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Volume 4, Number 1 ISSN 1528-2643

ACADEMY OF EDUCATIONAL LEADERSHIPJOURNAL

An official Journal of the

Allied Academies, Inc.

Jennifer Olson, University of IdahoEditor, Education Division

Michael Shurden, Lander UniversityRoyce Caines, Lander University

Editors, Business Education Division

in the

Academy of Educational Leadership

Academy Informationis published on the Allied Academies web page

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The Academy of Educational Leadership is a subsidiary of the Allied Academies,Inc., a non-profit association of scholars, whose purpose is to support and encourageresearch and the sharing and exchange of ideas and insights throughout the world.

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Copyright 2000 by the Allied Academies, Inc., Cullowhee, NC

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Academy of Educational Leadership Journal, Volume 4, Number 1, 2000

ACADEMY OF EDUCATIONAL LEADERSHIPJOURNAL

CONTENTS

LETTER FROM THE EDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

AN EVALUATION OF TEACHING STRATEGIESFOR AN INFORMATION SYSTEMSFOUNDATIONS COURSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Jean-Paul Van Belle, University of Cape Town

TECHNOLOGY BY IMMERSION: DESIGN OFAUDITOR LIABILITY ASSIGNMENTS USINGWEB-BASED RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Penelope Herickhoff, Minnesota State University, MankatoJane E. Baird, Minnesota State University, Mankato

A COMPARISON OF TWO MEASURES OFCOMPUTER SELF-EFFICACY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21Rex Karsten, University of Northern Iowa

THE DATA COMMUNICATIONS COURSE WITH ADEDICATED LAB: DESIGN, IMPLEMENTATION,AND STUDENT ASSESSMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Jong-Sung Lee, Middle Tennessee State UniversityJ. Lee Maier, Middle Tennessee State University

DEVELOPMENT OF THE ACADEMIC FIELD OFFINANCE: A PARADIGMATIC APPROACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44Kavous Ardalan, Marist College

INTEGRATING ESSENTIAL SKILLSIN INTRODUCTORY FINANCE:A COMPREHENSIVE EXERCISE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80Susan Christoffersen, Philadelphia University

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DETERMINANTS OF BUSINESS COMMUNICATIONS STUDENTS PERFORMANCE: ANEMPIRICAL INVESTIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87Kathy Hill, Sam Houston State UniversityBalasundram Maniam, Sam Houston State University

IMPLEMENTING TQM IN HIGHER EDUCATIONINSTITUTIONS: A STRATEGIC MANAGEMENTAPPROACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99Ramesh G. Soni, Indiana University of PennsylvaniaManmohan D. Chaubey, Indiana University of PennsylvaniaJohn C. Ryan, Indiana University of Pennsylvania

THE DEVELOPMENT OF MANAGEMENT PRACTICESAND MANAGEMENT EDUCATION ACROSS TIME:THE CASE OF THE PEOPLE’S REPUBLIC OF CHINA . . . . . . . . . . . . . . . . . . . . . 110P.C. Smith, University of TulsaGeorge S. Vozikis, University of TulsaDavid W. Pan, University of Tulsa

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LETTER FROM THE EDITORS

Welcome to the fourth volume of the Academy of Educational Leadership Journal. TheAcademy of Educational Leadership is an affiliate of the Allied Academies, Inc., a non profitassociation of scholars whose purpose is to encourage and support the advancement and exchangeof knowledge, understanding and teaching throughout the world. The AELJ is a principal vehiclefor achieving the objectives of the organization. The editorial mission of this journal is to publishempirical and theoretical and scholarly manuscripts which advance the discipline, and applied,educational and pedagogic papers of practical value to practitioners and educators. We look forwardto a long and successful career in publishing articles which will be of value to many scholars aroundthe world.

The articles contained in this volume have been double blind refereed. The acceptance ratefor manuscripts in this issue, 25%, conforms to our editorial policies.

We intend to foster a supportive, mentoring effort on the part of the referees which will resultin encouraging and supporting writers. We welcome different viewpoints because in differences wefind learning; in differences we develop understanding; in differences we gain knowledge and indifferences we develop the discipline into a more comprehensive, less esoteric, and dynamic metier.

Information about the organization, the journals, and conferences are published on our website. In addition, we keep the web site updated with the latest activities of the organization. Pleasevisit our site and know that we welcome hearing from you at any time.

Jennifer OlsonEducation Editor

University of Idaho

Royce Caines and Michael ShurdenBusiness Education Editors

Lander University

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Manuscripts

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AN EVALUATION OF TEACHING STRATEGIESFOR AN INFORMATION SYSTEMS

FOUNDATIONS COURSE

Jean-Paul Van Belle, University of Cape Town

ABSTRACT

This paper looks at three teaching strategies for a foundations information system courseand evaluates their impact on actual student performance. The course used is a first year one-semester introductory under-graduate course in Information Systems at the University of CapeTown, taught by the author. In this paper, three delivery options have been evaluated: the use ofcomputer-based training, the “mastery” method and the use of enrichment sessions. It appears asif only the adoption of the “mastery” method seems to have had an unequivocal influence on studentperformance, although there is some evidence in favour of enrichment session, assuming that theyhave been validated and refined through repeated use.

INTRODUCTION

Too often educators implement alternative teaching strategies without attempt at an ex-postevaluation of the educational effectiveness of the new course of action (Nelson, 1999). Two yearsago, we reported (Eccles & Van Belle, 1998) on a number of “innovative approaches” adopted ina first-year information systems course. In this paper, we evaluate the impact of some of theseeducational strategies and curriculum options for course delivery on student performance within thesame course. These results have been presented in summery form at a previous conference and arenow reported on more fully.

It has to be recognised that an educational environment almost never allows for laboratory-like circumstances and hence statistical analysis has to be hedged with numerous ifs and buts.Nevertheless, it is hoped that the tentative results presented in this paper will allow educators atother tertiary educational institutions to make more informed decisions on which educationalapproaches to take and perhaps to spur them on to report on their experiences.

This paper analyzes the effect of three different educational approaches on studentperformance in a first-year one semester IS course, the “Foundations of Information Systems” courseINF102F at the University of Cape Town:

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< The “mastery” method< The use of enrichment sessions< Computer-based training

The analysis is confined to comparative statistical analysis, leaving out many otherqualitative side-effects (mostly positive?) of the teaching strategies.

DATA SOURCE AND COURSE STRUCTURE

The INF102 course consists of three identical IS foundation courses. INF102F is offered inthe first semester to roughly 750 business science and information systems majors in the commercefaculty, the INF102S course is offered in the second semester to about 500 B.Com accounting andhumanities students, and the INF102H course is spread over the entire year with a focus onproviding a slower paced small group learning environment to about 100 ADP (academicdevelopment program) and post-graduate diploma students. Detailed information about this course(objectives, curriculum, practical organisation, requirements etc.) can be found on the course websiteat http://www.commerce.uct.ac.za/InformationSystems/courses/INF101/. The course consists of twodistinct modules: the practical component (spreadsheet and database skills) and the theorycomponent (basic IS concepts, IT technology and the organisational context of IS).

The data for this study is drawn mainly from the departmental records of the INF102F coursefor the academic years 2000 and 1999. The course year mark for 2000 is made up of 15 distinctcourse deliverables: 7 marked practical tutorial assignments (3 spreadsheets and 4 databaseexercises), 7 “enrichment session hand-ins”, 2 theory tests and the final practical examination.Although the number of students registered for the course stand at more than 700, analysis is limitedto a subset of the students – usually where data from student evaluations has to be used. Studentscompleted an optional course evaluation questionnaire on-line after writing the second theory testduring the last week of lectures. The questionnaire was administered and processed using theQuestionMark computer testing software. The main advantage of this approach is that it allows forthe unobtrusive identification of each student and thus the linking of student responses to studentperformance data. About 400 students provided usable course evaluations.

ACTIVE LEARNING: THE USE OF “IN-CLASS ENRICHMENT SESSIONS”.

Bloom (1956), in his well-known taxonomy, identified six cognitive domains. Since excathedra-based lecturing does not generally stimulate the higher order cognitive activities, an activelearning approach was followed to engage the student's mind. After each theory lecture, a secondlecture session later during the week (allowing thus for additional student preparation and review)attempts to make the material “come alive” by means of an “enrichment session”. The emphasis ofthis session is on participatory or active learning. Two examples of the type of activities in thesesessions are:

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< Small individual or mini-group exercises, in effect requiring the students to applytheir knowledge to small cases. Usually the answers have to be summarized on astructured answer sheet that must be handed in. This answer sheet is marked by atutor and contributes only nominally to the student year mark.

< “Action research" exercises whereby students have to determine the bestconfiguration (specifications and cost) for a home business PC or answer a list ofquestions using the Internet.

The intention of the additional materials is to enhance the educational process throughparticipatory learning units: students learn best when doing (Mills-Jones, A 1999; Bentley et al.,1999). It must be noted that the source data is not very reliable: enrichment sessions were often donein two or three-person groups, often with a wide range in the actual contribution of various teammembers. Consequently, some students received marks that they did not really deserve. However,the overall contribution of the enrichment sessions towards the year mark was negligible (0.5%) toreduce the “doing-it-only-for-the-marks’ ethic prevalent among many students.

Table 1 lists the correlation coefficients of various course component marks with the finalexamination mark for 1999. Although the overall final course mark is perhaps a better measure of“course performance” than the final examination mark, it includes the weighted component marks,which means that there is a strong (but variable) element of auto-correlation.

Table 1: Correlation of individual course component with final exam mark.

Coursecomponent(n = 694)

Correlationwith final

course mark

Correlation withfinal exam mark

(value)

Correlation withexam mark(Behr, 1988)

Enrichment sessions 0.44 0.37 definite but slight

Test 1 0.68 0.63 moderate

Test 2 0.65 0.60 moderate

Year mark 0.88 0.71 high and substantial

Practical examination 0.75 0.58 moderate

Because of the large sample, all these correlation coefficients are statistically significant tothe 1% level. However, the strength of the relationship between course component and the finalexamination mark varies, using Behr’s (1988) terminology, from a “high and substantial”

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relationship with the year mark, to a moderate relationship with the two tests or practical exam , toonly a “definite but slight” relationship with the enrichment sessions.

A methodological problem, of course, is that the other course components were explicitlyintended to be “evaluations” whereas the purpose of the enrichment sessions was not evaluation.Also, they were marked very generously, i.e. with a low discriminatory power. A separate analysiswas done on the original data set (which is slightly larger, since not all enrichment sessions wereincluded for mark purposes). But, although the correlation between the marks and final exam markincreases marginally to 40%, the correlation between the number of enrichment sessions handed inand final exam mark is only 29% (N=708)!

This last low correlation coefficient seems, therefore, to reduce the educational argument forthe value of the enrichment sessions, definitely in as far as examination preparation goes. However,this does not invalidate any broader educational arguments as to the overall learning experience ofthe course.

Despite this initial disappointment, some further analysis was conducted. Instead of 1999,the 2000 data was used, because 1999 was an early attempt at introducing enrichment sessions andthese sessions were much better developed and validated in 2000. Because final marks were not yetavailable at the time of writing, the course year mark was used instead. Figure 1 shows the results.

55%

60%

65%

70%

75%

80%

Ave

rage

Yea

r Mar

k O

btai

ned

0, 1 or 2 (N = 46)

3 or 4 (N = 92)

5 (N = 62)

6 (N = 79)

7 (N = 135)

Nr of Enrichment hand-ins submitted

Figure 1: Effect of Enrichment Sessions

This analysis shows a clear pattern: the more hand-ins (and, by implication, the more regularthe class attendance?), the higher a student’s year mark. Students who handed in less than 3enrichment session deliverables obtained a year mark that was on average a full 18% less than thosestudents who handed in all of the exercises, despite the fact that all these hand-ins together

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contributed less than 5% to their mark. For statistical analysis, rows were merged as per table 2.(The exact cut-off value for the grouping does not significantly affect the Z-score.)

Table 2: Hand-ins and Year mark - condensed

Nr of ER hand-inssubmitted

N Year mark average(Std. Dev.)

# lecturesAtt./week

0, 1, 2, 3 or 4 138 65.2% (12.4%) 2.7

5, 6 or 7 276 75.9% (9.6%) 3.4

Average = 5.1Total: 414 72.4% (11.7%) 3.1

The difference between these averages is statistically significant at the 1% level (the Z-scorebeing an extremely high 8.89). Although it is believed that part of this difference must be explainedby the positive benefit of doing the enrichment sessions, another contributing factor is the obviouslythe motivation and work attitude of the more conscientious student.

OJBECTIVE-BASED LEARNING: THE USE OF THE MASTERY METHOD

For a number of years, until the end of 1999, the mastery method was adopted for thepractical component of the course.

The mastery method divides the course material into a number of modules, each withdetailed learning objectives. Student performance can then be evaluated on a regular basis againstthese objectives and students only are permitted to progress once they have “mastered” the relevantmaterial. The main value of the mastery method is that it forces students to take immediate actionwhen they do not understand material presented on the course. Where knowledge and understandingis incremental, it is most important that students having difficulties at the start of the course aregiven assistance as soon as possible and then given an opportunity to be re-evaluated (Eccles & VanBelle, 1998).

Students had to master all four marked tutorials (obtain a mark of at least 70%). If a studentdid not pass the tutorial at their first attempt, they had to attend the following Monday revaluationsession and rewrite the tutorial. Students only had two revaluation attempts for each of the tutorials.For year mark calculations, lower marks of 50% and 0% respectively were awarded where studentsmastered (obtain at least 70%) the tutorial on their first or second revaluation attempt. Students whodid not master all four tutorials, did not obtain a DP and were barred from writing the final courseexaminations. In 2000 this mastery requirement was dropped due to extreme workload overheadsand administrative burden that the mastery method implies.

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The new, much more relaxed requirement for the 2000 academic year is that a student merelyhad to obtain an average of 50% for all (seven) marked tutorial assignments. It is illuminating to seethe effect of this relaxation on actual student performance for the practical examination mark. Thestandard of the practical examination in 2000 was as close to that of the 1999 examination aspossible. In both cases the first semester course was selected – who have comparable student bodies.(The analysis was repeated by excluding the small number of non-business science / non-IS majorstudents but no real different results were obtained.)

The a priori hypothesis would be that the mastery method has a positive impact on practicalexam marks. Figure 2 shows the actual distributions of the practical examination marks, using 10%intervals, for the 1999 (with mastery method) and 2000 (no mastery method) courses. The 2000distribution shows a clear shift to the left indicating lower marks, as hypothesised. The χ2-value forthe two distributions is 72.84, which is statistically very significant, i.e. the hypothesis that the twodistributions come from the same population should be rejected strongly (the critical value for 6degrees of freedom at the 1% confidence level being a mere 16.81).

Table 3 tabulates the two key statistical measures characterising the differences between thetwo distributions: the 2000 distribution has a substantially lower average and is much flatter i.e. hasa wider spread (standard deviation).

Table 3: Mastery Method and Practical Exam Marks

Practical Exam Mark 2000 (without mastery) 1999 (with mastery)

Average 76.5% 82.2%

Standard deviation 13.7% 10.9%

N 705 711

The dropping of the mastery method resulted in an average drop of 5.7% in marks. The Z-score is again an impressive (–)8.66 which is naturally significant at the 1% level. Note that, as anindependent control variable to ascertain the similar composition and capability of the two studentgroups, the average for the two theory tests for the two years were 56.0% (2000) and 56.5% (1999)respectively, confirming that the two groups are in fact comparable in other respects.

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Figure 2: Distribution of Practical Exam Grades

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

% o

f stu

dent

s

1999 (Mastery) 0% 1% 3% 9% 23% 39% 25%2000 (No Mastery) 2% 4% 6% 14% 29% 32% 13%

<40% 40% - 50%

50% - 60%

60% - 70%

70% - 80%

80% - 90%

90% - 100%

The above result presents a strong case in favour of the mastery method. However,it must be realised that this approach is very resource intensive in terms of labour, administration,computer laboratory use and course co-ordination. Since the number of students who actually failthe practical exam is relatively small, the real world cost-benefit analysis of the mastery method willdepend on the organisational and educational context. As UCT students seem to be much morecomputer literate now, there is less justification for the use of mastery method than there was whenit was first adopted in the earlier nineties.

THE USE OF COMPUTER-ASSISTED TRAINING

Many claims and evidence in support of computer-assisted learning/training (CAL) havebeen made. (Goldberg, 1997). The author has extensive experience in the use of computer-supportededucation. In an “ancient” study, supplementing class lectures with computer-based PLATO tutorialswas found to have a statistically significant positive impact although that particular study was basedon subject matter which required analytical understanding (financial break-even analysis) insteadof skill development (Van Belle, 1986).

To complement the textbook, lectures and laboratory assistance, students were given accessto computer-based training (CBT) packages from two commercially available suites: Net-G andIndividual Training. The use of these CBT packages was entirely at the discretion of the student. Theavailability of the CBT resources was mentioned in the first week of lectures and at occasionalintervals later during the course.

The Individual Training software consists of 4 modules covering MS-Windows, MS-Word,MS-Excel and MS-Access. Each module consists of about 8 to 12 hours of interactive training and

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is followed by an optional assessment test. The modules run as stand-alone tutorials which areloaded directly from a local file server. The Net-G suite is a set of much more comprehensive andin-depth Internet-based tutorials which are accessible both on- and off-campus to all registered UCTstudents from a central ITS server. However, Net-G requires a fairly elaborate registration anddownloading process and the use of an Internet browser.

Due to technical reasons it is not possible to track which students actually used the CBTsoftware. However, two of the questions on the course evaluation questionnaires pertained to thestudent experience with the CBT packages. It must be stressed that there is no evidence that studentswho responded to this question, actually did use the packages.

If one hypothesises that CBT contributes positively to learners’ performance, thecorresponding null hypothesis states that there is no difference between the average marks obtainedby students who used CBT vis-à-vis those who didn’t. Table 4 below lists the average marksobtained in the practical component of the course (the subject area addressed by the CBT), tabulatedaccording to students who indicated that they had used both, one or none of the CBT packagesrespectively. Note that the “Prac Exam” refers to the final two-hour practical exam written by allstudents, whereas the “Prac Avge” refers to a weighted average mark of practical exam and 7marked tutorials.

Table 4: CBT and Prac Marks

Average (Std. Dev.) N Prac Avge Prac Exam

Used both packages 84 74.6%(13.3%)

75.2%(14.1%)

Used one package 71 73.8%(12.5%)

74.7%(13.6%)

Used no CBT 259 78.2%(11.6%)

79.8%(12.0%)

Total 414 76.7%(12.2%)

78.0%(12.9%)

If the average results of the students who used at least one CBT package are compared tothose who did not by means of the Z-test (difference between means of large samples), Z-values of-3.14 (Prac Avge) and –3.60 (Prac Exam) are obtained. This indicates that the chance of bothsamples being drawn from the same population is statistically significantly less than 1%. However,the sign of the Z-value seems to flout intuitive reason: surely students who make use of additionallearning resources would be expected to perform better? The table shows that students who did notmake use of CBT actually obtained better scores, on average, than students who did.

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Figure 3: Student Rating for CBT Packages

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Net-G Ind. Training.

InadequateGoodVery goodExcellent

Some reflection revealed a possible alternative explanation: possibly the weaker studentsrequire the additional resources more than the brighter or better skilled students who either alreadypossess a lot of the required skills, are quicker to pick them up from the text or lectures, or preferto learn by doing. That the student group who made use of CBT is indeed a weaker group is shownif their average scores for the theory tests are compared: 54.1% (st.dev.= 13.3%) against an averageof 59.9% (12.4%) for the students who claim that they didn’t make use of CBT (Z-score of –4.40i.e. significant at 1%); although the gap (as measured by the standardised difference between the twoaverages) seems to be slightly narrower for the practical component.

It must again be stressed that there is no direct evidence that the students did indeed use theCBT packages so the validity of the analysis may be questioned.

Overall, therefore, there is no conclusive statistical support for or against the added valueof CBT on student performance. It is also interesting to note that the students did not seem toogreatly impressed with the two CBT packages (see Figure 3); perhaps this is due to the lack ofspecific emphasis or motivation given by the teacher for the use of the CBT packages? Ratings forother course delivery components were generally much more positive.

CONCLUSION

Although the data available is not always pure, i.e. it was not always possible to isolateindividual variables within the data sets, the following conclusions seem warranted.

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1) There is a strong support in favour of the educational benefit of the use of themastery method in imparting computer skills.

2) There seems to be support in favour of the use of well-designed and validatedenrichment sessions to enforce the theory component of the course, although othervariables such as student attitude and motivation may have played a role.

3) There was no conclusive evidence supporting or negating the value of computer-based training packages in the course.

It is hoped that colleagues at sister institutions will be able to verify or elaborate on theseresults and add evidence on their applicability in different contexts. It is also important to note thatthere are also additional positive educational effects from implementing these strategies that are notnecessarily measured in student performance in tests and exams. However, these do not lendthemselves easily to comparative statistical analysis.

REFERENCES

Behr A.L. (1988) Empirical Research Methods for the Human Sciences. Durban: Butterworths.

Bentley JF, Lowry GR & Sandy GA. (1999) Towards The Compleat Information SystemsGraduate: A Problem Based Learning Approach. Proceedings of the 10th AustralasianConfrence on Information Systems, Wellington (New Zealand), p.65-75.

Bloom B et. al. (1956) Taxonomy of Educational Objectives: The Classification of EducationalGoals. Handbook 1 Cognitive Domain. London: Longmans.

Eccles M. & Van Belle J.P. (1998) Innovative Design and Delivery of an IS Foundation Course.Proceedings of the 28th Conference of the SA Computing Lecturers’ Association.Stellenbosch (South Africa), p.123-129.

Goldberg M.W. (1996) CALOS: First Results from an Experiment in Computer-Aided Learning.Proceedings of the ACM's 28th SIGCSE Technical Symposium on Computer ScienceEducation. (Also available from http://hoebrew1.cs.ubc.ca/webct/papers).

Individual Training. http://www.individualsoftware.com.

Mills-Jones A. (1999) Active Learning in IS Education: Choosing Effective Strategies for TeachingLarge Classes in Higher Education. Proceedings of the 10th Australasian Confrence onInformation System. Wellington (New Zealand), p.622-633.

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Nelson MR. (1999). Effective Teaching Strategies, Teaching Assistant Program, Michigan StateUniversity. URL http://www.msu.edu/~taprog/ch4.htm.

Net-G Skill Builder. http://www.netg.com. See also http://websvm.its.uct.ac.za/Webcal/ for howNet-G is used at U.C.T.

Van Belle J.P. (1986) The Use of CBE in Business Economics: experiences at UWC. Conferenceon "Voortreffelikheid in Onderrig en Leer in Tersiêre Onderwys". Stellenbosch (SouthAfrica).

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TECHNOLOGY BY IMMERSION: DESIGN OFAUDITOR LIABILITY ASSIGNMENTS USING

WEB-BASED RESOURCES

Penelope Herickhoff, Minnesota State University, MankatoJane E. Baird, Minnesota State University, Mankato

ABSTRACT

The topic of Auditors’ Liability can be a challenging subject for accounting students tomaster, but it must be mastered for the students to understand the critical role of the auditor and thelegal and ethical environment in which auditors work as well as for successful passage of theCertified Public Accountant examination. Teachers at all levels face increasing pressure andnecessity to incorporate technology into the classroom. Business Law professors and Accountingfaculty struggle with how to effectively teach auditors’ liability, keep the students motivated, andmake use of the latest technology. Using the Internet to facilitate the learning of the appropriatelaws and their ramifications for auditors has several advantages, including providing the studentswith the most updated information, stimulating student motivation and learning by creating a moreactive learning environment, increasing student familiarity with Internet resources, and improvingstudents’ research skills. This paper summarizes several pedagogical concerns related to Internet-based learning, identifies a group of useful Internet resources that address auditors’ liability issuesand suggests possible assignments for use in class, as out of class projects, and as mechanisms forlearning in a distance-education environment.

INTRODUCTION

Teaching by immersion is always a painful experience. In December 1999, all College ofBusiness professors at Minnesota State University, Mankato received new laptop computers. Thefaculty had committed to increased use of technology in the curriculum and the university cataloguestated that, beginning with the freshman class of the 2000-2001 academic year, students would berequired to lease laptop computers for College of Business courses. In the previous academic year,the faculty had converted their academic programs from the quarter system to a semester format, haddramatically revised the structure of the university’s general education curriculum and had workedto develop and implement a variety of new assessment initiatives. Now, faculty members werescrambling to advance their technology goals by learning new software, mastering Web-page design,and restructuring their courses for the laptop environment.

Often professors felt overwhelmed by the pace of change within the college. Many newunknowns accompanied distribution of the laptops and increased the degree of ambiguity facingfaculty, administrators and students. These challenges had been anticipated and motivated the

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College to focus its resources. It chose to adopt a step-by step approach to faculty retraining andcurriculum development. The College sponsored many in-service training opportunities andencouraged faculty dialog and teamwork. Putting questions and concerns on the table and workingthe problem together seemed to help alleviate stress. The authors and their colleagues workedseparately and together to critically evaluate opportunities and problems in structuring Web-basedassignments for use in the classroom and in distance learning environments.

Many individuals recognized that in a laptop context, it would be easy to grasp at technologyfor technology’s sake. Most professors struggled with the more difficult and more importantchallenge, to maintain a mission-driven approach to curriculum design; that is, to incorporatetechnology in ways that achieves and maximizes learning-objectives of each course. Pedagogicalobjectives, such as learner-centered teaching, real-world problem solving, and sharing newknowledge with other learners are key components of the framework the authors are using indesigning course assignments.

This paper reports on several pedagogical considerations of Internet-based teaching, suggestsWeb-based resources, and presents potential course assignments for one particular topic: auditors’liability. Although the topic chosen is specific in nature, educators in all disciplines can benefit fromusing many of the approaches and resources discussed. In addition, the paper briefly reviews severalpotential opportunities and pitfalls in incorporating the Internet into the curriculum.

PEDAGOGICAL CONSIDERATIONS

Using computers and Internet resources in higher education courses is nothing new, but thefact that business and the public demonstrate increasing reliance on the Internet and theexponentially growing volume of information available on the World Wide Web make the task ofeffectively utilizing the available technology more daunting and more pressing (see, for example,Denning, 1996). There is some guidance available in the literature concerning how to incorporatethe Internet into the classroom (Boldt et al., 1994; Johnson, 1998(a); North et al., 1996; Monahan& Dharm, 1995, Ragothaman & Hoadley, 1997; and Stefanov, 1998).

Minnesota State University, Mankato utilizes a mission-driven approach to curriculumdesign, as advocated by the American Assembly of Collegiate Schools of Business - InternationalAssociation for Management Education (AACSB), the national accrediting body. The mission ofthe college is considered in developing course learning objectives. These objectives drive the designof class activities. In addition to content-related learning objectives, learning objectives ofteninclude development of critical thinking skills, technology skills, communications skills, researchskills, ability to work in groups, exposure to global perspectives, and “real-world” learningexperiences. The use of Web-based assignments and activities can and should enhance theachievement of these objectives, whether the activities are conducted in class, as homeworkassignments, or in a distance-learning environment. In developing a Web-based curriculum, theauthors want to ensure that each course has well defined learning objectives and strive to identifythe types of activities that would contribute effectively to achieving those objectives.

A secondary consideration that shapes the authors’ choice of assignments is the experiencelevels of students enrolled in the classes, both in terms of course content and in terms of Internet

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usage skills. In terms of course content, Internet-based activities can be adjusted from very basic,directed assignments to more unstructured, in-depth research activities. Higher-order learning andcollaborative learning can be enhanced through Internet activities if they are designed with thatobjective in mind (Comeaux, 1998; Jonassen, 1999). In terms of experience with the Internet, whilemost students even at the freshman level have experience logging on to the Internet, many use itmainly for electronic mail and do not have a lot of experience or success in using the Internet forresearch (Marxen et al., 1999). Additionally, those who use the Internet often assume that allinformation posted is accurate; they do not recognize the need to critically evaluate the varioussources of information (Marxen et al., 1999). Therefore, professors need to consider whetherspecific training is needed regarding Internet ethics, Internet search methods or evaluation ofInternet-based information. A handout for evaluating Web sites is available in Johnson (1998(b)).Alternatively, the assignments could be limited to more elementary, clearly directed assignments.

Another serious issue to consider is that of plagiarism. The Internet-based informationmakes it easy to simply “cut and paste” content from various sources to create a “final product”without giving credit to original sources, truly understanding the information or without includingany significant original content or commentary of the writer. The temptation to present“amalgamations” as original work confronts both faculty and students. The authors have observedwhat appears to be “intentional blurring” of well-established protocols on academic honesty in manyquarters and believe professors should be especially attentive to the messages they model to studentsin their teaching, their writing and as developers of university Websites. In the authors’ experience,student plagiarism is much easier to control and identify if the instructor directs the students tospecific sites with which the instructor is familiar. Another alternative is to require to students toturn in printed copies of all their Internet sources along with their assignments. Additionally, moststudents and professors are aware there are numerous sources of essays and papers available forpurchase on the Internet (see, for example http://www.popularsites.com/top100/index.shtml). Theauthors have found it helpful to consider plagiarism in the assignment-design phase and suggest thatproviding students with explicit instructions or training as to academic norms and expectations isgenerally time efficient and productive.

SUGGESTED ASSIGNMENTS RELATED TO AUDITOR LIABILITY

First order, or directed assignments, would allow exposure to specific Internet resources ortopic areas, but would be more limited in terms of developing higher-order skills and knowledge.Examples of these types of assignments would include the following:

a. Access the following section from the AICPA’s Website:http://www.aicpa.org/assurance/scas/comstud/brief/legal.htm; and write a briefsummary of the legal sources for auditors’ liability.

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b. Using the CPA Journal’s online Website (http://www.luca.com/cpaj.htm), choose anarticle on auditor’s liability published within the last year. Write a brief summaryof the article and attach a copy of the article to the summary.

Higher-level learning can be accomplished by assigning activities that require more researchand analysis. Examples include:

a. Research the topic of Auditors’ Liability under the 1934 Securities Act, usingInternet resources only. Include references to recent court decisions. (The instructorcould provide a list of sites or require students to locate the sites on their own).

b. Using Internet sources, locate information on recent case interpretations of auditors’liability to third parties under common law. Summarize and cite these rulings.Comment on how you think these interpretations might impact current businesspractice for auditors and their clients.

c. Assume you are an audit partner in a ten-office firm, Smith and Jones, LLP. Youhave just learned that one of your clients, (a) a privately held or, alternatively, (b) apublicly held company had materially misstated the previous year’s financialstatements and its creditors are suing your firm for (a) negligence or (b) fraud in anattempt to recover their losses. The material misstatement resulted from intentionaloverstatement of income by the client. The client had falsified numerous large salestransactions to overstate its earnings. In reviewing the audit papers from the year inquestion, you have discovered an unanswered review point you wrote to the auditsenior to follow up on some discrepancies in the revenue area. This is the first timeyour firm has been sued, and your partners are extremely nervous about the impactthis suit will have on their business and on their personal wealth. You have beenasked to prepare the following information for the next partners’ meeting:1. What law(s) or regulations govern your firm’s liability in this situation?2. What types of arguments should/could your firm prepare in order to defend

itself? What will the plaintiffs likely argue?3. Have there been any recent court decisions that might impact the

interpretation of your firm’s liability in this situation?4. To what extent could the partners in your firm be personally liable to the

plaintiffs?d. Access the Internet Sites for the journal Accountancy Age, and the United

Kingdom’s Accounting Web. Research the issue of auditors’ liability and preparea paper discussing the similarities and differences in the liability of auditors in theUnited States as compared to the United Kingdom.

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All of the assignments suggested above incorporate written activities, which can also aid inthe improvement of written communication skills and can be evaluated on that basis. Requiring thestudent to present the results of their research to the class could incorporate oral communicationskills.

The more unstructured and complex assignments would contribute more to learningobjectives related to critical thinking, research skills, and Internet-based technology skills. Usinga case-based scenario to stage a research project can simulate real-world learning, as in item “c”above.

Assignment “d” above illustrates the way in which the Internet can be used to providestudents with exposure to global perspectives. Another way to achieve this could be to arrange forjoint Internet-based research projects from students from universities in other countries.

