Mann-Whitney U statistical analysis for gender and designation.

Test statistics d,e ** significance at 0.05 That employees are treated equally and with respect

Designation MannWilcoxon Asym Sig. Z Whitney U W (2-tailed) 5219.000 8960.000 -1.920 0.055

That equal career and leadership opportunities are provided for men and women

5690.000

9431.000 -0.925

That you are empowered to influence the quality of decisions in your work That you are involved in decision-making affecting your position/work That you have fair opportunities for leadership advancement in CEMS That you participate in problem solving That you receive appropriate recognition for your contributions

4996.000 5299.500 5907.000 5123.000 5322.000

8737.000 9040.500 9648.000 8864.000 9063.000

That your manager/supervisor ensures that you are recognised and appreciated for your efforts

5097.500

Gender MannAsymp. Sig. Wilcoxon W Z Whitney U (2-tailed) 6920.000 12380.000 -0.591 0.554

0.355

6971.000

12431.000

-0.506

0.613

-2.533 -1.765 -0.435 -2.211 -1.732

0.011** 0.078 0.663 0.027** 0.083

7158.500 6839.500 6597.000 6483.500 6709.500

12618.500 16569.500 12057.000 16213.500 16439.500

-0.141 -0.756 -1.230 -1.483 -1.017

0.888 0.450 0.219 0.138 0.309

8838.500 -2.236

0.025**

6917.500

16647.500

-0.615

0.539

That your views and participation in management issues are valued The team spirit in CEMS leadership

5161.000 8902.000 -2.141 5868.500 16021.500 -0.526

0.032** 0.599

6780.500 6838.000

16510.500 12298.000

-0.898 -0.767

0.369 0.443

The team spirit in your direct work environment, including management related issues

5282.500

9023.500 -1.831

0.067

6421.000

16151.000

-1.582

0.114

Your work responsibilities are reasonable Ability to have an impact in decision making Opportunities for advancement in management Opportunities for personal leadership development Receive feedback on issues of leadership and governance. Receive supervision for leadership development Teamwork within CEMS Teamwork within department Teamwork across departments Valuing diversity CEMS cares about people Males and females are provided with equal career opportunities at CEMS Caring about employees Communication efficiency from CEMS leadership Openness and honesty in leadership

5892.500 5391.000 5540.500 5338.500 5969.500 5574.000 5954.500 5370.500 5699.500 6008.000 5790.500 6025.000 5225.500 5954.500 5565.500

9633.500 15544.000 15693.500 9079.500 9710.500 9315.000 16107.500 9111.500 15852.500 9749.000 9531.500 9766.000 8966.500 16107.500 9306.500

0.618 0.107 0.217 0.084 0.762 0.232 0.735 0.103 0.374 0.829 0.481 0.859 0.052 0.739 0.236

6698.500 6237.500 6272.000 7198.000 7101.000 6988.000 6814.000 6609.000 7159.500 7148.500 6658.000 7058.500 7203.500 6883.000 6761.000

16428.500 15967.500 11732.000 12658.000 16831.000 16718.000 12274.000 16339.000 12619.500 16878.500 12118.000 12518.500 12663.500 12343.000 16491.000

-1.094 -1.968 -1.858 -0.060 -0.250 -0.479 -0.823 -1.214 -0.133 -0.156 -1.131 -0.329 -0.048 -0.673 -0.908

0.274 0.049** 0.063 0.952 0.802 0.632 0.410 0.225 0.894 0.876 0.258 0.742 0.962 0.501 0.364

-0.499 -1.610 -1.234 -1.728 -0.303 -1.196 -0.339 -1.632 -0.888 -0.216 -0.704 -0.177 -1.941 -0.333 -1.184

Ngambi and Nthoesane

Appendix 6. Contd.

Serving as ethical role model(s) Setting direction and goals Trustworthiness d. Grouping variable: Designation. e. Grouping variable: Gender.

6098.000 16251.000 -0.018 5740.000 15893.000 -0.839 5755.000 9496.000 -0.773

0.986 0.401 0.440

6981.500 7193.000 7119.000

12441.500 12653.000 12579.000

-0.489 -0.071 -0.214

0.625 0.943 0.831

Full Length Research Paper

Establishment of indicators for early warning system on tilapia trade Zhang, Peng1,2, Yuan, Yong-ming1,2* and Kpundeh, Mathew Didlyn1,2 1

Wuxi Fisheries College, Nanjing Agricultural University, Wuxi 214081, P.R. China. Key Laboratory of Freshwater Fisheries and Germplasm Resources Utilization, Ministry of Agriculture, Freshwater Fisheries Research Center of Chinese Academy of Fishery Sciences, Wuxi 214081,P.R.China.

Accepted 31 December, 2012

With the development of fisheries and aquaculture, tilapia has become one of the closest species of aquatic products in contact with the international market. There are many factors which affect tilapia international trade. These factors are ultimately reflected in the volume and price of tilapia trade. In order to ensure the sustainable development of tilapia international trade, early warning system will play an integral role in forecasting the trade trends. Besides，，the indicators system is the foundation to establishing early warning system. This paper summarizes different system indicators for early warning on tilapia import and export. As our case study, we selected 2 indicators, total export value and policy factor as warning situation's indicator. The total export value depends on export volume and price growth rate as warning promise index. The safety warning coefficient R, alarm limits, and the scope of the R reflect the different level of tilapia culture, analysis and prediction of changes in tilapia trading system. The indicators established in this study will give an insight to farmers, importers, and exporters as well as would be investors on the trend and dynamics involved in tilapia production and trading system. Key words: Tilapia trade, early warning system, indicators.

