Buku Management Science PDF

Management and Industrial Engineering
Carolina Machado
J. Paulo Davim Editors
Management
Science
Foundations and Innovations
Series editor
J. Paulo Davim, Department of Mechanical Engineering, University of Aveiro,
Aveiro, Portugal
More information about this series at http://www.springer.com/series/11690
Carolina Machado J. Paulo Davim
•
Editors
Management Science
Foundations and Innovations
123
Editors
Carolina Machado J. Paulo Davim
Department of Management, School of Department of Mechanical Engineering
Economics and Management University of Aveiro, Campus Santiago
University of Minho, Campus Gualtar Aveiro, Portugal
Braga, Portugal
ISSN 2365-0532 ISSN 2365-0540 (electronic)

ISBN 978-3-030-13228-6 ISBN 978-3-030-13229-3 (eBook)
https://doi.org/10.1007/978-3-030-13229-3
Library of Congress Control Number: 2019931511
© Springer Nature Switzerland AG 2019

This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part
of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations,
recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission
or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar
methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specific statement, that such names are exempt from
the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this
book are believed to be true and accurate at the date of publication. Neither the publisher nor the
authors or the editors give a warranty, express or implied, with respect to the material contained herein or
for any errors or omissions that may have been made. The publisher remains neutral with regard to
jurisdictional claims in published maps and institutional affiliations.
This Springer imprint is published by the registered company Springer Nature Switzerland AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Preface
In the current days, and more and more in the future, all professionals look to
develop their abilities and competencies in order to more effectively answer to the
growing demands of today’s competitive work market. How to manage competitive
and successful organizations is a key question that nowadays professionals need to
deal in their daily organizational activities. Conscious of this reality, it becomes
quite normal that almost all professionals, from the different activity sectors, look to
course in the management and business field which is seen as an opportunity for
their need to obtain the necessary and critical knowledge and know-how to develop
their organizations’ management. Based on these concerns, this book, entitled
Management Science—Foundations and Innovations, can be seen and understood
as an excellent opportunity to begin to explore and become familiar with the
management sciences field in order to obtain the desired abilities and competencies
of these professionals.
Designed to contribute to the development of the skills required in business and
management careers, the knowledge and management tools provided by this pre-
sent book can be very useful for all those that, hand in hand with undergraduate
students, pursuing a managerial career in the different types of organizations look to
acquire or, in some cases, to refresh the management sciences foundations.
Focusing different management subjects, this book looks to introduce the reader in
the management sciences field, giving the “core” knowledge in subjects usually
needed to more effectively manage an organization. Based in the “core” subjects
presented in this book, everyone interested will be able to obtain the necessary
knowledge that can be applied as a whole to a variety of real-world business
situations or from a particular viewpoint that will allow them to follow their own
personal or professional interests. Providing a support to all those that are interested
in developing their knowledge in the management field, the book focusing on the
latest developments and thinking in what concerns the most recent management
research activity provides discussion and the exchange of information on principles,
strategies, models, techniques, methodologies and applications in the management
and business area.
v
vi Preface
This book is designed to increase the knowledge and effectiveness of all those
interested in the continual success of their careers in the different fields of activity
like university research and activity (particularly students at the undergraduate
level), business, manufacturing, education, health care as well as other services and
industrial sectors.
Following its main aims, this book looks to cover the field of Management
Science—Foundations and Innovations in ten chapters. The first chapter focuses
“Corporate Governance Foundations”, and the second chapter discusses
“Knowledge as a Valuable Asset of Organizations: Taxonomy, Management and
Implications”. The third chapter covers “The Culture of Management and the
Management of Culture: An Introduction”, while the fourth chapter contains
information about “HRM in the Organization: An Overview”. The fifth chapter
speaks about “Desirable Characteristics of the Human Resources Director”, and the
sixth chapter deals with “Age Management in a Formal Caregiving Organization:
An Exploration of Managers’ Perceptions”. The seventh chapter discusses “Social
Customer Relationship Management in Small and Medium Enterprises:
Overcoming Barriers to Success”; at the same time “Operations Research and
Emergent Technologies” is presented in eighth chapter. Finally, the ninth chapter
discusses “Institutional Factors and High-Performance Work Organisations
(HPWOs) in Sub-Saharan Africa (SSA)”, while the tenth chapter focuses
“Human Resources Management in a Small- and Medium-Sized Enterprise”.
Despite with a particular focus in all those that are beginning their studies in the
management field, Management Sciences—Foundations and Innovations can also
be used for academics, researchers, managers, engineers, practitioners, and other
professionals in related matters with management and business.
The editors acknowledge their gratitude to Springer for this opportunity and for
their professional support. Finally, we would like to thank all chapter authors for
their interest and availability to work on this project.
Braga, Portugal Carolina Machado

Aveiro, Portugal J. Paulo Davim
Contents
Corporate Governance Foundations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Nuria Bajo Davó, Víctor Manuel Martín Martínez
and José Manuel Rodríguez-Carrasco
Knowledge as a Valuable Asset of Organizations: Taxonomy,
Management and Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Yasemin Sen
The Culture of Management and the Management of Culture:
An Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
David Starr-Glass
HRM in the Organization: An Overview . . . . . . . . . . . . . . . . . . . . . . . . 75
Deirdre O’Donovan
Desirable Characteristics of the Human Resources Director . . . . . . . . . 111
S. Gutiérrez-Broncano, P. Jiménez Estévez, J. Opute and Q. Pittendrigh
Age Management in a Formal Caregiving Organization:
An Exploration of Managers’ Perceptions . . . . . . . . . . . . . . . . . . . . . . . 135
Filipa Luz, Regina Leite and José Alvarelhão
Social Customer Relationship Management in Small
and Medium Enterprises: Overcoming Barriers to Success . . . . . . . . . . 157
Nuttaneeya (Ann) Torugsa, Kritcha Yawised and Wayne O’Donohue
Operations Research and Emergent Technologies . . . . . . . . . . . . . . . . . 183
Gema Calleja, Jordi Olivella and Mariona Vilà
Institutional Factors and High-Performance Work
Organisations (HPWOs) in Sub-Saharan Africa (SSA) . . . . . . . . . . . . . 199
Raphael O. Oseghale, Richard B. Nyuur and Yaw A. Debrah
vii
viii Contents
Human Resources Management in a Small- and Medium-Sized

Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
Adriana Faria and Carolina Feliciana Machado
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
Editors and Contributors
About the Editors
Carolina Machado received her Ph.D. in management sciences (organizational

and politics management area/human resources management) from the University
of Minho in 1999, master degree in management (strategic human resource man-
agement) from Technical University of Lisbon in 1994, and degree in business
administration from University of Minho in 1989. Teaching in the human resources
management subjects since 1989 at University of Minho, she is since 2004
Associated Professor, with experience and research interest areas in the field of
human resource management, international human resource management, human
resource management in SMEs, training and development, emotional intelligence,
management change, knowledge management and management/HRM in the digital
age. She is Head of the Department of Management and Head of the Human
Resources Management Work Group at University of Minho, as well as Chief
Editor of the International Journal of Applied Management Sciences and
Engineering (IJAMSE), Guest Editor of journals, Book Editor and Book Series
Editor, as well as Reviewer in different international prestigious journals. In
addition, she has also published both as Editor/Co-Editor and as Author/Co-Author
several books, book chapters, and articles in journals and conferences.
J. Paulo Davim received his Ph.D. in mechanical engineering in 1997, M.Sc. in

mechanical engineering (materials and manufacturing processes) in 1991,
mechanical engineering degree (5 years) in 1986, from the University of Porto
(FEUP), the Aggregate title (Full Habilitation) from the University of Coimbra in
2005 and the D.Sc. from London Metropolitan University in 2013. He is Eur Ing by
FEANI-Brussels and Senior Chartered Engineer by the Portuguese Institution of
Engineers with an MBA and Specialist title in engineering and industrial manage-
ment. Currently, he is Professor in the Department of Mechanical Engineering at the
University of Aveiro, Portugal. He has more than 30 years of teaching and research
experience in manufacturing, materials, mechanical and industrial engineering, with
ix
x Editors and Contributors
special emphasis in machining and tribology. He has also interest in management,

engineering education and higher education for sustainability. He has guided large
numbers of postdoc, Ph.D. and master’s students as well as has coordinated and
participated in several financed research projects. He has received several scientific
awards. He has worked as Evaluator of projects for ERC-European Research Council
and other international research agencies as well as Examiner of Ph.D. thesis for
many universities in different countries. He is the Editor in Chief of several inter-
national journals, Guest Editor of journals, Book Editor, Book Series Editor and
Scientific Advisory for many international journals and conferences. Presently, he is
an Editorial Board Member of 30 international journals and acts as Reviewer for
more than 100 prestigious Web of Science journals. In addition, he has also published
as Editor (and Co-Editor) more than 100 books and as Author (and co-author) more
than 10 books, 80 book chapters and 400 articles in journals and conferences (more
than 200 articles in journals indexed in Web of Science core collection/h-index 48+/
7000+ citations, SCOPUS/h-index 56+/10000+ citations, Google Scholar/h-index
69+/16000+).
Contributors
José Alvarelhão Escola Superior de Saúde, Universidade de Aveiro, Aveiro,

Portugal
Gema Calleja Department of Management, Institute of Industrial and Control
Engineering, Universitat Politècnica de Catalunya, Barcelona, Spain
Nuria Bajo Davó Universidad Autonoma de Madrid, Madrid, Spain
Yaw A. Debrah School of Management, Swansea University, Swansea, UK
Adriana Faria School of Economics and Management, University of Minho,
Braga, Portugal
S. Gutiérrez-Broncano Department of Business Administration, University of
Castilla-La Mancha, Ciudad Real, Spain
P. Jiménez Estévez Department of Business Administration, University of
Castilla-La Mancha, Ciudad Real, Spain
Regina Leite Escola de Economia e Gestão, Universidade do Minho, Braga,
Portugal
Filipa Luz Escola de Economia e Gestão, Universidade do Minho, Braga,
Portugal;
Associação do Porto de Paralisia Cerebral, Porto, Portugal
Editors and Contributors xi
Carolina Feliciana Machado School of Economics and Management, University

of Minho, Braga, Portugal
Víctor Manuel Martín Martínez UNED, Madrid, Spain
Richard B. Nyuur Newcastle Business School, Northumbria University,
Newcastle upon Tyne, UK
Wayne O’Donohue Department of Employment Relations and Human Resources,
Griffith University, Gold Coast, Australia
Deirdre O’Donovan Department of Organization and Professional Development,
Cork Institute of Technology, Cork, Republic of Ireland
Jordi Olivella Department of Management, Institute of Industrial and Control
J. Opute Division of Business/Management, Marketing and People, London
South Bank University, London, UK
Raphael O. Oseghale School of Management, Swansea University, Swansea, UK
Q. Pittendrigh Michigan State University, East Lansing, USA
José Manuel Rodríguez-Carrasco UNED, Madrid, Spain
Yasemin Sen Department of Management and Organization, School of Business,
Istanbul University, Istanbul, Turkey
David Starr-Glass International Programs (Prague), SUNY Empire State College,
Saratoga Springs, USA
Nuttaneeya (Ann) Torugsa Ratchasuda College, Mahidol University, Nakhon
Pathom, Thailand;
Tasmanian School of Business and Economics, University of Tasmania, Hobart,
Australia
Mariona Vilà Department of Management, Universitat Politècnica de Catalunya,
Barcelona, Spain;
EAE Business School, Barcelona, Spain
Kritcha Yawised Faculty of Business, Economics and Communications,
Naresuan University, Phitsanulok, Thailand
Corporate Governance Foundations
Nuria Bajo Davó, Víctor Manuel Martín Martínez

and José Manuel Rodríguez-Carrasco
Abstract The first part of this chapter is dedicated to corporate governance and to
the different theories and models that can be found throughout the world, as well as
to the analysis of the influence of local culture and law in the governance models. On
a second step, the authors concrete the study in the Boards of Directors, and in some
of the variables that mostly affect them, choosing six countries for an empiric study.
Other important aspects, such as the board independence, the behavioral approach
to analyze the board effectiveness, or the governance of nonprofit organizations, are
analyzed in the last part of the chapter.
1 Introduction
Although already a lot has been written about corporate governance, it is a relatively
modern concept that was really subject of study in the past twentieth century, espe-
cially in its last quarter. This of course does not mean that corporate governance only
exists since then. In fact, and maybe it can seem to be contradictory, it is one of the
oldest concepts in the business world; organizations have always had a governance,
maybe called in another way such as management, administration or direction, but
finally meaning the same. Why, then, started so late the attention to this topic?
This first answer is still quite easy; things will get more and more complex once
we further delve into the topic. Historically, businesses or companies were led by
their owners, and their goal was clear for them, because they were managing for
their own interest, and nobody expected from them to manage in a different way.
But once the owners of the companies decided to delegate the governance of their
N. Bajo Davó (B)