Teaming, or small group interaction skills, can be incorporated into the Web-basedcurriculum in several ways. First, students in a traditional classroom environment could simply beassigned to work on any of the projects identified above with other students outside of class. If theactivity is conducted in a classroom in which computers and Internet access are available, studentscan be assigned the project as a group, with each student initially assigned a particular source orsubtopic to search for. The students could then be required to consult with each other to evaluateand integrate the information found and present their results to the class. In a distance learningcontext, the instructor could post the best student papers and projects on the class website. Thispractice not only recognizes superior performance and shares information with other learners, butalso provides models of high caliber work for students or teams who had difficulty understandingperformance expectations for the assignment.

In a distance-learning environment, students can be brought together via simple electronicmail. An even more effective method is to use threaded discussion groups, which are availablethrough most on-line classroom products. In a threaded discussion group, a research question canbe posed by an instructor and posted for the students to see. The students can then interact with eachother by posting their comments and discussions with each other directly on-line as they completethe project. The on-line discussions are recorded by the classroom systems so that the instructor hasa complete log of the students’ comments. This not only allows for realtime on-line interactionsamong the students, it also allows the instructor to actually follow the students’ thought processesrather than just seeing an end product, and enables the instructor to assess each individual student’scontribution to the group’s work. Any of the assignments suggested above could be provided in anon-line format as a group assignment utilizing threaded discussion groups.

USEFUL WEBSITES FOR TEACHING AUDITOR LIABILITY

Finding useful Websites can be a challenge because of the overwhelming amount ofinformation available on the World Wide Web (WWW). The three approaches the authors foundmost useful were:

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1. Examining Web sites of known professional organizations in the field2. Exploring Web sites of companies doing business in the field3. Utilizing Internet search engines to perform topical searches.

Utilizing these research techniques, we have identified a group of useful sites for accountingand business law professors and their students that address issues related to auditor liability. Thesesites are listed in Table 1 and described below by category.

USEFUL ACCOUNTING WEBSITES (U.S.)

http://www.aicpa.org/assurance/scas/comstud/brief/legal.htm: This is an excellent summaryof liability issues provided on the American Institute of Certified Public Accountants’ (AICPA)Website. Topics included in this summary are: Legal Sources of Auditor’s Liability, 10b-5 Reform,Auditor’s Responsibilities, Auditor’s Performance, Non-Audit CPA Services, Economics ofAuditor’s Securities Liability, Forms of Practice – Protecting Partner’s Personal Assets, andRelationship to Assurance Services.

http://www.sec.gov: The Securities and Exchange Commission’s (SEC) Website containstwo subsections of particular interest to students of auditor liability. These can be found directly atthe following addresses: http://www.sec.gov/enforce/adm.htm, which provides the text of specificenforcement actions for violations of securities laws, and http://www.sec.gov/edgar.hp.htm whichhouses all the various documents filed with the SEC.

http://www.aicpa.org/pubs/jofa: The Journal of Accountancy is provided on-line, free ofcharge, by the AICPA. Students can access specific issues or articles directly, or can search the siteby topic.

http://www.luca.com/cpaj.htm: The CPA Journal is provided on-line free of charge. Likethe Journal of Accountancy, students can search the site by topic or select a specific article.

USEFUL LEGAL WEBSITES (U.S.)

http://www.findlaw.com/: Findlaw is an excellent resource that allows online research ofstate and federal cases, constitutions, and codes. It also links users to legal sites by topic andarranges links to law journals alphabetically by law school.

http://www.abanet.org/buslaw/buslawedu/home.html: The site for the American BarAssociation (ABA) provides this resource for law educators with links to numerous legal resources.Another related section within the ABA site is http://www.abanet.org/lawlink/home.html. This isan extensive listing of related legal links provided by the American Bar Association. Categories ofsites included are: General Federal Government, the Legislative Branch, Executive Branch, JudicialBranch, Selected Law School sites, other internet Research Points (includes Findlaw and manyothers) and International Sites.

http://www.law.com: This is a useful general reference source for many law-related topics,including auditor liability.

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http://www.law.cornell.edu/: Cornell’s Legal Information Institute Online is acomprehensive legal resource containing the text of Supreme Court decisions and the U.S. Code,as well as other legal documents and resources on state laws and legal ethics.

http://www.law.uc.edu/CCL/sldtoc.html: the University of Cincinnati Law School providesthis site. The site contains a complete text of all the securities laws.

http://www.cornerstone.com: This is a company Website maintained by a legal research andconsulting firm specializing in securities cases. The site provides summaries of recent coursedecisions at no charge, plus a news feature highlighting current events related to securities issues.

http://www.longlevit.com/updates/update_index_pl.htm: This site is provided by a law firmand supplies updates on current legislation and case law.

http://www.statenet.com/about/: Statenet is a site that provides links to both federal and statelegislation and regulations. The site monitors 100% of all pending bills and regulations in the 50states and Congress and also provides news updates.

ACCOUNTING AND LEGAL WEBSITES (GLOBAL)

http://www.loc.gov/library/: The Library of Congress site provides online access to thelibrary’s legal resources including The Global Legal Information Network, a database comprisedof legal documents submitted by member nations. The full text of each document is available in theofficial language of the country of origin along with a summary or abstract in English. The databasecan be searched in English.

http://www.accountingweb.co.uk/news: The Accounting Web, this Site is based in theUnited Kingdom (UK) and offers news updates for accountants in both the UK and United States,which include liability issues. The site can be searched by topic and is helpful for internationalassignments.

http://www.lawsource.com/also/: Lawsource is a reference site that provides links to law-related Websites in the U.S. Canada and Mexico.

http://www.jurist.law.pitt.edu/: JURIST is self-described as “The Law Professors’Network.” A portion of the site is dedicated to topics that pertain to learning and teaching law,including law professors’ web pages, discussion groups on legal topics as well as research tools andlinks within the U.S., Canada, the UK and Australia.

SUMMARY

In summary, plunging into designing and teaching Internet-based course assignments canbe intimidating, but the Internet offers many opportunities for improving student learning. Thereis a wealth of credible information on the web, provided by professional associations, businesses,and educational institutions. The professor’s challenge is to ensure that learning objectives drivethe use of technology in the classroom rather than available technology dictating class activities.Even at the extreme, where all learning is provided in a distance-education mode, students andfaculty can be brought together and communication can be enhanced through vehicles such asthreaded discussion groups. As faculty gain more experience in Web-based course design, it is

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important to remember to document those experiences. The more that faculty share theirexperiences, both successes and failures, in the literature, the more successful we can all be inproviding a better education for our students.

Table 1

http://www.aicpa.org/assurance/scas/comstud/brief/legal.htmhttp://www.sec.govhttp://www.sec.gov/enforce/adm.htmhttp://www.sec.gov/edgar.hp.htmhttp://www.aicpa.org/pubs/jofahttp://www.luca.com/cpaj.htmhttp://www.abanet.org/buslaw/buslawedu/home.htmlhttp://www.abanet.org/lawlink/home.htmlhttp://www.findlaw.com/http://www.law.comhttp://www.law.cornell.edu/http://www.law.uc.edu/CCL/sldtoc.htmlhttp://www.cornerstone.comhttp://www.longlevit.com/updates/update_index_pl.htmhttp://www.statenet.com/about/http://www.loc.gov/library/

http://www.accountingweb.co.uk/newshttp://www.lawsource.com/also/http://www.jurist.law.pitt.edu/

REFERENCES

Boldt, D.J., L.V. Gustafson & J.E. Johnson (1994). The Internet: A resource in the teaching ofeconomics and beyond. Business Education Forum, (October), 23-26.

Comeaux, P. (1998). Collaborative Learning in Web-based Instruction. Proceedings of theWebNet 98 World Conference of the WWW, Internet, and Intranet (November), (ERICMICROFICHE ED427693).

Denning, P.J. (1996). Business designs for the new university. Educom Review, 31(November/December), 20-30.

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Johnson, J. (1998a). Is the Internet a Good Research Tool for Teaching about Law andGovernment? A Case Study from the Field. Update on Law-Related Education, (Spring-Summer), 31-34.

Johnson, J. (1998b). Using the Internet for Research: Teaching Strategy. Update on Law-RelatedEducation, (Spring-Summer 1998), 37-40.

Jonassen, D. (1999). Learning to Solve Problems on the Web: Aggregate Planning in a BusinessManagement Course, Distance Education (Vol. 20, No. 1), 49-63.

Marxen, V., D.E. Marxen, J.E. Baird & R.C. Zelin. (1999). Student Internet Usage: Its Implicationfor Campus Leaders. Academy of Educational Leadership Journal.

Matyska Jr., R.J. (1995). Using the Internet to expand resources. Business Education Forum,(December), 19-22.

Monahan, B.D. & M. Dharm. (1995). The Internet for educators: A user’s guide. EducationalTechnology, (January-February), 44-48.

North, A.B., J.Hubbard & J.E. Johnson. (1996). Inquiry-based learning via the Internet. BusinessEducation Forum (April), 47-50.

Ragothaman, S. & D. Hoadley. (1997). Integrating the Internet and the World Wide Web into thebusiness classroom: A synthesis. Journal of Education for Business, (March/April), 213-216.

Stefanov, K. (1998). Design Issues of a Distance Learning Course on Business on the Internet, Journal of Computer Assisted Learning, (June), 83-90.

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A COMPARISON OF TWO MEASURES OFCOMPUTER SELF-EFFICACY

Rex Karsten, University of Northern Iowa

ABSTRACT

This study answers a call for additional investigation of the computer self-efficacy (CSE)construct. The study compared two measures of CSE frequently employed in research concernedwith the behavioral factors influencing computer use. Statistical analyses provided evidence of theconvergent validity of the measures. The measures also demonstrated similar, significantrelationships with other study variables traditionally associated with CSE. In sum, both themeasures appear to capture general CSE, an individual's judgment of efficacy across multiplecomputer domains. In addition to providing research insight into the nature and measurement ofthe CSE construct, recommendations are offered regarding the choice of measures, measureadministration, and data collection that computer educators and trainers may find useful.

INTRODUCTION

Computer self-efficacy is defined as "…a judgment of one's capability to use a computer."(Compeau & Higgins, 1995: p. 192). The computer self-efficacy (CSE) construct has providedinsight into factors affecting skill development and the motivation to use computers (Marakas, Yi,& Johnson, 1998). Previous research, for example, indicates CSE plays a significant role in thedevelopment of computer skills (Gist, Schwoerer, & Rosen, 1989), an individual's decision to usecomputers (Compeau & Higgins, 1995), expectations of success with computers (Compeau, Higgins,& Huff, 1999), and computer-dependent course performance (Karsten & Roth, 1998a). While theearly research effort involving CSE has been fruitful and informative, the identification andmeasurement of CSE is of research and practical concern (Marakas et al., 1998). This concern hasled to a call for additional research that leads to improved measurement of CSE, and betterunderstanding of the nature of the CSE construct (Marakas et al., 1998).

This study answers this call through a comparison of two popular measures of CSE. A reviewof the literature indicates that versions of the CSE scales developed independently by Murphy,Coover and Owen (1989) and Compeau and Higgins (1995) have been two of the most frequentlyemployed measures in CSE studies conducted to date (Marakas et al. 1998). Though both measuresattempt to capture the same construct (Marakas et al., 1998), visual inspection of the respectivemeasures (see appendix) suggests obvious differences in approach to CSE assessment. Murphy etal. (1989) measure CSE as an individual's perceptions of his or her ability to accomplish specifictasks and activities involved in operating a computer. Compeau & Higgins (1995), on the otherhand, assess CSE as an individual's perceptions of his or her ability to use a computer applicationin the accomplishment of a job.

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Though both measures have provided meaningful insights into computing behavior, it isreasonable to ask if the two instruments capture the same CSE construct. Answering this questionappears likely to benefit both the research and applied communities. From a research perspective,a comparison of measures is a step toward improving and refining measurement of the CSEconstruct. From the applied perspective, such a comparison should assist computer educators andtrainers in the selection of the most relevant and informative available tool for assessing thecomputer skills and behaviors of students and trainees. Therefore, this study has several purposes:(a) to directly compare the two measures to determine if they are capturing the same construct, (b)to compare the nature of the information each measure supplies relevant to the assessment andunderstanding computing skills and behaviors (c) to identify any apparent advantages ordisadvantages in administration or analysis.

The paper is organized as follows. A brief overview of the self-efficacy and computer self-efficacy constructs is provided first. A review of the CSE literature relevant to the comparison oftwo CSE measures investigated is presented next. Study methodology is then described, followedby the presentation and discussion of study results. Study conclusions, limitations, and directionsfor future research complete the paper.

SELF-EFFICACY AND COMPUTER SELF-EFFICACY

Computer self-efficacy is based on self-efficacy, a well-established construct with its originsin Social Cognitive Theory (Bandura, 1986). Self-efficacy is the belief one has capability to performa specific task (Bandura, 1997). Individuals who perceive themselves capable of performing certaintasks or activities are defined as high in self-efficacy and are more likely to attempt and executethese tasks and activities. People who perceive themselves as less capable are less likely to attemptand execute these tasks and activities, and are accordingly defined as lower in self-efficacy (Barling& Beattie, 1983; Bandura, Adams, & Beyer, 1977).

Self-efficacy has three dimensions. Magnitude refers to the level of task difficulty thatindividuals believe they can attain. Strength indicates whether the conviction regarding magnitudeis strong or weak. Generality describes the degree to which the expectation is generalized acrosssituations (Gist, 1987). Estimations of self-efficacy are formed through a dynamic weighing,integration, and evaluation of complex cognitive, social, and personal performance experiences(Marakas et al., 1998). It is important to note that self-efficacy involves more than skill assessment.Self-efficacy reflects not only a perception of one's ability to perform a particular task based on pastperformance or experience but also forms a critical influence on future intentions. (Bandura, 1997).Studies across a wide range of research domains have consistently found self-efficacy to be a strongpredictor of subsequent task-specific performance. Readers are referred to Bandura (1997) and Gistand Mitchell (1992) for a more thorough review of the self-efficacy literature.

The insights offered by self-efficacy research, coupled with an increased interest in thevarious behavioral factors that can affect computer use and performance, has encouraged theidentification and measurement of CSE (Compeau & Higgins, 1995; Hill, Smith & Mann, 1998;Murphy et al., 1989). While a review of the literature indicates that most researchers agree that CSErefers to a judgment of one's ability to use a computer, there is less agreement regarding its

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measurement. In a meticulous review of forty studies involving the CSE construct, nearly halfemployed self-developed measures of CSE (Marakas et al., 1998). The measures reviewed variedin item number and content, level and dimensions of CSE assessed, and evidence of formalvalidation activities. Each of these characteristics is addressed in more detail in the discussion of thetwo CSE measures that follows. Readers are referred to Marakas et al. (1998) for a relatively recentand thorough review of the identification and measurement of the CSE construct.

THE CSE MEASURES

Both the Compeau and Higgins (1995) and Murphy et al. (1989) measures assess generalCSE, defined as "…an individual's judgment of efficacy across multiple computer domains."(Marakas et al., 1998: p. 129). General CSE can be thought of as a collection of all specific CSEs(e.g., word processor CSE, spreadsheet CSE, etc.) accumulated over time. As such, it may be mostuseful as a predictor of general performance within the diverse domain of computer-related tasksand activities (Marakas et al., 1998).

Initial examination of the two measures suggests they go about capturing CSE in decidedlydifferent ways. The measures differ in item number, item content, and the dimensions of self-efficacy assessed. Examples of each measure are provided in the appendix. The development andinitial test of the Compeau & Higgins (CHCSE) measure was originally reported in a 1995 study.It consists of ten items, ordered in ascending level of difficulty, which ask if an individual couldcomplete an undefined task using an undefined software package. For affirmative (YES) responses,individuals are then asked to indicate their confidence in that conviction on a 10-point, Likert-typeconfidence scale (scale anchors: 1 = "not at all confident", 10 = "totally confident). The measurecaptures two dimensions of CSE. CSE magnitude is operationalized as the number of "YES"answers to confidence scale items. CSE strength can be operationalized as the sum or mean of theresponses on the confidence scale, counting 0 for each "NO" response.

The development and initial test of the Murphy et al. (MCSE) measure was originallyreported in a 1989 study. The MCSE measure consists of thirty-two items that reflect a variety ofcomputer-related skills and knowledge. Each item begins with the statement "I feel confident…".

Individuals are asked to indicate their level of confidence via a 5-point Likert-type scale(scale anchors: 1 = "strongly disagree", 5 = "strongly agree). The MCSE measure captures the CSEdimension of strength only. CSE strength can be operationalized as the sum or mean of theresponses to the scale items.

Despite the apparent differences in measurement approach, both measures have providedinsights into computing behaviors and reasonable evidence of formal validation. The Compeau andHiggins (1995) study that developed and tested the CHCSE measure found significant relationshipsbetween CSE and an individual's outcome expectations regarding computer use, emotional reactionsto computers, and actual computer use. CSE was positively related to expectations of computersuccess, attitudes toward computers, and actual computer use. CSE was negatively related tocomputer anxiety (Compeau & Higgins, 1995). A recent, longitudinal study of individual reactionsto computing study that employed the same CHCSE measure confirmed many of the original studyfindings, and demonstrated that CSE remained a strong predictor of an individual's affect and

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computer use one year later. Compeau and Higgins have offered evidence of the construct validityof their CSE measure. The measure has demonstrated high internal consistency (reliability),empirical distinctiveness (discriminant validity), and was related as predicted to other constructs(nomological validity) (Compeau & Higgins, 1995, 1999).

The Murphy et al. (1989) study that developed and tested the MCSE measure found that the32 scale items loaded on three factors: beginning level, advanced level, and mainframe skills. Whilesubsequent analysis of the measure provides mixed support for the three factors originally identified(Marakas et al., 1998), the MCSE measure has provided insight into computing behaviors of use andinterest to computer educators and trainers. Harrison & Ranier (1992) found that age was negativelyrelated to CSE, computer experience was positively related to CSE, and males had significantlyhigher levels of CSE than females CSE (Harrison & Ranier, 1992a). Subsequent studies have shownthat participation in semester-long computer training can increase an individual's level of CSEregardless of age or gender (Karsten & Roth, 1998a, 1998b; Torkzadeh & Koufterous, 1994). Astudy that employed the MCSE measure also found a significant and positive relationship betweenCSE and computer-dependent course performance (Karsten & Roth, 1998a).

Studies employing the MCSE measure have also found CSE to be negatively related tocomputer anxiety and positively related to affirmative attitudes toward computers (Harrison &Ranier, 1992b). Such findings are offered as evidence of concurrent validity (Harrison & Ranier,1992b). The MCSE measure has consistently demonstrated high internal consistency (reliability)as well (Murphy et al., 1989; Harrison and Ranier, 1992a, 1992b; Torkzadeh & Koufterous, 1994).

In sum, the CHCSE and MCSE measures differ in content, length, and CSE dimensionsassessed. In spite of these apparent differences, both measures have been employed with somesuccess in multiple studies, and reasonable evidence in support of the construct validity of eachmeasure has been offered. A review of the literature, however, suggests that a test of the convergentvalidity of the measures has yet to be conducted. (Compeau & Higgins, 1995). The methodologyemployed in the comparison is presented next.

METHODOLOGY

Research subjects consisted of students enrolled in an introductory to information systemscourse at a midwestern university. Participation was voluntary, and confidentiality was guaranteed.The survey questionnaire was administered the first day of class, before computer trainingcommenced. The questionnaire collected two types of demographic data, AGE and GENDER, thathave been significantly associated with CSE in previous research (Harrison & Ranier, 1992a;Marakas et al. 1998). In addition, three separate measures of self-reported computer use werecollected: total years of computer experience (COMPEX), the number of prior computer coursescompleted that included computer training and use (COURSES), and the frequency of normalcomputer usedaily, weekly, monthly, or less than monthly prior to enrollment (NORMUSE).Again, all three variables have exhibited significant relationships with CSE in prior studies (Harrison& Ranier, 1992a; Karsten 1998a, 1998b). The categorical variables GENDER and NORMUSE weredummy coded when used in the regression analyses (Pedhazur, 1982).

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The questionnaire alternated the presentation of the CSE measures to prevent any orderingeffect. The ten-item Compeau & Higgins (1995) measure, slightly modified to acknowledge its usein an academic setting, was originally scored in one of the two possible ways recommended by theauthors. CSE magnitude was determined by counting the number of "YES" answers. Summarizingthe responses on the confidence scale, counting a zero for a "NO" response assessed CSE strength.Preliminary analysis found the measure of CSE strength to be much more informative than themeasure of CSE magnitude. In this study, extensive statistical analysis indicated that the magnitudescore did not increase the explanatory power of the instrument when examined alone or inconjunction with CSE strength. Consequently, CSE as measured by the Compeau & Higginsmeasure (CHCSE) is the computed mean score on the confidence scale items, and reflects CSEstrength. A higher mean CHCSE score indicates a higher level of CSE.

The thirty-two item Murphy et al. (1989) measure assesses CSE strength only. CSE strength(MCSE) was the computed mean score on the scale items. In similar fashion to the previousmeasure, a higher mean MCSE score indicates a higher level of CSE. In sum, both CHCSE andMCSE are measures of CSE strength.

Correlational analysis (Pearson r) was first used to assess the relationship between the twomeasures. In separate multiple regression analyses, each measure was then regressed on AGE,GENDER, COMPEX, COURSES and NORMUSE to determine the relationship of these variablesto CHCSE and MCSE. The results of the independent regression analyses permitted the comparisonof the two measures in terms of the amount of variance explained. Where appropriate, t-tests,ANOVA, and post hoc comparisons were also used to determine the significance and direction ofthe relationships among the study variables of interest.

RESULTS AND DISCUSSION

Both measures demonstrated high internal consistency. The reliability coefficients(Cronbach's alpha) for the CHCSE and MCSE measures were .935 and .965, respectively.As demonstrated in Table 1, the study sample consisted of 176 individuals, 101 males (57.4%) and75 females (42.6%). The mean age of the respondents was 20.3 years, reflecting the fact that moststudents in the course that provided the sample enroll in their sophomore and junior year. Table 1also shows that while students on average reported a considerable number of years of computerexperience (Mean = 5.31), over 70% indicated they had taken two or fewer courses providingcomputer instruction and requiring computer use to date (Mean = 1.14). In regard to normalcomputer use, 27.8% use a computer on a daily basis, 50% use a computer weekly, 13.6% use acomputer on a monthly basis, while 8.6% use a computer less than once a month. Finally, Table 1displays the scale range and computed overall mean for each measure (CHCSE M = 5.69, SD =1.89; MCSE Mean = 3.53, SD = .69).

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Table 1: Study Variables

Gender (GENDER) Males Females

Total Participants

N 101 75 176

% 57.4 42.6 100.0

Age (AGE)

Years < 19 19-20 21-22 > 22 Mean Median Mode

N 8 103 43 22 20.3 20.0 20

% 4.6 58.6 24.4 12.4

Computer Experience (COMPEX)

Years < 2 2-3 4-5 > 5 Mean Median Mode

N 26 36 58 56 5.31 4.00 4.0

% 14.8 20.4 32.9 31.9

Prior Computer Courses (COURSES)

# Courses 0 1-2 3-4 > 4 Mean Median Mode

N 84 43 25 24 1.14 1.00 0

% 47.7 24.4 14.3 13.6

Normal Computer Use (NORMUSE)

Frequency Daily Weekly Monthly < Monthly

N 49 88 24 15

% 27.8 50.0 13.6 8.6

Computer Self-Efficacy Scores

Measure Item Scale Range Mean St. Dev.

Compeau & Higgins (CHCSE) 0 -10 5.69 1.89

Murphy et al. (MCSE) 1-5 3.53 .69

Table 2 presents the study variable correlations. Of importance, the correlation betweenCHCSE and MCSE scores was significant and positive (r = .741, p < .05). This initial comparisonprovides evidence a strong relationship does appear to exist between the two measures of CSE.Examination of the bivariate correlations of the remaining non-categorical variables with CHCSEand MCSE indicated neither was significantly correlated with age. A significant, positive correlationbetween prior computer COURSES and CHCSE (r = .318, p < .05) and MCSE (r = .345, p < .05)respectively was also indicated. Prior computer experience was significantly correlated with theMCSE measure only (r = .152, p < .05).

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Table 2: Study Variable Correlations

CHCSE MCSE GENDER AGE COMPEX COURSES NORMUSE

CHCSE 1.000

MCSE .741* 1.000

GENDER .188* .176* 1.000

AGE -.020 -.018 .187* 1.000

COMPEX .111 .152* .091 .008 1.000

COURSES .318* .345* .127 .001 .056 1.000

NORMUSE -.444* -.470* .040 -.075 -.173 -.183* 1.000

Significance level: * p < .05 (GENDER & NORMUSE are categorical variables)

The results of the separate regression analyses conducted for the CHCSE measure and theMCSE measure are displayed in Table 3 and Table 4, respectively. As shown in Table 3, theindependent variables accounted for approximately 29% of the variance in CHCSE (Adjusted RSquare = .290, F = 11.21, p < .001). In contrast, Table 4 shows that the same independent variablesexplained approximately 35% of the variance in MCSE (Adjusted R Square = .350, F = 14.28, p <.001).

Table 3: Multiple Regression AnalysisDependent Variable = CHCSE (Compeau & Higgins)

Multiple R .564

R Square .318

Adjusted R Square .290

F = 11.21 Significance of F = .000*

Variables Beta Std. Beta T Sig T

AGE -.002 -.079 -1.205 .230

GENDER .680 .191 2.868 .005*

COMPEX .001 .010 .148 .882

COURSES .149 .197 2.980 .003*

D1 (NORMUSE) 2.520 .598 5.222 .000*

D2 1.010 .267 2.250 .026

D3 .348 .063 .659 .511

Significance level: * p < .001

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Table 4: Multiple Regression AnalysisDependent Variable = MCSE (Murphy et al.)

Multiple R .613

R Square .367

Adjusted R Square .350

Variables Beta Std. Beta T Sig T

AGE -.001 -.070 -1.096 .275

GENDER .218 .167 2.601 .010*

COMPEX -.001 .053 .852 .395

COURSES -.005 .195 2.980 .003*

D1 (NORMUSE) .992 .647 5.725 .000*

D2 .316 .229 1.953 .053

D3 .194 .097 1.032 .304


While the proportion of variance accounted for by the independent variables differs, theindependent variables exhibited similar relationships, in terms of significance, with each measure.Age was not a significant predictor of CHCSE or MCSE, not a surprising finding given thehomogeneity of the sample, as demonstrated by the measures of central tendency for AGE providedin Table 1.

Table 5: t-test Analyses for CSE Differences Based on GENDER

Measure = CHCSE N Mean St. Dev t-value p

Males 75 5.99 1.88

Females 101 5.31 1.88 -2.35 .020*

Measure = MCSE N Mean St. Dev t-value P

Males 75 3.64 .68

Females 101 3.38 .69 -2.41 .017*


Gender, however, was significantly related to both measures. The follow up t-test analysesdisplayed in Table 5 found significant differences in CSE between males and females on both themeasures. Males had significantly higher levels of CSE on the CHCSE (Male Mean = 5.99, SD =1.88, Female Mean = 5.31, SD = 1.88, p = .020) as well as the MCSE measure (Male Mean = 3.64,

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SD = .68, Female Mean = 3.38, SD = .69, p = .017). Marakas et al. (1998) have noted that whilethe majority of CSE studies they reviewed acknowledge the known relationship between gender andCSE, they are often characterized by an imbalance of subjects with regard to gender. Whether theratio of male subjects (101) to female subjects (75) constitutes an imbalance that contributes theobserved gender effect is unknown.

Two of the three measures of computer use, COURSES and NORMUSE, were significantpredictors of CHCSE and MCSE. The number of prior courses that required computer training anduse, and the frequency of normal computer use were significantly related to both dependentvariables. Years of computer experience, which showed a significant, positive bivariate correlationwith the MCSE measure may have been subsumed by the other measures of computer use. Theseresults are in keeping with prior researchit is not the quantity of computer experience, but ratherthe quality of that experience in terms of its influence on efficacy beliefs that appears to matter (Hillet al., 1987; Karsten & Roth, 1998a).

In order to better understand the finding regarding normal computer use, separate ANOVAswere conducted and post hoc Bonferroni pairwise comparisons (Keppel, 1991) were made todetermine the source of the significant relationship with the CHCSE and MCSE measures. As Table6 shows, those respondents who used computers on a daily basis had significantly higher CHCSEscores (Mean = 7.089, SD = 1.557) and MCSE scores (Mean = 4.116, SD = .600, p < .05) than didthe members of the other three groups. It is interesting, and CSE research would predict, thatdeclining mean CSE scores correspond with declining frequency of computer use. No significantdifferences were found in pairwise comparisons of the other group means.

Table 6: NORMUSE Means by Category

NORMUSE NCHCSEMean

CHCSESt. Dev.

MeanDifference*

MCSEMean

MCSESt. Dev.

MeanDifference*

Daily 49 7.089 1.557 4.116 .600

Weekly 88 5.362 1.594 1.727** 3.348 .583 .767**

Monthly 24 4.912 1.700 2.177** 3.293 .458 .823**

> Monthly 15 4.320 2.324 2.769** 3.026 .719 1.089**

Overall 176 5.693 1.895 3.531 .691

* Mean difference from Daily. Post hoc Bonferroni pairwise comparisons indicated significant mean differences existed between the Daily mean and every other group mean. No significant mean differences were found among the other group means.

Significance level: ** p < .05

CONCLUSIONS, LIMITATIONS, AND DIRECTIONS FOR FUTURE RESEARCH

This study had several objectives. The first objective was to compare two frequentlyemployed measures of CSE to determine if they capture the same construct. The results of the

30


analyses conducted in this study offers evidence that they do, at least with respect to the sample andstudy variables employed here. Visual examination of the Compeau and Higgins (1995) measuresuggests an apparent focus on efficacy with a computer application. On the other hand, the Murphyet al. (1989) measure appears more concerned with efficacy concerning basic computer skills andknowledge. Yet the analysis suggests both are tapping into what Marakas et al. (1998) refer to asgeneral CSE, an individual's judgment of efficacy across multiple computer domains.

The second objective was to determine which of the two measures is appear to be mostpractically informative in an applied sense. For the study sample and study variables employed here,the Murphy et al. (1989) measure appeared to have some advantages over the Compeau and Higgins(1995) measure. As reported, the same set of study variables accounted for more variance in theMurphy et al. measure. In addition, a simple inspection of the mean scores for individual items onthe Murphy measure offers meaningful insight into activity-specific perceptions of efficacy.Analysis of scale items may permit computer educators or trainers to pinpoint specific training needs(Gist, 1987). On the other hand, the computer application-job accomplishment orientation of theCompeau and Higgins measure might be informative when used to assess the CSE of moresophisticated computer users, or where efficacy in the use of software packages is the prime concern.The final objective was to identify any apparent advantages or disadvantages in measureadministration, data collection, or analysis. Both measures take little time to complete. Less thanfifteen minutes was required to collect the demographic data and all the measures employed in thisstudy. As mentioned in the methodology section, the Compeau and Higgins measure of CSEmagnitude (the number of "YES" responses to confidence scale items) did not yield additionalinsight and was discarded from this analysis. Since the magnitude dimension of CSE has beenvaluable in other research (Bandura, 1997), this finding may be limited to this study. On a relatedmatter, however, a change in the manner data is collected is recommended. Rather than requiring"YES" and "NO" responses for each item and subsequently counting "NO" as zero, it would seemmore intuitive for the user and an aid to data entry to modify the confidence scales to use a 0 to 10scale format. The latter format is equivalent and acceptable according to Bandura (1997).

The main concern regarding the Murphy et al. measure would be maintaining its timelinessand relevance to current and future computing skills. Items such as "I feel confident writing simpleprograms for the computer" or "I feel confident working on a mainframe computer" seem less likelyto help define CSE as time passes.

The limitations of this study have already been alluded to, and suggest directions for futureresearch. The study sample consisted of traditional college students, the majority of whom were 19to 20 years of age. Comparing the measures using a more diverse sample is recommended, and mayoffer additional insight. In addition, employing other measures of computer use, as well as objectivemeasures of skill and performance in the comparison is desirable. Finally, while the two measuresanalyzed here have offered meaningful insight into the factors affecting computer use, the continueddevelopment, improvement and refinement of these and other measures is necessary to enhance ourunderstanding of the CSE construct.