INTRODUCTION Tilapia (Oreochromis niloticus, Oreochromis mossambica) is native to Africa, but has been introduced in many countries around the world in recent years. According to Gupta and Acosta (2004), approximately 85 countries farm tilapia and about 98% of all farmed product is grown outside its native habitat. Tilapia is disease-resistant, reproduces easily, feeds on a wide variety of food and tolerates poor water quality with low dissolved oxygen levels. Most will grow in brackish water and some will adapt to full strength seawater. These characteristics make tilapia suitable for culture in most developing countries (ATA, 1998). Owing to these environmental friendly qualities of this species, many farmers are culturing it, and in recent years, have gained a wider consumer’s acceptance. Maribel (2002)’s paper reports that, comercial production has become popular in many countries

*Corresponding author. E-mail: yuan@ffrc.cn. Tel: +86-51085569021. Fax: +86-510-85550245.

around the world and traditional markets in Asia and Africa have expanded to many countries within America and Europe. Once considered a lowly, muddy-tasting fish grown in third world countries, tilapia is now farmed in dozens of countries (in ponds, tanks and cages) and subjected to rigid quality-control standards. According to the United Nations Food and Agriculture Organization (FAO) fishery statistics data (2010), today the most important producing country for tilapia is China, and the most important market for tilapia is the United States. Currently, China is supplying more tilapia to the US market than any other country (Carel et al., 2007; FAO 2012). According to China Customs' data (2012), in 2011, China exported some 330,300 tonnes of round (whole) fresh and frozen tilapia to the US, which was 32% more than that exported in 2008 (224,400 tonnes). China has quickly become a major supplier to the international market. This could increase the trade in tilapia, but it may also pose a threat to other producers because China can maintain low production costs and may be expected to undercut the price of other

Peng et al.

producers; in which case may cause other countries to resist the China's tilapia products (Tetreault, 2006). Due to this dispute and some other factors including the lack of constructive communication about sensitive issues, there was a considerable mistrust between the parties involved. Therefore, we need to identify changes in the market information timely (Paquotte and Lem, 2006; Jan et al., 2006). The purpose of this paper is to build a workable model useful in tilapia trading system. Function of indicators system establishment There were a lot of influencing factors which obviously could have affected the tilapia import and export trade. Owing to these factors, there was a need to have an unbiased and as far as possible, objective information about the actual conditions and development. But the question is: What would be the significance of such factors to the tilapia culture industry? Well this would lead to the elimination or reduction of industrial risks as well as aid in investment decision and prudent allocation of limited resources. 1. Early signals of recession or of recovery are of great interest to business minded people, the policy makers, research scientists and investors. Because such decision makers consider turning points in the aggregate level of economic activity to be of special importance, considerable effort has been spent to forecast on the occurrence of these turns (Jeong, 2003). A reasonable way to forecast these turning points is to search for sectors of the economy that tend to lead the overall economy, and then observe the different risk indicators of the import and export trade; which would suggest that, the overall economy will soon turn (Figure 1). 2. If the business-people, policy makers and investors catch the market changing information timely, they would be able to devise a comprehensive strategy that takes into account the needs and limitations of each sector or change the investment strategy according to their needs (Francisco et al., 2010; Christiaan et al., 2011). 3. In addition to the above purpose of establishing the indicators of early warning system is to improve the international competitiveness of China's tilapia trade which in turn will improve the efficiency of their culture industry, increase capital utilization rate and ensure the national interests, which will ultimately, promote the sustainable development of China's tilapia industry.

desirability of the fisheries. Besides the above, these must be simple, easily achieved, not redundant, should have variation and historical data (Bellows, 1994; Qiu et al., 2007). Indicators can be considered to be variable, permanent, signal, statistic, measurement, medium, or experiential model that is concise and potent for complicated systems with a variety of functions such as reflection, estimation, premonition and instruction (Rigby et al., 2001). The different indicators systems based on this concept can be used to inspect and evaluate the suitability of the early warning system that can improve the sustainable development of the industry. Bellows (1994) suggested that setting up the indicators system must include the entire process from motive, designing, to final application and related feedback. The contents of the different indicator systems differ from each other, as in different countries, regions, and developmental stages, which inform their great subjectivity. Establishment of indicators The clear strategy of profit maximization is considered as an assessment of the trade enterprise's financial results, adjustment of the internal business-processes, effective system of personnel motivation and developed informational base which are the main factors that help the enterprise to keep its leading positions at the market and have a positive price in the future (Barantseva et al., 2010). The risk of future major accidents cannot be measured directly. It is possible to evaluate past accidents and get a picture of the historical level. Nevertheless, within a limited sector, such as export to USA and Mexico, limited types of products, such as frozen fillets, are far too small to be able to draw useful conclusions from when it comes to loss of profit due to major risk in the tilapia international trade (Peter et al., 2002). Therefore, we need to establish improved and credible indicator systems for early determination of cause-effect relation between indicators for logical system of warning. Attaining a relatively high level of control requires frequent registrations. Such frequent registrations will affect the amount of data possibly gained by a given risk indicator, which has to be sufficiently large to avoid problems with statistical significance. The risk indicators or databases might not place extra registration burden on the operating company. But this has to be balanced against the selection of risk indicators that show a strong relationship and must meet the scientific criteria of validity and reliability.