Universidad Autonoma de Madrid, Madrid, Spain
e-mail: nuria.bajo@uam.es
V. M. Martín Martínez · J. M. Rodríguez-Carrasco
UNED, Madrid, Spain
e-mail: vmmartin@cee.uned.es
J. M. Rodríguez-Carrasco
e-mail: rocar@cee.uned.es
© Springer Nature Switzerland AG 2019 1
C. Machado and J. P. Davim (eds.), Management Science, Management
and Industrial Engineering, https://doi.org/10.1007/978-3-030-13229-3_1
2 N. Bajo Davó et al.
enterprises in what we could call “professional managers,” the conflicts started, and
here the Agency Theory, which tries to explain the relationship existing between the
so-called principals and agents, will help us to understand the problem.
With the increase of business complexity, also the systems and organisms to
manage the companies developed into more and more complex ones, with the Boards
of Directors as the main governing body. Should Boards of Directors be completely
or partially independent from the company’s management? How skilled are or should
be the members of the boards? And how should nonprofit organizations be governed?
These are some of the aspects to be reviewed in the following pages.
1.1 Corporate Governance—History and Concept
Based on the first thoughts stated in the introduction, let us try to find out the origin
and concept of corporate governance with the help of different theories and authors.
Some authors like Cheffins [1] point out that There is no definitive historical treat-
ment of corporate governance and there may never be one, given the vastness of the
subject. Corporate governance has been with us since the use of the corporate form
created the possibility of conflict between investors and managers [2]. The history of
corporate governance correspondingly extends back at least to the formation of the
East India Company, the Hudson‘s Bay company,… and the other major chartered
companies launched in the sixteenth and the seventeenth centuries.
Coming back to the Agency Theory, the principal is of course the owner of the
company, and the agents would be the managers. Somebody could not understand
why an owner would decide to delegate such an important responsibility in somebody
else… Who can take care of a business better than oneself? If we substitute the
word owner by shareholder, maybe the answer will seem to be easier. Shareholders
can own a part of a company that they do not know, and they necessarily need to
trust somebody else that takes care for their interests. And here, we find the root
cause for the conflicts studied by the Agency Theory: often, or at least sometimes,
managers—the agents—forget that they are working for the principal, and start to
think, completely or at least partially, about their own interests.
The authors traditionally considered as pioneers in the subject are Berle and Means
[3], with the publication in 1932 of The Modern Corporation and Private Property,
and James [4] wrote an interesting review of their book, in which he summarizes
what happened with the majority of the companies:
They are governed by a minority or through some factual or legal devise whereby decisions
for the corporation are made independently of ownership. The shareholder somewhere in
the evolution of the corporate system has lost an ancient incident of his property. He has
lost “control.” His property has become “passive”; that is, he holds merely a piece of paper
representing an equity on which he hopes to get a return. In a word his Ptolemaic corporate
universe has become Copernican. He is no longer the gravitational center. “Control“ is.
(James: 515) [4]
Corporate Governance Foundations 3
According to Wells [2], for some authors corporate governance “started to become
a major topic for public debate” already in the 1920s, with publications that “attacked
corporate management, asserted that management was benefitting itself at sharehold-
ers’ expense, and pointed to the separation of ownership and control as the ultimate
culprit”. But finally, Wells [2] sees Berle and Means’s [3] work as “a product and a
beneficiary of these debates”, explaining why their statements were quickly recog-
nized in the 1930s as “a classic.”
And more than forty years later, in 1976, Jensen and Meckling [5] developed the
already mentioned Agency Theory, trying to explain how to align the principal’s and
the agent’s interests with the corresponding agency costs, such as making the agents
participate in the corporation’s benefits or even in its property as shareholders [6].
It is maybe time to define corporate governance, and in this context, we have to
mandatorily start with the Cadbury Report of 1992 [7], which has been traditionally
classified as the first report providing principles for good corporate governance, in
this case for the companies in the UK, which was followed by many other countries.
According to this report, “Corporate governance is the system by which companies
are directed and controlled” [7]. The definition cannot be shorter or clearer, and it
contains in very few words the basic essence of corporate governance.
There are of course other definitions, certainly more elaborated, and we will
choose the one given by the OECD a few years ago, in the last review of their
famous Principles of Corporate Governance1 : “Corporate governance involves a set
of relationships between a company’s management, its board, its shareholders and
other stakeholders. Corporate governance also provides the structure through which
the objectives of the company are set, and the means of attaining those objectives
and monitoring performance are determined” [8].
Like in many other aspects of the business world, also in the corporate governance
we can find different theoretical models that have been defined. Following Bilbao
Calabuig, Escudero Guirado, Martín Martínez and Rodríguez Carrasco [6], the first
one is the shareholders’ model, typical from the Anglo-Saxon countries like the USA
or the UK. According to this approach, the main aim of corporate governance is to
satisfy the interests of the owners of the companies, and this means to maximize
their profit. Milton Friedman would be one of the most relevant authors studying this
theory, and for many, he is its original developer.
But of course, a company needs many other agents to survive, apart from its share-
holders, and this led to the stakeholders’ model. As stakeholders we could mention
managers, employees, customers, suppliers, and even the official organisations that
may have any relationship with the company. Edward Freeman is one of the major
exponents in defending this theory, and it states that, even if—of course—the inter-
ests of the shareholders are very important and its defence has to be ensured, also the
1 “Originally developed by the OECD in 1999, then updated in 2004, the 2015 revision of the
Principles of Corporate Governance addresses these and other emerging issues that are increasingly
relevant. Building on the expertise and experience of policy-makers, regulators, business and other
stakeholders from around the world, the principles provide an indispensable and globally recognized
benchmark for assessing and improving corporate governance” [9].
Table 1 A comparison of theoretical perspectives on organizational governance

Theory Interests Board Board role Model
members
Agency Theory Owners Owners’ Compliance/conformance: Compliance
and representa- Safeguard owners’ interests model
managers tives Oversee management
have Check compliance
different
interests
Stakeholder Stakeholders Stakeholder Balancing stakeholder needs: Stakeholder
Theory have representa- Make policy/strategy model
different tives: control management
interests elected or
appointed
by
stakeholder
groups
Stewardship Owners Experts Improve performance: Partnership
Theorya and Add value to top model
managers decisions/strategy
share partner/supportmanagement
interests
Source Adapted from Cornforth [11]
a This Theory is mentioned later
rest of stakeholders are relevant for the survival of the companies, and therefore, the
governance has to also take care of them. This theory is mostly applied in Central
Europe, and usually, Germany is highlighted as the best example [10] (Table 1).
There are other mixed approaches, as a combination of the two previous ones
and trying to find a balance between them, typical of countries like Japan or some
in Europe, such as France or Spain, looking after the interests for both shareholders
and stakeholders.
This paper discusses the six mentioned countries whose governance model cor-
responds to these three models.
1.2 Culture, Law and Corporate Governance
Needless to say that culture in general or cultural factors are important when we deal
with corporate governance. The individualist mentality of a country or the collectivist
one is mirrored in its legal system, its financial markets and in the degree of protection
of investors. La Porta et al. [12] have studied the legal systems of a variety of countries
with regard to different issues of corporate governance. The model is known in the
literature as the LLSV model, and a summary of the details appears in Table 2.
Table 2 Cultural and legal blocks of corporate governance

Anglo-Saxon block Intermediate block German block
Legal tradition The common law The French civil The German civil
law law and the
Scandinavian legal
tradition
Representative countries UK, USA, Ireland, France, Spain, Germany, Japan,
Australia, New Belgium, Italy Austria,
Zealand Scandinavian
countries
Priority strategic objective Shareholders Hybrid philosophy Philosophy
Philosophy shareholders and stakeholders
stakeholders
Degree of legal protection Very high Low Intermediate
of investors
Application of laws Application of great Application of low Highest quality
quality quality application
Dominant mechanism for Markets, especially Markets and Board The Board of
investor protection financial markets of Directors, Directors (it is
although this believed that being
usually plays a proprietary means
more prominent that they have rights
role over the company
but also the
obligation to
supervise their
management)
Other protection Collective Statutes of the Statutes of the
mechanisms for the investment company (e.g., companies (e.g.,
investor (especially the Activism of obligatory obligatory
minority) shareholders dividends) Average dividends) High
through degree of degree of
associations concentration of the concentration of
General ownership of the ownership of the
Shareholders’ companies, companies
Meeting (ownership although there are
is usually very clearly majority
dispersed) shareholders
Structure of the board 1 board (The Board 1 board (The Board 2 boards, executive
of Directors) of Directors) Board and the
supervisory Board
Source La Porta et al. [12] and Bilbao et al. [6]
The differences in the legal protection of investors explain why companies finance
themselves in different ways depending on which country the company was founded
and carries out its business, and in other words, the legal system has an influence in
the financial structure of the company and how it behaves in the market.
Countries and companies can be assigned to different blocks as it appears in
Table 2. Three blocks can be distinguished in the first place; the Anglo-Saxon block
protects the owners or investors against a possible misbehavior of the managers. In
general, the proprietary is much dispersed and shareholders defend themselves in
the general meeting of the company, and as a last resort, they can sell their shares
in the stock market. Between the objectives of the company, we can always find the
maximizing or optimizing the wealth of the shareholders.
The German legal environment is less favorable with the shareholders. The block
is more social in its endeavors and gives priority to the business objectives and the
welfare of its workers as well as other stakeholders. However, the investors find their
protection in the statutes of the company and the Board of Directors.
It is obvious that the Anglo-Saxon and the German block are the extremes of this
continuum, and in the middle, we can find a lot of countries and companies more
akin either to the Anglo-Saxon or to the German block.
The LLSV model has triggered a lot of research in different continents, countries
and groups of business firms, and legal reforms have been introduced leaning more
or less toward one of the blocks.
None of the models can be categorized as better than the others. Depending on the
countries and on the time, above all due to the economic situation at each moment,
the one or the other has been preferred over the others [13]. All models present
advantages and disadvantages, depending on who, the principal or the agent, is trying
to see benefits or prejudices for the one or the other part of the parties affected by
the Agency Theory.
A possible convergence between the different theories has been analyzed by dif-
ferent authors, and we can find different opinions in the specialized literature. While
Pic [14] stated, already at the end of the twentieth century, that the phenomenon
of globalization was leading to a certain harmonization of the governance practices
throughout the world, other authors like Guillén [15] mean that the governance of the
companies may follow the legal, political and economic local conditions, so that the
practices in the different countries or regions may differ. In this context, [16] Coffee
argues that one of the most important conditioning factors for the governance model
is the degree of concentration or dispersion of the companies’ ownership.2
However, in 2011 Martynova and Renneboog [17] have conducted a research
from 1990 onwards in 30 European countries and the USA, assigning indexes to
capture the major features of capital markets laws. Their research indicates how the
law in each country deals with potential conflicts between different parties, namely
between shareholders and managers, between a majority and minority shareholders,
and between shareholders and bondholders. The 15-year time series of indices and
2 In this paragraph, we follow Martín Martínez: 98–99 [18], who cites Bilbao Calabuig and Rodríguez
Carrasco: 154 and 159 [19].

large country coverage allows the authors to draw conclusions about the convergence
of corporate governance regimes across the countries.
The time series analysis of this research reveals that virtually every country of
the study has introduced substantial changes in the legislation since 1990. These
changes go in the direction of more corporate transparency, protection of sharehold-
ers in general and minority shareholders in particular. Martynova and Renneboog
[17] still believe that the countries of English legal origin provide the highest quality
of shareholder protection, while many continental European countries have improved
their legal system up to the standard set by the English one. However, the final con-
clusion is that the global convergence of legal systems toward a single one regulation
is unlikely to happen.
2 The Board of Directors
The next question would be who is taking care of corporate governance in the major
companies. As analyzed above, usually this task is not in the hands of the owners or
shareholders, but of the hands of the managers recruited to lead the companies. In
this context, it is worth to go back to the Cadbury Report of 1992 [7], where we can
find one of the best descriptions of the role of the Board of Directors:
Boards of directors are responsible for the governance of their companies. The shareholders’
role in governance is to appoint the directors and the auditors and to satisfy themselves that an
appropriate governance structure is in place. The responsibilities of the board include setting
the company’s strategic aims, providing the leadership to put them into effect, supervising
the management of the business and reporting to shareholders on their stewardship. The
board’s actions are subject to laws, regulations and the shareholders in general meeting.
(Cadbury Report: 14) [7]
Considering the company as a whole, we could see the Board of Directors as an

intermediate organism between the shareholders and the managers of the company.
While the group of shareholders can often be very large, the group of managers uses to
be quite small. On the other hand, and despite its potential big size, the shareholders’
group may be not much powerful, due to its dispersion, while the managers’ group
uses to be the most powerful piece of the companies. Here, we face again the dilemma
explained by the Agency Theory already described above.
Not all countries and cultures have the same type of boards, often even due to
legal requirements of the different local regulations:
• In most of the countries, we can find one-tier boards, which are composed by one
single Board of Directors, which is taking care of the complete governance of the
company. This system is typically considered an Anglo-Saxon governance system
that we can find in the UK, Italy or Spain, among many others. In this single
boards, we can find all directors together, independently of their category, and this
means that we can see in the Boards of Directors with a certain relationship with
the company (e.g., managers or shareholders) or without any relationship with it,
the so-called independent directors.
• Two-tier Boards of Directors have a Germanic origin and are present above all
in Germany, but they can be found also in other countries like France, Finland
or Belgium, for example. Like the name already explains, we will find here two
separate boards, the traditional Board of Managing Directors and the so-called
Supervisory Board, that coexist within the companies. While the Managing Board
is composed by definition only by directors that necessarily have a relationship
with the company in their capacity as managers, the Supervisory Board is com-
posed by shareholders of the entities, and in some countries like Germany, also by
employees, this means that they can also not be independent.
There is a large literature about advantages and disadvantages of each of the board
types, but finally there has never been a definitive conclusion about which of the
systems is better: depending on the economic situation, the geographical situation,
the business culture and other different aspects, the one or the other type of board
may be considered better.
But independently of having one-tiered or two-tiered boards, one of the keywords
probably coming now to the reader’s mind is ethics. Everybody should expect from
the Board of Directors an ethical behavior, but we all know that this is not always the
case. Every year, several financial scandals appear on the newspapers, and oftener
as desired the Boards of Directors are affected by them. The problem is that a non-
ethical or non-completely ethical behavior can sometimes lead to very important
financial benefits in the short term, and the temptation is sometimes too high, even
for directors. Trying to avoid this kind of situation, we can find now in almost every
country of the world the so-called corporate governance code, which tries to establish
some limits to the behavior of the companies’ directors. These codes are mostly not
mandatory, but not following them is not positive for the companies’ development,3
in the context of corporate social responsibility.
Boards of Directors are definitely the most relevant organism that the corporate
governance codes are analyzing: Approximately 75% of the recommendations pro-
vided by these Codes are referred to the Boards of Directors, reaching even 97% of
them in the French Code and with a minimum of 43% of the recommendations in
the US Code [21].
2.1 Analysis of the Board of Directors
The Spencer Stuart Board Index analyzes numerous variables related to the function-
ing of the Board of Directors. This paper discusses eight variables: average board
size, boards with senior independent director (SID) (%), independent board members
(%), average age of all directors, female board directors (%), foreign board directors
(%), average tenure and average number of board meetings per year [22].
3 More about this approach can be found in Fernández Fernández: 119 [20].
Table 3 Composition information