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REFERENCES

Bandura, A. (1997). Self-Efficacy: The Exercise of Control. New York: W. H. Freeman &Company.

Bandura, A. (1986). Social Foundations of Thought and Action. Englewood Cliffs: Prentice Hall.Bandura, A., Adams, N.E. & Beyer, J. (1977). Cognitive processes mediating behavioral change.

Journal of Personality and Social Psychology, 35(3), 125-139.Barling, j. & Beattie, R. (1983). Self-efficacy beliefs and sales performance. Journal of

Organizational Behavior Management, 5, 41-51.Compeau, D.R. & Higgins, C.A. (1995). Computer self-efficacy: Development of a measure and

initial test. MIS Quarterly, 19(2), 189-211.Compeau, D.R., Higgins, C.A., & Huff, S. Social cognitive theory and individual reactions to

computing technology: A longitudinal study. MIS Quarterly, 23(2), 145-158.Gist, M.E. (1987). Self-efficacy: Implications for organizational behavior and human resource

management. Academy of Management Review, 12(3), 472-485.Gist, M.E. & Mitchell, T.R. (1992). Self-efficacy: A theoretical analysis of its determinants and

malleability. Academy of Management Review, 17(2), 183-211.Gist, M.E., Schwoerer, C. & Rosen, B. (1989). Effects of alternative training methods on self-

efficacy and performance in computer software training. Journal of Applied Psychology,74(6), 884-891.

Harrison, A.W. & Ranier, K. (1992a). The influence of individual differences on skill in end-usercomputing. Journal of Management Information Systems, Summer, 9(1), 93-111.

Harrison, A.W. & Ranier, R.K. (1992b). An examination of the factor structures and concurrentvalidities for the computer attitude scale, the computer anxiety rating scale, and the computerself-efficacy scale. Educational and Psychological Measurement, 52(3), 735-745.

Hill, T., Smith, N.D. & Mann, M.F. (1987). Role of self-efficacy expectations in predicting thedecision to use advanced technologies: The case of computers. Journal of AppliedPsychology, 72(2), 307-313.

Karsten, R. & Roth, R.M. (1998a). The relationship of computer experience and computer self-efficacy to performance in introductory computer literacy courses. Journal of Research onComputing in Higher Education, 31(1), 14-24.

Karsten, R. & Roth, R. M. (1998b). Computer self-efficacy: A practical indicator of studentcompetency in introductory IS courses. Informing Science, 1(3), 61-68.

Keppel, G. (1991) Design and Analysis: A Researcher’s Handbook, Prentice Hall: New Jersey. Marakas, G.M., Yi, M.Y. & Johnson, R.D. The multilevel and multifaceted character of computer

self-efficacy: Toward clarification of the construct and in integrative framework for research.Information Systems Research, 9(2), 126-163.

Murphy, C.A., Coover, D. & Owen, S.V. (1989). Development and validation of the computer self-efficacy scale. Educational and Psychological Measurement, 49, 893-899.

Pedhazur, E.J. (1982). Multiple Regression in Behavioral Research: Explanation and Prediction.Fort Worth: Holt, Rinehart and Winston.

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Torkzadeh, G. & Koufteros, X. (1994). Factorial validity of a computer self-efficacy scale and theimpact of computer training. Educational and Psychological Measurement, 54(3), 813-821.

APPENDIXComputer Self-Efficacy Scale (Murphy, Coover & Owen, 1989)

Five-Point Likert-type Scale: 1 = Strongly Disagree, 5 = Strongly Agree

I feel confident entering and saving data (words and numbers) into a file.I feel confident calling up a data file to view on a monitor screen.I feel confident storing software correctly.I feel confident handling a floppy disk correctly.I feel confident escaping/exiting from a program or software.I feel confident making selections from an on-screen menu.I feel confident copying an individual file.I feel confident using the computer to write a letter or essay.I feel confident moving the cursor around the monitor screen.I feel confident working on a personal computer (microcomputer).I feel confident using a printer to make a "hardcopy" of my work.I feel confident getting rid of files when they are no longer needed.I feel confident copying a disk.I feel confident adding and deleting information to and from a data file.I feel confident getting software up and running.I feel confident organizing and managing files.I feel confident understanding terms/words relating to computer software.I feel confident understanding terms/words relating to computer hardware.I feel confident describing the function of computer hardware (keyboard, monitor, disk drives,processing unit).I feel confident troubleshooting computer problems.I feel confident explaining why a program (software) will or will not run on a given computer)I feel confident understanding the three stages of data processing: input, processing, output. I feel confident learning to use a variety of programs (software).I feel confident using the computer to analyze number data.I feel confident learning advanced skills within a specific program (software). feel confident using the computer to organize information.I feel confident writing simple programs for the computer.I feel confident using the user's guide when help is needed.I feel confident getting help for problems in the computer system.I feel confident logging onto a mainframe computer system.I feel confident logging off a mainframe computer system.I feel confident working on a mainframe computer.

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Modified Computer Self-Efficacy Scale(from Compeau & Higgins, 1995)*

Often in your courses you are told about software packages that are available to makecoursework easier. For the following questions, imagine that you were given a newsoftware package for a course assignment. It doesn’t matter specifically what thissoftware package does, only that it is intended to make your assignment easier andthat you have never used it before.

The following questions ask you to indicate whether you could use this unfamiliarsoftware package under a variety of conditions. For each of the conditions, pleaseindicate whether you would be able to complete the assignment using the softwarepackage. Then, for each condition that you answered “yes”, please rate yourconfidence about your first judgment by circling a number from 1 to 10, where 1indicates “Not At All Confident,” 5 indicates “Moderately Confident,” and 10indicates “Totally Confident.” For example, consider the following sample item:

I COULD COMPLETE THE ASSIGNMENT USING THE SOFTWAREPACKAGE…

NOT AT ALLCONFIDENT

MODERATELYCONFIDENT

TOTALLYCONFIDENT

…if there was someone givingme step-by-step instructions

TYES 1 2 3 4 T5 6 7 8 9 10

NO

The sample response shows the individual felt he or she could complete the assignment using thesoftware with step-by-step instructions (YES is checked) and was moderately confident he or she coulddo it (5 is checked).

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Modified Computer Self-Efficacy Scale(from Compeau & Higgins, 1995)*

(Continued)

NOT AT ALLCONFIDENT

MODERATELYCONFIDENT

TOTALLYCONFIDENT

...if there was someone aroundto tell me what to do

YES 1 2 3 4 5 6 7 8 9 10

NO

…if I had never used apackagelike it before

YES 1 2 3 4 5 6 7 8 9 10

NO

…if I had only the softwaremanuals for reference

YES 1 2 3 4 5 6 7

NO

…if I had seen someone elseusing it before trying it myself

YES 1 2 3 4 5 6 7 8 9 10

NO

…if I could call someone forhelp if I go stuck

YES 1 2 3 4 5 6 7 8 9 10

NO

…if someone else helped meget started

YES 1 2 3 4 5 6 7 8 9 10

NO

…if I had a lot of time to complete the assignment forwhich the software wasintended

YES 1 2 3 4 5 6 7 8 9 10

NO

…if I just had a built-in helpfacility for assistance

YES 1 2 3 4 5 6 7 8 9 10

NO

…if someone showed me howto do it first

YES 1 2 3 4 5 6 7 8 9 10

NO

…if I had used similarpackages before this one to dothe same assignment

YES 1 2 3 4 5 6 7 8 9 10

NO

* Scale items have been compressed for presentation here

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THE DATA COMMUNICATIONS COURSE WITH ADEDICATED LAB: DESIGN, IMPLEMENTATION,

AND STUDENT ASSESSMENT

Jong-Sung Lee, Middle Tennessee State UniversityJ. Lee Maier, Middle Tennessee State University

ABSTRACT

Creating a classroom environment that provides students with valuable hands-on experiencesrepresents a formidable challenge for many courses. One of the most challenging is the course indata communications because a hands-on project in this course may be costly, time consuming, orinterrupt services to students other than those taking the data communications course. This paperpresents a way that a computer lab dedicated to the data communications course can be implementedfor less than $600. It looks at preliminary course design, faculty preparation, lab project design,hardware/software acquisition, and student assessment.

INTRODUCTION

A major limitation of data communications courses offered in Computer Information /Management Information Systems (CIS/MIS) undergraduate programs is the lack of a hands-onnetwork experience. To gain this experience, students need ready access to client/server hardwareand software that allow them to actually install and manage various network configurations.Traditional department or college computer labs typically do not meet this need. In these labs,students come in contact with either stand-alone computers or client computers that have applicationssoftware installed for their diversified uses. Usually, students are not allowed to use or program theserver computers. The need for a hands-on network experience necessitates a lab that is dedicatedsolely to the data communications course. The major obstacles to creating an environment thatprovides for a hands-on network experience are the expense and availability of computer resources.If the computer and other hardware resources are not available, the must be acquired. If computerresources are available, they are usually restricted to demonstration purposes and students have noopportunity to actually use them. As a consequence, most data communications courses in CIS/MISprograms are taught using textbooks only. In this environment, the likelihood that a student will gaina valuable hands-on data communications experience is virtually nil.

The main areas of concern when developing a dedicated data communications lab are facultypreparation, adequate physical space, resource procurement and testing, and course design,implementation, and assessment. While all of these are major considerations, the focus of this paperis on the design, implementation, and assessment of a course that incorporates a dedicated lab

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experience. A brief discussion of faculty preparation, physical space, resource procurement andtesting is provided to give a fuller understanding of the courses total development.

FACULTY PREPARATION

Few CIS/MIS departments are fortunate to find and hire faculty with both the education andthe experience to design, install, and manage data communications systems. Most graduate programsin CIS/MIS require students take a course in data communications but these courses, like mostundergraduate courses, do not provide for a hands-on experience. As a consequence, the facultymember selected to teach a course with a hands-on component may require specific training beforebeing able to teach the course. Taking courses or attending formal training programs can provide thefaculty member with the requisite technical skill. However the technical skill is acquired, it must begained prior to the course’s implementation. This may add significantly to the lead-time needed toimplement the course.

PHYSICAL SPACE

Creating a dedicated lab for the data communications course does not necessarily demand alarge physical space. One factor to consider in finding a room of adequate size is the number ofcomputers and other devices to be installed in the lab. Figure 1 presents a model of the minimalhardware requirements believed necessary to implement an effective lab. Implementation of thismodel requires little physical space. A second important factor is the number of students that willbe using in the lab at any one time. This factor is influenced by course design and whether studentswill be working in a team/group environment or individually. The team/group approach may requireless space than individual approach.

RESOURCE PROCUREMENT AND TESTING

A suggested minimal lab design capable of providing an excellent hands-on experience callsfor three network configurations: (1) a stand-alone, Windows NT-based small PC network; (2) astand-alone, Novell Netware-based PC network; and (3) a “site” network composed of the two stand-alone PC networks connected to the Internet. The site network is shown in Figure 1. This modelprovides the student with experience in the basic design, installation, and management of networksin two important areas: first, in two widely used network systems and second, in connecting these twonetworks to the Internet via a switching device. The minimum resource requirements for thesenetworks are space, hardware, software, communication devices, and media. Limited financialresources will necessitate a great deal of creativity and innovation to implement the suggestedconfiguration. For information purposes, the following discussion describes how it was actuallyaccomplished for less than $600.

A small, but adequate, office space with an Internet connection and furniture was providedby the CIS Department. Hardware needs associated with the site network configuration shown inFigure 1 call for 2 server and 4 client computers. In addition, 2 backup computers were included in

37


the requirements. Because of limited financial resources, these 8 computers were acquired by“cannibalizing” 11 faculty replacement computers that were made available from within the college. A used printer was provided. Purchases included 32 MB RAM, NT server software, a demo versionof Novell Netware 5 software, two hubs, one switch, and 10 feet of UTP wiring. The total cost forthe needed resources to implement the site network configuration was $ 553.24. Obviously, the costwill be considerably higher if all items of hardware and software have to be purchased new.

Before declaring the lab ready for course use, each of the two PC networks was installed andtested by the professor. Basic applications such as file transfer and printer service were demonstratedsuccessfully. (See Figure 1). After testing the two stand-alone networks, the site network wasconstructed, connected to the Internet, and successfully tested. Approximately 4 months wereneeded to acquire needed resources and design, install, and test the 3 configurations.

COURSE DESIGN

The goal of this course is to teach data communications theory and network development inthe organizational context. Ideally, classroom discussion based on textbook material should besupplemented with hands-on projects in networking. For this reason, 40% of a student’s grade wasbased on the student’s performance in a team/group hands-on data communications project. Theremaining 60 % of the grade was made up of quizzes and exams based on the particular datacommunications concept being covered. The project was divided into three phases as describedbelow. For these phases, it was necessary to develop user/technical manuals for the students’ use.Each phase was preceded by a description and discussion of these manuals.

Phase 1: Students are required to develop a Windows NT-based PC network with one serverand two clients. The students must set up and install the physical wire connection between thecomputers and the hub. They are also required to install and configure the communication systemsoftware. In each step of the installation process, relevant communication topics that were coveredin the classroom discussion were re-emphasized. Following configuration and installation, eachsystem component has to be successfully tested. For the test, a text file must be created in the clientsand saved on the server to illustrate the concepts of file server computing. To gain a fullerunderstanding of the concepts of client/server computing, a second text file must be created. Thisfile is to be created partially in a client and partially in the server and saved on both the server andthe client computers. Students are also responsible for mapping a server disk folder into the clientPCs. To compete the project and further demonstrate client/server processing, the network printerserver and the internal mail server have to be configured and successfully tested. Two hours areallowed for Phase 1 and students are required to provide a written report of their actions.

Phase 2: Students are required to develop a Novell Netware-based PC network with oneserver and two client computers. Basically, they must accomplish the same activities as in Phase 1with the exception of installing the printer and mail servers. A maximum of 1 hour is allowed forPhase 2.

Phase 3: Students are required to develop a site network that combines the PC networksdeveloped in Phase 1 and Phase 2. They must connect the hubs in the PC networks to the switch.Students must successfully demonstrate simple file processing and client/server processing as they

38


did in Phase 1 and Phase 2 but, this time across the two PC networks. Additionally, the students haveto complete the physical connection of the switch to the Internet. To test this connection, the studentsare required to configure the TCP/IP in the client computers and successfully browse the Web. Onehour and thirty minutes are allowed to accomplish Phase 3.

COURSE IMPLEMENTATION

The best way to give the students maximum hands-on experience is to have each individualstudent complete the entire project. Typically, because of the large number of students taking thedata communications course, this is not feasible. Consequently, students are placed into teamsconsisting of 4-5 members. Course time constraints dictated that the lab project be divided into 2blocks. The first block requires students to implement Phase 1 and begins in the 5th week of the term.The second block requires students to implement Phase 2 and Phase 3 and begins in the 10th week.Students were required to form their project groups by the third week of the term. At the time teamsare formed, lab appointments are scheduled from the available lab hours. Each block is divided into5 parts and each team member is required to complete one of the five parts while the other membersobserve carefully. A team member working on his/her assigned part is allowed to receive onlyminimal help from other students. The blocks with their respective parts are as follows:

Block 1 (Implements Phase 1):Part 1: Wiring and installation of the Windows NT server program.Part 2: Configuring the server and the first client. Accomplishing a file server and

client/server computing example using a simple text file.Part 3: Configuring the server and the second client. Accomplishing a file server and

client/server computing example using a simple text file.Part 4: Installing and executing the network printer server.Part 5: Installing and executing the internal mail server.

Block 2 (Implements Phase 2 and Phase 3):Part 1: Wiring and installation of the Novell Netware server program.Part 2: Configuring the server and the first client. Accomplishing a file server and

client/server computing example using a simple text file.Part 3: Configuring the server and the second client. Accomplishing a file server and

client/server computing example using a simple text file.Part 4: Wiring and configuring the servers and clients for the site network model.Part 5: Wiring and configuring the site network to the Internet.

To provide each team the opportunity to install and configure the network software, thenetwork server operating system in the server is reformatted after each group completes their project.For the same reason, the client computers’ network configuration was also reset so that the next group

39


can configure the client computer. The professor was present to provide minimal help. Afterfinishing each part of the project, all the members of each team met at their preferred time and placeto prepare the required reports. The course was implemented with the required hand-on project inthe two semesters of the1999-2000 academic year. The only difference between the two semesterswas to rewrite and expand the operations manuals to include more detailed material and instructions.

COURSE ASSESSMENT

A survey was developed to evaluate students’ perceived usefulness/importance of their hands-on lab experience. The survey was given to the students at the end of each semester. Fifty- sixstudents responded in the fall semester and 71 in the spring semester. The goal was to determinewhether students believed the lab project significantly contributed to the their learning andunderstanding of data communications concepts. For this purpose, the following questions wereasked.

q How much do you believe your overall experience in the lab and the reports contributed to yourlearning of data communications and networking?

q How much do you believe you could have learned about data communications and networking withclassroom discussion only, that is, without the hands-on experience at the lab?

Students responded on a 0 through 9 scale (0 for least and 9 for most). A two-sample t-testwas used to test the hypothesis that the hands-on lab experience made a significance difference in thestudents’ perceived learning experience. Table 1 presents the test results. The p-value and thesummary measures strongly suggest that the students believe the lab project contributed significantlyto their learning experience.

Table 1Result of T-Test for Contribution of the Lab Project

N Mean StDev SE Mean

Question 1 127 7.09 1.74 0.15

Question 2 127 3.42 2.15 0.19

Two sample T for Question 1 vs Question 295% CI for mu Question - mu Question: ( 3.19, 4.15)T-Test mu Question = mu Question (vs <): T = 14.94 P = 1.0 DF = 241

A comparison was also made of the students’ perceived learning experience between the falland spring semesters. Table 2 presents the results of the two-sample t-test used to this comparison.Again, the extremely high p-value suggests that the students’ perception on learning was significantly

40


higher in the spring (second) semester than in the fall (first) semester. This difference is believed tobe the result of the instructor’s better preparation and improved manuals.

Table 2Result of T-Test for Contribution of the Lab

Project in the Two Semesters

N Mean StDev SEMean

Spring 71 7.41 1.74 0.21

Fall 56 7.27 1.70 0.15

95% CI for mu Spring - mu Fall: ( 0.13, 1.33)

T-Test mu Spring = mu Fall (vs <): T = 2.41 P = 0.99 DF = 120

The survey also sought to collect information about the students’ perception of the importanceof the required reports to their learning experience. To do this, the following questions were asked

1. How much to you believe your experience in the lab only (that does not include reports) contributedto you learning data communications and networking concepts?

2. How much do you believe your experience in the lab, including report writing, contributed to youlearning data communications and networking concepts?

The data in Table 3 suggest that there is no perceived difference in the learning experience betweenaccomplishing the lab only and the lab with reports (question 1 and question 2 above). Based on theresults and for the sake of saving time during the course, reports will be discontinued.

Table 3Result of T-Test for Contribution of Reports

Two sample T for Question 1 and Question 21

N Mean StDev SEMean

Question 1 127 7.09 1.74 0.15

Question 2 127 7.27 1.70 0.15

95% CI for mu Question 1 – mu Question 2: (-.061, 0.24)

T-Test mu Question 1 = mu Question 2 ( vs not =): T = -0.84 P = 0.40 DF = 251

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Table 4 presents the students’ perceived importance of the activities involved in the project.As might be expected, wiring was not perceived to be very important relative to the importance givento network management concepts and skills.

Table 4Mean Responses to Project Activities

Activities Mean Responses

Wiring 6.46

Installation of the server programs 7.65

Network management 8.05

Installing and running application programs 7.44

The questionnaire also had two open-end questions. The first of these questions was aboutthe contribution of the hands-on experience in the lab to students’ learning data communications.All the students who responded wrote favorable remarks. Some of these are listed below:

1. The lab to me was the best part. I wish that more lab or demonstration could be done in class.2. Hands-on experience is the easiest way for me to learn. The lab greatly enhanced my learning

experience in data communications.3. The lab was the bomb. The book was all theory oriented. It was nice to learn how networks

work in theory, but actually building a network was great. It added loads to myunderstanding of how a network works and I used that experience at work now.

4. I believe that the hands-on experience was extremely helpful in aiding my ability tounderstand what was going on. It makes things much clearer.

5. The hands on experience provided a better insight into the operations of the systems in thedifferent operating environment. Also makes the class a better experience in that this coursehas a practical application in the real world and only through practice do you truly learn theworkings of the systems and course information.

6. Hands on is the ticket, it's like driving to some place new. If you drive, you remember theway.

The second open-ended question concerned the students’ recommendations for improving thelab experience. As might be expected, because of the resources used to create the lab, most of thestudents indicated they wanted more physical space, more time for the project, better hardware andmore applications. These comments, as well as the other responses, form the basis for makingchanges and improvements. Again, limited financial resources may dictate whether or not some ofthe recommendations can be accommodated. However, because of these comments, changes are

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underway to replace the Windows NT software with Windows 2000 and LINUX software will bealso be included.

CONCLUSION

This article presents a practical and inexpensive way to design and implement a datacommunications course with a dedicated lab. Even though a lab can be developed with very limitedresources, results from the students’ surveys indicate that the lab had a very positive impact on theirlearning experience. The survey responses also provide important recommendations and suggestionsfor improving the course.

The goal of the data communications course is to provide material and instruction relative thedesign and theory of data communications in an organizational context. The dedicated lab providesa controlled environment in which receive a valuable hands-on experience that makes their classroomdiscussions come alive and contributes to their competitiveness in the job market.

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FIGURE 1THE SITE NETWORK

To the Internet

Windows NT Server Novell Netware Server

Switch

Hub HubPrinter

NT Client 1 NT Client 2 Netware Client 1 Netware Client 2

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DEVELOPMENT OF THE ACADEMIC FIELD OFFINANCE: A PARADIGMATIC APPROACH

Kavous Ardalan, Marist College

ABSTRACT

Any adequate analysis of the current state of affairs in mainstream academic financenecessarily requires fundamental understanding of the world views underlying explanations of thecourse of the development of science, in general, and finance, in particular. This paper provides fourexplanations, each based on one of the four possible fundamental, broad world views. It, therefore,starts with a discussion of how any worldview can be positioned on a continuum formed by four basicparadigms: functionalist, interpretive, radical humanist, and radical structuralist. It looks at thecurrent state of mainstream academic finance and notes that it is founded on the functionalistparadigm. Next, the paper argues that any explanation, of the course of the development of academicfinance to its current state, is based on one of the worldviews. It provides four explanations for thecourse of the development of science, in general, and finance, in particular. Each explanation isbased on one of the four paradigms mentioned previously. Finally, the paper emphasizes that thesefour explanations are equally scientific and informative; they look at the process of the developmentof academic finance from a certain paradigmatic viewpoint.

INTRODUCTION

Any adequate analysis of the current state of affairs in mainstream academic financenecessarily requires fundamental understanding of the world views underlying explanations of thecourse of the development of science, in general, and finance, in particular. This paper provides fourexplanations, each based on one of the four possible fundamental, broad world views. It, therefore,starts with a discussion of how any worldview can be positioned on a continuum formed by four basicparadigms: functionalist, interpretive, radical humanist, and radical structuralist. It looks at thecurrent state of mainstream academic finance and notes that it is founded on the functionalistparadigm. Next, the paper argues that any explanation, of the course of the development of academicfinance to its current state, is based on one of the worldviews. It provides four explanations for thecourse of the development of science, in general, and finance, in particular. Each explanation is basedon one of the four paradigms mentioned previously. Finally, the paper emphasizes that these fourexplanations are equally scientific and informative; they look at the process of the development ofacademic finance from a certain paradigmatic viewpoint.

The functionalist paradigm has provided the framework for current mainstream academicfinance, and accounts for the largest proportion of theory and research in its academic field. This hasbeen a topic for debate, both in the past and present. However, there has been no comprehensiveaccount of: "How and why academic finance has reached its current state of affairs?"

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More specifically, there was a heated debate in the not too distant past. (Horrigan reminds us:"Our sense of finance history is really astonishing. We all seem to think that finance as a subjectstarted about 1960, even though we know its origins go back a lot further than that." Frankfurter,Carleton, Gordon, Horrigan, McGoun, Philippatos, and Robinson, 1994, page 183). This has beencaptured by Kavesh (1970) in his address to the American Finance Association, which was made withreference to exchanges between Sauvain, Durand, and Weston.

Kavesh (1970) stated:

But disciplines change, new thinking evolves, controversiesflair. In finance one can almost sense the shifts by leafing through thevolumes. The early years were filled with descriptive articles, with aheavy "institutional" flavor largely reflecting the type of researchbeing carried out in those days. . . . Slowly, the mathematical andmodel-building revolution was revealed in the pages of the Journal.And feelings (pro and con) ran high. Balance and perspective weresought then - and are sought now - but to many it was the battlebetween the "new" vs. "old" finance. Some readers complained aboutthe lack of "relevance" in the newer approaches; others confessed thatthey could no longer understand what was in the Journal. Youngermembers wanted more "rigor." (page 5)

Sauvain (1967) stated:

We learn from them and they learn from us. . . . Sometimestheir mathematical logic leads them to examine an aspect of a problemthat we hadn't even thought about or to see a problem in an entirelydifferent light. . . . They can learn from us. Some of these bright youngmen spent so much time studying mathematics and theory that theylearned too little about finance. Once in a while one of my quantitativecolleagues comes to me with a question about some instrument orinstitution that reveals abysmal ignorance. (pages 541-542)

Durand (1968) stated:

The new finance men, on the other hand, have lost virtually allcontact with terra firma. On the whole, they seem to be moreinterested in demonstrating their mathematical powers than in solvinggenuine problems; often they seem to be playing mathematical games.(page 848)

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Weston (1967) stated:

Yet the developments in both theory and practice since the endof World War II provide a basis for predicting that our research willreflect an increasing ratio of analytical-theoretical materials withquantitative testing of models to studies dealing with institutions andinstruments. (page 540)

More recent debate continues along the same lines. Findlay and Williams (1985) state:

The real world decision making implications are also limiting,as practitioners are ever more inclined to employ "theoretical" asantonym for "practical" or "useful." (page 1)

Gordon (1994) states:

The existing body of literature in neo-classical theory is utterlyridiculous. It does not explain dividend policy; it does not explaincapital structure policy; it does not explain anything. It just says thatthere are imperfections. That is all it does. (page 197)

Frankfurter and Lane (1992) state:

The next section of this essay is a brief critique of the principaldividend models. It is argued that all these models share the commonproblem of not being able to explain observed behavior. (page 116)

Frankfurter and Wood (1995) state:

To our surprise we learn that academic theories that wereadvanced in financial economics during the last 40 years to rationalizethe practice, completely fail to consider its evolution. . . . Our advice,nevertheless, is to study more carefully dividend policies as a culturalphenomenon, rather than to expend efforts in mathematical modelbuilding. (pages 1 and 41)

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Merton (1995) states:

With all their seemingly abstruse mathematical complexity, themodels of finance theory have nevertheless had a direct and significantinfluence on finance practice. (page 7)

The debate continues. An essential question that arises, in this context, is: "How and whyacademic finance has reached where it is now?" Ironically, there is no all-encompassing explanationof the development of mainstream academic finance. (It is the contention of this paper to fill thisvoid.) Such a treatment necessarily should uncover the underlying worldviews and their fundamentalassumptions. This is in contrast to historical debates, which only touch upon the surface of thisimportant phenomenon (see Ardalan, 2000).

The paper is organized as follows. Section II lays down the foundation by discussingparadigms. It discusses how any worldview can be positioned on a continuum formed by four basicparadigms: functionalist; interpretive; radical humanist; and radical structuralist. Also, it looks atmainstream academic finance and notes that it is founded on the functionalist paradigm.

Section III argues that any explanation, of the course of the development of academic financeto its current state, is based on one of the worldviews. It provides four explanations, each based onone of the four paradigms mentioned previously. It emphasizes that these four explanations areequally scientific and informative; they look at the process of the development of academic financefrom a certain paradigmatic viewpoint. Section IV concludes the paper.

PARADIGMS

All theories of finance are based on a philosophy of science and a theory of society. Manytheorists appear to be unaware of, or ignore, the assumptions underlying these philosophies. (A primeexample is Frankfurter who stated: ". . . I came across Karl Popper’s book, . . . Thomas Kuhn andsome other philosophers of science . . . . Having read these materials, I realized that, for 20 or soyears, after quantitative publications, I actually did not know what I was doing except imitating otherpeople." (Frankfurter, Carleton, Gordon, Horrigan, McGoun, Philippatos, and Robinson 1994, pages190-191). The point of this example becomes more prominent when one notes that George M.Frankfurter is the Lloyd F. Collette professor of financial services at the College of BusinessAdministration of Louisiana State University in Baton Rouge. He has been a member of the editorialboard and editor of several finance journals.) While there appear to be different kinds of theory inmainstream academic finance, they are founded on a certain philosophy, worldview, or paradigm.(McGoun (1992a) is probably the first paper to examine the ontology and epistemology of finance,and their implications for research.) This becomes evident when these theories are related to thewider background of social theory.

With the above in mind, this section is intended to discuss paradigms and their underlyingassumptions and show how any worldview can be positioned on a continuum formed by four basicparadigms: functionalist, interpretive, radical humanist, and radical structuralist. It also discusses how

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worldviews underlie development of theories in general, and those of finance, in particular. It notesthat academic finance theories are founded upon the functionalist paradigm, and that non-mainstreamfinance theories are exclusively underwritten by the other three paradigms.Before discussing each paradigm, it is useful to look at the notion of "paradigm." Burrell and Morgan(1979) regard the:

. . . four paradigms as being defined by very basic meta-theoretical assumptionswhich underwrite the frame of reference, mode of theorizing and modus operandiof the social theorists who operate within them. It is a term which is intended toemphasize the commonality of perspective which binds the work of a group oftheorists together in such a way that they can be usefully regarded as approachingsocial theory within the bounds of the same problematic. The paradigm does . . . have an underlying unity in terms of its basic and often'taken for granted' assumptions, which separate a group of theorists in a veryfundamental way from theorists located in other paradigms. The 'unity' of theparadigm thus derives from reference to alternative views of reality which lieoutside its boundaries and which may not necessarily even be recognized asexisting. (pages 23-24)

In order to understand a new paradigm, a theorist should be fully aware of the assumptionsupon which his or her own paradigm is based. Moreover, to understand a new paradigm one has toexplore it from within, since the concepts in one paradigm cannot easily be interpreted in terms ofthose of another. No attempt should be made to criticize or evaluate a paradigm from the outside.This is self-defeating since it is based on a separate paradigm. All four paradigms can be easilycriticized and ruined in this way.

These four paradigms are of paramount importance to any scientist, because the process oflearning about a favored paradigm is also the process of learning what that paradigm is not. Theknowledge of paradigms makes scientists aware of the boundaries within which they approach theirsubject. Each of the four paradigms implies a different way of social theorizing in general, andfinance, in particular.

According to Burrell and Morgan (1979), each theory can be related to one of the four broadworldviews. (This paper borrows heavily from the ideas and insights of Burrell and Morgan (1979)and Morgan (1983) and applies them to finance.) These adhere to different sets of fundamentalassumptions about; the nature of science (i.e., the subjective-objective dimension), and the nature ofsociety (i.e., the dimension of regulation-radical change), as in Exhibit 1. This can be used as botha classifactory device, or more importantly, as an analytical tool.) (Bettner, Robinson, and McGoun(1994) and Frankfurter, Carleton, Gordon, Horrigan, McGoun, Philippatos, and Robinson (1994)have also referred to the scheme shown in Exhibit 1.) These assumptions are with respect to ontology,epistemology, human nature, and methodology. Assumptions about ontology are assumptions whichconcern the very essence of the phenomena under investigation.The second set of assumptions arerelated to epistemology. These are assumptions about the nature of knowledge - about how one might

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go about understanding the world, and communicate such knowledge to others. The third set ofassumptions are concerned with human nature and, in particular, the relationship between humanbeings and their environment. The fourth set of assumptions are concerned with methodology, theway in which one attempts to investigate and obtain knowledge about the social world.

The Functionalist Paradigm

In Exhibit 1, the functionalist paradigm occupies the south-east quadrant. Schools of thoughtwithin this paradigm can be located on the objective-subjective continuum. From right to left theyare: Objectivism, Social System Theory, Integrative Theory, Interactionism, and Social ActionTheory.