Selection criteria for indicators Regarding the selection criterion for indicators, the Minister of Agriculture, Fisheries and Food (MAFF 2000) of England/Britain requires that it should have policy relevance, analytical soundness, measurability, appropriate aggregation level, and is representative of social

Indicators system Sometimes, the misconception is adopted that there is a fully objective way to express the risk levels through a set of indicators (David and Nicole, 2000). This implies that,

Afr. J. Bus. Manage.

thousand tonnes

400 300 200 100 0 2000

2002

2004

2006

2008

2010

2012

year Figure 1. Tilapia trading volume (thousand tonnes) of China.

expressing the 'true' risk level is just a matter of finding the right indicators. However, this is a misconception. There are no single indicators that may express all the relevant aspects of price, production and safety (Robert and Qiang, 2003). There will always be a need for parallel illustrations to incorporate several approaches. However, this paper focuses on statistical indicators, and to some extent our basic principles as stated above may be misinterpreted. Yet, we would like to stress that, triangulation; a broader concept, is our fundamental approach in the project. The different types of indicators that we designed are given in Figure 2. The major indicator that may influence the world tilapia trade is total export value, which also depends on export volume and price. Export volume is affected by the export taxes, processing factories' capacity, tilapia farms' inputs, Gross Domestic Product (GDP) of the importing countries, Foreign Direct Investment (FDI), Tilapia Retail Price index (RPI), Revealed Comparative Advantage index (RCA), inflation rate, saving amount of urban and rural residents, and government inputs. Price growth rate is affected by exchange rate, product quality, trading volume and natural factors. The export taxes and governmentâ&#x20AC;&#x2122;s inputs are subjected to policy implications; when government inputs are high and export taxes are low, it will be beneficial to export. Manufacturersâ&#x20AC;&#x2122; capacity and tilapia farms' inputs will reflect the input of the tilapia culture industry; and directly affect the export volume of the tilapia trade. Inflation rate, GDP of the importing countries, tilapia RPI and saving amount of urban and rural residents can reflect the relationship between marketing supply and demand of tilapia global trade. In general, with more demand in the international tilapia market, the greater the export supply. In addition, the tilapia trade is a business. It must be related to finance, and foreign direct investment and inflation rate; when these are combined, they will reflect the financial factors that affect its export volume. Foreign inflation may cause

the tilapia international price to rise; thereby affecting exports. The revealed comparative advantage is an index used in international economics for calculating the relative advantage or disadvantage of a certain country in a certain class of goods or services as evidenced by trade flows. This revealed comparative advantage index mainly reflects the tilapia trade in the area of Chinaâ&#x20AC;&#x2122;s competitiveness in global tilapia market. We have also designed another warning promise index--price growth rate, which is explained by exchange rate, tariff, product quality, trading volume and natural factors. Tariff and trading volume would directly affect the trading price; if the supply cannot meet the demand of international tilapia market or high tariff, the trading price would be higher. In addition, exchange rate, product quality and natural factors can also affect the price indirectly. For instance, high exchange rate may lead to relatively high domestic production costs; thereby increasing the price in relation to other competing countries. Natural factors may impact the price perpetually; cold weather in the first half of the year and disease in the second half of the year are lead cause of the low production in recent years and have concomitant timely change in price. Furthermore, we chose policy factor as a warning situation indicator; this factor played a key role in China's tilapia import and export. Subsides, import and export quotas, as policy factor, directly affected the trading volume and price. Security or economic policy-decisionmaking and institutional security situation, as a policy factor reflect the situation in China and inform the pace of tilapia industrial development and industrial policy coordination. Formulation of composite indices Depending on a single indicator for identification and prediction of turning points is often not prudent (Burns,

Peng et al.

Figure 2. System indicators for early warning of tilapia trade.

1961); since no single leading indicator is perfect. The compilation of groups of indicators into composite indices is necessary and imperative in that respect. The composite approach has being proven to be more stable in determining turning point dates on an ongoing basis (Niemira and Klein, 1994). A typical picture one can envisage from a single indicator is unpredictable, as some will show an increase; some may show a decreasing trend while others will usually fall within the prediction interval (middle part in the diagrams); and as such no significant trend can be concluded. It is therefore an advantage to have an overall indicator that can balance the effects of the individual indicators in order to identify the overall development. One might think that the overall indicator always would fall within the predicted interval, but this is not the case. This is due to the large differences in weighted values

applied to the different categories, which implies that, some categories will dominate over others. Warning situationâ&#x20AC;&#x2122;s indicator selected for export value (Y) and the warning promise index (X) used to build the structural equation for the model are given below:

Y = X 1 â&#x2039;&#x2026; [P â&#x2039;&#x2026; (X

+ 1)]

Where the following notations are used: Y; total export value, X1; export volume, X2; price growth rate and P the average price in the previous year. To establish the warning promise indices of the VAR model, the first step is to determine the model's endogenous and exogenous variables. Export volume and price growth rate estimating equations are done using the

Afr. J. Bus. Manage.

econometrics software –EVIEWS, as follows:

X 1 = c + b 1N 1 + ⋅ ⋅ ⋅ + b 9N 9 + e t

RCA index,

RCA

X ij X i Wj W

Where, N1=Export drawback. N2 =Processing factories' fixed asset income N3 =Gross tilapia farms' fixed asset N4 =GDP of the importing countries N5 =FDI N6 =Tilapia retail price index N7 =Inflation rate N8= saving amount of urban and rural residents N9 =Aquatic fiscal expenditure b1, b2, b3, b4, b5, b6, b7, b8, b9 respectively are the right weight for each indicator.