Germany DAX 30
UK FTSE 100
France CAC 40
Spain IBEX 35 + top companies by market cap
USA S&P 500
Japan NIKKEI 225
Source Spencer Stuart Indexes of Boards of Directors for 2014 and 2017 [23–29]
Table 3 shows the information that has been used to develop each Spencer Stuart
Board Indexes by country. The most representative companies of the stock indices
of each country have been considered.
Table 4 provides a comparative summary of the situation of the variables studied
in the six countries analyzed for the years 2014 and 2017.
Figures 1 and 2 show the different variables analyzed, which are quantified for
each country. There are variables in percentage and others in absolute values, with
different scales, so that we have proceeded to transform all the data from Table 4 to
base 100, corresponding with the value 100, in each case, to the average of the six
countries for each variable.
In general, the analysis of the different variables in these two time periods shows
that there have been no significant changes in the size of the boards, which on average
stands at 11–12 members, nor in the age of the board members, around 60 years old,
nor in the years of permanence in the board, which is almost 6 years, nor in the
number of annual meetings that is around 9; while the degree of independence of
the directors has increased, especially in France, Spain and the USA; and finally, we
observe the slow internationalization of the members of the Board of Directors, and
the progressive incorporation of women in the administrative bodies.
Analyzing each variable, there is a certain convergence in the cultural models of
corporate governance, in some aspects:
Currently, one of the most important aspects is the independence of the directors.
In this case, there are relevant differences between countries; on average, it increases
by 20 points from 2014 to 2017, USA is the country that has advanced the most
in this aspect, and it also stands out for the greater separation between the roles of
president and chief executive.
In this context, it has become clear that, in most developed countries, in the last
three decades, have proliferated “codes of good corporate governance,” as already
mentioned in previous paragraphs, as a result of economic globalization and the
multiple financial scandals that have led to the regulation of the practices to be
followed in the government of companies.
Regarding the size of the boards, France is the country with the largest number of
board members, almost 14 members.
Table 4 Comparison of the variables between the countries of the Boards of Directors
Germany UK France Spain USA Japan Average
2014
1. Average board size 9.5 10.5 13.8 11.4 10.8 10.8 11.1
2. % Boards with senior n.a.a 100.0 32.0 35.0 47.0 n.a.b 53.5
independent director
(SID)
3. % Independent board n.a. 94.0 61.0 38.0 84.0 19.7 59.3
members
4. Average age all directors 55.7 55.9 60.0 59.0 63.0 60.7 59.0
5. % Female board directors 16.6 21.0 31.0 13.0 19.0 2.7 17.2
6. % Foreign board directors 17.8 32.0 31.0 10.8 8.1 2.1 17.0
7. Average tenure 6.2 4.8 5.3 7.5 8.4 3.3 5.9
8. Average number of board 6.1 7.6 8.3 10.4 8.1 14.0 9.1
meetings per year
2017
1. Average board size 16.3 10.2 13.9 11.0 10.8 11.0 12.2
2. % Boards with senior n.a.a 99.3 48.0 63.0 85.0 n.a.b 73.8
independent director
(SID)
3. % Independent board 60.0 61.4 69.1 44.0 85.0 29.1 58.1
members
4. Average age all directors 61.0 56.7 58.8 60.4 62.6 66.3 61.0
(%)
5. % Female board directors 28.7 25.5 42.0 38.3 22.2 4.9 26.9
6. % Foreign board directors 31.0 32.3 37.0 19.0 7.0 2.9 21.5
7. Average tenure 6.3 4.4 5.9 5.3 8.2 4.1 5.7
8. Average number of board 6.7 7.8 9.0 10.8 8.2 14.2 9.5
meetings per year
Source Own preparation based on the Spencer Stuart Indexes of Boards of Directors for 2014 and
2017 [23–29]
n.a. not applicable
a In Germany, the Board of Directors is dual, and two “boards” coexist: On the one hand, the
Executive Board (Vorstand), formed by internal board members, which is dedicated to the planning
and implementation of the strategy, and on the other hand, the Supervisory Board (Aufsichtsrat),
formed by external directors, whose mission is to approve or veto any of the decisions of the
Executive Board, but no executive power. Therefore, in the German case, the separation of the
duties of Chairman and Chief Executive Officer is not applicable, as in the case of the Boards of
Directors of a single board, since both roles are performed by different people, in different boards
b In Japan, the possible deficiencies of the single board system are met with the establishment of
the keirestu, which are informal meetings held by management teams, important shareholders and
financial creditors, acting similar to the German Supervisory Boards. Therefore, this variable does
not apply
Fig. 1 2014 comparison of the variables of the Boards of Directors for different countries. Source
Own preparation based on the Spencer Stuart Indexes of Boards of Directors for 2014 [23–26]
Fig. 2 2017 comparison of the variables of the Boards of Directors for different countries. Source
Own preparation based on the Spencer Stuart Indexes of Boards of Directors for 2017 [27–29]
In relation to the age of the directors, the average is around 60 years in the six
countries and in the two periods analyzed.
Regarding female participation in boards, significant differences are observed.
In 2017, France is the leader with 42% of women board members, and in the other
countries in these three years, there is a substantial increase, except in Japan, which
goes from 2.7 to 4.9% of women in the Boards of Directors, much lower than almost
27% on average in 2017.
At this point, we must point out the REDING Directive in the Community Frame-
work, whose objective is to achieve the minimum presence of 40% of the less repre-
sented gender in non-executive directors in 2020 and 2018 in public companies. The
current situation in the European Union averages 25.3%.
The conclusion for Japan is similar to the previous case when analyzing foreign
participation in the Boards of Directors, standing the last, not reaching 3% of foreign
directors. On the other hand, Germany, France and Spain have experienced significant
increases in these three years.
On the contrary, in relation to the number of annual meetings of the boards,
Japan stands out among all the countries, with about 14 annual meetings, doubling
Germany.
3 Board Independence and Corporate Governance
As already stated above, the independence of the board members is one of the most
important variables traditionally studied in the context of corporate governance.
Table 5 identifies the different types of board directors based on their relationship
with the ownership of the company and with the management team of the company.
Differentiating between internal or executive directors, who perform management
functions in society, and external directors, who are divided into proprietary direc-
tors, those designated by their status as shareholder or representative of a shareholder,
and independent directors, those who due to their personal or professional condi-
tions, can perform their functions without being conditioned by their relations with
the company, its significant shareholders or its directors. Of course, there can also
exist internal directors that are, at the same time, shareholders of the company.
Currently, the figure of the independent director is taking great relevance in cor-
porate governance, and for this reason, we want to dedicate an additional section.
The Independent Director must provide a deep diagnosis of the board, in order
to make valuable contributions; propose initiatives, warn of the dangers (economic,
financial, regulatory, of the organization and of the competition); and finally, he must
contribute ideas for the future, e.g.: remuneration system of senior management and
the board, type of advisors and consultants used by the company. In addition, it can
play an important role in defending the interests of minority shareholders, especially
when we are in front of highly concentrated companies.
Therefore, the independent director must provide ideas for the continuity of the
company and provide practical criteria to assist in the subsequent execution. However,
it presents a major problem. How can independence be determined?
Gupta and Young [31] present a series of recommendations on independent direc-
tors:
1. The mission of the independent director must be the protection in the board of
the interests of the minority shareholders.
2. Dispense with minimum percentages of independent directors in the board, since
there is no conclusive empirical evidence of the effectiveness of their presence.
There must be consistency with the principle of proportionality.
3. Annual evaluation by independent directors of the adequacy, relevance, reliability
and anticipation of the information received before going to the board. For Duchin
et al. [32], the effectiveness of external directors depends on the cost of acquiring
information from the company.
4. Processes for selection and appointment of independent directors more open and
transparent.
5. Internal training programs on the company and the sector, in the incorporation
of independent directors.
6. Evidence of a positive effect between the presence of independent directors and
CSR activities.
7. Annual evaluation of the performance of each independent director, to identify
if they are performing their functions efficiently and with the expected indepen-
dence.
8. Provide stakeholders, direct and confidential access to an independent director,
to communicate and raise ethical issues.
Table 5 Typology of board directors

Linkage with the property of the company
It has ownership It has no ownership
interest; capitalist interest;
directors non-capitalist
directors
Linkage with the Belongs to the Executive capitalist Executive director
company’s management management team; director
team internal or
executive directors
Does not belong to Proprietary Independent
the management director director
team; external or
non-executive
director
Source Adapted from Bilbao [30]
According to Spencer Stuart [27–29], one of the areas for improvement in the
Boards of Directors is the lack of independent directors, together with a lack of inter-
national advisors, a lack of women and a lack of directors with sectoral knowledge or
business experience. In relation to this last aspect, Mika and Ramseyer [33] and Kim
and Lim [34] conclude that there is a positive relationship between the valuation of
companies and the proportion of directors with previous experience.
Currently, companies must decide whether or not to implement certain committees
within the board that specialize in key tasks, such as the audit committee, the appoint-
ments, remuneration and cessation commission. For Marchetti and Stefanelli [35],
companies remunerate more generously those directors who have more popularity.
Meanwhile, Gupta and Fields [36] consider that the resignation of an independent
director provides a negative signal to the market, but this negative signal is lower
when the proportion of independent directors is higher.
4 The Demographic and the Behavioral Approach
4.1 Introduction
There is a variety of theories that sustain the building of the corporate governance
systems; some of them like the Agency Theory have been explained explicitly in
previous pages. At the same time, the Agency Theory, as well as other theories,
follows the approach of what is known as the demographic approach, which deals
mainly with the people and the characteristics within the government board of the
firm. Questions such as how many members are in the Board of Directors, their
background, whether they are female or male, independents or shareholders of the
firm, if they represent a large number of shareholders or minority groups of interest.
The alternative approach to the demographic is known as the behavioral approach;
it basically deals with the observation of how decisions are taken within the board.
Needless to say that on both approaches, we have to look thoroughly at the functions
of control and advice that members of the board execute in their assignment; however,
the emphasis on this approach is placed on the functions of counseling and advising;
issues such as if the members are prepared to exercise these functions are studied
under the approach, as well as the difficulties that the members of the board may
undergo to fulfill their functions, like the lack of time or the difficulties to have access
to the appropriate information in order to be able to exercise their advice. See Figs. 3
and 4.
In Fig. 3, we find the functions exercised by the members of the board, no matter
whether they are independent, shareholders, representing minority rights or others;
their role, under the umbrella of the Agency Theory, is to control the management of
the firm and to offer a sound advice on the decisions to be taken by the management
of the corporation.
While in Fig. 4, we are considering the role of the members of the board when
behavioral approach is followed. In this particular case, a part of the function of
control over the management of the firm, the role as advisers, is emphasized. However,
we may find a lot of difficulties to analyze what is happening within the board. The
Behavioral Theory expects that the members give a sound advice on the situation,
because the members have been elected given their ability to handle conflictive
situations as well, their expertise and knowledge in general. However, this is not
always the case. Many times, the board members do not have enough free time to
study the situation, or the information does not get to their hands-on time, or they
can even be unfamiliar with the situation.
A majority of authors maintain that the behavioral approach has its origin in the
study of Cyert and March [37] about how decisions are taken within the firm. In the
first place, they study the theory of the firm and its postulates, which they do not find
very helpful, due to of their emphasis on the economic approach [38], Henderson and
Quandt [39] among other authors. The above-mentioned authors find that the theory
of the firm means different things for a variety of authors. What is clear to them
is that organizations produce an economic activity, but the study of organizations
themselves is not very clear. However, they claim that the different interpretations
of the theory of organizations can be summarized under three headings:
a. Sociology, with representatives authors such as Weber, Durkheim and Pareto.
Functions
Demographic approach Control
Board
directors
Advice
Behavioural approach
Fig. 3 Functions performed by the board. Source Own elaboration
Ability
Knowledge
Expertise
Board members
as advisors Black box
Lack of time
No information
available.
Unfamiliar with
situation
Fig. 4 Board member role’s behavioral approach. Source Own elaboration

b. Social psychology, having as a main interest the criteria of effectiveness.