The functionalist paradigm assumes that society has a concrete existence and follows certainorder. These assumptions lead to the existence of an objective and value-free social science whichcan produce true explanatory and predictive knowledge of the reality out there. It assumes scientifictheories can be assessed objectively by reference to empirical evidence. Scientists do not see anyroles for themselves, within the phenomenon which they analyze, through the rigor and technique ofthe scientific method. It attributes independence to the observer from the observed. That is, an abilityto observe "what is" without affecting it. It assumes there are universal standards of science, whichdetermine what constitutes an adequate explanation of what is observed. It assumes there are externalrules and regulations governing the external world. The goal of scientists is to find the orders thatprevail within that phenomenon.

The functionalist paradigm seeks to provide rational explanations of social affairs andgenerate regulative sociology. It emphasizes the importance of understanding order, equilibrium andstability in society and the way in which these can be maintained. It is concerned with the regulationand control of social affairs. It believes in social engineering as a basis for social reform.The rationality which underlies functionalist science is used to explain the rationality of society.Science provides the basis for structuring and ordering the social world, similar to the structure andorder in the natural world. The methods of natural science are used to generate explanations of thesocial world.

Functionalists are individualists. That is, the properties of the aggregate are determined bythe properties of its units. Their approach to social science is rooted in the tradition of positivism.It assumes that the social world is concrete, meaning it can be identified, studied and measuredthrough approaches derived from the natural sciences.

Functionalists believe that the positivist methods which have triumphed in natural sciencesshould prevail in social sciences, as well. In addition, the functionalist paradigm has becomedominant in academic sociology and mainstream academic finance. The world of finance is treatedas a place of concrete reality, characterized by uniformities and regularities which can be understoodand explained in terms of causes and effects. Given these assumptions, the individual is regarded astaking on a passive role; his or her behavior is being determined by the economic environment. As in Jensen and Smith (1984) and Smith (1990), (For overviews of the finance literature see alsoBrennan (1995) and Weston (1994). See also Borokhovich, Bricker, and Simkins (1994), Cooley andHeck (1981), Faulhaber and Baumol (1988), Friend (1973), Jensen and Smith (1984), Merton (1995),

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Miller (1986), Naslund (1986), Roll (1994), Smith (1990), and Weston (1966, 1967, 1974, 1981.) thefollowing lists current theories and policies in mainstream academic finance. But, it also emphasizesthat they are based on the functionalist paradigm.

Since 1950, a number of major theories and policies in finance have developed; namely:

1. Efficient market theory: Fama (1970, 1976, 1991) reviews theory and evidence.Jensen (1978) provides a review of some anomalies, Schwert (1983) surveys the size-related anomalies, and Moy and Lee (1991) compile a bibliography of different stockmarket anomalies. Ball (1996) updates the review of literature.

2. Portfolio theory: Markowitz (1952, 1959) emphasizes the benefit of portfoliodiversification and lays down the foundation for the Capital Asset Pricing Theory.

3. Capital asset pricing theory: Jensen (1972) surveys the literature, Roll (1977)criticizes tests of the model.

4. Option pricing theory: For a review of theory, and its applications, see Cox and Ross(1976) and Smith (1976, 1979).

5. Agency theory: Jensen and Ruback (1983) and Jensen and Smith (1985) providereviews of this literature. Garvey and Swan (1994) review the literature on corporategovernance.

6. Arbitrage pricing theory: Ross (1976) proves the K-factor determination of assetprices.

7. Capital budgeting policy: Aggarwal (1993) provides an overview of capital budgetingunder uncertainty.

8. Capital structure policy: Fama (1978) reviews the literature. 9. Dividend policy: Black (1976) provides a summary of the issues. For a review see

Allen and Michaely (1994).

Bettner, Robinson and McGoun (1994) note the common threads among theories inmainstream academic finance are:

1. There is a cause and effect mechanism underlying all nature and human activity(ontology);

2. It is known through the set of nomological connections between initial conditions andfinal outcomes (epistemology);

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3. Human beings interact with each other and their society in accordance with thismechanism (human nature); and

4. Information regarding all natural and human activity can be acquired throughobservations and measurements unaffected by individual perceptual differences(methodology), (page 3) which leads to the conclusion that the current theories infinance are clearly based on the functionalist paradigm. (See McGoun (1992a) andBettner, Robinson and McGoun (1994) for a more complete treatment.) (The sameconclusion can be inferred from: Bicksler (1972), Findlay and Williams (1980),Frankfurter, Carleton, Gordon, Horrigan, McGoun, Philippatos, and Robinson (1994),Friedman (1953), Kavesh (1970), McGoun (1992a), Merton (1995), Sauvain (1967),Weston (1966, 1967, 1974), and Whitely (1986).)

The Interpretive Paradigm

In Exhibit 1, the interpretive paradigm occupies the south-west quadrant. Schools of thoughtwithin this paradigm can be located on the objective-subjective continuum. From left to right theyare: Solipsism, Phenomenology, Phenomenological Sociology, and Hermeneutics.

The interpretive paradigm assumes that social reality is the result of the subjectiveinterpretations of individuals. It sees the social world as a process which is created by individuals.Social reality, insofar as it exists outside the consciousness of any individual, is regarded as beinga network of assumptions and intersubjectively shared meanings. This assumption leads to the beliefthere are shared multiple realities which are sustained and changed. Researchers recognize their rolewithin the phenomenon under investigation. Their frame of reference is one of participant, as opposedto observer. The goal of the interpretive researchers is to find the orders that prevail within thephenomenon under consideration; however, they are not objective.

The interpretive paradigm is concerned with understanding the world as it is, at the level ofsubjective experience. It seeks explanations within the realm of individual consciousness andsubjectivity.

Interpretive sociologists seek to understand the source of social reality. They often delve intothe depth of human consciousness and subjectivity in their quest for the meanings in social life.The interpretive paradigm believes that human values affect the process of scientific enquiry. Thatis, scientific method is not value-free, since the frame of reference of the scientific observerdetermines the way in which scientific knowledge is obtained. Moreover, they believe that in culturalsciences the subject matter is spiritual in nature. That is, human beings cannot be studied by themethods of the natural sciences, which aim to establish general laws. In the cultural sphere humanbeings are perceived as free. An understanding of their lives and actions can be obtained by theintuition of the total wholes, which is bound to break down by atomistic analysis of functionalistparadigm.

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Cultural phenomena are seen as the external manifestations of inner experience. The culturalsciences, therefore, need to apply analytical methods based on "understanding;" through which thescientist can seek to understand human beings, their minds, and their feelings, and the way these areexpressed in their outward actions. The notion of "understanding" is a defining characteristic of alltheories located within this paradigm.

The interpretive paradigm believes that science is based on "taken for granted" assumptions;and, like any other social practice, must be understood within a specific context. Therefore, it cannotgenerate objective and value-free knowledge. Scientific knowledge is socially constructed andsocially sustained; its significance and meaning can only be understood within its immediate socialcontext.

An example is provided by McGoun:

When we ask whether the CAPM is right or wrong we are assuming that there is someunderlying reality there and that we can find out something about it. I would arguethat reality, in this case, is really what we think it is - that if we all believe in theCAPM, it works; if we do not, it does not work. I feel the same thing about optionpricing. If you look at the coincidence of the publication of the option-pricingformula, that sale of computers that actually have it programmed in, and the start oforganized options exchanges, we really have to question whether we have explainedsomething or whether we have created something. (Frankfurter, Carleton, Gordon,Horrigan, McGoun, Philippatos, and Robinson ,1994, page 201)

The interpretive paradigm regards mainstream academic finance theorists as belonging to asmall and self-sustaining community, which believes that corporations and financial markets existin a concrete world. They theorize about concepts which have little significance to people outside thecommunity, which practices financial theory, and the limited community which financial theoristsmay attempt to serve.

Mainstream academic finance theorists tend to treat their subject of study as a hard, concreteand tangible empirical phenomenon which exists "out there" in the "real world." Interpretiveresearchers are opposed to such structural absoluticism. They emphasize that the social world is nomore than the subjective construction of individual human beings who create and sustain a socialworld of intersubjectively shared meaning, which is in a continuous process of reaffirmation orchange. Therefore, there are no universally valid rules of finance and financial management.Interpretive finance research enables scientists to examine aggregate market behavior together withethical, cultural, political, and social issues.

Interpretive research in finance is negligible compared to the functionalist research. Thefollowing lists examples of interpretive research: Baker (1992), Baker and Wruck (1989), Cray andHaines (1992), Frankfurter and Lane (1992), Frankfurter and Wood (1995), Kryzanowski and Roberts(1993a, 1993b), Lintner (1956), McGoun (1996), O'Barr and Conley (1992), and Rosen (1990).

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The Radical Humanist Paradigm

In Exhibit 1, the radical humanist paradigm occupies the north-west quadrant. Schools ofthought within this paradigm can be located on the objective-subjective continuum. From left to rightthey are: Solipsism, French Existentialism, Anarchistic Individualism, and Critical Theory.The radical humanist paradigm assumes that reality is socially created and sustained. An example isprovided by Tinker, Merino, and Neimark (1982):

There are many examples that show scientific knowledge to be artifact rather thanmerely the outcome of a search for absolute truth. Breakthroughs in scientific theoryfrequently occur in times of crisis for a discipline or its underlying social system. Forexample, Edmund Burke's ideas came in response to the challenge of forces fordemocratization; Adam Smith's thought served as an important theoreticaljustification of laissez faire; Marxism was an attempt to provide an explanation of themore disturbing consequences of capitalism; marginal analysis was a counterblast toMarxism; Weber's bureaucratic theory can be viewed as a rationalization and,therefore, a theoretical justification of the contradictions of large-scale Germanmonopolies operating within an environment of laissez-faire ideology; Keynesianeconomics was an intellectual and pragmatic response to the crisis of massunemployment and the inability of neoclassical economics to locate the cause . . . Ina similar vein, the philosopher Wittgenstein has argued that even mathematical theoryis better understood when viewed as an invention rather than just a discovery . . .(pages 172-173)

The radical humanist paradigm provides critiques of the status quo. It tends to view societyas anti-human. It views the process of reality creation as feeding back on itself; such that individualsand society are prevented from reaching their highest possible potential. That is, the consciousnessof human beings is dominated by the ideological superstructures of the social system, which resultsin their alienation or false consciousness. This, in turn, prevents true human fulfillment. The socialtheorist regards the orders that prevail in the society as instruments of ideological domination.

The major concern for theorists is with the way this occurs and finding ways in which humanbeings can release themselves from constraints which existing social arrangements place uponrealization of their full potential. They seek to change the social world through a change inconsciousness.

Radical humanists believe that everything must be grasped as a whole, because the wholedominates the parts in an all-embracing sense. Moreover, truth is historically specific, relative to agiven set of circumstances, so that one should not search for generalizations for the laws of motionof societies.

The radical humanists believe the functionalist paradigm accepts purposive rationality, logicof science, positive functions of technology, and neutrality of language, and uses them in theconstruction of "value-free" social theories. The radical humanist theorists intend to demolish this

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structure, emphasizing the political and repressive nature of it. They aim to show the role thatscience, ideology, technology, language, and other aspects of the superstructure play in sustainingand developing the system of power and domination, within the totality of the social formation. Theirfunction is to influence the consciousness of human beings for eventual emancipation and formationof alternative social formations.

The focus of the radical humanists upon the "superstructural" aspects of society reflects theirattempt to move away from the economism of orthodox Marxism and emphasize the Hegeliandialectics. It is through the dialectic that the objective and subjective aspects of social life interact.The superstructure of society is believed to be the medium through which the consciousness ofhuman beings is controlled and molded to fit the requirements of the social formation as a whole. Radical humanist research in academic finance is non-existent. Examples of radical humanistresearch, although not even mentioned in academic finance, are: Biewener (1999, 2000), Cullenberg(1994, 1997, 2000), Perelman (1987, 1993, 1999), and Tinker, Merino, and Neimark (1982).

The Radical Structuralist Paradigm

In Exhibit 1, the radical structuralist paradigm occupies the north-east quadrant. Schools ofthought within this paradigm can be located on the objective-subjective continuum. From right to leftthey are: Russian Social Theory, Conflict Theory, and Contemporary Mediterranean Marxism.The radical structuralist paradigm assumes that reality is objective and concrete. Scientists do not seeany roles for themselves in the phenomenon under investigation. They use scientific methods to findthe order that prevails in the phenomenon. This paradigm views society as a potentially dominatingforce.

For radical structuralists, an understanding of classes is essential for understanding the natureof knowledge. They argue that all knowledge is class specific. That is, it is determined by the placeone occupies in the productive process. Knowledge is more than a reflection of the material worldin thought. It is determined by one's relation to that reality. Since different classes occupy differentpositions in the process of material transformation, there are different kinds of knowledge. Henceclass knowledge is produced by and for classes, and exists in a struggle for domination. Knowledgeis thus ideological. That is, it formulates views of reality and solves problems from class points ofview.

Radical structuralists do not believe that it is possible to verify knowledge in an absolutesense through comparison with socially neutral theories or data. But, emphasize that there is thepossibility of producing a "correct" knowledge from a class standpoint. They argue that thedominated class is uniquely positioned to obtain an objectively "correct" knowledge of social realityand its contradictions. It is the class with the most direct and widest access to the process of materialtransformation that ultimately produces and reproduces that reality.

Radical structuralists’ analysis indicates that the social scientist, as a producer of class-basedknowledge, is a part of the class struggle.

Radical structuralists believe truth is the whole, and emphasize the need to understand thesocial order as a totality rather than as a collection of small truths about various parts and aspects ofsociety. The financial empiricists are seen as relying almost exclusively upon a number of seemingly

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disparate, data-packed, problem-centered studies. Such studies, therefore, are irrelevant exercises inmathematical methods.

This paradigm is based on four central notions. First, there is the notion of totality. Alltheories address the total social formation. This notion emphasizes that the parts reflect the totality,not the totality the parts.

Second, there is the notion of structure. The focus is upon the configurations of socialrelationships, called structures, which are treated as persistent and enduring concrete facilities.

The third notion is that of contradiction. Structures, or social formations, containcontradictory and antagonistic relationships within them which act as seeds of their own decay.

The fourth notion is that of crisis. Contradictions within a given totality reach a point at whichthey can no longer be contained. The resulting political, economic crises indicate the point oftransformation from one totality to another, in which one set of structures is replaced by another ofa fundamentally different kind.

Radical structuralist research in academic finance is non-existent. The literature in this areahas been, historically, quite extensive, although there has been no mention of their existence inacademic finance. Some examples of radical structuralist research are: Gill (1999), Magdoff andSweezy (1987), Sweezy (1942, 1994, 1997), and Sweezy and Magdoff (1972).

In conclusion, this section briefly discussed social theory, its complexity, and diversity. Itshowed that the foundations of mainstream academic finance are in the functionalist paradigm; and,for the most part, finance theorists are not always entirely aware of the traditions to which theybelong. It recommends a serious conscious thinking about the social philosophy upon which it isbased and of the alternative avenues for development.

The diversity of theories presented in this section is vast. While each paradigm advocates aresearch strategy that is logically coherent, in terms of underlying assumptions, these vary fromparadigm to paradigm. The phenomenon to be researched is conceptualized and studied in manydifferent ways, each generating distinctive kinds of insight and understanding. This section suggeststhat there are many different ways of studying the same social phenomenon, and given that theinsights generated by any one approach are at best partial and incomplete, the social researcher cangain much by reflecting on the nature and merits of different approaches before engaging in aparticular mode of research practice. It is clear that social scientists, like other generators ofknowledge, deal with the realization of possible types of knowledge, which are connected with theparticular paradigm adopted.

DEVELOPMENT OF THE ACADEMIC FIELD OF FINANCE

This section is based on the idea that any explanation, of the course of the development ofacademic finance to its current state, is based on one of the worldviews. It provides four explanations,each based on one of the four paradigms mentioned previously. It emphasizes that these fourexplanations are equally scientific and informative; they look at the process of the development ofacademic finance from a certain paradigmatic viewpoint. The functionalist paradigm views scienceas the outcome of the search for objective truth; the interpretive paradigm views science as being

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socially constructed; the radical humanist paradigm views science as an element of the dominantideology; and the radical structuralist paradigm views science as being class determined.

Functionalist Explanation

Scientific progress is the cumulative discovery of objective truth. (Much of the discussion thatfollows is based on Popper (1979), and Frankfurter and Philippatos (1992).) Knowledge growslinearly as new data are added to the existing stock of research findings.

Science must be both objective and truthful. However, when a theory becomes more truthfuland has more explanatory power, the probability that its predictions become true gets smaller.

Progress in science satisfies the following two conditions. First, a new theory whichconstitutes a progress vis-a-vis another, must be at variance with it. It must lead to some conflictingresults. This reflects the revolutionary nature of progress in science. Second, progress in science mustbe conservative. A new theory must explain not only what is explained by all previous theories, butalso new phenomena.

A theory that fails must be discarded. This is the condition of falsifiability, as opposed toverifiability. A new theory is verifiable if:

(1) It is based on a new and unifying idea about observable relations;(2) It is testable; that is, it has testable implications which have not been observed yet;

and (3) It is successful in going through novel and severe tests; that is, success in new

predictions and difficulty in refutations.

The following is a comprehensive set of rules to judge the superiority of theory "B", the newtheory, over theory "A", the old theory:

(1) "B" is a more precise theory than "A";(2) "B" explains more facts than "A";(3) "B" explains facts in more detail than "A";(4) "B" succeeds in more tests than "A";(5) "B" implies more tests than "A"; and (6) "B" connects and unifies more facts than "A".

In summary, science is the totality of facts, theories, and methods, which scientists havecontributed to it, one element at a time. Scientific development is the gradual process of linearlyadding these elements, singly and in combination, to the ever-growing stock of research finding thatconstitutes scientific knowledge.

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McGoun (1992a) in his reflection "On the Knowledge of Finance" states:

The behavior of most scientists implies their having made certain tacit assumptions regardingscientific activity:

(1) There is a real external environment out there independent of science; (2) It is possible, at least in principle, to determine the truth of a scientific statement

regarding the external environment;(3) Scientists will never state all truths regarding the external environment; and (4) Over time, scientists state more precise truths regarding the external environment.

(page 161)

Weston (1994) in providing "A (Relatively) Brief History of Finance Ideas" applies the aboveprinciples and provides a general explanation (For a more detailed and specific explanation, seeWeston (1966).) by stating:

Review and analysis of financial history suggest five generalizations. One, thedevelopments of each historical period and the creators of these developments wereresponding to the pressing economic, financial, and socio-political problems of theperiod. Two, financial thought has also responded to the maturation of financialmarkets, internationalization, and increased competition. Three, the developmentand/or uses of new tools, new mathematical models, and new methodologies havefacilitated the creation of theories to explain financial behavior. Four, practice hasreflected the new learning with varying time lags but has also stimulated thedevelopment of theory to understand, explain, and predict financial behavior. Five,new ideas have built on the ideas provided by previous knowledge. (page 7)

In this context, Miller (1986) provides a specific explanation:

. . . finance surely became the field in the 60s and 70s. . . . What gave the academicfield of finance its great impetus in the 60s and 70s was a powerful and almost uniqueinteraction of theory and empirical research. . . . My review can at least serve as areminder . . . that the path of progress, . . . has a large element of the unanticipated andoften of the completely unintended. . . . Certainly, the first major breakthrough inmodern finance had such consequences. By first, I am not referring to the Modigliani-Miller propositions; they too did have unexpected consequences that I will get to indue course. But they were not first. That honor belongs to the mean-variance portfolioselection model of Harry Markowitz . . . (pages 396-397)

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Interpretive Explanation

Philosophers of science have shown that more than one theory can explain a given set of data.(Much of the discussion that follows is based on Kuhn (1970).) Scientific theories are based onparadigms. In the development of any science, the received paradigm is usually successful inexplaining most of the observations and experiments of researchers. Further development requiresthe construction of elaborate equipment, esoteric vocabulary, skills, and concepts. This restricts thescientist's vision, and science becomes rigid. But, by focusing attention on specific areas, a paradigmquite efficiently directs scientists to a precision of the observation-theory match.

Scientists learn concepts, laws, theories, and their applications through education. Furthertheories and applications will be reflected in the textbooks, from which future scientists will get theireducation. During university education, from early university courses to doctoral dissertation,students face more complex problems. These are modeled and solved based on previousachievements. Likewise, problems encountered during their subsequent independent scientificresearch are dealt with in the same manner. Scientists talk easily about a concrete piece of research,but they are not well aware of the established basis of their field, its legitimate problems, andmethods. They do successful research, without recourse to hypothetical rules of the game.

However, methodology does not necessarily lead to a unique conclusion about a certainscientific problem. The particular conclusion a scientist arrives at is generally determined by his orher background, personality, and the specifics of the investigation.

In the development of most sciences there has been competition between different views ofnature. They have all been scientific, but they have seen the world, and are practicing science in it,differently. Scientific observation restricts the range of admissible beliefs, but is not the onlydeterminant of such beliefs. An arbitrary factor, based on personal and historical elements, is anotherimportant determinant of the beliefs of a certain scientific community, at a certain time.

Science assumes that the scientific community chooses the right worldview. Science iscumulative; the extension of the scope and precision of scientific knowledge. However, that factorof arbitrariness has an important effect on scientific development.

A theory does not solve all the problems at a given time, and the solutions provided are oftenimperfect. This incompleteness and imperfection defines many of the problems that characterizescience.

A paradigm provides a map with details to be explained by scientific research. However, sincenature is too complex, that map is as essential as observation and experiment to the development ofscience. A paradigm also provides scientists with essentials for map-making. These are theories,methods, and standards.

In research, scientists select problems that can be solved with available concepts andtechniques. That is, these problems are mostly defined by existing knowledge and technique. Thescientist does not just look around. He or she knows what is to be achieved, how to designinstruments, and how to direct thoughts accordingly. The scientist is a solver of problems, not a testerof paradigms.

Scientific communities strongly defend their paradigm, even at considerable cost. Scienceoften suppresses fundamental novelties because they are subversive. However, since a paradigm is

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partly arbitrary, novelty cannot be suppressed for an extended period of time. Sometimes a problemcannot be solved by known rules and procedures, even by the experts of the field. On other occasions,a piece of equipment, designed and constructed for research, fails to perform in the anticipatedmanner, revealing an anomaly. In still other occasions, new and unsuspected phenomena areuncovered. In these and other ways, science goes astray. And when it does, the profession begins theextraordinary investigations, both observational and conceptual, that lead the profession, at last, toan invention of a new radical theory, a synthesis, a new set of commitments, a new basis for thepractice of science. The extraordinary episodes, in which that shift of professional commitmentsoccurs, are known as "scientific revolutions." They are the tradition-shattering, as opposed to thetradition-bound, activity of science.

Anomaly, problem, or new theory, appear in the context of paradigm. A more preciseparadigm is more sensitive, and provides a riper basis for paradigm change. In the normal mode ofdiscovery, resistance to change has a benefit. It ensures that the paradigm will not be easilysurrendered. Resistance guarantees that not only scientists will not be lightly distracted, but also theanomalies, that lead to paradigm change, will penetrate existing knowledge to the core. Thischaracteristic of science shows that research under a paradigm induces paradigm change.

Naturally, there is a conflict between the paradigm that suffers from the anomaly and the onethat explains it. Anomalies come to existence in a game played under one set of rules, theirexplanation requires the creation of another set. New theories can hardly arise without substantivechanges in beliefs about nature. When they become part of science, the nature of science becomesinherently different.

A scientific theory becomes invalid only if an alternative is available to take its place.Experience and experiment are essential to the process of rejecting a scientific theory, but they arenot the sole determinants of the decision. The judgement leading to that decision is based on thecomparison of both theories with nature and with each other.

Every problem, (Except those that are exclusively instrumental.) when seen from anotherviewpoint, can become a counter instance and, thus, as a source of crisis. This loosens the existingrules, allows for proliferating versions of the paradigm, which ultimately permits a new paradigm toemerge.

Scientists, in the wake of an anomaly or crisis, change their attitude toward the existingparadigm, and change the nature of their research accordingly. The proliferation of competingversions of paradigms, the eagerness to try anything, the expression of discontent, the recourse tophilosophy and debate over fundamentals, are symptoms of a transition to extraordinary research.A theory is accepted as a paradigm if it seems better than its competitors. But it need not, as it neverdoes, explain all the observations with which it is confronted. Paradigms gain popularity when theyare more successful than their competitors in solving a few problems that scientists consider asimportant. To be more successful is not, however, to be either completely successful with a singleor a large number of problems. The success of a paradigm, at the start, is largely based on a promiseof success in selected and still incomplete examples. Science takes shape in the actualization of thatpromise. The actualization is achieved by extending the knowledge of those facts that the paradigmpromises, by increasing the match between those facts and the paradigm's predictions, and by furtherdevelopment of the paradigm itself.

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The focus area of science becomes minuscule, which restricts vision. However, in this way,the paradigm directs scientists to investigate aspects of nature in such detail and depth that wouldotherwise be unimaginable.

The scientists who invent new paradigms have, almost always, been either very young or verynew to the field. Obviously, these scientists, who are least committed to the traditional rules ofscience, are more likely to see that those rules no longer define a playable game, and to conceiveanother set that can replace them.

The historical study of paradigm change indicates similar characteristics in the developmentof sciences. The choice between competing paradigms proves to be like the choice betweencompeting political institutions, that is, a choice between incompatible modes of community life.Because of its character, the choice is not, and cannot, be determined merely by the evaluativeprocedures of science. The role of paradigms in paradigm choice is circular. Each paradigm uses itsown assumptions to argue in its own defense. The circular argument can only be used for persuasion.It cannot be made logically, or even probabilistically, convincing to those whose view is based onanother paradigm.

There are other reasons for the incomplete logical contact in paradigm debates. No paradigmsolves all the problems it defines, and no two paradigms leave the same problems unsolved.Therefore, paradigm debates boil down to the question: Which problems are more significant? Sucha question involves values, which can be answered only with reference to criteria that lie outside ofscience. In fact, it is the recourse to external criteria that makes paradigm debate revolutionary.

The community of scientists is the highest entity for choosing a new paradigm. To understandhow such revolutionary decisions are made, one needs to examine both the impact of nature andlogic, and the techniques of persuasion, within the community of scientists.

They talk through each other. Each hopes to convert the other to his or her way of seeing thescience and its problems. The competition between paradigms cannot be resolved by proofs. Theycannot fully communicate, unless one group experiences the conversion which is called a "paradigmshift." The transition between competing paradigms cannot be made gradually, forced by logic andneutral experience. It must happen all at once or not at all.

At the time of paradigm change resistance is inevitable and legitimate, and proof looses itsimportance for justification. However, arguments gain relevance for persuading scientists to changetheir minds.

A new candidate for paradigm has few supporters at the start. They improve it, explore itspossibilities, in order to show the advantages of belonging to its community. If they are successful,the number and strength of the persuasive arguments in its favor increase. More scientists convert,and the exploration of the new paradigm goes on. Gradually the number of experiments, instruments,articles, and books based upon the new paradigm multiply. More and more scientists, convinced ofthe new paradigm's fruitfulness, adopt the new mode of practicing science. Finally, only a fewscientists remain who do not convert, and who cannot be judged as being wrong.

Scientific revolutions are defined as those non-cumulative developmental episodes in whichan older paradigm is replaced, in whole or in part, by an incompatible new one. It is a reconstructionof the science on a new foundation; a reconstruction that changes some of the most fundamentaltheories, methods and applications. When the reconstruction is complete, the community of scientists

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has changed its view of the field, methods, and goals. This aspect of scientific development is similarto a change in visual gestalt: the marks on paper that were first seen as a bird are now seen as anantelope. The parallel between political and scientific development should be clear.

Paradigms differ in substance, which is directed not only to nature but also on the scienceitself. They imply methods, problem-field, and standards of solution, which are accepted by thescientific community, at any time. The reconstruction of a new paradigm requires a redefinition ofthe scientific field. Some old problems may be passed to another science, or declared entirelyunscientific. Others, which were not existent or considered trivial before, may become the veryarchetype of significant scientific achievement. As the problems change, so does the standard thatdistinguishes a scientific solution from a metaphysical speculation, word game, or mathematical play.The science that emerges from a scientific revolution is both incomplete and incommensurable withits predecessor. That change affects the structure of post-revolutionary textbooks and researchpublications. (In this respect, it is interesting to note the following two statements. First, the statementby Harrigan: "I taught corporate finance the first time in 1956 . . . At that time, we used a textbook. . . It was all descriptive. It was about the practical details of stocks and bonds and investment banksand so forth." (Frankfurter, Carleton, Gordon, Horrigan, McGoun, Philippatos, and Robinson, 1994,page 194). Second, the statement by Carleton: ". . . most of the people - "financial economists" - whohave entered the Ph.D. degree since then (early 70's) got their degrees in the finance departmentunder programs that involved only a very narrow slice of economics training. Most of us who got intofinance at an earlier time had training in economics that was a lot more broadly based than simplyneoclassical economics." (Frankfurter, Carleton, Gordon, Horrigan, McGoun, Philippatos, andRobinson, 1994, page 193).)

When paradigms change, the world changes with them. With a new paradigm, scientists adoptnew instruments and look in new places. Even more important, after revolutions scientists see newand different things, when looking with familiar instruments, in places they looked before. In otherwords, after a revolution, scientists respond to a different world. Paradigms determine large areas ofexperience. The scientist with a new paradigm sees differently from the way he or she had seenbefore. What an individual sees depends both upon what he or she looks at and upon what his or herprevious visual-conceptual experience has taught him or her to see. The perceived size, color, andso on, of experimentally displayed objects also vary with the subject's previous training andexperience.

All in all, the older views of nature were, as a whole, neither less scientific nor more theproduct of human idiosyncrasy than those current today.

In summary, science is of fundamentally subjective nature. Researchers adhere to differentworldviews and generate alternative perspectives. This is because, they impose different meaningsand interpretations upon data. Competition between rival paradigms translates into advocates tryingto persuade others of the superiority of their paradigm. Knowledge is generated through a rigorousexamination of ideas. Ideas must usually survive scrutiny by advocates of diverse theoreticalpositions before they gain the status of truth. New definitions of truth come to being, as products ofa socially negotiated consensus between truth makers. This consensus may encourage scientists toview knowledge as objective, but it is, in fact, intersubjectively produced. As for scientific progress,theories that gain dominance are those that win the most converts; they do not negate their

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predecessors, they need not necessarily have greater explanatory or predictive power. Theories donot gain popularity because they are better than their predecessors, but because they are able to attractadherents and withstand attacks from other positions. Scientific progress is not the outcome of theinstrumental acquisition of information about objective reality, it is the product of a subjectiveprocess, in which scientists seek superiority of their paradigm as an end in itself.

Based on the interpretive paradigm, McGoun (1992a) in his reflection "On the Knowledgeof Finance," states:

Financial economists proceed as if their science is no exception. There is financial behaviorout there, and financial economists empirically test theoretical statements regarding financialbehavior to determine their truths, rigorously search for new theoretical statements regardingfinancial behavior, and periodically congratulate themselves on their success.

However, the ontology of finance is not what is implied by these assumptions: (1) Financial behavior is not independent of the science of financial economics.

Therefore,(2) The truth of scientific statements regarding the determinants of financial behavior is

not a matter subject to determination; (3) At all times, all current truths regarding the determinants of financial behavior have

been stated; and (4) Over time, financial economists state neither more nor better but different truths

regarding the determinants of financial behavior.

Actors know what determines their financial behavior, and these determinants change as theenvironment of the actors changes. Part of this environment is the science of financial economicsitself. Financial economics is not a positive science of what is nor it is even a normative science ofwhat ought to be. Rather, it is rhetorical science of contention for what will be. (page 162)

Frankfurter’s interpretation of the general developments in the academic field of finance fallswithin the interpretive paradigm, when he states:

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I started thinking about what we are really doing, and reached the conclusion that we arefollowing a positivist . . . logic. . . This logic was adopted in economics. Finance, of course imitateseconomics in every sense, following Friedman's famous 1953 book, Essays in Positive Economics.