Where i stand for the particular country, j: is the product's category. Xij: is the export value of the country's product k (for example, frozen tilapia, fresh tilapia or frozen tilapia filets) Xi: is the total tilapia export value of the country in question. W j: is the total tilapia export value of product k in the whole world W: is the total tilapia export value of the whole world

Regression equation for the above mode is:

Where IR= inflation rate P1= current average price level P0= the price level a year ago

T=Y0+k0f+k1Q1+k2Q2+……+kmQm Where f is the product price index, Qi (i = 0,1, ..., m) representative for exchange rate, tariff, product quality, trading volume and natural factors. Regression coefficients ki (i = 0,1, ..., m) for each variable. Security early warning coefficient is given as:

SC =

Ti − Tj −1. ∆ XN

Where, SC is the safety warning coefficient; Ti and Tj, respectively are representative of the warning year and profit growth rate in the base year we have designed; ∆X compared with the base year, the number of products export increase (∆X> 0); N is the whole tilapia production in the base year. Alert level was set according to the size of the interval of R. when R ≥ 0, the alert level is set as a non-alert; when -1 ≤ R <0, the alert level holds; when R <-1, the alert level is set to be given a higher priority.

GDP = C + I + G + (X - M) Where, C= Private consumption I = Gross investment G= Government spending X= Exports M= Imports The revealed comparative advantage was first proposed by Balassa in 1965. It reflects a country's exports of goods from certain types of providers of proportion size of export product relative to the proportion of such goods in world trade (Hua and Zheng, 2011; Wu, 2012).

Inflation rate

IR =

P1- P0 × 100% P0

Designing risk early warning system The process of designing risk early warning systems needs to focus on a variety of sources of change. International competitiveness and price growth rate showed a significant upward trend, but also directly reflected the changes in product supply-demand relations. Therefore, the economic risks warning will select the price change rate as the warning promise indicators to be observed, and to reflect the trend curve. Choose the time coordinates as abscissa, let Σt = 0 and the trend model ∆x= a + bt + ct2, standard error is calculated by the following equation: n

∑(xt −∆xt )2 t =1

n−3

t =1

∑x2t −a∑xt −b∑txt −c∑t2xt n−3

Where ∆x stands for the change in forecast prices over time. Analyzing the effects of capital operation and natural factors to the industry’s profitability in short-term provides a theoretical basis for predicting the near future, longterm competitiveness and profit trends. Policy factors involve the use of the Delphi Method that can make you to arrive at an average score which shows the average level of policy implication. Conclusion This study has developed the indicators of the early warning system for forecasting tilapia import and export

Peng et al.

trade in China. Because there is no individual perfect measure for warning nowadays, we have attempted to discuss the construction of indicators which hinges on what aspect of competition it sought to study. Thus, various measures of import, and export or overall competitiveness have been identified, together with their respective fields of application. Furthermore, for one and the same definition, a number of different measures of competitiveness may be advanced. Their quality depends on the components used for their construction; the geographical coverage and the level of aggregation of markets and competitors. Despite the serious problems posed by construction and aggregation, indicators of competitiveness can be a useful analytical tool in breaking down and analyzing changes in the major countries' exposure to competition. This has helped to analyze the risk brought to China by the newly-industrializing countries of South-east Asia as competitors on the world market. Moreover, for a number of countries, long-term movements in these indicators of competitiveness shed light on trends in trade volumes, both directly by pinpointing causes for demand shifts, and indirectly by indicating changing patterns of profitability in the tradable goods sectors. We have presented a new indicators system which offers a convenient method to analyze the risk of the tilapia international trading system. Also, amalgamating the whole system would allow the government manager to identify those sustainability factors with greater strengths in domestic country. These aspects made it possible to establish the policies needed to preserve and encourage the international investors and culture farmers. ACKNOWLEDGEMENTS This work was supported by China Agriculture Research System (CARS-49). The Authors are thankful to farmers and all the researchers who helped in the collection of our data. We are also grateful to all our reviewers. REFERENCES American Tilapia Association (ATA) (1998). Introduction to tilapia culture. International Centre for Aquaculture and Aquatic Environments Swingle Hall Auburn University, Alabama. Barantseva S, Lesnikova J (2010). Balanced system of indicators as an instrument of the strategic management of the trade enterprise profits. Adv. Sci. J. 2:89-92.