c. Administrative, Barnard [40] and Simon [41] interested in the process of decision-
making, although they very often find themselves in a black box (See Fig. 4),
which does not explain very much of the process of decision-making.
However, in recent times the research has made an attempt to describe what takes
place precisely in that black box.
4.2 Modern Efforts to Open the Black Box
4.2.1 The Contribution of Forbes and Milliken
Forbes and Milliken [42] made an attempt to explain the performance of the board
taking as starting point the demographic approach, although they subscribe Petti-
grew’s thesis that it is necessary to go beyond the demography-outcome approach
in order to understand fully the performance implications of board characteristics
[43]. However, their purpose to explain the performance of the board has similarities
with the behavioral approach inasmuch as they pretend to focus on the analysis of the
control and service task of the board, and so they require board members to cooperate
in the exchange of information, in the evaluation of different alternatives, and finally
to reach well-reasoned decisions. Consequently, they take for granted that the board
is a strategic decision-making group.
The theoretical background of the study One of the first findings of Forbes and
Milliken is that the literature on board research has failed to establish which demo-
graphic characteristics lead to a concrete outcome. Consequently, the board perfor-
mance from the point of view of their composition does not reveal much.
Toward a model of board processes In order to develop their model of boards as

groups, they define working groups as “intact social systems that perform one or more
tasks within an organizational context.” The authors believe that the link between
board demography and firm performance depends on factors that are specific to
boards as groups and to the specific criteria of effectiveness. The model developed
by these authors appears in Fig. 5.
The four pillars of the model are the board characteristics, the processes that take
place within the board, the board-level outcomes, and finally the firm-level outcome.
The first task of the board refers to its legal duty of controlling the top management
team on behalf of the shareholders of the corporation. Their service tasks refer to
provide advice and counsel to the CEO and top management in the formulation of
the strategy.
It is taken for granted that the group has sufficient knowledge and skills to provide
this particular advice. However, the difficulties arise when we consider that in the
boards, there are members that can be considered either insiders or outsiders. It is
Fig. 5 A model of board processes and their impacts on board effectiveness. Source Forbes and
Milliken [42]
understandable that the insiders have more knowledge of what is going on within the
corporations, while outsiders bring other characteristics and expertise to the group
that might be more valuable to the corporation.
As already discussed in previous paragraphs, one question to be considered is the
size of the group. A large group is less manageable than a small group; however,
large groups provide more information than a small group; therefore, it is important
to reach an agreement about the size of the board. Pozen [44] maintains that group
of seven members is an appropriate number to achieve the purpose of the board,
provided that they are experts on the subjects being discussed and devote enough
time to their task. Other factors to be considered are the number of meetings of the
board as a group, and this means how many times it meets per year to exercise its duties
of control and advice. In addition to that, boards do not implement their decisions;
its output is mainly cognitive. Considering all these factors, the effectiveness of the
board depends on social psychological processes, like participation and interaction
among the members, the exchange of information and the critical discussion that
may take place within the group.
Criteria of board effectiveness
The model developed by Forbes and Milliken [42] is concerned with two criteria of
board effectiveness. 1. The board task effectiveness is defined as the board ability to
perform its control and service task effectively, and 2. The board ability to continue
working on its agenda is clear if it shows a certain amount of cohesiveness. Board
performance is different from firm performance. Board task performance represents
the ability of the board to fulfill control activities such as decisions regarding the hir-
ing, compensation and replacement of senior management, as well as the approval

of major initiatives proposed by the top management team. Among the service activ-
ities provided by the board, we can find provisions of service management such as
acquisitions or the analysis of strategic alternatives proposed to the board. It is clear
that most of these activities are confidential, and therefore, it is extremely difficult
for researches to measure and judge this type of performance.
The cohesiveness refers to the degree to which the members are willing to continue
working together and their motivation to remain on the board. A certain amount of
turnover within the board can be considered normal, after all their work is episodic,
but high levels of turnover will likely reduce the expertise afforded by different
members.
Board processes and their impact on board effectiveness
As it can be observed in Fig. 5, what really affects board performance and cohesive-
ness are the effort norms, the cognitive conflict and the board use of its knowledge
and skills.
The authors define effort norms “as a group-level construct that refers to the group
shared beliefs regarding the level of effort each individual is expected to toward a
task.” “Effort is a product of motivation and refers to the intensity of individuals’
task performance behavior.”
It must not be forgotten that the time that board members dedicate to their tasks
differs greatly across boards. Time is a manifestation of effort, but researchers find
that boards devoting the same amount of time achieve a different level of performance.
“Cognitive conflict refers as disagreements about the content of the task being
performed.”
The presence and use of knowledge and skills Boards need a lot of expertise and
skills to achieve effectiveness, although the availability of knowledge and skills
does not guarantee the use of expertise. The knowledge and skills of the board can
be divided into two dimensions: (1) Functional area knowledge and skills and (2)
firm-specific knowledge and skills. Under the number 1, we can include account-
ing, finance, marketing and law among others. Members of the board ought to be
knowledgeable of these areas.
Firm-specific knowledge refers to detailed information about the firm and an

understanding of its operation and internal management issues.
Forbes and Milliken [42] conclude their research with different propositions of
which we find the next three as the most important ones (the proposition numbers
correspond to the original document):
Proposition 1: Board effort norms, cognitive conflict, and the use of knowledge and skills
will be positively related to board task performance.
Proposition 2: Cognitive conflict will be negatively related to board cohesiveness.
Proposition 3b: The relationship between cohesiveness and board task performance will be
moderated by cognitive conflict. (Forbes and Milliken) [42]
Table 6 Effects of board demography on board processes

Board process Job-related Proportion of Board size Board tenure
diversity outsiders
Effort norms No Positive Negative No
hypothesized hypothesized
relationship relationship
Cognitive conflict Positive Positive Positive Negative
Presence of functional Positive No Positive No
area knowledge and hypothesized hypothesized
skills relationship relationship
Presence of No Negative No Positive
firm-specific hypothesized hypothesized
knowledge and skills relationship relationship
Use of knowledge and Negative No Negative Positive
skills hypothesized
relationship
Cohesiveness Negative Negative Negative Positive
Fuentes: Forbes and Milliken [42]
The authors summarized their thought in Table 6, knowing that their reasoning will
provide multiple and contrasting effects on the processes that contribute to effective
board performance.
4.2.2 Conflicting and Ambiguous Results
Ees et al. [45] say that, after the previous research using the Agency Theory, the results
are conflicting and ambiguous. For this reason, they emphasize the need for deeper
studies of the behavioral process that takes place in and around the boardroom, in
order to understand the conditions for corporate governance. Based on the previous
work of Cyert and March [37] and Simon [41], they argue that boards are more
concerned with solving problems of coordination and managing the complexity and
uncertainty associated with decision-making. They point out that the problem of
applying the Behavioral Theory to research the conduct of boards is the limited
ability of organizational members to effectively gather and process information.
They believe that corporate governance institutions such as boards can be conceived
as problem-solving institutions that reduce complexity, create accountability and
facilitate cooperation and coordination between stakeholders.
In their research, they regard the firm as a nexus of coalitions of stakeholders, each
of them with different objectives. Consequently, the role of the board is mediating
between various coalitions of internal and external groups, in order to ensure that
the organizational effort is directed toward achieving the goals that the dominant
coalition has set.
Table 7 Research streams on boards and corporate governance

Internal relationships External relationships
Structure I. Command and control II. Codification and compliance
– Incentives and goal alignment – Law, codes, contracts and
– Monitoring and bonding regulation
Interactions III. Collaboration and conflict IV. Coordination and cooptation
– Political bargaining – Social networks and director
– Power and trust interlocks
– Conflicts and emotions – Social elites and social movements
Decisions V. Cognition and competence VI. Conformity and ceremony
– Decision-making biases – Institutional embeddedness and
– Cohesiveness and commitment identity
– Diversity and competence – Norms, symbolism, language and
rhetoric
Source Ees et al. [45]
Board contribution is expected to enable cooperation and to gather knowledge to

reduce agency costs. The key concepts in this approach to corporate governance are
bounded rationality, satisfying behavior and political bargaining.
The framework of the behavioral approach is presented in Table 7.
Main research channels in the study of boards and corporate governance
The model that appears in Table 7 indicates the six major research streams dealing
with structure, interactions and decisions processes. Each of these research streams
can be divided into two; this means the structure deals with command and control
and with codification and compliance. The interactions deal with collaboration and
conflict and with coordination and cooptation. Finally, decisions deal with cognition
and competence and with conformity and ceremony.
Each pair of these research streams can be differentiated by their focus on inter-
nal and external relationships. Internal relationships are those that take place in and
around the board, between board members and groups of coalitions of internal par-
ticipants and stakeholders. On the other hand, external relationships focus on the
relationships between board members and groups or coalitions of external stake-
holders.
Ees et al. [45] propose a line of research of the behavioral approach based on the
concepts illustrated in Exhibit 1.
Exhibit 1
(1) Bounded rationality. “The concept, taken from Simon [41], refers to the
notion that decision-makers experience limits in their ability to process
information and solve complex problems.”
(2) Satisfying behavior and problematic search. “Satisfying behavior implies
that actors tend to accept choices or judgments that are good enough.”
(3) Routinization of decision-making. “Board of Directors operates from the

basis of routines that era built up over time.” Routines can be under-
stood as the codified memory of the organization, such as past experi-
ence, knowledge, beliefs, values and capabilities of the organizations and
its decision-makers.
(4) Political bargaining in the context of corporations as coalitions of stake-
holders. From this point of view, organizations can be seen as com-
plex political systems with agents organized in coalitions and even sub-
coalitions. The partners of the coalitions may have different preferences
and objectives, situation that demands negotiations and bargaining over
aims and objectives.
In summary, the behavioral approach of boards and corporate governance will

pay attention to decision-making processes rather than structure and outcomes, and
views the corporation as a nexus of coalitions of stakeholders without any previous
assumptions of goals and objectives. This approach will deal with complexity and
uncertainty related to strategic decisions.
4.2.3 The Influence of Micro- and Macro-Level Variables
Minichilli et al. [46] take as a base for their research the model developed by Forbes
and Milliken [42], particularly the effort norms, the cognitive conflicts and the use
of knowledge and skills as determinants of board control and advisory tasks. They
conduct their research in two different scenarios: Norway and Italy, which are con-
sidered to differ in their legal and cultural dimensions. “The findings show that (1)
Board processes have a larger potential than demographic variables to explain board
task performance; (2) Board task performance differs significantly between board
operating in different contexts; and (3) National context moderates the relationships
between board processes and board task performance.”
Their analysis offers an evidence of how both micro- and macro-level variables
influence board tasks performance and shows how the macro-level country variable
moderates relationships between board processes and task performance.
5 Corporate Governance in Special Situations—The Case

of Nonprofit Organizations
The development of the theory and practice of corporate governance has been applied
to different situations, like the family business and the nonprofit organizations. Our
first task would be to define these types of organizations. In the literature of the third
sector, we may encounter a variety of definitions; however for our purpose, we define
nonprofits organizations as legal or social entities created for the purpose of produc-
ing goods and services whose status does not permit them to be a source of income,
profit, or other financial gain for the units that establish, control or finance them. In
practice their productive activities are bound to generate either surpluses or deficits
but any surpluses they happen to make cannot be appropriated by other institutional
units. (UN) [47]. Kreutzer [48] defines corporate governance in the nonprofit sec-
tor as the set of processes, customs, policies and laws affecting the way in which
a nonprofit organization is directed, managed or controlled. According to Salamon,
cited by Harrow and Philips [49], the six main characteristics of a nonprofit organi-
zation are: organized, private, self-governing, voluntary, public benefit in nature, not
distributing surplus or profits [50].
Hopt and von Hippel say that the nonprofit organizations have been regarded as the
neglected “stepchildren” in the shadow of their profit counterparts [51]. Nowadays,
the situation has changed significantly. Today they make up a considerable part of
the GNP and create more jobs than many other economic sectors and represent
about 6% of the total employment in the OECD countries [52]. For this reason, a
majority of authors claim the need to review and improve their governance in line
with corporate governance developments for profit [49]. The question is whether the
theories and practices developed in the lucrative sector can be transposed with minor
modifications to the nonprofit sector.
We believe that there are serious difficulties for a transposition of the rules and
practices from the profit sector to the nonprofit one. The nonprofit sector cannot
distribute profit to the owners, because there are not owners or shareholders in the
nonprofit sector, and apart from that, there is not a specific market that might exercise
control over them, and mergers and acquisition are very rare in this sector. We also
cannot find a financial press with daily reports and comments of the market [51, 53].
Cornforth has presented a typology of six different theories of corporate gover-
nance, of which we present only three because they are the most used in the field of
the nonprofit organizations [11]. See Table 1.
Needless to say that the Agency Theory, explained in the first part of these pages,
has gained status in the literature and among professionals. It is understandable that,
from the nonprofit sector side, there might have been intentions to apply such a
theory in the field, just as it is explained and applied in the profit sector or with
certain modifications, at least in the large nonprofit organizations. However, there
are not many empirical studies that support the use of this theory in the nonprofit
sector [54].
The main problem of the Agency Theory in the nonprofit sector is to define who
are the principals or the owners of the organizations existing in the sector. May the
founders or the donors be considered as the principals? Or different stakeholders as
we may see later? This difficulty has favored the consideration of other theories like
the Stewardship or Stakeholders’ Theories.
The Stewardship Theory has its roots in the School of Human Relations [55]. The
theory assumes that the managers of the organizations, as agents, want to do a good
job and cooperate with the governing body of the organization. The main purpose
of this governing body or Board of Directors is that the management may achieve
Table 8 Differences between Agency Theory and Stewardship Theory