His view is merely a statement - a statement for which there is no solid proof. But, everyoneaccepted the statement because it was made with such fervor that it seemed true. No one questionedits validity. Then, I started looking more closely at what happened around that time. I found, to mysurprise, that many people criticized Friedman at the time the statement was made. If I want tocriticize positive economics today, I would not be able to come up with anything new that I could addto the criticism that was voiced at that time. In other words, everything was known then and there yeteveryone disregarded the criticism and instead followed positive economics, which is basically theunderpinning of whatever we do in finance today. All the models follow a positivist logic.(Frankfurter, Carleton, Gordon, Horrigan, McGoun, Philippatos, and Robinson, 1994, page 191)

McGoun’s (1992a) provides a more specific explanation of developments in the academicfield of finance:

Changes occur in the world view or weltbild. Paradigms are overthrown byrevolution and/or research programs degenerate. The influence of science on theintellectual environment is what permits science to advance.

While it is by no means clear what a scientific revolution is, Modigliani andMiller (1958) would certainly be a strong candidate for having effected one infinancial economics. According to Ross (1988), "If the view of the progress of sciencethat interprets it as one of paradigms has merit, then surely the work of Miller andModigliani provides a laboratory example of a violently shifted paradigm." (p. 127)

For better or worse, the process of simplification, the mathematization, and thearbitrage structure of their proof all have had a profound impact on the way in whichfinancial economics has proceeded since. In turn, they are intellectually indebted totheir predecessors for their graphs, their diagrams, their notation, and whatever wasreferenced in their footnotes. (page 166-167)

Radical Humanist Explanation

In contemporary social life rational domination is the primary mode of organization. (Muchof the discussion that follows is based on Held (1980).) Neutrality, objectivity, and an observer whois not part of phenomenon being studied, provide the basis for the social order that replaces earlierforms of social organization reflecting criteria like birth, class, ethnicity, and gender. Bureaucraticvalues, replace traditional values, and provide the foundation for certain elements of society todominate others, through the control of the definitions of rationality.

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Claims, perspectives, and philosophies are ideological, if they conceal social contradictionsin favor of a dominant class or group. For instance, they are ideological, when they present over allsocial interests but conceal the interests of the ruling class; or when they present societal outcomesas natural but they are the result of particular social relations; or when they present the socialsituation as harmonious but it is conflict ridden. Ideologies are not illusions, but embodied in socialrelations. Ideologies often consist of packages of symbols, ideas, images and theories, through whichpeople experience their relation to each other and the world. Ideologies mystify social relations, oradequately reflect distorted ones. Therefore, the aim should be to expose contradictions betweensociety's performance and legitimating ideologies.

Rationalization may encompass the following two meanings. First, it refers to themathematization of experience and knowledge. That is, the extension of the rationality of the modelof natural sciences to all scientific practices, including the conduct of life itself. Second, it refers tomeans-end relationship. That is, the attainment of a given end by the use of the precise calculationof means.

Rationalization most often refers to the extension of means-end rationality, which is oftencalled technological rationality, instrumental reason, or subjective reason. The emergence andadvance of instrumental reason led to the progressive undermining of traditional world views;Reformation and Protestantism played important roles in the formation of conditions necessary forcapitalist development; and capitalism provided a major impetus to the further development ofinstrumental reason and bureaucratization, resulting from the division of labor.

Individualism, or self-interest, was nurtured in the sixteenth and seventeenth centuries. Itsunderlying philosophies were committed to the view that the individual is rational and capable ofindependent thinking. Its fulfillment was held to be dependent on social and economic conditions inwhich the individual would be free to work and think in a setting of his or her choice. Freecompetition and liberalism were thought to be sufficient. Over time, however, the notion of individualachievement was expressed in terms of labor productivity figures. That is, performance wasmotivated, guided, and measured by standards external to the individual. Capital accumulationrequired the expansion of instrumental reason, which created a common framework for alloccupations. Compliance and subordination to pre-set goals and standards were required of allindividuals. Furthermore, as standardized techniques advanced, and technological rationalityexpanded over the whole of society, they developed values only for the better functioning of theapparatus. Propositions regarding production, organization, rules of the game, business methods,science and technique, are evaluated with reference to the means-end relationship, and if, as means,they are suitable for reaching the end they remain unquestioned.

Specialization atomizes individuals. The continued extension of division of labor leads to thefragmentation of tasks. Under these circumstances, there are fewer opportunities for mental andreflective labor. Knowledge of the total work process is not easily available. The majority ofoccupations tend to become isolated units, which require co-ordination and management from above.Centralized control mechanisms, private and public bureaucracies, appear as necessary for, and aguarantee of, a rational order.

The private and public bureaucracies, thus, seem to emerge on an objective and impersonalground. The objective and impersonal qualities of technological rationality make them look more

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reasonable, and provide the bureaucratic groups the universal dignity of reason. The rationality,embodied in the giant capitalist enterprises, makes it appear as if individuals, when obeying them,obey objective rationality. The private bureaucracy creates a delusion that there is harmony betweenspecial and common interests. Under these circumstances, there is a decline in the acceptability ofcritical thinking by society.

Reason gains its only meaning with reference to the process of coordinating means to pre-determined ends. Instrumental reason gains its privileged status, since it is embodied in the conceptof rationality. The confounding of calculatory with rational thinking, creates the perception thatwhatever cannot be measured and reduced to numbers is illusion or metaphysics. The differencebetween phenomena is judged only as the difference in quantity or efficiency. The individual, insteadof having qualities of resistance and autonomy, has qualities of compliance and adjustment. But theindividual's lack of freedom is not usually experienced as such. It is not considered as the work ofsome hostile force. Rather, it is considered as the result of reason. Individuals do not come to knowthat, in fact, subjective reason is pursued and put to profitable use.

All individuals who seek the maintenance of their lives have to act rationally. That is, theyhave to behave according to the standards which insure the functioning of the apparatus. Thisreinforces types of behavior that are adaptive, passive, and acquiescent, whereby the mechanisms ofsocial control are strengthened.

The Enlightenment gained its success based on modern science, i.e., with the mathematizationof nature, and it gave an enormous impetus to science. The new science defined a purely rationalworld as the only true reality. It portrayed the world as a scientific universe, which could besystematically comprehended only by science itself. Every object, which could be represented bymathematical theorems, became a possible subject of study. The development of a universal,mathematically formulated science, and its emergence as the model for all science and knowledge,represents the era of positivism.

Positivism counters the influence of purely a priori thinking and establishes the authority ofobservation. Positivism makes few distinctions between the methods appropriate to the physical andhuman sciences. The study of society is equated with that of nature. Both are seen as governed bynatural necessity. Therefore, individuals should take a positive attitude toward the prevailing stateof affairs. Positive philosophy affirms the existing order, against negating it. Science does not denythe necessity of progressive reforms. But the form of these changes is always determined by theestablished order.

Science sees all social movements as subject to law-like regularities; it regards many socialinstitutions as unchangeable through rational will. Political action, therefore, must direct itself tofixed and general limits. Central issues in social struggle should be resolved by scientificinvestigation. Thus, critical thinking surrenders to ideology. Scientific system surrenders metaphysicsand political imagination to the existent.

Certain principles of positive philosophy ensure the existing order. They are the principleswhich justify the authority of observation, against alternative forms of reason and imagination. Onlyseeing the given, follows from the positivist view that phenomenon must be observed. Human activityis categorized as objective necessity. Sociology, as a positive science, has no relation to valuejudgements, and facts and values are quite separate entities. Therefore, there is no objective basis,

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independent of science and its findings, to criticize society. "What is" is "what ought to be!" But, thisstance cannot be justified by positive philosophy. Since, questions of "ought," i.e., of valuejudgement, are irrational, by the separation of fact and value. Positive philosophy builds uponprejudgments and evaluations, which it cannot rationally justify.

The goal of radical humanists is to be able to judge between competing analyses of reality andto expose elements of ideology. Radical humanists view science and evaluation as united. One mustbe able to evaluate aspects of reality, e.g., ideology and myths, in order to analyze it accurately. Apositivist approach cannot do this, because it has no basis to assess competing frames of reference.For emancipation, it is essential to nullify the influence of scientism in philosophy, and other spheresof thought. Scientism implies that science is not one type of possible knowledge, rather it is "the"knowledge. Positivism provides scientism with the most sophisticated defense. Positivism came tolife as a critique of ideology (of religion, dogma, speculative metaphysics, etc.), however, it becamea central element of technocratic consciousness and the key aspect of modern ideology.

Radical humanists must discard the illusion of objectivism from knowledge. This illusionconceals the processes in which facts are constructed, and prevents consciousness of the interlockingof knowledge with interests. Knowledge is formed in virtue of three interests: (1) information thatincreases our power of technical control of objects in the environment; (2) interpretations that makepossible the orientations of action within common traditions by furthering mutual, intersubjectiveunderstanding; and (3) analyses that free consciousness from its dependence on hypostatized power.The third interest, the emancipatory interest, is securing freedom from hypostatized forces andconditions of distorted communication. This interest is based in individuals’ capacity to deciderationally, to self-consciously reason, in light of available knowledge, rules, and needs. Humanhistory is made with will and consciousness. But, once it is noted that history reflects domination,repression, and the ideological framing of action, it becomes clear that self-understanding is oftenlimited by unacknowledged conditions. If the rational capabilities of human beings are to be nurtured,a particular type of knowledge becomes necessary, to guide the elucidation and abolition of theseconditions. The form of knowledge most appropriate for this purpose is self-knowledge generatedthrough self-reflection. By bringing to consciousness the determinants of the self-formative process,structures of distortion can be revealed, isolated and, under the proper, specifiable conditions,eradicated.

Emancipatory interest in knowledge is the driving force to achieve self-understanding andautonomy of action. It is the human beings' ability to reflect on their own development, and to actwith greater consciousness and autonomy, which sets the basis for the emancipatory interest inknowledge.

To summarize, there are three knowledge-related interests and three categories of knowledge.Each of the interests initiates a distinct methodological approach to the generation of knowledge.Each is rooted in life, which is basic to the survival and development of human beings. It is only inlight of these interests that knowledge can be comprehended.

Interests, power bases, and institutional settings, affect the concern and practices of socialscientists. It is not sufficient to recognize, as with interpretive paradigm, that knowledge communitiesare guided by, and defensive of, paradigms. Beyond this, paradigms must be dealt with within the

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larger social context, through ties to interest and power bases in organizations, institutionalcomplexes, and so on.

In academic finance, there are instances where reference is made to the ideological nature ofmainstream academic finance. The following constitutes a sample of three.

Frankfurter (1995) states:

Neoclassical economics, with its notion of the existence of an almighty, all-encompassing market, is the ideological base, and positivist thinking, as articulatedby Friedman's (1953) classical essay, is the methodological base. (page 26)

Gordon states:

It may be wondered why neoclassical economics theory remains widely acceptedwhen many of its important theorems are so false as to be ridiculous. The answer isthat the theory is an ideology and not a science. In fact, neoclassical economic theoryprovides a more attractive vision of the future and rationalization of the status quothan our great religions. (Frankfurter, Carleton, Gordon, Horrigan, McGoun,Philippatos, and Robinson, 1994, page 180)

Bittner, Robinson, and McGoun (1994) state:

The famous capital markets scholars have founded ideological dynasties (TheChicago School, The Rochester School, etc.) and even received Nobel Prizes.Through their joint control of the editorial boards of the major finance journals andthe political and social processes which underlie doctoral education, capital marketresearchers can ensure the perpetuation of their methods as the sole form of legitimateinquiry, and guarantee their own future success. (page 2)

Whitely (1986) specifically explains how business finance was transformed into financialeconomics to meet the self-interest of both academics and the professional finance community.

In seeking to explain how the study of business finance became transformed into "financialeconomics" so quickly in the USA, it is necessary to combine a discussion of academic expansion,the growth of technocratic beliefs in the efficacy of science, economists' imperialism, . . . and changesin financial markets, especially the rise of new financial intermediaries.

The high prestige of the natural sciences after the Second World War, . . . encouraged thewidespread belief in the late 1940s and 1950s that "science" could be applied to managerial andbusiness problems and scientific research into these problems should be supported.

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This belief in the methods and procedures perceived to be typical of the natural sciences, . .. also encouraged the growth of the "behavioral sciences" and the expansion of economics in the1960s. The apparent success of Keynesian inspired macro-economic advice and relatively steadygrowth rates of the US economy in the 1950s and 1960s reinforced the belief that economics andsocial affairs could be "managed" through the use of expert advice based on scientific research, andthat the appropriate way of conducting such research was exemplified by the use of mathematicalprocedures and models in economics and O.R. . . . This belief was expressed in some detail in thestudies of business education in the USA . . . The Ford foundation accompanied these suggestionswith the allocation of considerable funds for doctoral research and faculty development to encouragebusiness schools to become more "scientific" by applying mathematics, statistics and the socialsciences to business problems.

As part of this general "scientification" of business education and research, the study ofbusiness finance has become transformed since 1960.

From being largely descriptive and focused on the operations of particular financialinstitutions, it has developed a highly mathematical and formal approach and concentrated onvaluation processes in perfect markets.

. . . the study of finance has become highly organized around a particular style of research andanalysis drawn from orthodox, neo-classical economics. . . . Indeed, the dominant intellectualstandards and goals are remarkably similar to those of Anglo-Saxon (positive) economics andresearch appears to be similarly organized and controlled as a "partitioned bureaucracy."

Partitioned bureaucracies are highly rule-governed scientific fields which manifest aconsiderable degree of technical task uncertainty in dealing with empirical phenomena at the sametime as a much greater degree of control over analytical work and objects.

This partitioning remains effective as a means of coping with uncertainty as long as thereputational system as a whole is dominated by the standards and goals of those undertakinganalytical studies and retains sufficient economic and social support for their standards to governaccess to material rewards.

The expansion of the US equity markets, of individuals and institutions participating in themand of financial intermediaries have had a number of consequences. First, the number of peopleengaged in brokerage, analysis and fund management has grown substantially.

Secondly, . . . More people are now engaged in investment analysis and management than inthe 1940s and more of them are coordinated and controlled in hierarchical organizations. Theseconsequences have encouraged attempts at 'professionalization' among financial analysts.

A third . . . was the . . . new forms of competition - including new financial instruments -between financial institutions.

The expansion of job opportunities in investment analysis and management, . . . andcompetition between, funds managers provided a benign setting for the expansion and transformationof business finance teaching and research. (pages 171-185)

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Radical Structuralist Explanation

To survive and reproduce themselves, human beings transform reality, where material realityis the most important. (Much of the discussion that follows is based on Carchedi (1983).) In a society,which is defined with reference to social relations, this transformation takes place through the socialdivision of labor. That is, the social product results from a collective activity. The social division oflabor implies that these groups enter into relations with each other to produce, while they use meansof production. That is, they enter into production relations. These groups, formed in terms ofproduction relations, are called social classes. A complete definition of a social class encompasseseconomic, political, and ideological elements, with dialectical relationships. Production relations,under capitalism, are antagonistic and asymmetric. They are antagonistic, since they unite twoantagonistic poles, defined as owner/appropriator/nonlaborer and nonowner/expropriated/laborer.They are asymmetric, since in this relation the owner is the principal, or determinant, and the non-owner is the secondary, or determined. Therefore, social classes, who are the carriers of contradictoryaspects of social relations, are antagonistic too. They exist in a context of class struggle, andconstantly attempt to dominate each other.

Transforming material requires knowledge of doing it. Gaining knowledge of doing it requiresdealing with it, i.e., transforming it. This is the materialist basis of epistemology. That is, only thosewho are engaged in material transformation have the possibility of knowing reality. In other words,science has a materialist nature, i.e., the principle of the determination of the concrete in thought bythe real concrete. This starts with the development of knowledge by material production. Therefore,only classes, identifiable in terms of production relations, have the objective possibility of anindependent knowledge of reality. Furthermore, the class which deals with a larger portion of reality,has the greater objective possibility of gaining a correct knowledge of it. Under capitalism, theproletariat, which deals with an increasing portion of social reality, has the objective possibility ofknowing it correctly. (The proletariat is defined as all the individuals who participate in thetransformation of material, i.e., in the transformation of the social product, while not owning themeans necessary for this transformation.) In the context of the constant attempt that classes make todominate each other, the need for classes to know reality in order to transform, can only realize itselfthrough a multiplicity of world views. Since all of them are struggling for domination, it can onlyrealize itself through ideological class struggle. Knowledge is, thus, in the most fundamental sense,ideological, since it formulates views of reality and solves problems from a class point of view.

The materialist position presupposes the existence of material reality and non-material reality,i.e., social relations. This recognizes the existence of both material and non-material real concretes,and the primacy of social relations of material transformation, i.e., production relations, over othersocial relations and phenomena, as well as over material transformation.

The primacy of real transformation over the production (transformation) of knowledge impliesthat the production of knowledge is a process of mental, active transformation, and not of reflectionof the real concrete in thought, and is class determined. In other words, there are differentinterpretations of the same reality and all of them are objective, though not necessarily correct. Thedifferent interpretations are antagonistic. This is because they are conditions of domination, on the

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level of knowledge, of antagonistic classes. In other words, they are conditions of reproduction orsupersession of inherently antagonistic structures.

There is complementarity between class determination of knowledge, plurality of objectiveknowledge, and the possibility for one of them to provide a correct, but not in the sense of areflective, vision of reality. More specifically, knowledge is both objective, and class determined,since these problems are raised and solved from class points of view. This implies, first, that thesolution of problems is an aspect of class domination. That is, problems are never solved to theadvantage of the whole society, of all classes, but only to the advantage of one, or some, of them.Second, it implies the incompatibility of different types of knowledge, because they are classdetermined. Therefore, knowledge is the correct solution, as checked by the process of practical andlogical verification, of problems from a class point of view. It is, therefore, not reflective. Problems,in principle, can be correctly solved by the class that has the largest contact with reality. The principleof class determination of knowledge, and thus of the incompatibility of different kinds of knowledge,prevents verification in terms of comparison with socially neutral theories or data. However, thematerialist basis of epistemology ensures the possibility for one class to produce a knowledge thatis not only class determined, but also able to be correct because of that class's position within thesocial structure. This perceives reality, and thus problems, in terms of contradictions, and has at itsdisposal a theory that justifies its claim to be able to solve not only localized but also generalcontradictions.

The proletariat believes that each class generates its own knowledge, as a condition ofdomination over other classes. From the proletariat’s point of view, absolute or judgmental relativismis ruled out, because it is the proletariat that has the objectively determined possibility of gaining acorrect knowledge of reality.

Class affiliations affect the concern and practices of social scientists. It is not sufficient torecognize, as with interpretive paradigm, that knowledge communities are guided by, and defensiveof, paradigms. Beyond this, paradigms must be dealt with within the larger social context, throughties to social classes.

In relation to the development of the general field of management, Burrell and Morgan (1979)provide an interesting reference and explanation:

What is interesting for our present purposes is the form taken by Braverman'sattack upon many of the contemporary schools within management theory, an attackwhich is predicated upon an analysis of advanced capitalism in terms of its basiceconomic structure, using conceptualizations derived from Marx's Capital. With theaid of detailed examples, Braverman carefully links the developments of these schoolswith changes in the societal means and relations of production. In essence, he portraysmanagement theory as a superstructural manifestation of the workings of theeconomic base of capitalist societies. He implies that "as a branch of managementscience," it "views all things through the eyes of the bourgeoisie." . . . Moreover, theybecome an important motive force in this process in their own right. Thus, . . . through

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their intervention, they actively and in a concrete way ensure its survival andcontinued good health. (pages 381-382 )

CONCLUSION

This paper briefly discussed social theory, its complexity, and diversity. It started with thepremise that any worldview can be positioned on a continuum formed by four basic paradigms:functionalist; interpretive; radical humanist; and radical structuralist. It argued that any explanation,of the course of the development of academic finance to its current state, is based on one of theworldviews. It discussed four explanations for the course of the development of science, in general,and finance, in particular. The functionalist paradigm views science as the outcome of the search forobjective truth; the interpretive paradigm views science as being socially constructed; the radicalhumanist paradigm views science as an element of the dominant ideology; and the radicalstructuralist paradigm views science as being class determined.

This paper noted that scientists often approach their subject from a frame of reference basedupon assumptions that are taken-for-granted. Since these assumptions are continually affirmed andreinforced, they remain not only unquestioned, but also beyond conscious awareness. In this way,most researchers in finance tend to favor the functionalist paradigm, and its explanation of thedevelopment of mainstream academic finance.

The partial nature of this view only becomes apparent when the researcher exposes basicassumptions to the challenge of alternative ways of seeing, and starts to appreciate these alternativesin their own terms. To do this, one has to explore other paradigms from within, since the conceptsin one paradigm cannot easily be interpreted in terms of those of another. Once each explanation isviewed from within the respective paradigm, all four explanations are seen to be equally scientificand informative; they look at the process of the development of academic finance from a certainparadigmatic viewpoint.

The diversity of finance research possibilities referred to in this paper is vast. While eachparadigm advocates a research strategy that is logically coherent, in terms of underlying assumptions,these vary from paradigm to paradigm. The phenomenon to be researched can be conceptualized andstudied in many different ways, each generating distinctive kinds of insight and understanding. Thereare many different ways of studying the same social phenomenon, and given that the insightsgenerated by any one approach are at best partial and incomplete, the social researcher can gain muchby reflecting on the nature and merits of different approaches. It is clear that social scientists, likeother generators of knowledge, deal with the realization of possible types of knowledge, which areconnected with the particular paradigm adopted.

This paper noted that the foundations of mainstream academic finance are based upon thefunctionalist paradigm; and, for the most part, finance theorists are not always entirely aware of thetraditions to which they belong. It recommends a serious conscious thinking about the socialphilosophy upon which finance is based and of the alternative avenues for development.

It is interesting to note that this paper’s recommendation is consistent with the fourparadigms:

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(1) It increases efficiency in research: This is because, diversity in the research approachprevents or delays reaching the point of diminishing marginal return. Therefore, therecommendation is consistent with the functionalist paradigm, which emphasizespurposive rationality.

(2) It advocates diversity in research approach: This is consistent with the interpretiveparadigm, which emphasizes shared multiple realities.

(3) It leads to the realization of researchers’ full potentials: This is consistent with theradical humanist paradigm, which emphasizes human beings’ emancipation from thestructures which limit their potential for development.

(4) It enhances class awareness: This is consistent with the radical structuralist paradigm,which emphasizes class struggle.

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ACKNOWLEDGEMENTS

The author wishes to thank his brother's family (Ali, Roya, Kaveh, and Neema) for their constantadvice, support, and encouragement. The author would also like to thank his own family (Haleh,Arash, and Camellia) for their understanding and patience with his research-related absence fromhome.

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INTEGRATING ESSENTIAL SKILLSIN INTRODUCTORY FINANCE:A COMPREHENSIVE EXERCISE

Susan Christoffersen, Philadelphia University

ABSTRACT

An exercise for an introductory finance class is described. Although the assignment is tocalculate the beta coefficient of a stock and use it in the Capital Asset Pricing Model, the goals ofthe assignment are more comprehensive. Financial concepts covered range from simple calculationsof rates of return to more complicated considerations of how to form expectations. The exercise ismulti-objective in that it also strengthens essential writing skills, computer competencies andquantitative analyses including statistics and graphing.

INTRODUCTION

Although college students take courses in computer, communication and analytical skills, thebusiness community decries the dearth of functional literacy in college graduates (Rubenstein, 1998).The problem is not simply deficient course content or delivery. These fundamental skills are beingtaught but may not be adequately reinforced throughout the curriculum.

The need for reinforcement is not new. Advocates of “writing across the curriculum” havebeen urging us to not blame the Freshman English teachers for our students’ poor writing skills.Rather, they suggest that if we incorporate language skills throughout the curriculum, clear writingwill take on importance and good grammar will be more than a workbook assignment. Similararguments can be expected from introductory computer instructors. If students are to graduate withappropriate professional competencies, professors must use the essential skills introduced in earlierclasses. This requires careful sequencing of courses and pre-requisites, a task that is beyond thescope of this paper. Rather, this paper provides a multi-objective exercise for use in an introductorylevel finance class to strengthen computer, written and analytical skills while teaching importantfinancial concepts.

OBJECTIVES

The general competencies integrated in this exercise include algebra, graphing, statistics,writing, presentation skills, software and Internet use. The financial concepts include: stock marketindices, rates of return, beta coefficient, the capital asset pricing model, expectations, annualpercentage rate, effective annual rate of return, geometric mean and sensitivity analysis. The goalof the exercise is to engage students in the learning process. “As is often the case with difficultconcepts, it is best to understand by doing” (Hill, 1999). The assignment initially directs the students,

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but at a certain point it requires them to then make some decisions. The result is that students initiatethe questions, a very effective pedagogy.

PREPARATION

Two assignments precede this exercise, one to establish the level of writing competencyrequired and the second to refresh spreadsheet skills. The first assignment requires a literature searchon an assigned topic and a concise summary and analysis of a relevant article. The assignmentclarifies the difference between analysis and summary, along with providing appropriate writingpractice. This establishes a language arts benchmark while giving the students the opportunity toexercise critical thinking.

The first writing assignment might be to ask the students to address the question, “Are firmsethical?” The students each do a literature search, refining research skills, to find a source thataddresses the issue. When the students work in teams of three, they can not simply summarize onearticle but must reconcile diverse viewpoints, which requires critical thinking. One grade is givento the team, and team members then distribute the points to individuals. This grading scheme hasbeen very effective in eliminating the free-rider problem.

The second assignment is a very simple Excel exercise. The students download a data set,StockAB, from my web-site, http://faculty.PhilaU.edu/Christoffersens, use cell addresses to createand copy simple formulae, and graph a data series. Specifically, students calculate average rates ofreturn, standard deviations and coefficients of variation. They then compare individual stocks to aportfolio and discover how portfolios mitigate risk. Once the level of acceptable writing is establishedand the spreadsheet refresher completed, students are ready for the “beta assignment,” the exercisedetailed in this paper.

THE “BETA ASSIGNMENT”

The students each choose a stock listed on the NYSE and obtain pricing information for thisstock, as well as the relevant stock market index, from the Internet. They then download the data intoan Excel spreadsheet. The students enter formulas to calculate rates of return for the stocks as wellas for the stock market index. Performing regression analyses on these returns, the students calculatethe Beta coefficient for their stocks. The students then graph the resulting rates of return andregression lines. (The specific assignment appears at the end of this article.)

Estimation of the remaining parameters of the Capital Asset Pricing Model (CAPM) requiresthe student to make decisions and generates lively discussions. To calculate the required rate ofreturn, the students must convert the weekly rates of return to annual figures using either the formulafor Effective Annual Returns or Annual Percentage Rates (APR). The astute student may notice thatthe annual rate of return thus calculated does not exactly conform to the data, at which time oneintroduces the difference between arithmetic means and geometric means.

In Excel, there is a function that will calculate the geometric mean but only for positivenumbers. It would be an unusual period if for three years neither a stock’s price nor the index

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declined at all. Adding one to the rate of return, finding the geometric mean and then subtracting oneto arrive at the annual rate of return easily remedies this

To evaluate the required rate of return, students compare it to the expected rate of return.Without fail, students will initiate discussion on how one forms expectations, a topic that might haveseemed pedantic or irrelevant. Finally, sensitivity analysis of the capital asset pricing model showshow sensitive the calculation of the required return is to various assumptions regarding inflation andmarket risk premiums.

Dividends ought to be included in the data set as the changing prices only reveal capital gains,not dividend yield. If this information can be added to the price of the stock at the time of paymentone could accurately measure the total rate of return of the stock. Thus the students areapproximating the rates of return and therefore beta. This is not a significant concern (Morningstar,1998) as dividend yields have been so low, especially for high tech stocks where they may not exist.The error may be more pronounced for utilities or other stocks where the dividend is substantial, andshould therefore be incorporated into the calculation of returns.

The write-up requires that students demonstrate an understanding of the data analysis and theuse of such analysis in financial decision making. Equipment permitting, students present briefPowerPoint demonstrations and discuss their results vis-à-vis the associated firm. Counter-cyclicalstocks and those with high or low beta coefficients generate interest, as does the implications of theR2 reported for the regression equation.

RESULTS

For the Students:

Although the increase in students’ computer competence is readily observable, not everycollege student possesses computing facility. Those who are Internet-wary will discover thecomputer’s usefulness when faced with the alternative of searching the library shelves and enteringstock prices and indices covering weekly data for three to five years into a spreadsheet. The ease ofdownloading the data from the Internet is also demonstrated.

Embedding the formulas, performing the regression analysis, and creating the graph developthe student’s ability to use Excel. In the introductory computer class, one often can not exploit aspreadsheet’s power to this extent. Statistical concepts are revisited and shown to be useful. Thosestudents unfamiliar with statistics can easily handle the regression analysis while others generallygain an appreciation for the material integrated from other classes.

Although rates of return are discussed and compared throughout the course, it is surprisinghow few students immediately grasp the calculation of the rate of return:

(P1 - P 0 ) / P 0.

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This exercise, based on actual prices, clarifies this fundamental concept. The size of the data set,three to five years worth of weekly data, may raise protests but leads to a useful discussion of therelevance of the past for predicting the future. Selecting an index directs the students’ attention tothe differences between indices. Dealing with actual data prompts the student to initiate meaningfuldiscussions, which is a far more effective pedagogy than lecturing.

Much of the write-up concerns the Beta coefficient, specifically, what it reveals about thenature of the stock (and firm) under analysis. The capital asset pricing model then demonstrates theusefulness of Beta for decision-making. Students generally underestimate the task of writing up theirresults. Clumsy language and tortuous phraseology are clear indicators of non-comprehension.Clarity of expression is thus a judicious criterion for grading. The classroom presentations are alsoquite indicative of the level of comprehension.

For the Professor:

Would the use of this assignment necessitate the teaching of a spreadsheet program,introduction to the Internet and verb conjugation in addition to an ambitious finance syllabus?Theoretically, the answer is no. There are learning support centers on campus for writing andcomputer lab assistants for computer assistance. The professor need only uphold the requirement thatstudents be competent in the skills that others have taught in related classes. This entails sequencingcourses and appropriate pre-requisites but beyond the freshman level, one ought to be able to requirecompetence in writing and computing proficiency.

In reality, more work does fall on the professor’s shoulders. The students may have takenwriting classes but one still needs to explain why the paper is rejected, i.e. what is redundancy andwhy write in the present tense. The inadequacies of very computer illiterate students may exceed thepatience of computer lab assistants so it may be result that the professor explains niceties such as thedifference between relative and absolute cell addresses in formulas.

One should not have to “waste” time explaining graphing, regression analysis and

(P1 - P 0 ) / P 0

but expect this. The time is not really wasted if by using these constructs they become relevant and,once grasped, remebered.

TIMING

Deadlines must be flexible to allow time to students who have trouble finding or downloadingdata, as well as for problems originating with the University network. The plethora of problems isunimaginable, ranging from diskettes that have been sat upon to system crashes. Due to thenumerous difficulties, the professor may assign “should” and “must” deadlines, i.e. “you should have

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your data by Wednesday, if you have a problem, tell me Wednesday; you must have it by Friday.”One could provide a global perspective by presenting this explanation of French business practice:“The French have two kinds of deadlines, hard and soft, a date cible, a general target, and a datebutoir, a critical deadline” (Platt, 1998).

Tasks can be assigned in the following increments to create opportunities to addressdifficulties in a timely matter.

Download dataCalculate rates of returnCalculate Beta coefficientGraph regression line and rates of returnWrite-up

The total time requirement for this exercise is probably two to three hours. However, allowtwo weeks to complete the first four steps and allow a week for the write-up. If students fall behind,it is difficult to catch up independently because information on subsequent steps is not grasped if theyhaven’t understood the basics. That is, the interpretation of the regression results is somewhatincomprehensible if the student is not clear on the concept of rate of return. Thus the incrementalsteps seem necessary, at least for the weaker students. After the first four steps, the studentsmistakenly think they are just about finished. However, the write-up involves understanding andusing the information they have compiled and this is often the most challenging part of the exercise.

CONCLUSIONS

Although the Capital Asset Pricing Model is only briefly treated in the text, it is emphasizedhere as it links many aspects of finance as well as incorporates various and sundry skills. The exerciseprogresses from simple to sophisticated concepts and these are comprehended rather than justmemorized. The project generates a lot of activity and is very rewarding.

The student assignment for this exercise follows. The author appreciates notification of its useand any feedback or suggestions.