Bellows B (1994). SANREM Research Report. Proceedings of the Indicators of Sustainability Conference and Workshop pp.1-95. Burns AF (1961). New facts on business cycles. In: Moore GH (Ed.), Business Cycle Indicators, NBER, New York 1:36. Carel L, Budry B, Joy C, Curtis J (2007). U.S. Import demand for tilapia from selected FTAA countries. Farm & Business: the journal of the Caribbean Agro-Economic Society (CAES). 7(1):139-156. Christiaan H, Dick VD, Patrick JFG (2011). Real-time macroeconomic forecasting with leading indicators: An empirical comparison. Int. J. Forecasting 27:466-481. David JP, Nicole AG (2000). A framework for the economic evaluation and selection of sustainability indicators in agriculture. Ecological Economics. 33:135-149 FAO (2010). Tilapia-january 2010-china. http://www.globefish.org/tilapiajanuary-2010-china.html FAO (2012). February, http://www.globefish.org/tilapia-february2012.html Francisco JB, Rafael C, Mercedes G, Macarena LO, Fátima P (2010). Goal programming synthetic indicators: an application for sustainable tourism in Andalusian coastal counties. Ecol. Econ. 69:2158-2172 Gupta MV, Acosta BO (2004). A review of global tilapia farming practices; Aquaculture Asia pp.7-12, 16. Hua XH, Zheng XD (2011). Assessment of cross-strait agricultural product trade indicators. Asia-Pacific Econ. Rev. 1:75-79 Jan EV, Terje A, Torleif H, Jorun S, Odd JT (2006). Major hazard risk indicators for monitoring of trends in the Norwegian offshore petroleum sector. Reliabil. Eng. Syst. Saf. 91:778-791 Jeong GC (2003). Developing an economic indicator system (a forecasting technique) for the hotel industry. Hospital. Manag. 22:147-159 Maribel RL (2002). Strategy for the export of tilapia in Cuba. Fisheries training programme, the United Nations University. Ministry of Agriculture Fisheries and Food (MAFF) (2000). Towards sustainable Agriculture. A Pilot Set of Indicators. MAFF Publications, London. Niemira MP, Klein PA (1994). Forecasting Financial and Economic Cycles. p.6. Paquotte P, Lem A (2006). Seafood markets and trade: A global perspective and an overview of EU Mediterranean countries. Options Méditerranéennes B(62):43-55. Peter B, Benoît C, Anton F, Ingrid KN, Davide P, Walter S, Josef S, Volker G (2002). Developing indicators for the sustainable management of mountain forests using a modeling approach. Forest Policy Econ. 4:113-123. Qiu HJ, Zhu WB, Wang HB, Cheng X (2007). Analysis and design of agricultural sustainability indicators system. Agric. Sci. China 6:475486. Rigby D, Woodhouse P, Young T, Burton M (2001). Constructing a farm level indicator of sustainable agricultural practice. Ecol. Econ 39:463478. Robert M, Qiang X (2003). Forecasting the New York state economy: the coincident and leading indicators approach. Int. J. Forecasting 19:701-713. Tetreault I (2006). Farmed Tilapia. Seafood Watch Final Report, May 16. Wu JY (2012). Competition or Complementarily? An Empirical Study on Economic Relationship among“BRICS”. Int. Bus. 2:21-30.

African Journal of Business Management Vol. 7(1), 78-84, 7 January, 2013 Available online at http://www.academicjournals.org/AJBM DOI: 10.5897/AJBM11.123 ISSN 1993-8233 ÂŠ2013 Academic Journals

Full Length Research Paper

Being affected from crisis: Case of furniture industry in Turkey Mehmet Colak Mugla University, Faculty of Technology, Kotekli, 48000, Mugla, Turkey. E-mail: cmehmet@mu.edu.tr. Accepted 31 March, 2011

The objective of the businesses and assets of an open system is to continue to adapt to the environment; and their ability to adjust and be affected by the environment and the structure of the subsystems in line with expectations depends on their response to change. Constant change in organizational environment and organizations that cannot take the necessary measures against environmental influences and balance lead to the creation of hazards. Achievements of businesses, made possible largely by seeing and handling of danger in advance, depend on assessments. Businesses and environment influence entail various threats and crises which organizations may face. Due to the devastating effects of crisis, coping skill of managers, in terms of organization is essential. To manage crisis, problems need to be identified in advance, as a way to prevent them from occurring; rather than to take steps to limit their consequences. As can be seen it is better to predict and prevent crises from occurring or steps should be taken to limit their results, if they cannot be stopped. The main problems of the industry in Turkey are financial problems, transportation, lack of domestic and imported raw materials, inadequate use of modern and design-focused production, and particularly for small- and medium-scale organizations, lack of information about the international markets. In addition, the global crisis that shook the world economy in 2001, together with other sectors, deeply affected the furniture industry. Furniture industry is affected by a crisis environment, which is what this study aims to determine. In this regard, the pre-and post-crisis situations of furniture enterprises crisis may well be studied. Key words: Furniture industry, crisis, crisis sources, crisis management. INTRODUCTION For organizations to survive, they need to follow the rapid changes and developments taking place in their sectors closely. In todayâ&#x20AC;&#x2122;s world, with the effects of globalization, the competition has become more severe than it was before and the uncertainty has increased to the highest level (Arikboga, 2001). Such severe competition and high level of uncertainty sometimes provide organizations with threats and sometimes with opportunities (Uslu, 1999). Apart from natural disasters, crises emerge as a result of the interaction among technology, human behaviors and organizational culture (Tutar, 2000). External factors believed to be one of the elements causing crises can include factors related to economic system such as economic fluctuations and irregularities, mismatching supply and demand; technological developments, changes in the expectations, values and living styles of the

society, legal and political restrictions, and natural disasters such as war, earthquake, and flood (Ergin, 1992). Every type of crisis can lead to spontaneous distortion of the interaction between humans, technology and other elements of the organization. First of all, crisis is a state which is unexpected and not easy to detect by the organization. There may be some signals of crisis. Yet, what is important at that point is that the organization should be able to recognize the signals and take measures to avert a crisis by displaying great sensitivity towards environmental changes (Tutar, 2000). Crisis can be described as the state of tension which can not be expected in advance, should be responded fast, threat existing values, goals and predictions of the organization by making the avoidance and adjustment