Dimension Agency Theory Stewardship Theory
Theoretical basis Economics Psychology and sociology
Approach Control (distrust) Collaboration and trust
Principal–agent relation Goal conflict Aligned goals
Agent’s motivation Mainly extrinsic Intrinsic
Organizational identification Low identification High identification
Human behavior Individualist Collectivist
Governance mechanisms Monitoring and incentives Empowering structure
Source Adapted from Puyvelde [56]
Fig. 6 Typology of stakeholders in nonprofit organizations. Source Adapted from Puyvelde et al.
[57]
the corporate mission and objectives of the institution and act as effective stewards
of the organization’s resources [11]. In Table 8, we present the differences of several
variables in regard to the Agency and Stewardship Theories.
The Stakeholder Theory is based on the seminar work of Edward Freeman, and it
refers to groups or individuals who can affect, or are affected, by the achievement of
the corporation’s purposes. Freeman distinguishes between groups that are essential
for the organization, and those that might be affected by the decisions taken by
the organization. Another distinction explains the differences between internal and
external stakeholders. The latter have an influence on the organization from the firm’s
environment like customers, suppliers, trade unions, banks or the government, while
the internal stakeholders are not part of the environment, but they are members of
the organization like employees or executives [10]. See Fig. 6.
Usually, the objectives of a corporation are accomplished by balancing the con-
flicting interests of different groups. However, Cornforth states that, in the nonprofit
sector, the interests of different stakeholders are less controversial than in any other
sector [11], and the interests of the principal and agent are better aligned than in the
lucrative sector.
6 Conclusions
Corporate governance understood as the system by which companies are directed

and controlled has its origin and foundation at the time when the owners of large
companies decide to delegate the management of the company to a group of man-
agers. At that moment, what would later be called the Agency Theory appears, which
deals with the conflicts that may arise between the objectives of the owners, optimiz-
ing their profits, and the objectives of the managers who work for their own interest
and whose objectives do not necessarily coincide with the ones of owners of the
company.
The alignment of the interests of both groups has not been easy over time, because
other approaches have emerged, the most popular among them the Theory of Stake-
holders that aims to take into account the objectives of all the interest groups linked
to the future of the company.
In all this development of corporate governance, it is necessary to consider the
culture where the company carries out its activities, as well as the commercial and
corporate legislation of the original country of the company. This situation has led
the authors to take into account the different legal situations, considering a legal
tradition in an Anglo-Saxon block that relies on the common law. Another block is
formed by the countries that follow the French civil law, and finally the countries
that make up the block of German civil law.
At the present time, some authors maintain the position that the globalization of the
markets has contributed to a convergence of the different systems erasing the cultural
and legal specifications. Some empirical studies state that since 1990, many countries
have introduced changes in their legislation that prioritize corporate transparency and
the protection of shareholders in general and of minority shareholders in particular.
These empirical studies arrive at the conclusion that the countries with an Anglo-
Saxon legal tradition show the greatest legal protection of the shareholders, while
those of continental European tradition are leaning towards the English system.
The responsibility of leading the corporate governance rests, according to the latest
analysis, with the Board of Directors; their main task is to specify the objectives of
the company, determining who should direct it. The exercise of control is another
function of the board, as well as informing shareholders about the results of their
performance.
Boards of Directors do not have the same structure in all countries; in those of
Anglo-Saxon tradition, they are composed of a single board, while in those of German
tradition they usually are dual boards, one board with an advisory function and the
Executive Board. There is a whole body of literature that analyzes the advantages
and disadvantages of both systems.
There are a variety of reports that analyze various variables of the Board of Direc-
tors, such as the size of the board, the number of directors of different categories,
independent directors, the age of the directors, the gender of the directors, foreign
directors, duration of its mandate and number of annual meetings. Of all these vari-
ables and their situation in several countries are duly reported in the previous pages.
All these characteristics that we have previously discussed, and whose research
can be obtained from reports of official authorities and from the annual reports of
the companies, make up what is known as the demographic approach to corporate
governance. There is another approach to the subject, the behavioral approach. Both
approaches have points in common such as the control functions and the advice
exercised by the board on the management of the company.
The behavioral approach, however, pays more attention to the advisory func-
tion and deals with the skills, knowledge and expertise that board members need
to perform their work. The empirical analysis of this approach encounters several
difficulties, because it is difficult to know how decisions are taken within the board
to perform this task, and researchers usually find in their investigation what is called
a black box.
There is a whole series of authors who have not only tried to analyze the two
approaches at the same time, but have even tried to open that black box we have
just referred to in order to analyze what is happening inside it. To this end, they
have relied on the Behavioral Theory of the firm, following the research carried out
decades ago by well-known authors such as Cyert and March [37] and Simon [41].
As an epilogue to this analysis, it was important to mention the corporate gover-
nance in special situations, such as the family business and nonprofit organizations.
We have decided to write some words about corporate governance in nonprofit orga-
nizations, given the weight that this sector has in both the creation of employment,
as its weight in the GDP of different countries and its social importance.
The nonprofit sector has always tried to look itself in the mirror of the lucrative
sector, in order to make a transposition of the theories developed in it. We find in the
first place that the transposition of the Agency Theory is not operative because it is
difficult to pinpoint who are the principal and the agent in nonprofit organizations.
Secondly, there is usually no conflict of interest between these two figures. Hence,
other approaches have been adopted such as the Stakeholder Theory and, above all,
the Stewardship Theory, where the alignment of objectives between the principal and
the agent is more operative and the interests of the stakeholders are less controversial.
References
1. Cheffins, B. R. (2013). The history of corporate governance. The Oxford handbook of corporate
governance (pp. 46–65). Oxford: Oxford University Press.
2. Wells, H. (2010). The birth of corporate governance. Seattle University Law Review, 33(4),
1247–1292.
3. Berle, A. A., & Means, G. C. (1991). The modern corporation and private property. First
edition of 1932, with prefaces of the 1968 and 1991 editions. New Brunswick: Transaction
Publishers.
4. James, D. (1933). The modern corporation and private property, by Adolf A. Berle Jr. and Gar-
diner C. Means. Indiana Law Journal, 8(8), Article 11. Retrieved from http://www.repository.
law.indiana.edu/ilj/vol8/iss8/11.
5. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behaviour, agency
costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. Retrieved from
http://www.sfu.ca/~wainwrig/Econ400/jensen-meckling.pdf.
6. Bilbao Calabuig, P., Escudero Guirado, C., Martín Martínez, V. M., & Carrasco, J. M. R. (2018).
Política de empresa y estrategia (4th ed.). Madrid: Universitas.
7. Cadbury Committee (1992). Report of the committee on the financial aspects of corpo-
rate governance (Cadbury Report). London: Gee. Retrieved from http://www.ecgi.org/codes/
documents/cadbury.pdf.
8. Organisation for Economic Co-operation and Development (OECD) (2015). G20/OECD prin-
ciples of corporate governance. Paris: OECD Publications Service. Retrieved from http://www.
oecd.org/daf/ca/Corporate-Governance-Principles-ENG.pdf.
9. Organisation for Economic Co-operation and Development (OECD) (2018). G20/OECD prin-
ciples of corporate governance. Retrieved from http://www.oecd.org/corporate/principles-
corporate-governance.htm.
10. Stoner, J., Freeman, E., & Gilbert, D. (1995). Management. Upper Saddle River: Prentice-Hall.
11. Cornforth, C. (2003). The governance of public and non-profit organisations. New York: Rout-
ledge.
12. La Porta, R., López de Silanes, F., Shleifer, A., & Vishny, R. W. (1998). Law and finance.
Journal of Political Economy, 106(6), 1113–1155.
13. Fumás, V. S. (2004). El gobierno de la empresa en España: una cuestión de modelo. Papeles
de Economía Española, 100(II), 133–146.
14. Pic, J. J. (1997). A glance at corporate governance around the world. Paris: Spencer Stuart.
15. Guillén, M. F. (2000). Convergence in global governance? Corporate Board, 21(121), 17–21.
16. Coffee, J. C., Jr. (2001). The rise of dispersed ownership: The roles of law and the state in the
separation of ownership and control. The Yale Law Journal, 111(1), 1–83.
17. Martynova, M., & Renneboog, L. (2011). Evidence on the international evolution and conver-
gence of corporate governance regulations. Journal of Corporate Finance, 17(5), 1531–1557.
18. Martín Martínez, V. M. (2016). Tendencias actuales de gobierno corporativo: Comparativa de
los consejos de administración de Alemania, EE.UU. Japón y España. Revista Universitaria
Europea, 24, 95–124.
19. Bilbao Calabuig, P., & Rodríguez Carrasco, J. M. (2008). Gobierno corporativo, cultura y
sistema legal: un estado de la cuestión. ICADE, 75, 143–162.
20. Fernández Fernández, J. L. (2004). Finanzas y ética. La dimensión moral de la actividad
financiera y el Gobierno Corporativo. Madrid: Universidad Pontificia Comillas de Madrid.
21. De Andrés, P., & Santamaría Mariscal, M. (2018). Del consejo de administración a los Códigos
de buen gobierno. Economistas, 158, 106–125.
22. Martín Martínez, V. M. (2015). Una comparativa internacional del gobierno corporativo: Los
consejos de administración en el sector de la automoción (Doctoral thesis). Director: Dr. José
Manuel Rodríguez Carrasco, Codirector: Dr. Eduardo Pérez Gorostegui. Faculty for Economic
and Business Sciences, Universidad Nacional de Educación a Distancia, Madrid, Defended on
29th January 2016.
23. Spencer Stuart (2014a). Japan board index 2014. Spencer Stuart.
24. Spencer Stuart (2014b). España 2014. Índice Spencer Stuart de Consejos de Administración
(18ª edición). Spencer Stuart.
25. Spencer Stuart (2014c). Deutschland 2014. Der Spencer Stuart Board Index. Spencer Stuart.
26. Spencer Stuart (2014d). 2014 Spencer Stuart board index (USA). Spencer Stuart.
27. Spencer Stuart (2017a). Japan board index 2017. Spencer Stuart.
28. Spencer Stuart (2017b). España 2017. Índice Spencer Stuart de Consejos de Administración
(21ª edición). Spencer Stuart.
29. Spencer Stuart (2017c). 2017 UK board index. Spencer Stuart.
30. Bilbao Calabuig, P. (2003). Prácticas de buen gobierno y eficiencia empresarial: Un mod-
elo de gobierno corporativo para las empresas del IBEX-35 (Doctoral thesis). Director: Dr.
José Manuel Rodríguez Carrasco. Faculty for Economic and Business Sciences, Universidad
Pontificia Comillas de Madrid, Madrid, Defended on 8th October 2003.
31. Gupta, A., Otley, D., & Young, S. (2008). Does superior firm performance lead to higher quality
outside directorships? Accounting, Auditing, and Accountability Journal, 21(7), 907–932.
32. Duchin, R., Matsusaka, J., & Ozbas, O. (2010). When are outside directors effective? Journal
of Financial Economics, 96(2), 195–214.
33. Mika, Y., & Ramseyer, J. M. (2005). Who appoints them, what do they do? Evidence on outside
directors from Japan. Journal of Economics Management Strategy, 14(2), 299–337.
34. Kim, H., & Lim, C. (2010). Diversity, outside directors and firm valuation: Korean evidence.
Journal of Business Research, 63(3), 284–291.
35. Marchetti, P., & Stefanelli, V. (2009). Does the compensation level of outside directors depend
on its personal profile? Some evidence from UK. The Journal of Management and Governance,
13(4), 325–354.
36. Gupta, A., & Fields, L. P. (2009). Board independence and corporate governance: Evidence
from director resignations. Journal of Business Finance & Accounting, 36(1–2), 161–184.
37. Cyert, R. M., & March, J. (1965). Teoría de las Decisiones Económicas en la Empresa. México:
Herrero Hermanos.
38. Samuelson, P. A. (1947). Foundations of economic analysis. Cambridge: Harvard University
Press.
39. Henderson, J. M., & Quandt, R. E. (1958). Microeconomic theory. Nueva York: McGraw-Hill.
40. Barnard, Ch. (1938). The functions of the executive. Cambridge: Harvard University Press.
41. Simon, H. A. (1957). Administrative behavior (2nd ed.). New York: The Free Press.
42. Forbes, D. P., & Milliken, F. J. (1999). Cognition and corporate governance: Understanding
board of directors as strategic decision-making groups. Academy of Management Review, 24(3),
489–505.
43. Pettigrew, A. (1992). On studying managerial elites. Strategic Management Journal, 13,
163–182.
44. Pozen, R. C. (2010). The case for professional boards. Harvard Business Review, 88(12), 50–58.
45. van Ees, H., Gabrielsson, J., & Huse, M. (2009). Toward a behavioral theory of boards and
corporate governance. Corporate Governance: An International Review, 17(3), 307–319.
46. Minichilli, A., Zattoni, A., Nielsen, S., & Huse, M. (2012). Board task performance: An explo-
ration of micro- and macro-level determinants of board effectiveness. Journal of Organizational
Behavior, 33, 193–215.
47. United Nations (2003). Handbook on nonprofit institutions in the system of national accounts.
New York.
48. Kreutzer, K. (2009). Nonprofit governance during organizational transition in voluntary asso-
ciations. Nonprofit Management & Leadership, 20(1), 117–133.
49. Harrow, J., & Philips, S. D. (2013). Corporate Governance and Nonprofits. In M. Wright,
D. Siegel, K. Keasey & I. Filatotchev (Eds.), The Oxford handbook of corporate governance
(pp. 607–633). Oxford: Oxford University Press.
50. Salamon, L. (1999). America’s nonprofit sector: A primer. New York: The Foundation Center.
51. Hopt, K., & Von Hippel, T. (2010). The board of nonprofit organizations: Some corporate
governance thoughts from Europe. In K. Hopt & Von Hippel (Eds.), Comparative corpo-
rate governance of non-profit organizations (pp. 531–564). Cambridge: Cambridge University
Press.
52. Anheier, H. (2010). What kind of nonprofits sector, What kind of society? Comparative reflec-
tions. In K. Hopt & T. Von Hippel (Eds.), Comparative corporate governance of non-profit
organizations (pp. 3–21). Cambridge: Cambridge University Press.
53. Glaeser, E. (2003). The governance of not-for-profit organizations. NBER working paper
(8921). http://www.nber.org/chapters/c9964.
54. Olson, D. E. (2000). Agency theory in the non-for-profit sector: Its role at independent colleges.
Nonprofit and Voluntary Sector Quarterly, 29(2), 280–296.
55. Hung, H. (1998). A typology of the theories of the roles of governing boards. Scholarly Research
and Theory Papers, 6(2), 101–111.
56. Puyvelde Van, S. (2013). Applying agency theory to nonprofit governance: Theoretical
and empirical contributions (Doctoral thesis), Vrije Universiteit, Brussels. https://www.
researchgate.net/publication/265915437.
57. Van Puyvelde, S., Caers, R., Jeggers, M., & du Bois, C. (2012). The governance of nonprofit
organizations: integrating agency theory with stakeholders and stewardship theories. Nonprofit
and Voluntary Sector Quarterly, 41(3), 431–451.
Knowledge as a Valuable Asset
of Organizations: Taxonomy,
Management and Implications
Yasemin Sen
Abstract This chapter presents basic information about knowledge management.