ASSIGNMENT #3: THE CALCULATION AND USE OF THE BETA COEFFICIENT

Data:

Using the Internet, obtain pricing information for any stock of your choosing that is listed onthe New York Stock Exchange (NYSE). Record closing prices for the end of the week for at least athree-year period. This should give you about 156 data points. If there is a holiday, use the closingprice for the previous day; do not enter zero. An easily accessible site is http://investor.msn.com.Also download the appropriate stock market index for the same time frame.

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An alternative for those who are absolutely unable to use the Internet is to visit the Referencesection of the library and use the Standard and Poor’s (S&P) Daily Price Quotations for the NewYork Stock Exchange. This will involve a significant amount of data entry (over 300 4-digitnumbers) from 12 different volumes. Note that prices are recorded as fractions of a dollar, not dollarsand cents. Thus you must convert the fraction (in eighths) to decimals (cents). For example, if theprice is 10-02, this means ten dollars and two eighths, which should be converted to $10.25. Use theS&P Composite Index for the measure of the market’s overall performance. This can be found in thefront of the book of price quotations.

Analysis:

< Calculate the rates of return for your stock and for the market index.< Using these rates of return calculate the Beta coefficient for your stock by regressing

the stock’s return on the market’s performance. This can be done in an Excelworksheet, using the Tools menu, under Data Analysis (Regression) OR usingthe function wizard, and specifying the statistical function: slope.

< Create a scatter graph of rates of return, with the market rates of return on the X-axisand the Stock’s rate of return on the Y-axis, as shown in the textbook.Reference the textbook appendix for chapter five, pg. 222, Essentials ofManagerial Finance, 11th ed., Weston, Besley and Brigham (1996).

Write-up:

< Explain the key concepts: rate of return and Beta coefficient.< Report your results and explain their implications. Attach your data sets as well as the

scatter diagram, the regression equation, and the R2.< What is the required rate of return for your stock? Explain the parameters used in

your calculations.< Given the required rate of return, recommend a buy/sell decision for an investor and

explain the basis for your recommendation.< Using sensitivity analysis, determine the sensitivity of your required return to changes

in risk-aversion and then to changes in T-bill rates.< Please use correct grammar and spelling. Organize your material and proof read your

paper. It should be about one page in length.

Presentation:

Prepare either PowerPoint slides or overhead projection transparencies to briefly explain tothe class what was interesting in your results.

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REFERENCES

Harell, D. (1999). Morningstar Incorporated, Chicago, Illinois.

Hill, C. (1999). A Simple Experiment of Elasticity, Conference Proceedings: Teaching Economics,Robert Morris College and Irwin McGraw-Hill Publishing.

Platt, P. (1998). French or Foe? 2nd Edition, Cincinnati, OH: C.J. Krehbiel Co., quoting Mr. Jean-Claude Guez, Partner, Arthur Andersen Consulting.

Rubenstein, E. S. (1998). The College Payoff Illusion, American Outlook, Fall, 14-18.

Weston, J. F., S. Besley, & E. F. Brigham. (1996). Essentials of Managerial Finance., 11th Edition,Fort Worth, TX, Dryden Press.

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DETERMINANTS OF BUSINESS COMMUNICATIONSSTUDENTS PERFORMANCE: AN EMPIRICAL

INVESTIGATION

Kathy Hill, Sam Houston State UniversityBalasundram Maniam, Sam Houston State University

ABSTRACT

This study examines the determinants of course performance among Business Communicationstudents. The study looks at characteristics of the students, motivation, maturity, and background.Looking cross-sectionally, the study found that the students’ expected grade to be highly correlatedto the final assigned grade. The study also tested the difference between the expected grade andactual grade and found that the difference to be significant at the conventional one percent level.Further, by subdividing the data into four groups by different instructors, the study also found thatthe expected grade to the most significant variable. The results of the subsets also indicate thatstudent grade expectation and actual grade assigned at the end of the semester are statisticallydifferent for all instructors except one.

INTRODUCTION

The factors influencing student performance are of considerable interest to universities andcolleges. They are constantly seeking ways to increase or at least maintain enrollment in the face ofdecreasing demand for business education (Higher Education Research Institute, 1992). As such itis becoming increasingly more important to have greater teaching abilities in the classroom and findnew ways to motivate and retain students. It is also becoming common for most institutions torecognize this and start adjusting their tenure criteria or implementing post tenure review to reflectthis need. Tompkins et al. (1996) found that professors spend about fifty to seventy percent of theirtime teaching; whereas, Tripathy and Ganesh (1996) found that teaching effectiveness carries animportant weight of approximately forty percent depending on the type of institution. Because somuch weight is associated with student learning and teaching effectiveness, educators have begunto not only find ways to improve their teaching but to also look at the students for clues to improvetheir retention of the subject matter.

The purpose of this study is to determine the factors that influence students’ final grade in aparticular business communication course. This study examines which of these factors are importantand how these factors influence student learning. This is important because it can provide insightsinto the areas in which instructors should place emphasis to maximize their effectiveness in theclassroom and also change some to the variables that they have control of to improve studentlearning. This study is similar to the Hill and Mehta (2000) study, but their sample size was small,

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and they did not incorporate as many variables as this study does. Also, their data were not brokendown into subsets to test for individual instructors.

This study provides the results of student performance in business communication courseswhere there is little literature. It also contributes to an increased understanding of studentperformance by providing replication and support for the findings in previous studies. Finally, thisresearch provides important information for assessing the development of programs for improvingstudent performance.

LITERATURE REVIEW

Performance research in business communication courses has been very limited in numberand scope. Role playing in business communications courses was studied by Johnson (1985), and heconcluded that role playing can aid students in identifying attitudes and behavior conducive toeffective communication. He further mentioned that if role playing is used along with other learningactivities, it can provide realistic practice in developing person-to-person business communicationskills. On the other hand, Golen (1985) analyzed interpersonal communication barriers identified bybusiness communication students. He concluded that the five most serious communication barriersperceived by these students were a tendency not to listen, lack of interest in the subject matter,prejudice or bias, poor organization of ideas, and resistance to change.

The factors influencing student performance among undergraduate business students are ofconsiderable interest to educators. For example, Durden and Ellis (1995) and Ellis, Durden, andGaynor (1998) suggest that overall GPA, class attendance, year in school, mathematical aptitude,gender, participation in outside activities, and number of hours carry exert significant influence onstudent performance. Others like Romer (1993) found that successful homework completionencourages better academic performance.

Other research on student gender and performance include Mutchler, Turner, and Williams(1987) and Tyson (1989). They found that female students performed at a higher level than did malesin accounting courses. Other researchers, Fraser, Lytle, and Stolle (1978), Hanks, and Shivaswarny(1985), and Lipe (1989), found no significant difference in male versus female performance.Boouillon, and Moran (1992) have shown that male students outperformed female students in aparticular course. They showed that male students performed better that females in Principles ofAccounting I course. Ravenscroft and Buckless (1992) examined the gender performance byconsidering differences in course context and grading policy. They found that if male or femalestudents perform better at certain course requirements, such as homework, this may lead todifferences in the course grade.

Maniam, Lunce and Nichols (1994) found, with respect to performance and motivation, thatstudents given daily quizzes perform better than students given no quizzes. Maniam (1996) alsofound that student performance improved in classes where pop quizzes and daily quizzes areadministered when compared to classes where no quizzes are given.

Carpenter, Friar and Lipe (1993) investigated the impact of race, gender, and gradeexpectations on student performance across three university environments. Their analysis of genderindicates that females had lower grade expectations than males; however, there was no significant

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difference in the actual course grade they received compared to males. Their analysis of race oncourse performance indicates that minority students have lower grade expectations and receivedsignificantly lower grades relative to majority students. In comparing race and gender, there was nosignificant difference between majority and minority females; however, minority males performedsignificantly below majority males. This study also looked at attrition rates and found that minoritystudents are more likely to drop the course than majority students, with the problem being most acutefor minority males. Ward, Ward, Wilson and Deck (1993) conducted a study by investigating theinfluence of Composite English and Math ACT test scores on black student performance for theintroductory accounting course rather than the advanced course. Their finding that composite ACTscores alone may not be sufficiently accurate predictors of the performance of black accountingstudents supports the results of previous studies.

This study’s focus is the influence of different variables on student performance in a businesscommunication course. The variables included are study hours for the particular course, current gradepoint average, total semester hours being taken, gender, age, work load per week, primary languagespoken at home, marital status, total number of hours on other business communication relatedcourses and expected grade from the course. It is also hoped that faculty will gain some useful insightfrom this experiment. The study also serves as a pilot study for a much bigger study where studentperformance in such classes can be generalized. Other factors such as student perception of theinstructors will also be analyzed in the future.

METHODOLOGY AND DATA

Several explanatory variables are used to analyze their influence on the student performance.A thorough literature search indicates that no previous study was done to see the effects of theseexplanatory variables on performance of students in business communication courses using the modelthat this study proposes. The study by Hill and Mehta (2000) looked at similar variables, but theirstudy is limited due to the small sample size and limited explanatory variable list. They found thatexpected grade and current grade point average (GPA) to be relevant in explaining the studentperformance.

It seems that student performance should be related to such characteristics as intelligence,motivation, maturity, background, etc. As a proxy for intelligence, the students’ cumulative gradepoint average (GPA) is included in the model. Motivation may be affected by gender (GEN), age(AGE), marital status (MRT), and students’ grade expectation(EGR); hence, information on thesevariables will be obtained. It may also be measured by looking at the total number of hours spent perweek on studying and working on homework assignments (STH). Background, as far as businesscommunication is concerned, is typically conceived in terms of students’ exposure to writing courses(WRC) such as English, Literature, or other writing courses in general. One method to represent suchbackground is to consider the number of semester hours earned in each of these fields. Anothermethod to represent this is ethnic background and language spoken at home (LAN). Since thismethod has stirred debate in the past, it is used as a secondary method along with the first method.Finally, two other variables - number of hours students work per week (WRH), and number ofsemester hours registered for the semester (SMH), are also used to see their relationship in the model.

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The following model will be estimated for the students:

AG = $0 + $1EG + $2STH + $3SMH + $4GPA + $5WRC + $6WRH + $7AGE + $8GEN + $9LAN + $10MRT + g

where AG is the dependent variable which measures the students' performance measured by finalgrade received. The grades are assigned as a percentage of a 100 point scale. The independentvariable (Xs) tries to capture all factors that influence the student performance.

EG = grade expectation and is expected to have a positive sign.STH = total hours spent per week on studying and working on homework and is expected to have a

positive sign.SMH = number of college credit hours registered for the semester and is expected to have a negative

sign.GPA = cumulative grade point average that measures the ability of the student and is expected to have

a positive sign.WRC = total semesters hours previously earned in writing enhanced courses and is expected to have a

positive sign.WRH = total number of hours working and is expected to have negative sign.AGE = age of the students and is expected to have positive signGEN = a dummy variable representing gender (1= Female, 0 = Male) and is expected to have positive

sign.LAN = a dummy variable representing primary language spoken at home (1= English, 0 = Others) and

is expected to have positive sign.MRT = a dummy variable representing marital status (1= Single, 0 = Others) and is expected to have

negative sign.

Multiple regression analysis is used in estimating the equation because this allows forunbiased estimates of the influence of variables on performance. This experiment is conducted in auniversity environment in Texas. Data on most of these variables in the model are obtained from astudent survey (available from first author). The final grade (AG) was obtained from the instructorsat the end of the semester. This was done using the social security number from the student survey.The instructors were allowed to see the survey after the final grades were assigned but the cover pageof the survey which obtained the identification of the student (social security number and theirsignature) was removed.

Based on previous research the variables included in this model are expected to contributein explaining student performance in this course. It is hypothesized that as the student's gradeexpectation (EG) increases, so will the actual performance in the class. The number of hours that thestudent studies (STH) is a measure of the effort applied to the subject by the student and is expectedto be directly related to student performance. Total semester hours that the student is currently taking(SMH) is expected to have a negative influence on test performance. It is hypothesized that gradepoint average (GPA) which measures the student's intelligence and past performance and ability willhave a highly significant and positive influence on performance. This has been a general finding inprevious research. Other variables such as the number of semester hours students have taken in otherrelated courses (WRC) and age of the students (AGE) should have positive influence in the final

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grade; whereas, total number of hours working (WRH) is expected to have a negative sign becausestudents will have less time to study or prepare for this course. Finally, three dummy variablesrepresenting gender (GEN), the language spoken at home (LAN), and marital status (MRT) are usedin this model. It is hypothesized that females tend to perform better than males and also those thattend to speak English at home should perform better than those who do not. It is also believed thatmarried, divorced or widowed students would be more responsible, and hence, their performance willbe higher compared to the single students. Since these variables stirred debate, it is used inconjunction with other variables to measure background and responsibilities. The regression analysisis then repeated for each sub sample (for different instructors) to see its relationship to the actualgrade.

The study also looks at the difference between the expected grade and the actual grade toanalyze the student expectation versus actual performance. It is hypothesized that students usuallyhave high expectation in such a class, but their actual grade is usually much lower because theirwriting skills are very poor. Therefore, the study tests the following hypothesis:

Ho1: Actual grade (AG) and Expected grade (EG) are equalHa1: Actual grade (AG) and Expected grade (EG) are not equal

The hypothesis is first tested for a significant difference for the entire sample and then it isrepeated for each sub sample. The ANalysis Of VAriance (ANOVA) statistical procedure will beused to test the null hypothesis (Ho1) that no significant difference existed among the grades (i.e., theactual grade and expected mean grade on the comprehensive final examination were essentiallyequivalent). It is our belief that expected grade will be different (higher) than the actual grade sincestudents typically assume such a course is relatively easy and thus they believe that they will makea high grade but in reality that is not the case.

RESULTS

First, the survey was conducted in the Fall term of 1999 and the students were given all theinformation about the survey and purpose of the experiment. They were also told that their final gradefor this class would be obtained from the instructor. If they chose not to have their final course gradeavailable for this experiment, they were told not to fill the survey and also not to write their socialsecurity number on the survey. Using the survey results and the final grade from the instructor, thedata set was prepared for analysis. Out of the one hundred eighty six surveys, only one hundred sixtyseven were usable where all the pertaining information was filled out in the survey.

First the summary statistics of the dependent and the independent variables is provided inTable I. The mean actual grade obtained by the students was 82.54; whereas, their mean expectedgrade was 87.17. This is not surprising since students typically have higher expectation in mostclasses. Given this dispersion between the expected grade and the actual grade, further testing willbe carried on later to reveal if student expectation is unrealistic in this course. The only other variablethat stands out is their work load. Most of them on the average are working almost nineteen hours

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a week, which is significant because the average number of semester credit hours registered by eachstudent is almost 14 hours per semester (see the SMH). Another interesting observation is that themean age of the students is 22.9, together with the fact that most of them are single, should give someindication of their maturity level.

Table I: Summary Statistics (Overall Sample)Mean Std. Deviation High Low

AG 82.5 14.0 97 0EG 87.2 6.1 97.5 67.5

STH 3.5 3.4 20 0SMH 13.8 2.8 21 6GPA 2.8 0.03 3.95 1.9WRC 7.8 0.6 42 0WRH 18.9 15.6 60 0AGE 22.9 4.3 50 19GEN 0.48 0.51 80* 87**LAN 0.97 0.17 162+ 5++

MRT 0.87 0.33 145& 22&&

Note: * Number of females in the course; **Number of males in the course+ English spoken at home; ++ Other language spoken at home& Number of single students; && Non-single students

The multiple regression test was conducted on the data set to analyze the influence of the tenexplanatory variables on student performance, and the following results were obtained, as shown inTable II, Table III, and Table IV. In Table II the estimated adjusted R2 shows 11.66%, variation ofthe dependent variable (AG) is explained by the regression which indicate this is relatively a poorfit. The F-ratio is significant at the one percent level, which implies that the explanatory variablesexplain the dependent variable well and its impact on student performance, even though the adjustedR2 is low.

Table II: Regression Statistics (Overall Sample)Multiple R 0.412131R Square 0.169952

Adjusted R 0.116638Std. Error 13.16013

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Table III: Analysis of Variance (Overall Sample)Model DF SS MS F SignificanceRegression 10 5527.9 552.8 3.19 0.0009*Residual 156 27017.5 173.2Total 166 32545.4Note: * Significant at the one percent level

Table IV: Regression Coefficients (Overall Sample)Model Coefficients Std. Error t-statistics P-value

Intercept 6.714 21.301 0.315 0.753EG 0.755 0.194 3.887 0.0001*

STH -0.241 0.319 -0.754 0.452SMH 0.537 0.402 1.335 0.184GPA -0.816 2.354 -0.347 0.729WRC 0.042 0.138 0.301 0.763WRH 0.002 0.067 0.023 0.982AGE 0.290 0.293 0.991 0.323GEN 2.686 2.164 1.241 0.216LAN -1.028 6.059 -0.170 0.866MRT -1.838 3.627 -0.507 0.612

** Significant at 1 percent level

The above estimated equation shows that all other variables come up with the expected signexcept credit hours registered (SMH), current grade point average (GPA), working hours per week(WRH), and primary language spoken at home (LAN). The variables SMH and WRH were expectedto be negative but came up with a positive sign, although they are not significant. Thus the perceivednotion that number of semester hours registered and number of hours students work is irrelevant totheir performance. Similarly, LAN (language spoken at home) was expected to be positive, but itcame out negative but insignificant. Therefore, the perceived notion that English speaking studentswill perform better than the non English-speaking students in a business writing course are not validin this case. Probably the most puzzling result is the current grade point average (GPA) which wasexpected to be positively related to student performance. Unlike the Hill and Mehta (2000) study, thevariable (GPA) came with the wrong sign although it was not significant. As predicted, the expectedgrade, EG is significant at the one percent level which implies that students had a good expectationof their standing in the class before the final exam.

Therefore, it is safe to say that the significant F statistic and a low R2 call for further studybefore concrete conclusions can be drawn. On the other hand, the data set suggests that expected

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grade (EG) has an impact on the actual grade obtained at the end of the semester. Yet, it is puzzlingto see that GPA did not play an important role in the actual grade obtained at the end of the semester.

In order to test the hypothesis, whether the mean difference between the expected grade andthe actual grade is zero (no difference), the study performed a two tail test. The computed z teststatistic is -3.90 with the critical z equals 1.96. Using an alpha of 1 percent, the test rejected the nullhypothesis; there is a significant difference between the expected grade and actual grade obtained atthe end of the semester. Therefore, although students had the high expectation of making a highgrade, the study shows that the actual grade they obtained is much lower than the expected grade.

Next the study breaks the sample down into four subsamples to repeat the test for the fourdifferent instructors. The test is done merely to see if the explanatory variables behave differently inthe four subsamples. First, the summary statistics yield the same results as the results of the overallsample where the expected grade was higher than the actual grade for every instructor, and the othervariables were also relatively the same as the overall sample. The ANOVA results shows that theoverall F-statistics is significant at the conventional 1 percent for Instructors I and III, significant atthe 10 percent level for Instructor IV but not significant for Instructor II. Similarly the adjusted R2

are 0.83, -0.09, 0.67, and 0.23 for Instructors I, II, III, and IV respectively. The regressioncoefficients, together with the F statistics and Adjusted R2 are reported in Table V for all foursinstructors.

Table V: Regression Analysis (For Individual Instructors)Model Instructor I Instructor II Instructor III Instructor IVIntercept 10.46 (21.14) 27.74(64.68) 0.10(12.16) -13.43(31.38)EG 0.33(0.16)* 0.61(0.65) 0.74(0.11)*** 0.98(0.35)**STH -0.36 (0.16) 0.19(1.04) -0.14(0.23) -0.06(0.41)SMH -0.13(0.34) 1.02(1.15) 0.15(0.20) 0.44(0.64)GPA 8.27(2.48)** -5.01(6.79) 2.71(1.26)** -0.65(4.17)WRC -0.15 (0.13) 0.39(0.39) 0.01(0.08) -0.09(0.19)WRH 0.21(0.09)* -0.10(0.21) 0.03(0.04) -0.04(0.10)AGE 0.25(0.44) 0.52(0.93) 0.18(0.25) 0.34(0.37)GEN 3.39(2.70) 3.59(6.09) 1.11(1.04) 2.72(4.12)LAN 14.18(4.27)** -10.97(22.26) 5.05(2.20)** -2.64(11.21)MRT 1.62(4.43)* -7.70(14.29) 0.93(1.49) 3.62(5.97)Adjusted R2 0.8314 -0.0873 0.6723 0.2316F-Statistics 9.8808*** 0.5341 11.4633*** 2.0849*Note: Standard Error in parentheses

*** Significant at 1 percent ** Significant at 5 percent * Significant at 10 percent

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Table V provides some interesting mixed results. Just like the overall sample, the expectedgrade variable (EG) is significant for three instructors (Instructors 1, III, and IV), but it is notsignificant for Instructor II even though it has the correct sign. Similarly, the cumulative grade point(GPA) is also significant for Instructors I and III but insignificant for Instructors II and IV. The otherinteresting variable is language spoken at home. In two cases (Instructors I and III), it is has thecorrect sign, and it is significant at the five percent level. On the other hand, it has the incorrect signfor the other two instructors. Breakdown of student characteristics may explain this difference, forexample, using race as an explanatory variable may explain this difference. But these mixed resultswarrant further investigation.

The F-statistics is significant for three instructors (I, III, and IV) but not instructor II. Overall,taking into account the F-statistics and the adjusted R2, it is safe to say that the results are somewhatconsistent for Instructors I, III, and IV but inconsistent for Instructor II. Subsample II (for InstructorII) has no significant variables and its F-statistics is also not significant, meaning overall the modeldoes not explain the dependent variable and its impact on student performance.

The hypothesis test to analyze if the mean difference between the actual grade (AG) andexpected grade (EG) for these four subsamples is then conducted. . Casual observation indicated thatthe expected grade is higher than actual grade for all the instructors although the difference is smallfor instructor IV. The t-test was conducted for each subsample and the results indicate that the thereis a difference between the actual grade (AG) and expected grade (EG) for Instructors I, II and III.The test failed to reject the null hypothesis for instructor IV. In otherwords, there is no differencebetween the actual grade and expected grade for Instructor IV. A closer look at the summary statisticsindicate that the mean expected grade (83.04) and actual grade (80.14) was the closest for InstructorIV among all the instructors.

DISCUSSION

The overall results of the study showed that the only factor that played a significant role instudent performance is their expected grade. Some of the more common variables such as the GPAdid not play a significant role in this study. This result contradicts previous studies where GPAplayed a important role in student performance (Hill and Mehta, 2000). Looking at the F-statistics,it is clear that the model can explain the dependent variable relatively well. The paper also showedthat there is significant difference between actual grade and expected grade for the overall data set.This shows that student expectation in this course is unrealistic and not in line with the actualperformance. This in part is because students think that business communication is a relatively easycourse, but their performance indicates otherwise.

Sub-dividing the data into the four subsamples by instructors provided some clues for thepuzzling yet interesting results. Again, the expected grade was an important variable, but the GPAwas also significant in two out of the four cases. The F-statistics clearly shows that the modelexplains the explanatory variable in three out of the four cases. The study also showed that there isa difference between the actual grade and expected grade in three out of the four instructors.

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SUMMARY AND CONCLUSION

The objective of the study was to get an indication of how some of the variables influencestudent performance in a business communication class environment and to analyze if the expectedgrade is in line with the actual grade. The study provides some interesting clues about studentperformance but the results warrant further study before concrete conclusions can be drawn.

Since the data set encompasses four different instructors, every precaution was taken to makesure the data were valid. For example, all the data sets were collected in one semester (Fall 1999).The course content of each instructor was reviewed to make sure they are similar. At the same time,each instructor’s syllabus was reviewed to ensure consistency. Instructors were not allowed toconduct the survey, and they also did not see the survey until the final semester grade was assigned.Even though no instructor in this experiment wanted to see their individual survey results, they weremade available without revealing the student identification.

Future study can take many directions. For example, further analysis can be done with biggerdata sets for each instructor which will strengthen these results considerably. Furthermore, studentperception of each instructor can be compared to see how they differ among instructors and how theyrelate to student performance among instructors. This will provide further insight about studentperception (evaluation) and student performance. We can also compare student performance indifferent courses across campus. Similarly, different courses with different quantitative skills (for e.g.quantitative versus non-quantitative courses) can be compared to analyze which variable(s) playsignificant role in explaining student performance. Also, future study can be conducted to comparestudent performance in big classes versus small classes or business courses versus non businesscourses. Student perception of faculty can also be analyzed in such situations.

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REFERENCES

Bouillon, M. and B. M. Moran, (1992). “The Relative Performance of Female and Male Students inAccounting Principles Classes," Journal of Education for Business, 224-228.

Carpenter, V. L., S. Friar, and M.G. Lipe, (1993). "Evidence on the Performance of AccountingStudents: Race, Gender and Expectations," Issues in Accounting Education, 8(1), 1-17.

Durden, Garey C., and Larry, V. Ellis.(1995). “The Effects of Attendance on Student Learning inPrinciples of Economics.” American Economic Review Papers and Proceedings 85 (2): 343-46.

Ellis, Larry V., Durden, Garey C., and Patricia E. Gaynor. (1998). “Eveidence on Factors thatInfluence the Probability of a Good Performance in The Principles of Economics Course.”Business Quest.

Fraser, A., R. Lytle, and C. Stolle, (1978). "Profile of female Accounting Majors, AcademicPerformance and Behavioral Characteristics," The Woman CPA, 18-21.

Hanks, G., and M. Shivaswarny, (1985) "Academic Performance in Accounting: Is there a GenderGap?", Journal of Business Education, 154-156.

Higher Education Research Institute, (1992). “Freshman Interest in Business in Steep Decline,”University of California at Los Angeles, 1.

Hill, K., and S. S. Mehta. (2000). “Student Performance in a Business Communication Course: ACase Study.” The International Journal of Business Disciplines 10 (1), forthcoming.

Johnson, E. C. (1985). “Role Playing in Business Communications,” Journal of Education forBusiness, 11 (2), 60-63.

Lipe, M. G., (1989). "Further Evidence on the Performance of Female Versus Male AccountingStudents," Issues in Accounting Education, 4, 144-152.

Maniam, B., (1996). "Enhancing Student Performance in Basic Finance Class with Daily Quizzes:An Empirical Investigation," Southwest Decision Sciences Institute Proceedings, 27-30.

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IMPLEMENTING TQM IN HIGHER EDUCATIONINSTITUTIONS: A STRATEGIC MANAGEMENT

APPROACH

Ramesh G. Soni, Indiana University of PennsylvaniaManmohan D. Chaubey, Indiana University of Pennsylvania

John C. Ryan, Indiana University of Pennsylvania

ABSTRACT

In recent years, "Total Quality Management" (TQM) has received much attention all over theworld. It is claimed that the TQM approach has and will change the way business is conducted(Gilks, 1990), and is often compared to the revolutionary developments such as introduction offactory, assembly line, etc. (Elmuti and Kathawala, 1996). Challenged by global competition, U.S.companies, both in the service and manufacturing sector, are embracing TQM. TQM is also makinginroads in government; because of a presidential Executive Order several federal agencies haveadopted TQM (Burstein and Sedlak, 1988). However, higher education institutions--universities andcolleges--have been slow in adopting this approach (Artzt, 1993). The paper presents a starategicmanagement approach to and a model for system-wide implementation of TQM in higher educationinstitutions.

INTRODUCTION

In recent years, "Total Quality Management" (TQM) has received much attention all over theworld. It is claimed that the TQM approach has and will change the way business is conducted(Gilks, 1990), and is often compared to the revolutionary developments such as introduction offactory, assembly line, etc. (Elmuti and Kathawala, 1996). Challenged by global competition, U.S.companies, both in the service and manufacturing sector, are embracing TQM. TQM is also makinginroads in government; because of a presidential Executive Order several federal agencies haveadopted TQM (Burstein and Sedlak, 1988). However, higher education institutions--universities andcolleges--have been slow in adopting this approach (Artzt, 1993). In this paper, we present a modelfor implementing the TQM in higher education institutions.

TOTAL QUALITY MANAGEMENT

The concept of quality is not new to the humankind; we have always, subconsciously orconsciously, carried out actions to ensure quality so "that a product meets a desired or specificstandards" (Lundquist, 1998). However, the definition and the scope of quality have continuouslyevolved over time. From the 1920s through the 1950s, this concept was driven by developments inthe field of Statistical Quality Control that had a great impact upon shop floor management. During

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this period, however, quality control was viewed as an exclusive responsibility of the quality controldepartment. In the late 1950s quality began to be recognized as an organization-wide responsibility.Feigenbaum (1956) coined the term "Total Quality Control" to describe this phenomenon.Subsequently, as pointed out by Rehder and Ralston (1984), the term "control" was replaced by"management" to overcome the negative connotation associated with the word "control." And, thus,the term "total quality management" came into existence.

Today, total quality management (TQM) is viewed variously as a philosophy, whichemphasizes that quality is responsibility of everyone in an organization; as a process for managingchange; as a strategy to improve organizational competitiveness and effectiveness; as a value systemthat emphasizes striving for quality in product or services; and an approach to doing business thatcovers the whole organization. TQM has been also described as a management "unification" process(Stuelpnagel, 1989) that emphasizes teamwork and employee empowerment. Employees at all levelsare organized and motivated with knowledge and responsibility for managing and improvingorganizational processes. Thus, TQM is far more than simply statistical quality control and qualityassurance. It is concerned with "changing the fundamental beliefs, values and culture of a company,harnessing the enthusiasm and participation of everyone," (Atkinson and Naden, 1989) with theultimate goal of doing the job right first time (Tang and Zairi, 1998).

As a customer driven strategy, TQM focuses upon the organization's desire to satisfycustomer expectations (Marchese, 1993). With the blessings of and commitment from the topmanagement, this strategic approach to TQM encourages and motivates employees to participate incontinuous improvement of the product, service, and operations (Willis and Taylor, 1999). Statisticalprocess control (SPC) and Quality Circles (QC) are integral parts of the TQM philosophy. The useof SPC in TQM emphasizes that the management focus upon the processes, and not just the output.The use of QC empowers the employees through participation in managing and improvingorganizational processes.

The principles of TQM, as discussed above, have been clearly summarized by Hendricks andTriplett (1989) as follows:

TQM is a strategic, holistic, ongoing approach to organizational improvement.

It demands management leadership in establishing total quality as a way of life.

It is driven by a clear vision for the future and a blueprint for action.

It focuses on the client, both internal and external.

It requires clear definition of client expectations and meeting them, 100 percent of the time.

It requires human resource excellence in training, communication, cooperation, feedback andreward sharing.

It requires continuous measurement of client satisfaction.

It demands responsible citizenship and respect for the public good.

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POTENTIAL BENEFITS OF TQM TO HIGHER EDUCATION INSTITUTIONS

Most institutions of higher education in the U.S. are facing numerous challenges andcompetition--shrinking budgets; dropping enrollments; fierce competition among institutions toattract students; competition from major companies that are educating their employees internally;competition from world class institutions in Japan, Europe and other countries (Bemowski, 1991).There are also pressures for increased accountability and outcome assessment. Adoption of TQMwill help institutions of higher education maintain their competitiveness, eliminate inefficiencies inthe organization, help focus on the market needs, achieve high performance in all areas, and satisfythe needs of all stakeholders (Edwards, 1993). In order to produce quality leaders for tomorrow, aninstitution of higher education can no longer afford to teach "one set of values [TQM] and adoptinga different set for itself" (Matthews, 1993).

TQM EXPERIENCES IN HIGHER EDUCATION INSTITUTIONS

As mentioned earlier, institutions of higher education have been slow in adopting the conceptof TQM. However, many institutions have implemented TQM, at least in some parts of theirorganization. Bingham (1993), Vazzana, et al (1997) and Schonberger (1995) have describedadjusting TQM from its industrial birthplace to the halls of academe. The following are just a fewexamples of the many institutions of higher education that have adopted TQM to improve theiroperations. Oregon State University has adopted the TQM concepts for managing its physical-plantoffice, which experienced a 25 percent reduction in completion time for remodeling projects. LamarUniversity in Beaumont, Texas used a team approach to TQM implementation and showedimprovement in getting potential students to apply for admission earlier and improvements in staffdevelopment (Montano and Utter, 1999). The School of Business at Edinboro University ofPennsylvania has adopted TQM and improved class scheduling, hiring and employee morale(McMillen, 1991). The Ohio State University used a nine-phase program for TQM implementation(Coate, 1990). At Babson College, TQM was integrated in curriculum and used as a way to run theinstitution (Engelkemeyer, 1993). Auburn University has used TQM to restructure programs andservices in its student affairs division (Muse and Burkhalter, 1998).