Colak

mechanisms of the organization inadequate. The concepts such as stress, anxiety, panic etc are the representatives of the emotions experienced in a crisis period (Tagraf and Arslan, 2003). There are different definitions of crisis provided in the literature. Some definitions define crisis as lack of adequacy to intervene in a threatening condition. Some authors emphasized the necessity and priority of coping with unexpected conditions while defining the concept of crisis. On the other hand, in the generally agreed definition of crisis, it is seen as a situation threatening the existence of the organization (Can, 1994). In theory, crisis can be defined as a state of tension which cannot be expected in advance, should be responded fast, threat existing values, goals and predictions of the organization by making the avoidance and adjustment mechanisms of the organization inadequate (Anonymous 1, 2010). What is primarily important for organizations is not to look for the ways of coping with a crisis when it has already began but to develop a managerial structure that can predict that a crisis is coming and can make use of the crisis conditions to make the organization more successful and give a new momentum to the processes of the organization (Vergiliel, 2001). For a new situation emerging to be defined as a crisis, it should have the following characteristics (Akat and Budak 1999). a. Crisis represents a sudden change that can not be sensed in advance; b. The state of crisis cannot be predicted; c. Crisis should be responded to fast and urgently. The managers can not respond to a crisis with their standard decision making mechanisms; d. Crisis threatens the goals and existence of an organization (Yeniceri, 1993); e. As a crisis cannot be overcome with the standard decision making mechanisms, it requires urgent intervention and this may lead to tension on the part of managers (Can, 1994).

advance and eliminating them (Anonymous 3, 2009). The issue of crisis management is of great importance for organizations because when it can be fully exploited, organization can be ready for unexpected events and minimize their losses in crisis periods. On the other hand, with the employment of crisis management by organizations, they can be ready for crises, their employees can more easily cope with the negative impacts of crisis conditions, minimize their time losses and the most importantly, the existence of the organization is not threatened (Anonymous 4, 2010). Purpose of the study The demand for furniture has greatly increased in Turkey as a result of population increase, urbanization and improved living standards. In this respect, the furniture sector should be reshaped with a new view that can recognize the necessities of the age. Today, Turkish furniture industry mostly consists of small-scale organizations using traditional production methods. However, particularly within the last 15 to 20 years, the number of the middle- and large-scale organizations has increased. Today, there are nearly 60,000 organizations in the furniture industry and the number of the employees is nearly 260,000. The important centers of furniture production are; Istanbul, Ankara, Bursa (Inegol), Kayseri, Izmir and Adana. The main problems of the industry in Turkey are financial problems, transportation, lack of domestic and imported raw materials, inadequate use of modern and design-focused production, and particularly for small- and medium-scale organizations, lack of information about the international markets. In addition, the global crisis shaking the world economy in 2001, together with the other sectors, deeply affected the furniture industry. The purpose of the present study is to determine the extent to which the furniture industry was affected from the crisis. MATERIALS AND METHOD

â&#x20AC;&#x153;Crisis managementâ&#x20AC;? can be defined as the construction of an effective structure to avoid a potential crisis. That is, it can be defined as prevention of the elements that can lead to a crisis by predicting them in advance or minimization of the negative impacts. We can clarify this with a simile. Crisis is like a virus inhabiting a weak body. Its effect on our body is in reverse correlation with the strength of our body. It can make you sick or make your immune system stronger like a vaccination (Anonymous 2, 2009). Crisis management is a process where crisis signals are received and evaluated and required measures for organization to minimize its losses are taken. Crisis management covers a long process. The most important element in this process is predicting occurrences in

Materials In this context, pre- and post-crisis states of the furniture organizations located in Istanbul, Ankara, Bursa, Kayseri, Izmir, Samsun, Mugla, Kars were investigated in this study. The reasons for the selected organizations operating in the furniture sector as the survey area of the present study are listed below: (a.) The importance of furniture industry has increased in this century and it is expected to increase more in the future, (b.) Furniture industry realized the 1% of all the export in the year 2009; that is, 1 billion dollars of the total 100 billion dollars and its contribution is expected to increase in the future, (c.) Furniture sector has positive contributions to the development of other related sectors, (d.) Firms operating in furniture sector believe that such studies will

Afr. J. Bus. Manage.

be great contribution to the sector.

Method The empirical data of the present study were collected through interview and questionnaire methods. Using more than one data collection tool is argued to improve the reliability of the findings (Seyidoglu, 1995). The reason why the questionnaire technique was selected is that it makes collecting large amount of data in a short time possible (Kuheylan, 1989). The questionnaire was administered in face to face interviews to the managers of the organizations. There are 55 questions concerning the pre-crisis state and 47 questions concerning the post-crisis sate. Totally 49 organizations were administered the questionnaire and the findings are presented in Table 1.

RESULTS AND DISCUSSION What should be done by organizations is to get ready for a crisis and the adverse effects it will create, take the required measures, develop pre-emptive alert systems, manage the chaotic situation to be created by a crisis successfully and minimize the effect of a crisis. The required measures should be planned by organizations within the framework of “crisis management” before a crisis starts. Special attention should be taken not to destroy the future of the organization just to save the day. Following the crisis, though no change occurred in the functioning area of the furniture organizations, the number of their employees decreased and this led to reduction in the size of the organizations. This holds particularly true for the small-scale organizations. The number of the personnel consisting of university graduates did not change much. However, 25% of the organizations think of changing their sector. While recruiting new personnel following the crisis, the recruiting decisions were mostly based on necessity. The organizations preferring the registered workers before the crisis somehow changed their preferences favoring the recruiting of unregistered workers following the crisis. While there was no decrease in the number of the insured workers employed by the large-scale organizations, there was a decrease in the small-scale organizations. While the number of the uninsured workers employed by the small- and medium-scale organizations increased, there was no uninsured worker in the largescale organizations. The number of the organizations requiring a qualification certificate from their workers decreased after the crisis. The wage of the workers is mostly determined by qualifications and performance. The number of the foremen and unqualified workers increased after the crisis but no significant change was observed in the number of the managers. While the number of the employees working for minimum wage in large-scale organizations increased, their number decreased in the small-scale organizations. Small decreases were observed in the amount of the export. Large-scale organizations formed crisis management