Knowledge is regarded as a valuable asset of organizations and knowledge-related
processes play a critical role in business operations. Businesses that are successful in
management of knowledge processes create value and gain competitive advantage.
In this context, in order to provide an understanding about the term of knowledge,
first part of the chapter has been spared for the essentials of knowledge topic. In this
part, importance, definition and taxonomies of knowledge have been covered. The
second part, on the other hand, has been spared for knowledge management issue.
In this regard, origins, definitions and enablers of knowledge management issues
have been covered. In this chapter, knowledge management has been taken from a
process-oriented viewpoint and it has been defined as management of knowledge
processes.
1 Introduction
In today’s highly competitive business world, environmental factors have been chang-
ing rapidly. Economic conditions, consumer preferences, industry specifications and
many other factors are shaping the future of organizations. In relation to those
changes, rules of success for organizations have also been changing. Effectiveness
and efficiency, quality and agility are all important factors which become critical in
time for organizations. However, on top of these factors, there is one thing which
creates a difference for organizations, that is, the power of knowledge. Businesses
which create and use knowledge continuously can develop new competencies, new
products and services and even new industries. This results in competitive advantage
and long life. Of course, it is not an easy work all the time. As well as consciousness,
it requires time, effort and resources. There may be different knowledge processes
in organizations and management of these processes constitutes knowledge manage-
Y. Sen (B)
Department of Management and Organization, School of Business,
Istanbul University, Istanbul 34322, Turkey
e-mail: ysen@istanbul.edu.tr

30 Y. Sen
ment issue. Besides, successful management of knowledge processes occurs in case

organizations provide necessary conditions. Therefore, understanding the nature of
knowledge and being aware of necessary conditions to manage it bear an important
role. For this reason, in subsequent sections essentials of knowledge and management
of knowledge issues will be presented.
2 Essentials of Knowledge
Knowledge in organizations is not ready to use all the time, and in order to utilize
its advantages, it requires a careful process of knowledge management. Also, under-
standing the nature of knowledge is important for a successful management of it.
Therefore, in this section, essentials of knowledge will be covered.
2.1 Importance of Knowledge
Knowledge as a valuable asset of organizations…
Information era and the age of digitalization made the term knowledge more
important for organizations than it was before. From industrial revolution to today’s
business world, business organizations have changed in qualitative and quantita-
tive ways. Complexity of factories, new production systems, changes in processes
and structure of workforce ... etc. all these things which came with industrializa-
tion reshaped organizations and the evolution is continuing without slowing down.
One can define businesses as “economic entities which brings factors of production
together in an efficient and effective way with the aim of meeting society needs.”
While this definition is still valid today, assigned meanings of components should be
revisited. Economic theory mentions factors of production as land/natural resources,
labor/workforce, capital and entrepreneurship. At first glance, explaining process is
simple. Entrepreneurs use their capital to form and operate a business unit with the
help of workforce and by processing natural resources. However, there is something
missing here. What about knowledge? Knowledge is needed in every aspect of the
business process. At the beginning, you need a business idea. In order to generate
it, entrepreneur should use his/her cognition, insights, experiences and paradigm.
As well as personal knowledge, one needs knowledge of industry, knowledge of
society needs and knowledge of how to do things … etc. Examples can be increased
of course but the point is that it is not over with even finding a new business idea.
Entrepreneur should bring the correct amount of materials together, should use money
and workforce wisely. Otherwise, the business cannot fulfill the necessity of being
an economic unit. Also, whether it is blue collar or white collar, workforce should
use their knowledge on processes. Another point is that organizations are thought as
learning units anymore, and therefore, we can say that businesses can also form their
Knowledge as a Valuable Asset of Organizations: Taxonomy… 31
Fig. 1 Factors of production
cognitive system and make use of knowledge in its operations via human or nonhu-
man agents. This means there is a world of knowledge and it cannot be ignored. All
these issues bring the question that is there a new factor of production? The answer
is yes. That is “Knowledge” (Fig. 1).
Knowledge-intensive job, knowledge worker, knowledge organization and many
other terms which can be thought as a part of the knowledge economy show that the
concept is vital for today’s business world. Knowledge means experience, competi-
tive advantage and long life. Or in short, we can say that knowledge equals power.
Businesses are not operating in an economy in which demand is much more than sup-
ply. That means the time is far beyond than the age in which businesses sell whatever
they produce. First productivity, later quality and then speed were important issues
for competitive advantage. Above all, knowledge is an absolute must for competitive
advantage, because knowledge leads to productivity, quality and also speed in case
it is managed well.
Knowledge is the most valuable asset of organizations. Whether it s a production
or service organization, profit or nonprofit organization, ownership of knowledge
is the key which differentiates organizations from others. Although it is difficult to
measure the knowledge’s own value quantitatively, it can be estimated by looking
at the effects and consequences of knowledge on businesses. There may be many
firms which provide the similar goods and services in an industry, but the wealth of
knowledge underlies factors which bring a firm beyond others. For example, take
32 Y. Sen
the “way of doing something” that can be thought as part of a firm’s knowledge. It
may include a new technique that others don’t know, a process that solves a common
problem that others cannot resolve or a genius idea which add a different aspect to
your product/service and that was not thought by others before. One cannot measure
the amount of knowledge used in this product/service, but results explain the power
of knowledge. This new technique creates a more productive process, this way of
solving problem results in quality assurance and this new aspect fulfills a niche
market which creates more profit in turn.
However, knowledge is not ready in businesses all the time. It may be gained
through experience in years; it may be hidden in the minds of employees or most of
the time it should be created and accumulated in organizations. Therefore, in order
to utilize the power of knowledge, businesses need to know how to manage it. But
before that it is important to understand the nature and types of knowledge. For this
reason, in the next section, the nature and types of knowledge will be clarified.
2.2 Definition and Taxonomy of Knowledge
There is a common perspective about the importance of knowledge among pro-

fessionals and academicians, but when it comes to definition of knowledge, there
are different perspectives and explanations in the literature [1]. Defining the term
is needed to understand nature of knowledge. As well as definition, classification
also plays an important role. In an organizational setting, knowledge is existed in
different forms, and in order to transform knowledge into competitive advantage,
business managers should be aware of these different types of knowledge. Since
different knowledge types have different characteristics and different management
techniques accordingly, knowing that specifications provides advantage in applying
accurate knowledge management strategies.
2.2.1 What Is Knowledge?
A general definition of knowledge is stated in the literature as justified true belief.

The meaning underlying this statement is also explained as follows:
A belief held by an individual that is both true and for which they have some justification…A
belief is an internally accepted statement, the result of an observation or an inferential or
deductive product combining observed facts about the world with reasoning processes. [2,
p. 266]
According to this definition in order to regard something as knowledge, it should

have some requirements (true and justified). Although it is a general definition, expla-
nation of belief stresses an internal process and explains knowledge with personal
observation and evaluation of the world.
Another definition of knowledge is made by Davenport and Prusak [3]. In their

work, authors defined the term as follows:
Knowledge is a fluid mix of framed experience, values, contextual information, expert insight
and grounded intuition that provides an environment and framework for evaluating and
incorporating new experiences and information. [p. 5]
In this definition, knowledge is defined as a dynamic concept which includes many

components inside. The experience can be thought as the center of this definition,
and also, it is in relationship with all other factors. Many decisions are framed based
on past experiences. Values shape our perspective on issues, insights and area of
expertise determines our perceptual selectivity, contextual information affects our
understanding and all of these factors help to create new experiences.
Besides, in another definition, knowledge is explained as it is below:
Knowledge is the result of a process which combines ideas, rules, procedures and informa-
tion. [4, p. 105]
Here, the attention is taken to the process and knowledge is regarded as the conse-
quence of this process. This definition also implies a mixture of different components
with a combination. As different from the previous one, rules and procedures are
regarded as factors which together form knowledge. Although all definitions relate
knowledge with personal cognition, they underlie different aspects of knowledge and
that makes it difficult to reach a consensus.
One mostly accepted explanation of knowledge is made via comparison of the
term with data and information. It is presented as knowledge pyramid (Fig. 2) or
hierarchy of knowledge and this representation shows the relationship between data,
information and knowledge. Knowledge is thought as something more than infor-
mation and information is thought as something more than data. Beyond that, some
researchers also add wisdom on top of this hierarchy which is called with acronyms
of the terms as DIKW (Data-Information-Knowledge-Wisdom) [1].
Data is defined as “a set of discrete, objective facts about events” [3, p. 2]. There
are many objects and events which can be observed and seen in an environment.
Characteristics of these items are represented by symbols and these symbols consti-
tute data. So, data is composed of raw facts and it has no meaning itself. It cannot be
interpreted without being processed or being used in a contextual setting.
Information on the other hand can be defined as processed data. In Every day,
businesses collect much data from the environment (e.g., data gathered from a market
research) and store them within several places in their organizations. These numbers
have no meaning itself and need some processing to become information. Processing
data needs some cognitive effort and it gets some meaning as become information.
In the transformation process of data to information, several methods can be used as
well.
These several methods were explained by Davenport and Prusak as follows [3,
p. 4]:
Contextualized: We know for what purpose the data was gathered
34 Y. Sen
Fig. 2 Knowledge pyramid
Categorized: We know the units of analysis or key components of the data

Calculated: The data may have been analyzed mathematically or statistically
Corrected: Errors have been removed from the data
Condensed: The data may have been summarized in a more concise form
When it comes to Knowledge, the term can be described as “information with

judgment.” Knowledge contains evaluation, high contextualization and purpose. It
is more meaningful and highly cognitive.
On top of the hierarchy, there is wisdom. It is related to ability to make decision
without thought [5]. Wisdom includes intuition and high interpretation.
For example, let’s take a series of numbers whose values change from 1 to 5.
These numbers are just symbols and don’t make any sense itself. They cannot be
interpreted and have no meaning at all. Therefore, these numbers are regarded as
data now. In order to call them as information, numbers should be processed. They
can be put in a contextual setting and can be categorized or statistically analyzed.
For example, if we know that these numbers are collected from a firm’s customers
via a market research survey which is about attitudes toward one specific product of
the firm and if we take the mean score of these numbers, then we can say that this
data is contextualized and calculated. In other words, data turned into information.
Information has more meaning and it gives some idea now. But this mean score of
customer attitude needs some judgment to be knowledge. If the firm compares this
number with its past figures, then this information will give idea about the success
of the product. This comparison includes high cognitive effort, high meaning and
interpretation which means information becomes knowledge. Then, the firm will
make a decision on whether or not to continue producing this product, and if this
decision is made based on intuition, it is regarded as wisdom (Fig. 3).
Fig. 3 Hierarchy of knowledge
2.2.2 Taxonomy of Knowledge
“Knowledge Taxonomy” is a term related to classification of knowledge. These clas-

sifications can be made based on different perspectives. One of these perspectives
regards knowledge types as separate classes. Besides, knowledge can also be catego-
rized as opposite end points on a continuum, and based on this view, knowledge can
be a combination of different classes as well [6]. However, whether it is thought as
separate classes or on a continuum, knowledge has a multidimensional characteristic
and it can be categorized in different ways. Alavi and Leidner [7] combined these
different types of knowledge from the literature and created a table (Table 1). Accord-
ing to this classification, knowledge is categorized as tacit or explicit, individual or
social, declarative or procedural, causal or conditional and relational or pragmatic.
Tacit and explicit knowledge is the most widely used categorization. This cate-
gorization is made by Nonaka based on the work of Polanyi [7]. In his work, Polanyi
told about personal knowledge and proposed language as the limits to the articu-
lation of tacit component [8]. Tacit knowledge is possessed by individual and it is
characterized with inexpressible or difficult to share parts of knowledge. This can be
non-expressed mental models or viewpoint of a person, experiences and way of doing
something as well as non-expressible inner elements (e.g., intuition). On the other
hand, explicit knowledge is characterized with expressed and shared components of
knowledge. For example, knowledge stored in organizational databases that is open
to access of all members resides in this kind of knowledge category.
Individual and social knowledge is another categorization. According to this
classification, individual knowledge is created personally and social knowledge is
shared among a group of people. Insights gained through experience can be an
example of individual knowledge, whereas shared communication norms within a
group constitute social knowledge [7]. Individual–social knowledge classification
36 Y. Sen
Table 1 Taxonomy of knowledge [7]