Several universities, colleges and junior colleges have used quality circles to increase theireffectiveness in areas of residential life (Keller, 1987), student learning support (Wilkinson, 1986),work life management of college employees (Shibata, 1984), college administration (Moretz, 1983;Ladwig, 1985; Ruff, 1984; and Romine, 1981), library facilities (Sell and Mortola, 1985), and studentservices (Deegan, 1984). Most of the reported experiences with the quality circle implementationin higher education have been positive. However, there is some evidence that the success of qualitycircle programs may be jeopardized by problems, such as inadequate training, problematic groupmembership, exclusion of supervisors, etc. (Simmons and Kahn, 1990).

Both sides of the issue are being aired. Not everyone thinks that TQM belongs on campus.TQM may be useful in support and administrative areas, but classroom norms seem to violate theassumptions of TQM, (Jauch and Orwig, 1997); some question the value of TQM in higher education,(Fisher, 1993); and others identify some critical barriers to the utilization of TQM in academia (Lam

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and Zhao, 1998); and yet another suggests that the basic postulates of quality within TQM areincompatible with the philosophy of academe (Berisiman, 1995).

The above examples illustrate that TQM is being used in colleges and universities. However,most of the early TQM applications have been in the support or administrative areas, not in theclassroom. This is changing. Many recent applications of TQM in higher education have focusedon the central academic functions such as academic program delivery (Watson and Hallett, 1995),faculty evaluation (Altman and Pratt, 1997), in the classroom (Mehrenz, Weinroth and Israeli, 1997),and a quest for a new breed of educators (Demichiell, 1997). What is missing in the current effortsis a systemic model for the implementation of TQM for the university as a whole.

APPROACHES TO STRATEGY IMPLEMENTATION

The key task in implementing TQM is to unite the total organization behind this strategy. Theorganization then designs its operations to the requirements for successful execution of strategy.Successful implementation of strategy, therefore, requires creating a "fit" among the internalprocesses and subsystems of the institution (Strickland and Thompson, 1999). The literature in thefield of strategic management provides many approaches to strategy implementation. However, itmust be remembered that there is no one best way for implementing strategy. The specific actionagenda needed for strategy implementation will vary from organization to organization.

Strickland and Thompson (1999) summarize the key implementation tasks as consisting ofthe following eight key elements: (1) exercising strategic leadership, (2) building an organizationcapable of successfully executing the strategy, (3) establishing a strategy-supportive budget, (4)installing appropriate administrative support systems, (5) designing and installing rewards andincentives linked to performance objectives of TQM, (6) shaping an organizational culture to fit theTQM philosophy, (7) Allocating ample resources to strategy critical activities, (8) Instituting bestpractices and pushing for continuous improvement. The "goodness of fit" among the eight elementswould determine the success of the TQM strategy. Another framework for examining the fit amongthe critical areas is provided by the McKinsey's 7-S framework (Waterman, 1984). These seven areasare strategy, organization structure, shared values, skills, systems, staff, and management style.

Brodwin and Bourgeois (1984) have described five basic approaches to strategyimplementation. Their approaches are based upon the roles and methods used by the president inimplementing strategy. The approaches are:

The Commander Approach: The president concentrates exclusively on the strategy formulation andthen passes it along to others to implement it.

The Organizational Change Approach: The president after developing the strategy puts it intoeffect by reorganizing the institution's organization structure, instituting incentives, or by hiringstaff.

The Collaborative Approach: The president involves the top managers in the planning processitself to ensure acceptance of the resultant plan.

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The Cultural Approach: The president involves not only the top but also the middle and lower levelmanagers in the planning process. The implementation is facilitated by developing anorganizational culture supportive of the plan.

The Crescive Approach: The president addresses the twin issue of strategy formulation andimplementation simultaneously. S/he through statements and actions, guides the managers intocoming forward as champions of sound strategies.

The commander and the organizational change approaches are the traditional ways ofimplementing strategies. The strategy formulators and implementers are separated from each other.There is little sharing of information between the two groups and results in too many unintended anddysfunctional outcomes. The collaborative approach involves the top management team in theprocess and thus increases commitment and lowers resistance from top management. However, thisapproach still separates the thinkers from the "doers" and is likely to result in a negotiatedcompromise. Although, the organizational change approach can be used to implement relativelymore difficult strategies in a wider variety of organizations, these three approaches, according toBrodwin and Bourgeois (1984), can be effective only in small institutions operating in a relativelystable environment.

The cultural approach is an extension of the collaborative approach but it provides forparticipation by more levels of managers and, therefore, fosters greater institutional commitment tothe TQM. It still maintains the distinction between the planners and the implementers and does nottap into the creative abilities of employees. However, a strong institutional culture may breedconformity and thus can hinder creativity in the long run.

The crescive approach is essentially a bottom-up approach where the president loosens his/hercontrol over the strategy making process and instead sets the employees' premises--the notion of whatwill constitute strategic actions, and acts as a judge of plans formulated at the lower level. Thisapproach provides for the broadest participation and eliminates the difference between the plannersand the implementers. The president can facilitate the crescive approach by (1) keeping theorganization open for new and potentially discrepant information, (2) articulating a general strategyof superordinate goals to guide the organization, (3) by shaping the premises by which strategicoptions are selected at all levels, and (4) shaping the institution through day-to-day decision in the"logical incrementalism" fashion and not in one radical step. The cultural and the cresciveapproaches are particularly suitable for use in large and complex organizations.

SOME CHARACTERISTICS OF HIGHER EDUCATION INSTITUTIONS

Higher education institutions are complex organizations with a strong sense of tradition anda distinct culture. According to Vroom (1984) institutions of higher Education are also characterizedby vagueness in their educational mission statement and a tendency toward anarchy in the internalgoverning structure. The organizational structure is generally bifurcated between academic andadministrative components. One of the strong values of the academic component is the "academicfreedom" where it may not tolerate any interference from outside sources. The pressure of factorssuch as tenure creates a unique situation at higher education institutions.

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Higher education institutions have many stakeholders who must be involved in the TQMprocess. Apart from administrators, faculty, staff, and students, the institutions also need to accountfor the interests of students' parents, government agencies, benefactors, alumni, the community, andaccreditation agencies. Each of these stakeholders makes demands upon the institution and the TQMmust bring these stakeholders into the TQM process to maximize "client satisfaction."

IMPLEMENTING TQM AT HIGHER EDUCATION INSTITUTIONS

The choice of a method for TQM implementation will depend upon situational factors suchas size of the institution, complexity of programs, institutional culture, and the style of themanagement. In view of the complex characteristics of higher education institutions as discussedabove, the implementation approach should be based upon high participation. The crescive or thecultural approach as described by Brodwin and Bourgeois (1984) meets these requirements. In thecultural approach the president assumes the role of a coach and focuses upon defining and developingthe new culture of the institution. In the crescive approach, as discussed earlier, the president's roleis changed to that of a premise setter and a judge. Given the uniqueness of culture, the TQM processwould have to be managed in a way that it does not trample the "sacred cows"--such as academicfreedom--of the organization.

We propose an eleven-step model for implementing TQM in larger institutions of highereducation.

The president adopts quality as the core of institutional value system and communicates this value,and works to develop commitment to it throughout the institution.

The president promotes the value through frequent symbolic and substantive actions.

Educate administrators and academic deans in TQM and customer orientation, inteam/participative management.

Identify customers needs and set performance objectives.

Train and designate "internal resource persons" who provide technical assistance to the rest of theinstitution.

Train faculty, staff, and employees in appropriate statistical techniques, process analysis, decision-making, and customer orientation.

Form quality teams to seek continual improvement in the process and identify individual qualitychampions.

Define/delegate authority throughout the institution.

Develop performance measurement systems to continuously monitor the progress of the institution;the measurement should focus on the stakeholders' needs satisfaction.

Institute incentives and reward systems and relate them to TQM objectives.

Work continuously to reduce the resistance to change.

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This model fits very well with the model developed by Tennor and DeToro (1992), whichcombines the teachings of quality gurus--Deming, Juran, Crosby, and Feigenbaum. The TQMimplementation, as presented by Tenner and DeToro, is built on three fundamental principles of totalquality (customer focus, process improvement, total involvement) and six supporting elements(leadership, education and training, support structure, communication, reward and recognition, andmeasurement). The compatibility of our TQM implementation model for higher education and thegeneral TQM implementation model presented by Tennor and DeToro (1992) is illustrated in thefollowing figure.

TQM

Step 1: The president adopts qualityas the core of institutional valuesystem and communicates thisvalue, and works to develop

commitment to it throughout theinstitution.

QUALITY PRINCIPLES

Customer Focus

Step 4: Identify customer needs andset performance objectives.

Process Improvement

Step 7: Form quality teams to seekcontinual improvement in the

process and identify individualquality champions.

Total Involvement

Step 8: Define/ delegate authoritythroughout the institution.

SUPPORTING ELEMENTS

Leadership Step 2: The president promotes the value through frequent symbolic andsubstantive actions.Step 3: Educate administrators and academic deans in TQM and customerorientation, in team/participative management.

Education and Training Step 3: Educate administrators and academic deans in TQM and customerorientation, in team/participative management.Step 6: Train faculty, staff, and employees in appropriate statisticaltechniques, process analysis, decision-making, and customer orientation.

Support Structure Step 5: Train and designate "internal resource persons" who provide technicalassistance to the rest of the institution.

Communication Step 8: Define/delegate authority throughout the institution.Step 11: Work continuously to reduce the resistance to change.

Reward and Recognition Step 10: Institute incentives and reward systems and relate them to TQMobjectives.

Measurement Step 9: Develop performance measurement systems to monitor continuouslythe progress of the institution; the measurement should focus on thestakeholders' needs satisfaction.

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In implementing TQM as an integrating mechanism in educational institutions, the presidenthas to first adopt and disseminate the TQM vision throughout the institution. In its strategicleadership role the president should "sell" the concept of TQM through symbolic and substantiveactions and educate other administrators including academic deans, the faculty, staff, and otheremployees in TQM concepts and techniques. The emphasis here is to build institution-widecommitment to a culture that values quality and customer orientation. The education may beprovided through the development of internal resource persons, or by hiring external resources.These programs should, preferably, be held at an off-campus location to minimize distractions. TheTQM education program may be followed by a retreat for the president and the top administratorswhere they focus on building a consensus on and commitment for the new way of doing things.

Successful implementation of TQM will require creating and nurturing a system of commongoals and objectives, values, beliefs, and attitudes--a common vision--in the institution. Theinstitutional objectives are geared toward maximizing client satisfaction. The major task of the TQMleaders and champions in different departments and divisions will be to foster a supportiveorganizational climate. The president of the institution would have to take a leadership role and theprimary responsibility for creating and communicating organizational standards that supports andnurtures the TQM philosophy.

The new organization structure for TQM is team based and should meet several criteria. Itmust be responsive to the needs of the clients and provide for employee involvement at all levels.It should provide for open communication and coordination among various organizational units anddistribute authority needed to manage each organizational unit. The institution should examine itsapproaches to staffing with a view to build and nurture the skills, competence, managerial talent andtechnical know-how needed to manage organizational processes. The administrative support systemshould establish TQM facilitating policies and procedures. The support system should providestrategy-critical information on a timely basis (Thompson and Strickland, 1999).

As mentioned earlier, higher education institutions have many stakeholders or clients. Theobjective of TQM is maximum client satisfaction; the institution should develop links with all clientgroups and provide mechanisms for frequent interactions to assess their needs. The client needsassessment data would provide basis for setting up institutional goals and objectives. In order tobuild commitment to the new values of the organization, clear work objectives should be identified.Next, the incentives and reward structure should be modified to link with performance targets. Theinstitution also needs to design and establish appropriate evaluation and control system to monitorclient-satisfaction, quality improvement, and goal attainment.

The proposed model for implementing TQM will require changes and adjustments all overthe organization. According to Lewin (1951), any situation is characterized by a state of equilibriumbetween forces constantly pushing against one another. One set of these forces is pressure for changeand the opposing forces are resistance to change. To facilitate change the organization should firstdisturb this equilibrium in favor of the pressures for change. The Crescive approach offers severaladvantages that reduce the resisting forces: the change process is incremental, and not radical; theemployee participation is maximized; the change is initiated and implemented by the employee; and

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the top management control is minimized. However, the president should be ever vigilant aboutidentifying the forces of resistance and create conditions to overcome those forces.

SUMMARY AND CONCLUSION

In this paper, proposes an eleven-step model for implementing TQM in institutions of highereducation. The unique characteristics of such institutions require an approach that is different fromthose used in businesses and industry. The proposed model is based on the theories of strategicmanagement. It is developed around the Crescive approach of strategy implementation as proposedby Brodwin and Bourgeois (1984). It casts the institution president in the role of a proponent andchampion of TQM in the organization, and involves the rest of the organization in devising andimplementing the TQM philosophy. The authors believe that TQM can greatly improve theeffectiveness of higher education institutions and that the proposed model can help a successfulimplementation of TQM.

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THE DEVELOPMENT OF MANAGEMENT PRACTICESAND MANAGEMENT EDUCATION ACROSS TIME:

THE CASE OF THE PEOPLE’S REPUBLIC OF CHINA

P.C. Smith, University of TulsaGeorge S. Vozikis, University of Tulsa

David W. Pan, University of Tulsa

ABSTRACT

Management practices in China have progressed to include a restricted view toward freeenterprise. Tracing the historical ramifications of Chinese business practices, this paper analysestraditional comparative management theories with an expanded model that allows for thecomplications that involve Chinese business. The official line in Chinese ideology now is that theclosed-door policy to other societies that prevailed during the “cultural revolution” was absurd andwrong, because it damaged China's economic and intellectual development, and consequently therewas an insatiable thirst for knowledge in China in early 1980s. Ever since, economic reforms haveresulted in gradual reforms in the process and the content of management education, which in turnhas brought changes in China's educational, sociopolitical, legal, and economic environmentalfactors, as well as changes in the prevailing management philosophy and attitudes toward theenterprise's stakeholders. Learning is slowly becoming a double-loop learning through changes inthe underlying values, assumptions, attitudes and givens of the Chinese system.

INTRODUCTION

The Chinese economy has moved from the edge of collapse in 1978 to a seventh place in theworld in 1998, measured by GDP (Chinese State Bureau of Statistics, 1998). Scholars, in viewingan economy with such noticeable achievements during the past twenty years, often question how suchprogress has been achieved and whether lessons can be drawn from these achievements.

China today is the most populous nation in the world, and is still for all practical purposesunder the control of Communism Party. Although the Party is advocating its ideological belief muchless than in the past and in a slightly modified version, it still carries out its intent through directivesto its members who constitute the overwhelming majority of Chinese government officials, as wellas top management personnel at almost every segment of the nation's economy. This totalitariansystem has effectively micromanaged the nation's economy through numerous economic turns duringthe past twenty years, arguably in a very inefficient way compared to a free-market economy.

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History has a tendency to repeat itself, and there is no exception in China's case. During theTang Dynasty era of the 7th and 8th centuries, China's economy was estimated to account for one-third of the world’s economy and its trade partners included the Roman empire linked by the "SilkRoad" on land, and the east coast of central Africa by sea. However, China gradually became acountry of self-proclaimed "Central Kingdom" with a closed door to the rest of world. This has ledmany scholars both Western and Chinese, to conclude that the philosophical policy of isolationismthat prevailed for ten centuries until the eighteenth century prevented an industrial revolution inChina, in spite of the fact that China had plenty of capital, labor, technology, and infrastructureduring this period.

During more recent times, at the end of Mao's era in the late 1970s, the People's Republic ofChina lacked most of the elements necessary for economic development. This situation was furtherexacerbated by the chaos of the Cultural Revolution brought by Mao's extreme policies late in hislife. At his death, China's centralized government still in a totalitarian format, offered a morepragmatic leader, Deng Xiaoping, after the Party's 3rd plenary of the 11th Congress, the opportunityto effectively change the course of China. Deng's "liberation of thought and seeking truth throughpractice" started to trickle down the national management system in the form of Party directives.China poised to make a concerted effort to change its course, and abandoned the philosophicalisolationism that clouded the prospects for progress. Deng forced the adoption of an Open Doorpolicy which, in spite of strong resistance by conservatives, was arduously advocated by Deng afterhis only official visit to the United States immediately after the establishment of diplomatic relationsbetween the two countries in January, 1979. These policies were deemed ideologically very radicalat that time because they were viewed as advancing capitalism (Solomon & Ding, 1993).

Since then, China's economy has primarily been through two periods: Consolidation andReform (1980-1990) and Furtherance of Reform and Growth (1991-to date). The first period wasmired by a mixture of ideological confusion between the traditional planning economy and themodern concept of market economy introduced by the importation of advanced western technologyand manufacturing process. The economic conflict between the market demand and the traditionalpolitical corruption led to the 1989 Tiananmen Square massacre, prompting the Chinese economyto significantly slow down until the spring 1991.

The second period started in the early nineties by Deng Xiaoping's visit to numerous SpecialEconomic Zones in southern China during which he issued various directives to further the policiesof the Open Door policy and economic reform. During the first few years of this period, China’seconomic growth exploded at a rate of about 12% annually, primarily due to the boom of theexporting industries. However, because of a comparable increase in inflation, the Chinesegovernment was forced to adopt a policy called "Soft Landing," and today the Chinese economy isestimated to maintain a questionable 8% growth rate with a noticeable deflation nationwide on itseconomy partially due to the economic recession of most of its neighboring nations. In the nearfuture, an estimated 20 million Chinese workers will be de facto laid off due to the inevitablerestructuring of state enterprises. In order to maintain a sustainable growth of the economy, theChinese government has made a major policy shift from an export-dependent economy to a domestic-consumer economy (Documentation Research Bureau of the Central Committee, 1998).

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The purpose of this paper is to examine the present state of affairs in the People’s Republicof China (PRC) in terms of management process, management practices and especially managementeducation, with the help of a comprehensive management development model developed by theauthors, and drawn from the literature. This model will be further supplemented with the analysisand comparison of industry management practices and the management education curriculum in thePRC “business” schools during the early 1980s with the current practices and management curricula.It is hoped that an inference will be drawn for the importance of the development of managementprocess and education in a developing nation such as China.

LITERATURE REVIEW ON COMPARATIVE MANAGEMENT

As the world enters the era of global economy, the field of cross-cultural or comparativemanagement is also rapidly developing. In an early pioneering work, Harbison and Myers (1959)recognized that different people in different cultures view management differently. Some believe thatit merely is a series of functions, some regard it as an art, while others view it as a social class or eliterepresenting the intelligentsia. For the workers, management is identified with their boss who has theauthority to fire them.

When we cross the limited borders of a specific society and we view management in a wide,international perspective new economic, social and political dimensions suddenly enter the picture.While advocating that “management, indeed, is all these things and perhaps more...” Harbison andMyers tried to view management from several angles, notably: first, as an economic resource; second,as a system of authority; and third, as a class or elite. With these concepts they applied a wide-ranging, international comparative analysis and concluded that the essential prerequisite ofindustrialization is definitely a high-level manpower development, which must be an integral part ofplanning for general economic growth. The underdeveloped countries should therefore regardeducation as an investment rather than as a "consumer" service, and they ought to create a shift in theunderlying mentality of the educational institutions toward the generation and development of high-level technical and managerial resources representing an increase in social investment, in contrastto a mere increase in social service.

In another seminal work, Farmer and Richman (1965) introduced the significant notion thattraditional management theory has serious drawbacks in terms of both orientation and applicabilityto different types of cultures and economies. All schools of Management, Universalism, Process,Behavioralism, Decision Theory, etc., make the fundamentally questionable assumption, that externalfactors, (the Macroenvironment as the authors call it, in contrast to the firm's Microenvironment,) isconstant and given, with the firm fixed in space and time. Management however, is not a "black box"and consequently managerial effectiveness cannot be achieved with a universal recipe. In addition,Farmer and Richman recognized the constant and close interdependence that links managerialeffectiveness, productive efficiency, and environmental constraints. These external environmentalconstraints are classified as educational, legal-political, sociocultural, and economic. They have adirect impact on the elements of the management process, which in turn affect and are affected bythe management style and managerial effectiveness. Finally, the latter will determine the firm's

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efficiency, which will determine the system's efficiency as a whole. Management is therefore, thedependent variable around which the economic environment revolves. The Farmer and Richmancomparative management model is depicted in Exhibit 1.

Negandhi and Prasad (1971) on the other hand, argued that if the environmental and culturalfactors were the main determinants of management practices and effectiveness, one would expectclose similarities in the management practices of two comparable industrial firms. Their modelidentifies basically the same elements of the external environment as Farmer and Richman, butrecognizes management philosophy as an independent variable. Exhibit 2 illustrates the Negandhi-Prasad model (Negandhi & Prasad, 1971, p. 23).

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Other authors, such as Kelley and Worthley (1981) isolated the role of culture in theformation of managerial attitudes, while England (1978) considered the personal value system to bea relatively permanent framework, which is likely to influence the general nature of a manager'sbehavior. England concluded that in national samples of managers in the U.S., Japan, Korea, India,and Australia:

There are large individual differences in personal values within each group. Personal value systems are like mostother human characteristics, and individuals differ greatly with respect to them.

Personal value systems of managers are relatively stable and do not change rapidly.

Personal value systems of managers are related to and/or influence the way managers behave on the job.

Personal value systems of managers are related to career success. (Ibid.)

Pizam and Reichel (1977), in a study of Israeli managers of Western descent and Israelimanagers of Oriental descent found that differences in managerial attitudes because of culture persist,even with second generation of managers from tradition-oriented societies. Kassem (1977) makesan additional important contribution to comparative management by observing that different culturessingle out different aspects of organizations and their management for special attention. He furthernotes that whereas American organizational scientists have taken a human-process approach to thestudy of management and organization theory, their European counterparts have opted for atechnostructural one.

All of the aforementioned studies, as well as most of other related research (England and Lee,1974; Sekaran, 1981; Harari and Zeira, 1978; Roberts, 1970; Evans, 1975; etc.) concentrate on therole of culture as an external, independent variable. Managerial values, attitudes and philosophy aretreated either as a dependent variable or as an independent variable as in the Negandhi and Prasad'smodel. Management practices however are always a dependent variable.

COMPARATIVE MANAGEMENT AND MANAGEMENT EDUCATION

Learning has been defined as the detection and correction of error (Argyris 1980, p. 291).Learning that results in the detection and correction of error without a change in the underlyingassumptions, values, attitudes or givens can be defined as single-loop learning, analogous to thefunction of a house thermostat. The thermostat detects whether actual performance (the actualtemperature of a room) is comparable to the planned performance (the temperature setting.) If a gapexists between the two, the error is detected and corrected with the thermostat shutting down thefurnace or turning it on.

Double-loop learning occurs when the detection and correction of error requires changes inthe underlying assumptions, values, attitudes or givens of the system. Using the same example, thethermostat the necessary adjustments and changes would be made with following questions: Why

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is the room temperature set at 70 degrees? Why does it measure the temperature? Why have thethermostat all together? (Ibid.)

Another related theory, is Argyris and Schon's (1978) distinction between espoused theoriesand theories-in-use. Espoused theories are the underlying assumptions, values, attitudes, andphilosophy that people hold in their heads mainly as a result of culture. On the other hand, theories-in-use are the theories that people actually use to produce observable behavior, consciously orsubconsciously.

The discussion above leads us to the conclusion that culture as an independent variable in acomparative management model, constitutes in a very broad situational sense an espoused theory andsingle-loop learning. Less developed countries in dire need of economic development must use acomparative management model that generates double-loop learning to break the grip of traditionalculture, which might violate the prevalent view on efficiency, on management practices, and ontheories-in-use. In order to accomplish this, a feedback mechanism is needed to be included in themodel, as the ultimate characteristic of double-loop learning that will initiate changes, unfreezeassumptions, values, and philosophies, and refreeze new ones. It is strongly suggested by the authorsthat these changes can only be brought about through management education, which in essence is afeedback mechanism linking the consequences of the theories in-use to the environment, with theprevailing espoused theories of a national system.

The weaknesses of the comparative management models discussed in the previous section canbe summarized as follows:

They did not place appropriate emphasis upon management education as a change-initiating variable.

Management education is not an independent variable, but a result of the consequences of the theories-in-use, i.e.management practices.

There was almost a complete lack of the concept of feedback as a mechanism that creates double-loop learning,especially true for countries that are anxious to bring economic development and progress rapidly and sustainably,as in the case of the PRC.

Management education has to be recognized as the sine qua non condition, and needs to be integrated as such, inany comparative management model that seeks the "unfreezing" of well-entrenched philosophies and values in orderto create economic reform and maintain sustainable economic growth. And finally,

All elements of any comparative management model should be considered as both independent and dependentvariables including culture, which has been the ultimate independent variable throughout the literature.

A comprehensive comparative management education model is proposed in Exhibit 3. Thismodel attempts to end the debate as to whether management philosophy is a dependent orindependent variable, the "apple of contention" between the Farmer-Richman and the Negandhi-Prasad models.

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The management practices and functions are built upon the prevalent correspondingmanagement philosophy and attitudes toward the business stakeholders. These are subsequentlyderived from the environmental factors comprised of socioeconomic, educational, political and legaldeterminants of cultural and traditional endowments. The product of this process in turn willdetermine the nature and the degree of management effectiveness, which in turn will establish thedefinition of an enterprise’s organizational effectiveness. The aggregate effectiveness of all firms willascertain whether the total business system in a nation is effective and efficient as to thepredetermined definition of management effectiveness. The business system's effectiveness andefficiency or the lack thereof, will also reinforce or will make the necessary adjustments and changesin the environmental factors of culture and tradition, as well as reinforce or reorient the objectivesof management education provided by educational business institutions for future managers. Througha process of attrition, this reinforcement or in case of an overall business system deficiency thechange in the orientation of management education, will affect the prevailing managementphilosophy and attitudes toward the business firm's stakeholders, i.e., employees, consumers,suppliers, stockholders, government, and community. Thus, the loop is completed, and double-looplearning takes place with the corresponding changes in the underlying national values and attitudes.

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The model advanced in this paper is the result of ex post facto field research that wasconducted in the People's Republic of China in the early 80s and recently revisited to test its validity.Exploratory field research has three basic purposes: to discover significant variables in the fieldsituation, to discover relationships among variables, and to establish a basis for future rigoroushypothesis testing (Kerlinger, 1973, p. 406.) It is the belief of the authors that all these objectiveshave been achieved in this study. Ex ante field research is almost impossible in the PRC, becauseChinese authorities have insisted that Western scholars be attached to Chinese institutes oruniversities, work "collegially" with Chinese scholars, avoid controversial subjects, and pursue the"construction of a social-economic system with unique Chinese characteristics." Nevertheless, thisstudy, relying on primary and secondary sources, attempts to reinforce the validity of the Double-Loop Comparative Management Model. One caveat that should be strongly advanced is the fact thatthe PRC is a vast country that has changed dramatically in the past twenty years in all aspects. Privateenterprises have grown rapidly from nonexistence when this study was initiated to over 960,000 unitsemploying 13.5 people in 1998. This increase represents productivity estimates to account for 15%to one-third of the country's GDP. The Chinese government has finally recognized the indispensablerole of private enterprises in the latest revised Constitution (Johnson, 1999). The question that stillremains is how far this trend will be allowed to continue under the control of the country'sCommunist Party.

The sections below will elaborate on each factor and variable included in the Double-LoopComparative Management Model presented in this paper, as they pertain to China.

THE ENVIRONMENTAL FACTORS IN CHINA

China's geographical boundaries were set early in Chinese history, around the second centuryAD. Its land mass is approximately the same as that of the United States, but with two thirds lessfarmable land. The Chinese population increased significantly between 1650 and 1750 doubling insize from 150 million to 300 million and doubling again by 1950. During the 1992 census, the secondcomprehensive census for China ever, the population exceeded 1.19 billion. The Chinese traditionalview that population was strength, faded as the numbers of people skyrocketed. Advances inagriculture have freed millions of migrants from rural areas to the cities, and China now has about74% population classified as farmers as compared to 90% twenty years ago (State Bureau ofStatistics, 1998). For instance, it is estimated that in Beijing there is a constant number of about twomillions of transients.

Young Chinese today are more individualistic and less willing to accept and obey authority.They do not seem to have the collective spirit of their parents and grandparents, and are more inclinedto pursue Western personal values and lifestyles introduced through the Open Door policy. ChineseTV offers ordinary Chinese programs ranging from American Funniest Home Videos to regular NBAgames.

In education a whole new avenue of learning has opened through private vocational and eliteschools and joint MBA business programs. Night courses, TV universities, and self-study programs

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are just a few examples of China's educational experiments in recent years, undoubtedly reflectinga reaction from the past years of turmoil when educated individuals were treated with suspicion andeducational content was defined by the traditional Communism ideology. However, college educationis still a privilege because only about 25 percent of those who will sit for China’s National CollegeEntrance Exams are estimated to enter college in 1999. Regardless, this is considered a significantimprovement from twenty years ago, when only 3 percent entered college in 1979.

Politically, the leaders of China have changed their brand of ideology several times duringthe past twenty years. The early "scientific socialism" was a direct legacy of the teachings of Marx,Engels, Lenin, and Mao Ze Dong, while more recently a relatively new version claims that "Socialismis a process of development”. China is still searching for a firm political ideology and as a result itseconomic development is inevitably unbalanced and irregular, mainly because there is no precedentto follow, and because the government feels that it needs to explore whatever might fit Chineseunique characteristics. Based upon this presumption, the late Chinese leader Deng extended his "cat-catches-mouse" theory to a new one:

"Whether we have a market economy or a planned economy, it is only a tool toimprove productivity."

Under this directive the Chinese economy endorsed a policy of "Connecting to InternationalTracks" in all aspects of commercial trade functions, without however attempting to apply the samepolicy in the political arena.

China is also in the process of building its legal system, and many laws have beenpromulgated bringing regulations especially to the economic sector. But there is an obvious absenceof a comprehensive legal framework, mainly because the Chinese Civil Code has been drafted andredrafted five times. It is a mixture of the French code, German laws, Anglo-Saxon procedures, etc.,that make a simple solution to an issue almost impossible. Chinese legal experts, with assistance ofwestern scholars including American scholars, are studying foreign laws because they do realize thatthe construction of legal infrastructure and synchronization of Chinese laws and especially trade lawsare essential for China's final "acceptability" into the World Trade Organization, in terms ofinternational trade and direct foreign investment (Qiu, 1983). Finally, Chinese President Jiang Zeminsigned an agreement with U.S. President Bill Clinton in 1998 that will enable American legal expertsto provide programs that will help train Chinese lawyers, prosecutors, and judges, and hopefullyhasten the Chinese government’s plans to complete its basic legal infrastructure by the year 2010(Documentation Research Bureau of Central Committee, 1998).

MANAGEMENT PHILOSOPHY IN CHINA

China's Management philosophy is dominated by the ideas and teachings of its leadersespecially as reflected in Deng's thoughts and dicta regarding productivity improvement. However,

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along with the importation of technology and trade promotion also came Western managementtheories and values, which created a dilemma between socialism and free enterprise. As far as thepolitical status quo was concerned, the socialist model had worked quite well in terms of managementeffectiveness even though admittedly at the expense of efficiency. However, in today's China veryfew people would still argue for the merits of a pure socialist ideological system unless they are thedirect beneficiaries of political promotions and perks in a governmental hierarchy.

Even the Chinese central government had to openly question the productivity of state-ownedenterprises and has initiated consolidation mergers among state-owned firms and governmentagencies eliminating about 20 million jobs nationwide. The government’s main goal now is toestablish the competitiveness of state-owned enterprises by improving efficiency throughconsolidation and joint ventures with privately owned firms, which have set a higher bar in terms ofefficiency and product competitiveness. All these developments have increased the pressure and onceagain raised the critical fundamental question of whether Chinese business education can prepareand/or retrain individuals with updated and marketable skills necessary to function in the ever-changing and diverse business environment of market economy.