teams. The organizations increased overtime working hours during the crisis. Following the crisis, in order to overcome the adverse affects of the crisis, the organization put greater emphasis on their advertisement efforts and decreased their promotion expenditures. High majority of the organizations used marketing strategies in their sales, attempted to reduce the expenditures and encouraged their workers and sale offices to work more efficiently to minimize the adverse affects of the crisis. Most of the organizations motivated their workers against the crisis. More than half of the organizations were able to predict the crisis in advance and their perception of a crisis as a threat weakened after the crisis. Nearly half of the organizations view a possible crisis environment as an opportunity. Moreover, most of the organizations see the other organizations working in the same sector in the same region as a threat. The main factors viewed to be the causes of a crisis are human factors, organizational infrastructures, affective factors, technical factors, and competitive environment. The organizations consider their post-crisis performances as not good. In the determination of the investments, having profit is the strongest factor and this is followed by necessities. In crisis period, the organizations attempt to reduce the expenditures rather than manipulate the production. While 56% of the organizations do not think that the measures taken by the state are not adequate, 44% of them think that they are sufficient. In a crisis period, overcoming the adverse affects of the crisis depends on revising the targets, finding the suitable way on time to minimize the losses caused by the crisis by analyzing the strategies and policies. In a crisis period, every moment and decision are of great importance. Managerial hesitations and panic atmosphere in the management, chain decision making and approach selection mistakes may lead to emergence of mistakes that can harm the organization. Conclusion First, existing conditions (both external and internal) should be well analyzed so that the question “what is our position?” can be clearly answered. Here, economic factors, the state of the sector, existing market conditions and other external factors should be analyzed well. Moreover, internal analysis should be carried out to determine the strengths and weaknesses of the organization. Moreover, opportunities and threats should be clearly determined and measures should be taken to turn the crisis into an opportunity. In short, strategies and plans should be revised and necessary adjustments should be made. In an environment of increasing competition, “operational efficiency” is of great importance but it becomes vital in crisis periods. Measures that can improve the efficiency and savings should be immediately put into effect. Saving does not

Colak

Table 1. The pre-crisis and the post-crisis situation of enterprises.

Parameter

Pre-crisis f (%)

Post-crisis f (%)

Scale of the organization Small Medium Large

8 17 23

16.6 35.5 47.9

25 15 8

52.09 31.25 16.66

The number of the employees 5-10 11-20 21-30 31-40 41 and more

15 12 7 7 7

31.5 25 14.5 14.5 14.5

13 19 5 2 9

27.08 39.58 10.41 4.18 18.75

The number of the university graduate employees 0-2 3-4 5-6 7-8 9 and more

24 11 5 6 2

50 22.9 10.4 12.5 4.2

25 10 6 5 2

52.08 20.85 12.5 10.41 4.16

The number of the insured employees 0-10 11-20 21-30 31-40 41 and more

19 12 3 6 8

39.59 25 6.25 12.5 16.66

15 20 5 0 8

31.25 41.68 10.41 0 16.66

The number of employees working without insurance 0-10 11-20 21-30 31-40 41 and more

38 10 0 0 0

79.16 20.84 0 0 0

41 6 5 0 1

85.42 12.5 10.41 0 2.08

The number of the foremen 0-2 3-4 5-6 7-8 9 and more

10 15 10 7 6

20.8 31.4 20.8 14.5 12.5

15 18 7 8 0

31.25 37.5 14.59 16.66 0

The number of unqualified employees 0-10 11-20 21-30 31-40 41 and more

28 10 7 3 0

58.37 20.8 14.58 6.25 0

30 13 3 0 2

62.5 27.08 6.25 0 4.17

The number of the managers 0-2 3-4 5-6 7-8 9 and more

30 10 6 2 0

62,5 20.8 12.5 4.2 0

32 10 5 1 0

66,66 20.8 10.41 2.08 0

Afr. J. Bus. Manage.

Table 1. Contd.

Percentage of export in the production 1-10% 11-20% 21-30% 31-40% 41% and more

26 9 3 4 6

54.17 18.75 6.25 8.33 12.5

24 12 2 3 7

50 25 4.16 6.25 14.59

Percentage of import in the production 1-10% 11-20% 21-30% 31-40% 41% and more

25 14 2 2 2

52.09 29.19 4.16 4.16 4.16

24 15 1 5 7

50 31.25 2.08 10.42 6.25

Measures taken for a crisis Yes No

33 15

68.8 31.2

30 18

62.5 37.5

Strategies developed to make a crisis an opportunity Advertisement Reduction Incentive Promotion Others

8 15 8 9 8

16.66 31.25 16.66 18.75 16.66

16 15 9 5 3

33.33 31.25 18.75 10.42 6.25

The number of the organization improving their facilities and commercial relationships as a result of the economic developments Yes No

30 18

62.5 37.5

24 24

50 50

The number of the employees working with minimum wage 0-10 11-20 21-30 31-40 41 and more

25 14 4 4 1

52.08 29.16 8.3 8.3 2.08

21 19 4 1 3

43.75 39.59 8.33 2.08 6.25

The number of the organizations having crisis management teams Yes No

12 36

25 75

17 31

35.41 64.58

The method used to determine the wages According to performance Minimum wage According to qualification Others

6 13 27 2

12.5 27.09 56.25 4.16

7 10 31 0

14.58 20.84 64.58 0

6.29

16.66

39 2 4

81.2 4.18 8.33

33 2 5

68.75 4.18 10.43

Preferences for employing the workers The organization preferring to employ unregistered workers The organizations preferring to employ insured workers The organizations preferring to employ daily workers Others

Colak

Table 1. Contd.