Knowledge type Definition Examples
Tacit Knowledge is rooted in actions, Best means of dealing with
experience and involvement in specific customer
specific context
Cognitive tacit Mental models Individual’s belief on
cause–effect
relationships
Technical tacit Know-how applicable to specific Surgery skills
work
Explicit Articulated, generalized Knowledge of major customers in
knowledge a region
Individual Created by and inherent in the Insights gained from completed
individual project
Social Created by and inherent in Norms for inter-group
collective actions of a group communication
Declarative Know-about What drug is appropriate for an
illness
Procedural Know-how How to administer a particular
drug
Causal Know-why Understanding why the drug works
Conditional Know-when Understanding when to prescribe
the drug
Relational Know-with Understanding how the drug
interacts with other drugs
Pragmatic Useful knowledge for an Best practices, business
organization frameworks, project experiences,
engineering drawings, market
reports
resembles tacit–explicit knowledge and individual knowledge can turn into social
one with communities of practice.
Knowledge is also categorized as declarative and procedural knowledge. Declar-
ative knowledge consists of facts or figures. On the other hand, procedural knowl-
edge is the knowledge about the way of doing something [6]. This categorization
also called as know-what and know-how level of knowledge. “Know-what” level
of knowledge represents “the knowledge of what action to take when one presented
with a set of stimuli” [9, p. 4]. Besides, “know-how” knowledge is regarded as the
next higher level of knowledge and it represents the knowledge of how to apply the
action taken. For example, if a manager knows what strategy is suited for a business
unit, this can be regarded as know-what type of knowledge; on the other hand, if the
manager knows how to apply one specific strategy, this kind of knowledge can be
regarded as know-how type of knowledge.
Another categorization is made as causal, conditional and relational knowl-

edge [10]. Causal knowledge represents the knowledge of reason to take an action.
Conditional knowledge represents the knowledge of when to take a specific action
and relational knowledge represents the knowledge of relationships between differ-
ent events. Again, we can exemplify these classifications on our previous strategy
example. If the manager knows why this specific strategy type is the best one, this
knowledge is regarded as causal knowledge. If manager knows in which situations
this specific strategy is suitable, this knowledge represents conditional knowledge.
And if the manager knows the relationship of this strategy with competitiveness of
the business unit, then this knowledge is regarded as relational knowledge.
The last category specified by Alavi and Leidner is pragmatic knowledge. This
type of knowledge is defined as useful knowledge such as best practices, market
research results or project experiences in the context of an organizational setting [7].
As well as these classifications that are explained above, there are different types
of knowledge specified in the literature. One of these classifications is true–false
knowledge classification and the other one is certain–uncertain knowledge classifi-
cation [6]. Definition of these classifications can be made as opposite of another. True
knowledge represents the verified knowledge, while false knowledge is the knowl-
edge that is not true. Similarly, certain knowledge is the knowledge that is assured
and uncertain knowledge is the knowledge cannot be assured.
Another classification of knowledge is the one made by Mahlup. According to him,
knowledge is classified under five categories based on the meaning of known to the
knower. The first one is the practical knowledge that is useful to individual. Practical
knowledge can be applied to different areas. This can be a business knowledge or
household knowledge as well. The second one is the intellectual knowledge that
is satisfying intellectual curiosity of individual such as knowledge achieved based
on a scientific inquiry. The third one is the small-talk and pastime knowledge that
is satisfying nonintellectual curiosity or light entertainment of individual such as
gossip or jokes. The fourth one is the spiritual knowledge that is religious-related
knowledge of individual, and lastly, the fifth one is the unwanted knowledge that is
outside the interests of individual such as knowledge retained from an advertisement
seen accidentally during a walk on the street [1] (Table 2).
3 Managing the Valuable Asset: Knowledge
In today’s business environment, knowledge is regarded as a main source of compet-

itive advantage. In order to create value and to benefit from its advantages, successful
management of knowledge processes plays a critical role. Therefore, in this section,
knowledge management topic will be covered.
38 Y. Sen
Table 2 Mahlup’s classification of knowledge [1]

S. No. Knowledge type Explanation Example
1. Practical knowledge Knowledge useful to Knowledge about a
individual quick way of statistical
analysis
2. Intellectual knowledge Knowledge satisfying Knowledge achieved
intellectual curiosity of based on a scientific
individual inquiry
3. Small-talk and pastime Knowledge satisfying Gossip or jokes
knowledge nonintellectual curiosity
or light entertainment of
individual
4. Spiritual knowledge Religious-related Knowledge of behavioral
knowledge of individual codes in a specific
religion
5. Unwanted knowledge Knowledge outside the Knowledge retained
interests of individual from an advertisement
seen accidentally during
a walk on the street
3.1 Origins of Knowledge Management
Knowledge management is a topic which is nourished by different disciplines in the

literature. For this reason, it is difficult to give a precise starting point for origin of the
term. Some researchers trace the genesis of knowledge management back to the ori-
gin of knowledge. This perspective explains knowledge management based on Greek
philosophy of ancient times [11]. However, in organizational theory, it can be traced
back to the modern times of management literature. In 1960s, with the emergence
of systems and situational approaches in management, the attention of organizations
has been taken to its external environment [12]. This perspective stressed the impor-
tance of monitoring changes in environmental factors and processing information
gathered from micro- and macro-environment of organizations in order to survive in
the industry. When it comes to 1980s, contemporary management approaches such
as total quality management stressed management of knowledge based on a problem-
solving and continuous improvement perspective. A knowledge sharing culture, lean
formal structures, teamwork and collaboration are main themes of this management
perspective. Although we can see early signs of knowledge management within that
time frame, this discipline gained widespread importance in 1990s with econom-
ical, social and technological advancements. With the effects of globalization and
developments in information technologies, management of knowledge has become
a popular issue for competitive advantage (Table 3). Especially, the work of Nonaka
[13] contributed to the field by explaining modes of knowledge conversion and by
giving direction for process of organizational knowledge creation. Knowledge has
Table 3 History of
Time frame Advancements Implications
knowledge management
1960s Systems and Monitoring
situational environment and
management information
approaches gathering
1930s Contemporary Sharing of
management knowledge
approaches—TQM Problem solving
Continuous
improvement
1990s Globalization Knowledge creation
Advancement in IT Knowledge storage
Learning Knowledge use
organizations
been seen as an asset of organizations and businesses tried to find ways of storing
knowledge in order to use it again when necessary.
As it is seen from the above explanations, knowledge management takes its place
within philosophy, information systems, organizational theory, organizational learn-
ing, strategic management and many other areas. All these disciplines, directly or
indirectly, take knowledge management issue from different angles and stress the
importance of it. Therefore, knowledge management can be thought as an eclectic
discipline which has an old history.
3.2 What Is Knowledge Management?
As stated before, knowledge management is an eclectic discipline and this makes it

difficult to reach a consensus on one common definition. For this reason, there are
different perspectives and explanations of knowledge management in the literature.
Even from the point of business management area, a variety of definitions has been
made by several researchers. Some of these definitions concentrate on processes of
knowledge management, some of them cover its aims and importance, whereas some
take the term as a more comprehensive topic.
A definition which stresses the process of knowledge management has been made
by Jasimuddin [14] as follows:
Knowledge management involves activities related to capturing, utilizing, creating, transfer-
ring, and storing of organizational knowledge. [p. 173]
As it can be seen from this definition, knowledge management has been explained
by several processes (i.e., capturing, utilizing, etc.) and organizational knowledge has
been regarded as something to be stored for utilization.
Nonaka [13], on the other hand, explained knowledge management with conver-
sion processes between tacit and explicit knowledge. According to this definition,
40 Y. Sen
knowledge management includes processes of socialization (tacit to tacit), exter-

nalization (tacit to explicit), combination (explicit to explicit) and internalization
(explicit to implicit) [p. 18]. With this definition, creation of organizational knowl-
edge has been stressed and social interaction between organizational members has
been thought as an important issue for creation of organizational knowledge.
Although it is explained by processes, some definitions of knowledge manage-
ment also stress the importance and aim of knowledge management for organiza-
tions. One of these definitions can be stated as follows. In this statement, knowledge
management has been defined as:
Strategies and processes of identifying, capturing and leveraging knowledge to help the firm
compete. [15, p. 322]
Here, knowledge management has been taken from a strategic management per-
spective, and besides processes, the purpose issue has been stressed in the defini-
tion. According to this explanation, knowledge management is something that is
implemented strategically in order to help firms for creating competitive advantage.
Similarly, Jarrar [15] regards knowledge management as a systematic process that
contributes to the knowledge-related effectiveness of an enterprise. Knowledge has
been stated as an asset by this researcher and as the way to get returns from these
knowledge assets, processes such as observation, instrumentation or optimization of
the firm’s knowledge economies have been proposed [p. 322].
In another definition below, knowledge has been regarded as an object that is
ready in organizations (whether explicit or implicit), and accordingly, knowledge
management has been explained with processes other than creation. Here again,
knowledge has been regarded as an asset which can be stored and transferred.
Knowledge management promotes an integrated approach to identifying, capturing, retriev-
ing, sharing, and evaluating an enterprise’s information assets. These information assets
may include databases, documents, policies and procedures, as well as the un-captured tacit
expertise and experience stored in individual workers’ heads. [16, p. 19]
As different from other definitions, Salisbury [17] regarded knowledge manage-

ment as a comprehensive system that is formed to enhance the growth of an orga-
nization’s knowledge. It has also been explained with creation, preservation and
disseminating processes, but here a limitation has been made for the knowledge that
will be managed. This was defined as the knowledge which can be regarded as core
competence of organizations and management of this knowledge has been stated as
a success factor for organizations [pp. 128, 129].
One common point of all these definitions above can be regarded as the attempt
to determine processes of knowledge management. However, there has also been a
distinction made in the literature between knowledge processes and knowledge man-
agement practices. Processes that naturally exist in organizations such as knowledge
sharing or knowledge acquisition have been regarded as knowledge processes; on the
other hand, knowledge management practices have been explained with interventions
made for effective and efficient management of knowledge assets of organizations
[18]. In line with this perspective, a more comprehensive definition has been made
by Lee and Yang [19] as follows:
Table 4 Different definitions of knowledge management

S. No. Knowledge management definitions Author(s)—Year
1 Knowledge management involves Jasimuddin (2006)
activities related to capturing, utilizing,
creating, transferring and storing of
organizational knowledge
2 Knowledge management includes Nonaka (1994)
processes of socialization,
externalization, combination and
internalization
3 Strategies and processes of identifying, APQC (1997) cited in Jarrar (2002)
capturing and leveraging knowledge to
help the firm compete
4 A systematic process that contributes to Jarrar (2002)
the knowledge-related effectiveness of
an enterprise
5 Knowledge management promotes an Gartner Group (1999) cited in Hicks
integrated approach to identifying, et al. (2006)
capturing, retrieving, sharing and
evaluating an enterprise’s information
asset
6 A comprehensive system that is formed Salisbury (2003)
to enhance the growth of an
organization’s knowledge
7 Knowledge management consists of a Andreeva and Kianto (2012)
set of management activities that enable
the firm to deliver value from its
knowledge assets
8 Knowledge management is an emerging Lee and Yang (2000)
set of organizational design and
operational principles, processes,
organizational structures, applications
and technologies that helps knowledge
workers dramatically leverage their
creativity and ability to deliver business
value
Knowledge management is an emerging set of organizational design and operational prin-

ciples, processes, organizational structures, applications and technologies that helps knowl-
edge workers dramatically leverage their creativity and ability to deliver business value.
[p. 784]
There is knowledge worker in the center of this definition, and knowledge man-
agement has been considered as practices and organizational factors which will make
knowledge workers create knowledge and value for their organizations (Table 4).
Based on these explanations, another distinction can be made between different
knowledge management perspectives. In this sense, knowledge management per-
spectives can be categorized as content view (or classical knowledge management
42 Y. Sen
Fig. 4 Classical and process-oriented KM perspectives
perspective) and process view (or process-oriented perspective) (Fig. 4). Classical
knowledge management perspective regards knowledge as quasi-physical entities
that are hidden and need to be made explicit in the organization, whereas process
view of knowledge management concentrates on learning and development during
knowledge processes [20].
Similar to classical- and process-oriented knowledge management perspectives,
another classification has been made by McElroy [21] as first-generation knowledge
management (KM) and second-generation knowledge management (KM). First-
generation knowledge management includes processes of knowledge sharing and
use, which is characterized as supply-side knowledge management (KM). However,
second-generation knowledge management adds process of knowledge production
to the knowledge sharing and use processes. In other words, supply-side knowledge
management and demand-side knowledge management together constitute second-
generation knowledge management [p. 9] (Fig. 5).
Second-generation KM stresses the point that classical knowledge management
perspective ignored. That point is knowledge creation. Knowledge is not ready to use
all the time, and creation of knowledge requires social interaction and learning pro-
cesses. Approaching the topic with the content point of view overlooks the importance
of learning and development. Therefore, in this chapter, knowledge management has
been taken into consideration from the process viewpoint. Another issue that should
be clarified here is the definition of knowledge management. As it can be seen from
the previous explanations above, there are a variety of definitions for knowledge
and knowledge management concepts in the literature. Knowledge management is a
comprehensive topic and it can be regarded as a general umbrella for management
of all knowledge-related processes (i.e., organizational learning, corporate memory
system, etc.) in an organizational setting. That means knowledge management can be
defined as “management of knowledge processes of any kind in the organizations.”
With this perspective, knowledge creation, knowledge sharing and knowledge use
can be thought as processes of knowledge. Besides, Knowledge management can be
regarded as a discipline which enhances operation of these processes. In this context,
Fig. 5 Supply-side and demand-side KM perspectives
in the next section enablers and obstacles will be covered as knowledge management
practices.
3.3 How to Manage Knowledge Processes?
In organizations, knowledge processes and knowledge management play an impor-

tant role in creating value. They contribute to capabilities, operations and returns
of organizations. Successful management of knowledge processes makes the firms
use its resources more efficiently and operate innovatively. Besides, it makes them
perform better as well [22]. Therefore, analyzing the issues related to knowledge
management is critical for organizations. Processes of knowledge (here knowledge
creation, knowledge storage, knowledge sharing and knowledge use) are located
in the center of overall system. Operations of these processes, on the other hand,
depend on several factors in organizations. These factors can be regarded as enablers
of knowledge management and they should be handled carefully in order to achieve
success. Enablers of knowledge management can be listed as leadership and strategy,
organizational structure, organizational culture, human resources management and
information technologies (Fig. 6). While these factors are important for success of
knowledge management, harmonization among all of these factors is fundamental
as well.
44 Y. Sen
Fig. 6 Enablers of knowledge management
3.3.1 Enablers of Knowledge Management
As stated before, knowledge processes are fundamental for organizational success.