The recent wave of utilization of foreign funds and technology including those from HongKong and Taiwan, and the honeymoon period of economic cooperation with Western firms whichstarted from the Chinese special economic zones in Shenzhen, Shantou, Zhuhai, and Xiamen havediminished since its second peak around 1994-96. After being put into the direct test of "cut-throatcompetition" with joint ventures, private firms and sole foreign investments in selected sectors, thestate-owned enterprises which are primarily managed still under the traditional ideological socialistphilosophy, have proven once again their vulnerability in terms of market share and profit marginsonce they operated without governmental policy protection.

MANAGEMENT PRACTICES IN CHINA

As mentioned earlier, the prevalent management practices in the People's Republic of Chinaare slowly changing from the Marxist slogan "From each according to his ability, to each accordingto his need," to the idea of "From each according to his ability, to each according to his work."Putting into simple words, "Allowing someone to get rich first." (Deng Xiaoping, 1981). That is tosay, while the goal is for society as a whole to get rich, those who work harder will get rich first. Asa result, people from every sector of Chinese state-controlled entities have been more or less involvedin trade and as a consequence, many incidents of armed protection for smugglers by the People'sLiberation Army or Armed Police Units, as well as corruption by custom officials or within a wholegovernment agency have been reported even at very high governmental levels. For example, theChinese government recently executed a former deputy governor of Jiangxi Province and convicteda deputy chairman of the state People’s Congress with a death sentence for corruption involvingmillions of dollars (People’s Daily, 2000). Another case involving about 700 government officialsfrom Fujian Province involving an equivalent of about 10 billion dollars smuggling of variety goodsis pending (duoweinews.com, 2000). Because of this kind of incidents, the Chinese central

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government has decided to order all military, judicial, and custom agencies to liquidate theirinvolvement in business activities (People's Daily, 1998).

Because demand for goods and services still remains very high in China, a variety ofexperimentation in management practices is taking place in China today more than at any other timein recent history. The perennial dilemma between the methods employed in a market economy vs.the ones used by a planned economy is further accentuated by the fact that young people in Chinatoday have different heroes than their predecessors, and they are becoming challengers andsynthesizers of old and new ideas. The old and new ideas originate from the various ideologicalmovements that have swept China since 1949: first the cooperative movement, then thecommunization and the Great Leap Forward, then the Cultural Revolution, and most recently theFour Modernizations.

Regardless of ideological movement, China still seriously lacks a comprehensive accountingand legal infrastructure to base sound and cohesive management practices and control. The Chinesecentral government has only recently installed a managerial system to directly inspect theaccountability of major projects funded by state money. One highway project had to be closed formajor repairs only six month after its completion because of corruption and the repair work added45 percent in cost overcharges above the original budget.

Additionally, the Chinese government has gradually allowed foreign capital flow into thoseservice sectors that used not to be open to foreign investment, and as a consequence, foreigninsurance, investment, financing and banking companies have opened offices in China. DuringPresident Clinton’s visit to China Chinese officials sought help to draft the blueprint for a financialinfrastructure primarily targeting residential housing. It seems that the Chinese government is finallyrealizing that social stability is closely tied to the private right of long-term land use or the privateright to home “possession”, albeit not land ownership, since, according to communist theory, allproduction resources including land are owned by the people as a whole. This anachronism hasalready created a backlash and recent demonstrations when some unpaid workers demanded to takeaway their land share and move on because their state enterprise would no longer provide them a job.

Although many jobs are still assigned by the government, there has been gradually a growinglabor market system since the late 1980s, primarily for high-level managers with advanced degrees.Students graduating from universities with a foreign language proficiency and/or exposure to westernmanagement methods or technical skills appear to command a strong demand from a variety ofindustries. Although, the existence of the term “jobless” is still debated about its appropriateness intheory by Party theorists and economic scholars, the number of “displaced” or "off-position" workershas exploded in recent years, because employment is no longer guaranteed by the government despitea pledge to that effect in the Chinese Constitution.

The experience from joint ventures and foreign investment since the early 1980s has madethe Chinese government to finally realize that the Chinese way is not the only way to productivityand economic development, and Chinese policy makers have learned to appreciate so-called capitalistmanagement theories and techniques. Although Chinese financial managers still undertake thebudgeting, capital budgeting, and the overall planning for a firm on how much will be produced, andhow much will be charged for it, a market adjustment mechanism has been introduced into the

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system. Market demand has been finally recognized as an incentive to production, and the firms thathave adopted adjustments based on the realities of the market have prevailed profit-wise, over thosethat resisted adopting them. However, the central government often can still intervene to haltproduction when a firm is considered to lack efficiency or competitiveness, or provide favorabletreatment to encourage export businesses, regardless of the firm’s level of competitiveness.

Overall however, the role of the central government's State Planning Commission has beenlimited to those industry sectors considered to be of national interest such as transportation, banking,communication, energy, aerospace, and national defense industries. The Chinese government haspromised gradually to also open up its banking, energy, and communication industries, when it signsagreements with World Trade Organization (WTO) nations.

Finally, in the area of joint ventures, management practices were quite rigid, as was the firstjoint venture law (Qiu, 1983). Nowadays however, everything is subject to negotiations, makingagreements on participation percentage and management practices quite flexible, depending on thebenefits to the parties involved. Clearly, at this stage, industrial enterprises in China are far fromhaving reached true independence in term of management practices, as in western countries. Theserigidities however may be disappearing as the Chinese leadership “feels” its way forward. How farit will go in this direction still remains to be seen.

MANAGEMENT EFFECTIVENESS

There are different opinions concerning the definition of managerial effectiveness. Steers(1977, p. 135), views managerial effectiveness in terms of the attainment of operative and operationalgoals, with the manager's responsibility being to ensure that maximum effort is directed toward thesegoals, whatever these may be.

In China, while there is some match between skills and job requirements nowadays, thepersonal loyalty still shadows management training and promotion. Although the firm's profitabilityhas been emphasized as outlined above, it happens primarily not from market forces, but from thefirm's employees who have started to demand better pay and bonuses. In most Chinese firms thecombined total from bonuses and subsidies often exceeds the actual fixed salary designated by thegovernment's pay schedule.

Requirements for a managerial position are increasingly based more on educational andindustrial skills rather than traditional experience. In the past, the managers who ran China's factoriescame up through the ranks of workers without formal training and the conventional industrialmanagement structure that employs a director and deputy directors, was simply the party's secretaryassigned to that firm. Nowadays, certain education and formal training becomes a prerequisite to beconsidered for further promotion in the management hierarchy. The government often cites theincreased number of personnel at management level with advanced academic degrees to showcaseits achievements compared to 20 years ago, before the adoption of the Open Door policy.

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ENTERPRISE EFFECTIVENESS

There are four sets of effectiveness-related variables: (1) organizational characteristics; (2)environmental characteristics; (3) employee characteristics; and (4) managerial policies and practices(Steers, 1977, p. 178.) In the early 1980s, unemployment was considered by Chinese officials as theunique problem of those capitalist societies, because it is generally and officially considered a moresignificant cost item from a socialist society's point of view, than inefficiency. In China at the time,workers in state-run enterprises received fixed salaries and other benefits based upon what they didregardless of their technical qualifications, but not upon the company's performance in the market.Soon thereafter, the Workers Daily, the official newspaper of the state-controlled trade unions,criticized the existing national system and called for salaries and rewards to be linked to output andrevenues, not just costs, in order to boost industrial efficiency (Oka, 1983c, p. 2.). As this systemslowly changed, most state-run enterprises still survived with money borrowed from state banks. Thesituation really started to change in the mid 1990s when the government allowed insolvent orinefficient state-run firms to go bankrupt or acquired by other efficient firms.

This preoccupation with only the environmental characteristics of the concept oforganizational effectiveness is no longer perpetuated. Millions of workers are unemployed orunderemployed due to the change of government policies in all industry sectors. The Chinesegovernment is determined to restructure 3,000 major state-run firms in order to improve enterpriseeffectiveness and make products competitive, and China’s formal entry into the WTO is estimatedthat it will cause two-thirds of state run enterprises to go out of business.

China still needs to do a lot in readjusting and restructuring its economy and enterpriseeffectiveness. Chinese managers in the past used to have their firm’s production output tied to theirchance of promotion, but now the majority of Chinese managers have become aware of the marketforces and the importance of enterprise effectiveness.

SYSTEM EFFICIENCY

While China concedes that it is desperately short of skilled people to help achieve economicmodernization, the economic system still pays more attention to structure resulting from politicaldogma, rather than strategy and technology. The experimentation with "special economic zones" withpromises of cheap labor, cheap land, low taxes, and the joint ventures between foreign investors andChinese enterprises, have proven a success. The success of the economic zones however, have notbeen easily duplicated in other parts of China because of the Chinese system's layers of bureaucratswith overlapping authority and little business experience. In some instance, more than 300government agency seal stamps must be sought before a business can start operations.

Another sign of the acknowledgment of the system's inefficiency is the fact that China’sInternational Trust and Investment Corporation, the body that handles foreign investment insideChina, was empowered recently to make investments abroad. If China does invest abroad, it will notbe because it lacks natural resources, but because these resources need managerial and technological

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skills, which the Chinese system does not possess. Thus, investing abroad by China, anunderdeveloped, cash-poor country, means not only securing a long-term supply of natural resources,but also and most importantly, gaining access to advanced technology, management, and training(O'Callaghan, 1983.)

The inefficiency of the rigid, monolithic ideological system that prevented living standardsfrom rising and banned free enterprise in the early 1980s, has given way to a new system of aneconomy liberalized enough to awaken consumer appetites and encourage self-employment and somesemblance of private business. After years of debate on what exactly is “Chinese socialism withunique characteristics”, the Chinese leaders are still not quite sure which way to go. The governmentgradually tested its way to open the markets in the following order: raw materials, steel andpetroleum, consumer-goods, aerospace, auto, insurance, communication, banking, and very recentlythe mortgage finance industry in order to stimulate domestic consumption and sustain economicgrowth.

China's new system also has been labeled “the responsibility system”, as it has aimed tostimulate production by offering rewards and incentives, encouraging free market trading andallowing private ownership and self-employment. But as the economy grew, a new group of Chinesebusinesspeople has emerged through this process. They initially seemed to become richer than theircountrymen overnight, and they did not know how to position themselves in society. They laterrealized that management knowledge is the key to collaborate or compete with foreign investors inthe international market. Now they realize that the best key to success is to have their firms staffedby the best managers, scholars, and scientists nationwide. Some managers are offered with a salaryof $12,000 a year to "jump over the ditch" to private firms, as compared to the mediocre averagedmanager's salary of $1,000 a year in most state-run firms. Because of this huge difference inincentives, some CEOs in the most successful state-run firms or agencies have been caught forcorruption, embezzlement or smuggling. The reforms on the concept of managerial andorganizational effectiveness are still an on-going process which has created a new Chinese “style”of socialist system liberating productivity contained for a long time, but also creating asocioeconomic system of widespread corruption and crimes because of the sudden emergence of hugedifferences between the rich and the poor under the never-openly-abandoned socialist ideology.

MANAGEMENT EDUCATION

Even though the Chinese government leaders know the importance of technical knowledgeand skills successful managers should possess, they have been shifting back and forth several timessince the early 1980s regarding who shall have the ultimate authority over a firm's operation: theParty secretary or the firm's manager? This paradox of duality in management system has placed agreat amount of strain on the nation’s managerial capacity, because the compatibility and rapportbetween these two individuals often determines whether a product can respond to rapid changes inthe marketplace, thereby ultimately determining the survival of firm.

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The same paradox holds true for the administration of Chinese universities. Branch partysecretaries oversee Chinese universities in the form of a party committee and have stifled theenthusiasm and creativity of university faculty or zhishi fenzi (intellectuals) particularly in the areasof social sciences, which include business management. Although the Party has declared thatintellectuals are the crucial element of proletariat and a part of the leading social classes, most ofthem, after having experienced years of purges and precarious existence, are still unable or unwillingto separate independent thinking from the political influence or pressure in their daily activities.

Even though Chinese have a tradition of respect for knowledge and those who impart it suchas intellectuals and teachers, this tradition was officially discarded in China for about 20 years beforethe early 1980s when manual labor was extolled over educational endeavors. Manual labor wasconsidered as a core, while education was labeled as peripheral to the core according to MaoZedong’s understanding of the essence of Marxism at that time, even though he had once declaredthat “the more knowledge one has, the more the tendency to become reactionary”. This directive fitthe psychology of most party's leaders nicely because most of them had no formal college education,including Chairman Mao who only had the equivalent of two years of college education. Nowadays,as mentioned earlier, Marxism is viewed in China as a "developmental science" and the contributionsof "advanced" theories are allowed to add to the “umbrella of the Marxist theoretical system”. Thisoxymoron of a doctrine has to a large extent remained in place and consequently restrained theimprovement of management education. In China, officials that are younger, better-educated and trueprofessionals can be promoted to streamline the government bureaucracy, eliminate overstaffing, andboost efficiency for China's modernization drive, only by being patient and through attrition over theyears.

Despite the constant official calls for better treatment of intellectuals, and despite the officialacknowledgment that without intellectuals China cannot achieve its economic goals, manygovernment officials still believe that intellectuals should be used for their talent, yet not fully trustedfor their thoughts. As a result, hundreds of thousands of Chinese intellectuals sought intellectualfreedom elsewhere, primarily in the United States. Their achievements and innovations accomplishedoutside China have forced the Chinese government to take action to stem “this brain drain”, andbankrolled by Hong Kong tycoons, has recently launched the “Yangzi River Scholar Program” thatoffers endowed professorships with a subsidy of $12,000 a year for 500 positions across China.Another ambitious plan of tripling current faculty's salaries has been under way at Qinghua andBeijing Universities since 1999 showing the government’s emergency concern over "a widened gapbetween generations of scientists and scholars” (Documentation Research Bureau of CentralCommittee, 1998). Unfortunately, almost all the aforementioned measures to remedy the sad stateof Chinese educators are in the areas of natural, technological, or medical sciences, and very few aremade available in the area of social sciences and specifically Business Management education whichcan play a fundamental role in changing the problems with the system’s social policies andinefficiencies.

In 1998, China’s GDP stood at $.97 trillion. To reach its goal of $2.25 trillion GDP by theyear 2010-2015, China must sustain a rate of 6 to 8 percent annual growth from now on. Toaccomplish this, many millions of qualified managers and technicians are needed, and the Chinese

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Ministry of Education announced in 1999 numerous measures to improve higher education andvocational education to accommodate this spectacular economic growth needs such as:

Investment in higher education will continue to increase, with a focused investment of 100 millionYuan for a period of five years to each of the ten leading universities.Higher education has been diversified in a more flexible way with training at three levels. Thelower level is equivalent to the two-year junior college in the United States or Japan's short-termuniversities. The middle level is for training technicians, and the higher level for engineers,scientists, professors and doctors. Also in existence are "night class" universities, correspondenceschools, and TV universities.Classes and degrees from higher learning business schools and majors will become the ticket toland a better paying job in the labor market. The management of institutes of higher learninghave been significantly improved by appointing scholars to be the university presidents withauthority in deciding school affairs, and gearing education toward market needs, rather thanpolitical functionaries.Reforms have been made in enrollment, graduate placement, student scholarships based on needand/or merit, course content, and teaching materials and methods, all geared toward thecountry's reforms in the labor system, and management practices.

SELECTION OF STUDENTS

Students are selected to enter an institution of higher learning by their scores in the NationalStandard Qualification Exam for College Entrance administered by the Ministry of Education oncea year. This exam will be offered now twice a year in order to give an additional chance to youngpeople who might have failed the first time for a variety of reasons. This exam is highly competitiveand students for universities at different prestige levels are primarily selected based on theircomposite score. The best universities or colleges classified as state key universities always have thefirst pick from the pool of applicants across the nation, then the regional or provincial key universitiesand “ordinary” national universities, down to the local area or city vocational colleges. In the late1970s and early 1980s, only 3-5 percent of qualified applicants were selected and had a chance fora postsecondary education, but since then this number has been gradually improved to an estimated25% in 1999.

The virtual elimination of formal education during the Cultural Revolution and the manysubsequent years of discrediting knowledge and skills have also created a tremendous backloggeddemand for continuing education, for all those who feel that they are not equipped with what isnecessary to advance in their jobs. In the recent governmental consolidation of functions and

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personnel, up to 46 percent of government employees either lost their position or were provided withfinancial incentives in order to advance their education.

Chinese government has also started to charge tuition at higher learning institutions since1995, even at those specialized institutions in the areas of agriculture, forestry, natural resourcesexploration, and teacher colleges which until recently were deemed to be vital to the nationaleconomy and the absence of tuition constituted the incentive to attract prospective students. Stillhowever, in case of students with special financial needs, universities will help them either throughgovernment subsidies or work-study programs, an idea copied recently from U.S. institutions.

SELECTION OF FACULTY

Traditionally, outstanding graduates were retained as faculty members upon graduation fromtheir university. However over the years, this led to all the problems of inbreeding in academics, andnowadays inter-university exchange of graduates as faculty members has become the norm with aone-year nominal probationary period is still in place for all newly appointed faculty instructors.Faculty no longer enjoys the traditional life-long tenure, but instead a system of 1-5 year termappointment has been introduced. During these term appointments and according to points earnedthrough the system, instructors are promoted through the ranks of assistant, associate and fullprofessors. Those who are not reappointed are only paid a basic salary without the perks and benefitsassociated with the appointment to the faculty position.

PLACEMENT OF GRADUATES

Student placement to jobs was traditionally conducted according to the needs of particularindustries as identified in the state plan, and according to their grades and major. However, if studentsexcelled in their studies, they might be sought by different government units and their destiny wouldbe the combination of bureaucratic power struggles through "Party directives" and their ownambition. Even though before graduation the students were given the opportunity to express their jobchoices and preference of employment location, and the school supposedly "considered" theserequests, the final job decision rested with the government through the form of the "people's need,nation's interest, and the Party's directives." For example before 1990, ninety percent of thegraduates of Beijing Foreign Trade Institute were appointed to the state offices of foreign economicrelations and trade and their branches. The rest, usually top students were probably selected to teach,and appointed to other state colleges. Nowadays, government placement efforts depend on how aparticular student's higher education had been funded, with only varying degrees of assistance to helpa student find a job. The National Placement Informational Network for College Graduates has alsobeen recently established to facilitate the process of "mutual selections" regarding job placement.

Overall, unlike the early 1980s, students with a business education are highly demanded now,and most of business graduates have landed a job with the major profitable state firms, joint ventures,or foreign investment firms and command the highest salaries because the labor market is gravitating

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toward the market forces rather than the Party's directives. However, in many areas of China the oldpractice of “Party directives” still remain prevalent.

MANAGEMENT EDUCATION OBJECTIVES

The birth of a true business management program in China was the launching in 1980 of thefirst National Center for Management Education at the Dalian Institute of Technology in Dalianjointly run by Sino-American scholars. Since then, numerous similar institutions have beenestablished: The Guanhua College of Business Administration at Beijing University, the Sino-European Institute of Management in Shanghai, and the Tianjin University's Management Center,among others. The main objective of those management institutions and programs is to train thequalified business managers for the thousands of Chinese firms which will in turn play an importantrole for China’s future economic development and ultimate well being for its people.

MANAGEMENT CURRICULUM

The emphasis on management educational training placed by today's Chinese educators isunprecedented. Chinese magnet institutions for foreign trade for example such as Suzhou College,are designed to provide training for foreign trade personnel and are funded by the Chinesegovernment. Admission of students is highly selective, and students are chosen from the first “pick”from the pool of qualified applicants, before other non-key institutions are allowed to select. Theproficiency in a foreign language is usually a plus for a decision of admission. Students, aftercompleting their first year requirements in general education, will move into different specializationswithin the university.

Exhibit 4Business Management Curriculum Shuzhou College (Early 1980s)

Business Economics Retail Administration ManagementAdministrative and Management Theories Market Research and Decision-MakingProduction/Operations Management Personnel ManagementFinancial Management AccountingNational Economic Planning StatisticsPricing Management Economics

The coursework is conceived by faculty and presented to the Ministry supervising theparticular college for approval. After approval, the course work is structured around homeworkassignments, examinations, and an internship with a real-life job situation. Grades are based on howwell a student performs in all three aspects of management training.

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A major requirement of all business majors is to master at least one foreign language at a veryfluent level, and some students take a second language as well. English is given particular attention,and indeed most students choose English as their foreign language requirement. The first two yearsare usually devoted to the thorough study of foreign language, and because about forty percent offoreign language study is accomplished in small groups, usually a large proportion of the faculty isforeign language instructors. In Beijing University of Foreign Trade for example, 181 out of 530faculty were foreign language instructors in 1980, while in Shanghai University the percentage waseven higher, with 100 foreign language instructors out of 180 faculty for 1,300 students. Nowadays,the importance of foreign language training has remained the same, but the number of languageinstructors has been reduced.

Exhibit 5Labor Management Curriculum Shuzhou College (Early 1980s)

Industrial & Organizational Management MarketingForeign Trade Quantitative EconomicsValue Engineering Systems EngineeringBusiness Psychology AdvertisingPackaging Principles of Business and Organization ManagementDistribution Management Retail ManagementFinancial Management Human Resource ManagementMarket Research and Forecasting Decision-Making and Management Policy

Since foreign trade institutions are directly supervised and operate under a specific Ministry,its curriculum will be geared toward preparing graduates that will serve the needs of that particularministry, in this case the Foreign Trade Ministry. Exhibits 4 and 5 illustrate the content of twoManagement tracks in the Department of Commercial Enterprise Management in Shuzhou Collegein the early 1980s. The lack of cohesion and the extraordinary overlap between these two coursesgoes hardly unnoticed.

DEVELOPMENTS IN CHINA’S MANAGEMENT EDUCATION CURRICULUM

There are certain trends in Management Education in the People's Republic of China,especially in senior institutions such as Beijing's University of Foreign Trade. These developmentsconstitute a movement away from the dense, overlapping, and general courses of Exhibits 4 and 5in early 1980s, and toward a more specialized and qualitative management approach. The curriculumof Core courses (Exhibit 6) and Elective courses (Exhibit 7) from Beijing University of Foreign Tradein the late 1990s bears evidence to the many significant changes that have taken place as comparedto the early 1980s.

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Professor Zhang Dingling, Director of the Department of Foreign Trade Management at theBejing University for Foreign Trade, a Ph.D. from New York University, made a very interestingobservation in the early 1980s:

"We have an entirely different system of Personnel Management. According to our principles,we are here to serve the people and we are willing to sacrifice. But actually, we find that noteveryone is willing to sacrifice. So, I wonder as Department Head, whether we should introduceOrganizational Behavior into our courses. This is very difficult, because a part of our colleagues thinkit would be useful if we introduce motivation and leadership, and communication systems. But insome things we have a better system than you (U.S.) have, because we have all this bottom-up, top-down participative management, because every member of our society is an owner, since the peopleown all factories. Theoretically speaking, I am the owner of the school because I am a member of thepeople, but actually people would think differently because of my position in the hierarchy. So, it isvery difficult (to reconcile these ideas) and decide whether we should introduce behavioral sciencesto our management courses (Zhang, 1983.)

Professor Zhang’s comments on the teaching of Motivation and Leadership twenty years agohas been constantly debated in China ever since, and still represents one of the most puzzlingdilemmas that face the Chinese academia. However, as evidenced by the list of courses in the late1990s curriculum, China has begun to firmly “connect” its tracks with those of the world economy.The Chinese economy which used to be largely controlled by communist theory and doctrine, seemsto have made some strides to become compatible with the rest of the world. The business curriculumoutlined above shows that at the very least, Chinese students seem to be well prepared, if not forbehavioral managerial thinking, at least for solid international business careers.

Another recent development in Management Education in China in the last twenty years isthe emphasis placed on Accounting programs throughout the country. Educators and Chinese officialsalike have come to realize the enormous problems that the economic system has had to experiencewith antiquated accounting procedures and concepts, especially with China’s entry into the WTO.Rent and depreciation have been discovered the hard way, and more emphasis is placed now onFinancial Accounting, Auditing, and Managerial Accounting. As a result, China's first CertifiedPublic Accountants graduated in 1981, while the city of Shanghai formed an accounting partnershipto deal with foreign accounting firms.

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Exhibit 6Curriculum of CORE Courses: Beijing University of Foreign Trade (Late 1990s)

Accounting Theories Auditing Cargo Projection & Maintenance

Computer Theory & Applications Corporate Financial Management Cost Accounting

Financial Accounting Financial Management Foreign Exchange Risk Management

International Contractor Applications International Borrowing and Lending International Cargo Air Transportation

International Cargo Rail Transportation International Cargo Sea Transportation Intl Cargo Transportation Insurance

International Cargo TransportationLaws

International Economics International Economic CooperationTheory

Intl Economic & TechnologicalCooperation

International Finance International Finance Applications

International Investments International Law International Leasing

International Marketing International Organization Management International Settlements

International Technology Transfer International Trade International Trade Accounting

International Trade Application Investment Feasibility Study Introduction to China’s InternationalTrade

Introduction to Intl CargoTransportation

Introduction to World EconomicEconomy

Macro & Micro Economics

Management Theories Managerial Accounting Marketing Theory

Money and Banking Multinational Banks Applied Statistics

Sea Commercial Law Thesis (1) Thesis (2)

Transportation Economics Western Accounting Commodity Inspection Applied Calculus

Physics Chemistry Chemistry Experiments

Commodity Inspection Theory Commodity Favorite Policy Applications Commodity Inspection: CommodityTheory

Commodity Inspection: English Export Commodity Package Verification Export Commodity Loading Verification

Import Commodity Weight Verification Import Commodity Damage Verification Law Theory

(Note: Those core courses are distributed among 11 majors)

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Exhibit 7Curriculum of ELECTIVE Courses: Beijing University of Foreign Trade (Late 1990s)

Accounting Information Systems Advertising Applied StatisticsApplied Statistical Computer Applications Auditing Banking and Monetary Theory

Business Communication Business Strategy and Policy Chinese Financial and Monetary PolicyChinese Literature Commercial Bank Management Commodities

Commodity Inspection Management Computer Applications Computer Decision-Making ApplicationsComputer Theory and Program Design Construction Project Budgeting Consumer Behavior

Corporate and Investment Law Cost Accounting Country and District EconomicsDeveloping Country Economics Econometrics Economics and Business Readings

Economics & Technology Research Writing Electricity Experimental Data TreatmentFinance Foreign Exchange and Banking Accounting Foreign Exchange Risk Management

Futures Markets History of China’s Foreign Trade Human Resource ManagementInternational Accounting International Borrowing and Lending International Business Law

International Business Management International Business Settlements International Business StatisticsIntl Cargo Transportation Geography Intl Commercial Goods Transportation International Cargo TransportationIntl Cargo Transportation Insurance International Economics Intl Economic Cooperation Applications

Intl Economic & TechnologicalCooperation

International Finance International Finance Applications

International Investments International Law International LeasingInternational Marketing International Taxation International Settlements

International Technology Transfer International Trade International Trade ApplicationsInternational Trade Financial Management International Trade Insurance International Trade Statistics Applications

International Trade Strategies Introduction to China’s International Trade Introduction to MNCsIntroduction to Security Investments Introduction to World Economic Relations Introduction to World Major Markets

Introduction to World Trade Organizations Investment Feasibility Study Linear RegressionLOTUS 1-2-3 Macromanagement of China’s Intl Trade Management Information Systems

Management Science Managerial Accounting Managerial EconomicsMarket Research Merchandising MNCs

MNC Financial Management MNC Management MoneyMoney and Banking Organizational Behavior Production Management

QSB Software Quantitative Economics Quantitative Project AnalysisReal Estate Development & Investment Sampling Inspection Sea Commercial Law

Stock Market Analysis Western Economics World Economic GeographyWorld Economic Statistics World Market Environment

(Note: Those elective courses are distributed among 11 majors)

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Marketing also seems to have undergone several fundamental changes in terms ofconceptualization. Instead of relying on the domestic marketing mix to be carried over to the foreignmarkets, there is now a dichotomy between domestic and international marketing, which the Chinesefeel do not need to be integrated. Thus, domestic marketing governs domestic trade and is undertakenin a very large scale by the domestic state enterprises under the different ministries, while the import-export companies under the Ministry of Foreign Trade undertake international marketing.International marketing and the different methods of pricing, packaging, etc. that it entails, areheavily taught in the Institutes of Foreign Trade supervised by the Ministry of Foreign Trade, andinvolve two years of academic courses and another two years of specialization.

The most striking development in management education in China however, must be theinterest and fascination Chinese business educators have developed with the case study method.Introduced for the first time by a team of U.S. professors headed by William R. Dill, Dean of thegraduate business school at New York University in 1980, it has literally captivated the Chinesemanagement educators since the early 1980s. (The Wall Street Journal, June 11, 1980, p. 30.). Casesbased on Chinese enterprises involve a long month and a half study period, and are part of an 18-week course. New Chinese management textbooks make sure there are at least two case studies aftereach chapter. Also, cases on Chinese firms such as the very successful Haier Industries Group havebeen included in casebooks at Harvard Business School in the late 1990s.

Finally, some other areas of management education are beginning to make some headway inChina such as, computer programming, simulation, and management information systems.Technology limitations however, as well as the lack of resources and equipment make these fieldsof study inaccessible to most of China's commercial colleges. Small business management andentrepreneurship has also made some progress in China in the late 1990s, as more retired skilledworkers have been allowed to teach their trade to groups of apprentices and partner with them, whilestill continuing to receive retirement benefits, partially in order to maintain their basic standard ofliving due to increased inflation over the years. The continuing liberalization in this aspect ofbusiness endeavor was stressed long ago in the National People's Congress in early 1980s, bydeclaring that private enterprises are an important supplement to the socialist system of publicownership, because they help to solve unemployment and provide goods and services that the state-run economy cannot (Fung, 1983b.) Throughout China, thousands of private schools in differentfields have blossomed to train the laid-off workers without specialized skills and knowledge tobecome entrepreneurs.

EPILOGUE

The culture of any nation is not something separate or private, but a part of the world'sheritage. China has made contributions to the common stock of knowledge, and of course hasabsorbed much from other countries. The official line in Chinese ideology now is that the closed-doorpolicy to other societies that prevailed during the “cultural revolution” was absurd and wrong,because it damaged China's economic and intellectual development, and consequently there was aninsatiable thirst for knowledge in China in early 1980s. Now this thirst has been squelched by the

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inflow of knowledge from the West. However, the Chinese government is still struggling with manyquestions and social dilemmas regarding how their paradoxical system of market freedom, but limitedpolitical freedom should work. In addition China has “discovered” in recent years corruption,embezzlement, prostitution, abuse of power, and negligence by government officials as reported inChinese news media.

China's economy is rapidly changing. The economic reforms have resulted in gradual reformsin the process and the content of management education, which in turn brings changes in China'seducational, sociopolitical, legal, and economic environmental factors, as well as changes in theprevailing management philosophy and attitudes toward the enterprise's stakeholders. Learning isslowly becoming a double-loop learning, by introducing changes in the underlying assumptions,values, attitudes and givens of the Chinese system. Despite the success of China's “new look”economy however, the reforms and the emerging relative freedom have created almost as manyproblems for Chinese leaders, as they have solved. As O'Callaghan predicted in the early 1980s,waste and pollution, the imbalance between heavy and light industry, and the reconciliation ofMarxism with the new responsibility system, are formidable hurdles that need to be overcome.Today's China seems to show a willingness to examine other cultures, and absorb aspects that wouldbenefit the country (1983b). China tends to make itself more receptive to American ideas that canplay a decisive role in economic, managerial, and educational developments in the post-Mao and thepost-Deng China. Meanwhile, China also illustrates a bitter resentment toward the Americangovernment because of such events as the Chinese Embassy bombing in Belgrade in May 1999, andthe frequent accusations of Chinese human rights record by some U.S. legislators in recent years. Onthese issues, a clearly drawn difference is found between two sides. Can China continue her path tobe a member of the international community? Could China change her already threatened system ofthe Communist Party power monopoly into a democratic, free-market nation in the near future? Orwill China sustain her rapid growth of GDP at a rate of 6-7 percent for the next 20 years after gainingentry into the WTO in the next few years? Only time will tell!

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ACADEMY OF EDUCATIONAL LEADERSHIP JOURNAL · PDF fileRoyce Caines and Michael Shurden ... the “mastery” method and the use of enrichment sessions. ... Academy of Educational...

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