The organizations requiring qualification certificate for recruiting Yes No

35 13

72.9 27.1

32 16

66.66 33.34

The organizations regarding a crisis as a threat to the organization Yes No

26 22

54.16 45.84

29 19

60.42 39.58

Are the organizations working in the same sector in the same region a threat? Yes No

26 22

54.16 45.84

29 19

60.42 39.58

The organizations using marketing strategies in the sale of their products Yes No

26 22

54.16 45.84

32 16

66.66 33.34

Labor preferences for the production Cheap labor Qualified labor Both of them

3 24 21

6.25 50 43.75

6 25 17

12.5 52.08 35.42

Preferences for the way of collecting returns Cash Installments Both of them Others

9 9 28 2

18.75 18.75 58.33 4.17

8 11 26 3

16.66 22.91 54.18 6.25

Product storage Yes No

30 18

62.5 37.5

29 19

60.42 39.58

Customer satisfaction Yes No

47 1

97.92 2.08

44 4

91.7 8.3

Warranty period for the products Yes No

40 8

83.33 16.67

39 9

81.25 18.75

The number of the shareholders Yes No

22 26

45.84 54.16

25 19

52.08 39.58

Investment decisions Profit Necessity

24 24

50 50

27 21

56.25 43.75

The performance of the organization in the last year Very good Good Not bad Bad

2 17 25 4

4.14 35.45 52.08 8.33

2 8 20 18

4.14 16.66 41.66 37.5

Afr. J. Bus. Manage.

only mean lying of the workers but also increasing the efficiency of business process and making better use of technologies. Even improvements in stock management can lead to significant savings. In a crisis environment, cash management exhibits greater importance. Cash management should be followed more closely and means should be sought to improve its efficiency. During the crisis management process, the managers should have some specific skills. For organizations to be successful, human factor and team work are of great importance. The workers should be able to focus on how they can contribute to their organization rather than on their concerns about being unemployed. Motivation should be kept high, and special emphasis should be put on the importance of every worker’s making the required effort. If there is a need for sacrifice, this should be equally shared among the workers. As a result of urbanization, population growth, developing living standards, the demand for furniture in Turkey has greatly increased. In this respect, the furniture industry in the country has been shaping itself in line with the contemporary developments in the world. As a result, today’s contemporary organizations must administer crisis management to be able survive and reach their goals in a crisis environment. For this to be achieved, first effective crisis management system should be established in the organization. However, crisis management is not adequate on its own. For a crisis management system to function effectively there is a need for some managerial skills and for managers to take responsibilities. In a world where rapid changes and increasing ambiguity have been observed, more political, economic and legal complexities have been observed particularly in developing countries like Turkey. It is a fact that in today’s world, organizations need crisis management information more than ever. Otherwise, the organizations that can not comply with the external factors will have great difficulties in surviving. It is a vital importance to have a healthy communication for every organization. Hence, organizations need to have adequate information about psychology, risk evaluation, history, relations with

media, and different cultures etc. Though usually there is no response within the few hours following the break-out of a crisis, these few hours are vital in determining the destiny of the organization. It is important to be able to predict the worst and decide what to do before, while and after the crisis and to communicate them to the public. This is only possible when detailed preparations are made for a possible crisis. Correct selection of the location of the production, proper market analysis, proper selection of the technologies to be used, selection of the personnel with required qualifications etc. are important to avert a possible crisis. REFERENCES Akat I, Budak G (1999). Business Management. Barıs Publishing. Izmir. Anonymous 1 (2010). www.kobifinans.com.tr/tr/bilgi_ merkezi/02061001/20892 Anonymous 2 (2009). www.danismend.com/konular/stratejiyon/ krizyonetimi.html. Anonymous 3 (2009). www.priciturkey.com / kriz.html Anonymous 4 (2010). www.priciturkey.com Arıkboga S (2001). Business Management in Crisis Environment. J. Economics. 410-411(February March). Can H (1994). Organization and Management. Siyasal Ofset. Ankara. Ergin E (1992). Business Policies, Der Publishing. Istanbul. Kuheylan S (1989). Research Methods. D.E.U. Faculty of Economics and Administrative Sciences Publishing. Izmir. Seyidoglu H (1995). Scientific Research and Writing Manual. Guzem Publishing. Istanbul. Tagraf H, Arslan NT (2003). Crisis Emergence Process and A Proactive Approach to Crisis Management. C.U. J. Economics and Administrative Sciences. 4(1). Tutar H (2000). Management in Crisis and Stress Environment. Hayat Publishing.14. Istanbul. Uslu A (1999). Strategic Marketing and Management in the Periods of Economic Crisis and Consumer Behaviors. M.U. J. Economics and Administrative Sciences. XV(1). Vergiliel TM (2001). Crisis and Business Management. Alfa Ofset. Bursa. Yeniceri O (1993). Management, Organization and Behavior in Companies. Tutibay Publishing. Ankara.