When taking into consideration the information age in which today’s businesses
operated, it is not difficult to understand why it is so important. Knowledge is the
key factor that differentiates an organization from others, and in order to utilize from
its advantages, management of knowledge processes bears a critical role. There
may be many processes that can be regarded as knowledge processes in a complex
organizational setting. However, here mostly accepted processes of knowledge will
be covered. These processes can be regarded as knowledge creation, knowledge
storage, knowledge sharing and knowledge use.
Knowledge creation is related to producing or acquiring new knowledge. Creation

of knowledge is mostly carried out by individuals. Individuals are potential learners
and they gain experience and insight throughout their lives. These individuals apply
their experiences into business practices, and while doing this, they create new know-
how with interaction of other employees. Organizations can create knowledge inside
by means of these individuals. Besides, transfer of new knowledge from outside of
the organization can also be a way of knowledge creation. Adoption of this knowl-
edge into business operations creates new knowledge. Knowledge storage is related
to storing knowledge on data warehouses or other mediums for later use of organi-
zational members. However, it is important to note that only explicit knowledge is
suitable for storage in the organization. Therefore, some part of knowledge resides in
the minds of individuals and this knowledge can be utilized by knowledge sharing.
Knowledge sharing can take place with observation, learning and social interaction.
Long-term apprenticeship can also be a way of knowledge sharing. With this process,
it becomes possible to transfer valuable knowledge from one individual to another.
Knowledge use is another knowledge process that is important for organizations.
Whether it is stored or shared, the knowledge should be used in organizations in
order to create value and gain competitive advantage. At the same time, the process
of knowledge use contributes to other knowledge processes and continuous operation
of these processes requires successful knowledge management practices. Therefore,
factors that enhance these processes which are called as enablers of knowledge man-
agement play a critical role.
Leadership and Strategy
Although all of the factors are important, leadership and strategy can be regarded
as the main enablers of knowledge management. In any organization, the success
is mainly dependent on top management’s perspective and operations. As business
conditions are changing over time, requirements of successful management are also
evolving. In order to adapt to today’s highly ambiguous and competitive environment,
organizations should be aware of environmental changes and timely response to these
changes needs efficient and effective knowledge management practices. Since the
leader is the person who will execute knowledge management practices, top man-
agement’s direction and support in this process are important. First of all, the leader
should be aware of the need for knowledge management and then create necessary
conditions for it. These necessary conditions can include a suitable organizational
structure and culture, a budget spared for knowledge processes or allocated resources
for knowledge management.
As related to the leadership factor, strategy is another important issue that should
be taken into consideration. Knowledge management efforts should be spread over
all of the organization. In order to do this, there should be a strategic focus for
knowledge management. In other words, knowledge management practices should
be integrated into the strategic management process of the organization. Top manage-
ment should place knowledge management practices into the organization’s mission
and vision; besides knowledge management-related objectives and strategies should
46 Y. Sen
be determined. In this way, management of knowledge management processes will

gain prominence and achievements will be under the control continuously.
Organizational Structure
Structure is the other enabler for knowledge management in organizations. Organi-
zational structure should also meet the needs of today’s environment. Knowledge
management requires a flexible structure which enhances creativity of individuals.
Rigid hierarchical organizational structures, on the other hand, may restrict peoples’
interaction and may affect the process negatively. Learning and development are
important processes for creation and sharing of organizational knowledge and struc-
ture is one of the factors which may affect these processes. Therefore, a team-based
or contemporary type of structure can be regarded as more suitable for knowledge
management. Applying less formality and increasing channels of communication
will help for successful management of knowledge processes in organizations.
Organizational Culture
In relation with other factors, organizational culture is critical for the success of
knowledge management. Effectiveness of any business strategy depends on its con-
gruence with organizational culture, structure and objectives. The same thing is valid
for knowledge management strategies and practices as well. Culture includes deeply
held beliefs and assumptions of an organization. If a suitable culture is settled in
the organization, it enhances knowledge processes and ensures the continuous value
creation. Effective management of knowledge processes requires a learning-oriented
culture. As stated before, learning and development are critical for knowledge cre-
ation. Sharing of ideas, being open to new ways of doing jobs, a collaborative atmo-
sphere, learning from mistakes and opportunities for development can be listed as
some specifications of learning-oriented cultures. Besides, these characteristics cre-
ate a reciprocal trust among organizational members and improve creativity and
innovation as well.
Human Resources Management
Human element is one another factor which should be taken into consideration in
management of knowledge processes. Knowledge is mainly created by individuals
and applied to business operations. As well as creation, knowledge sharing and use
processes are also affected by individuals in an organization. Therefore, investing in
human resources (HR) is critical for the success of knowledge management. There
should be supportive human resources practices for this process. Recruitment of
individuals to knowledge-related positions, training and development of employees,
appropriate reward and incentive systems that support knowledge processes perfor-
mance and creating motivation among employees can be regarded as some examples
of supportive HR practices.
Information Technologies
Information technologies (IT) can be used as a supporter of knowledge processes.
Some part of organizational knowledge can be explicit and this explicit knowledge
can be stored in common databases. In this way, knowledge can become open to use
of organizational members when necessary. It also makes activities such as knowl-
edge search, knowledge acquisition and knowledge dissemination possible. As well

as this function of IT, information technologies are also important for communica-
tion and business operations in organizations. Adaptation to changing environments
needs rapid responses and this requires applying advanced information technolo-
gies. In this way, processes of knowledge can be conducted more efficiently than it
has been before. Therefore, a successful knowledge management needs appropriate
information technologies as well.
As it can be seen from explanations above, knowledge processes can be enhanced
by several factors that are called as enablers of knowledge management. The impor-
tant point here is that all of these factors are related to each other, and therefore, the
congruence among them is also important for the process. Successful management of
knowledge processes can be regarded as a source for value creation and sustainable
competitive advantage. For this reason, all related parties should be aware of these
issues and align their businesses accordingly.
4 Conclusion
Sustainable competitive advantage is the main issue of all businesses and factors that
affect it have been evolving as time is passing. Today’s businesses need to create
and use knowledge continuously in their operations. Businesses that create and use
knowledge better can differentiate themselves from competitors and survive in the
industry. Therefore, knowledge is a valuable asset of organizations and processes
that create knowledge are critical. However, it is not easy to maintain knowledge
in organizations all the time. It can be regarded as a volatile mixture that can just
disappear or become invalid with rapid changes in the environment. For this reason,
continuous processes that help to create knowledge are crucial for organizations. In
order to maintain this continuity, knowledge management should be implemented
carefully. Knowledge management can be regarded as the management of knowl-
edge processes and it includes several enabling factors. These factors are critical for
successful management of knowledge processes and they can be listed as leadership
and strategy, organizational structure, organizational culture, human resources man-
agement and information technologies. Leadership support and efforts are vital for
knowledge management. Resource allocation, consciousness and directions are all
dependent on top management perspective on knowledge management. Integrating
knowledge management efforts with strategy is another important factor. It creates
unity of objectives and brings a long-term focus. A perfect fit of organizational struc-
ture and culture is also needed for easy implementation of knowledge management
practices. Lastly, human resources management and information technologies are
critical as well.
All these factors together help to manage knowledge processes (here knowledge
creation, knowledge storage, knowledge sharing and knowledge use) and result in
higher value creation. Therefore, business managers should be aware of these fac-
48 Y. Sen
tors and operate their businesses accordingly. Otherwise, any attempt to manage
knowledge processes is condemned to fail.
References
1. Wallace, D. P. (2007). Knowledge management: Historical and cross-disciplinary themes.

London: Libraries unlimited Publshing.
2. Losee, R. M. (1997). A discipline independent definition of information. Journal of the Amer-
ican Society for information Science, 48(3), 254–269.
3. Davenport, T. H., & Prusak, L. (1998). Working knowledge: How organizations manage what
they know. US: Harvard Business Press.
4. Rahe, M. (2009). Subjectivity and cognition in knowledge management. Journal of Knowledge
Management, 13(3), 102–117.
5. Gamble, P. R. & Blackwell, J. (2002). Knowledge management: A state of the art guide.
London: Kogan Page.
6. Ein-Dor, P. (2006). Taxonomies of knowledge. In D. G. Schwartz (Ed.), Encyclopedia of knowl-
edge management (2nd ed., pp. 848–854). Pennsylvania: IGI Global.
7. Alavi, M., & Leidner, D. E. (2001). Knowledge management and knowledge management
systems: Conceptual foundations and research issues. MIS quarterly, 107–136.
8. Polanyi, M. (2005). Personal knowledge. London: Routledge.
9. King, W. R. (2009). Knowledge management and organizational learning. In W. R. King (Ed.),
Knowledge management and organizational learning (pp. 3–13). Boston, MA: Springer.
10. Zack, M. H. (2002). Developing a knowledge strategy. In C. W. Choo., & N. Bontis (Eds.),
The strategic management of intellectual capital and organizational knowledge (pp. 255–276).
Oxford: Oxford University Press.
11. Schwartz, D. G. (2006). Aristotelian view of knowledge management. In D. G. Schwartz
(Ed.), Knowledge management: Concepts, methodologies, tools, and applications (pp. 10–16).
Pennsylvania: IGI Global.
12. Kocel, T. (2005). Isletme Yoneticiligi, Arikan Basımevi.
13. Nonaka, I. (1994). A dynamic theory of organizational knowledge creation. Organization
Science, 5(1), 14–37.
14. Jasimuddin, S. M. (2006). Disciplinary roots of knowledge management: A theoretical review.
International Journal of Organizational Analysis, 14(2), 171–180.
15. Jarrar, Y. F. (2002). Knowledge management: Learning for organisational experience. Man-
agerial Auditing Journal, 17(6), 322–328.
16. Hicks, R. C., Dattero, R., & Galup, S. D. (2006). The five-tier knowledge management hierar-
chy. Journal of Knowledge Management, 10(1), 19–31.
17. Salisbury, M. W. (2003). Putting theory into practice to build knowledge management systems.
Journal of Knowledge Management, 7(2), 128–141.
18. Andreeva, T., & Kianto, A. (2012). Does knowledge management really matter? Linking knowl-
edge management practices, competitiveness and economic performance. Journal of Knowl-
edge Management, 16(4), 617–636.
19. Lee, C. C., & Yang, J. (2000). Knowledge value chain. Journal of Management Development,
19(9), 783–794.
20. McInerney, C. R., & Day, R. E. (2007). Rethinking knowledge management (Vol. 12). Berlin:
Springer.
21. McElroy, M. W. (2002). Second-generation knowledge management. 1–18.
22. Darroch, J. (2005). Knowledge management, innovation and firm performance. Journal of
Knowledge Management, 9(3), 101–115.
The Culture of Management
and the Management of Culture:
An Introduction
David Starr-Glass
Abstract Management is not an abstraction; rather, it is an active process con-

ducted within a specific organizational environment. To be successful and effective,
managers must appreciate the organizational environment within which they operate
and align their efforts with its underlying system of assumptions, beliefs, and val-
ues—that is, with its culture. This chapter provides an introduction to the cultural
forces at work within work-related environments: national cultures, organizational
cultures, and organizational climates. It offers a broad and pragmatic insight into
organizational culture and culture typologies. It also invites managers to explore the
culture of their work and organizational environments, to determine the cultural ele-
ments and forces at work, and to select a managerial approach that is appropriate and
culturally attuned.
1 Introduction
For some, the notion that organizations possess distinctive cultures might seem an
abstraction which, although perhaps of interest, has little real-world significance. For
others—especially those who have not worked in organizations—the idea that orga-
nizational cultures provide significant opportunities and challenges for management
may seem farfetched, abstruse, or arcane. However, the experienced reality is that
managerial effectiveness and the ultimate success or failure of the manager’s work
are inextricably linked to the distinctive culture that the organization has adopted
and developed. To explain this, consider the following scenario.
D. Starr-Glass (B)
International Programs (Prague), SUNY Empire State College,
Saratoga Springs, USA
e-mail: David.Starr-Glass@esc.edu

50 D. Starr-Glass
1.1 Scenario One
You have applied for a managerial position. Your application and CV have been
reviewed, and you have been invited to an interview with senior representatives of
the firm. Before the interview, you tried to acquire as much information as possible
about the new position and about the firm. You reviewed their Web site, promotional
literature, and annual reports. You studied the application form, the questions asked,
the nature of the recruitment process, and even the corporate logo. You tried to form
an understanding of the corporate ‘being’—of who the firm is, rather of what it is.
You know what they do, but you want to understand why they do it and how they do
it. You recognize that organizations are inanimate and lack human characteristics;
nevertheless, you also appreciate that they do project distinctive corporate persona
which mirrors their interior essence, even although you remain unsure about how
authentic or reliable these projections might be [1–3].
As you arrive for the interview, you observe the layout of the office spaces, the
interaction between employees, and the colors, designs, and wall-hangings—all in
an effort to glean some understanding of the organization’s inner personality. The
door opens and even as you enter to room you know that the interview has begun.
There is the handshake and you attempt to signal your strength of character, hoping
that it will be recognized and appreciated [4]. You already know that employment
interviews are a universal part of the hiring process [5, 6]. You also know that hiring
decisions are usually made in the first few minutes of the 45 min scheduled meeting
[7, 8]. That makes you nervous. You wonder about the validity or reliability of such a
speedy process. But your main focus right now is assessing the situation, projecting
your interest in the position, and setting out the value that you bring. You are also
beginning to understand that this interview is not exclusively about you or even about
your competencies. It seems that the focus is not on you, but on us—not about you
the individual but about you as a potential member of the organization. What is being
considered, assessed, and probed is whether you can become part of us—whether
you can be usefully incorporated into the being and the fabric of the hiring firm.
Management might be understood as an abstraction, but managing—the active
verb—is what the organization wants from you and they need to ensure that your
managing efforts will be relevant and effective. What is being decided at this interview
is not whether you can fit into a specific job, or even into some generic organization,
but whether you can fit into our distinctive organization and our distinctive way of
thinking and doing [9, 10]. In a word, your employment interview is your first tenta-
tive contact with the firm’s organizational culture and you—and those interviewing
you—must ultimately judge whether it is a culture within which you can contribute
and flourish.
The Culture of Management and the Management of Culture … 51
1.2 The Forces of Culture
The premise of this chapter is that effective and successful management is not simply
associated with a cluster of technical skills and competencies, or even a given set
of psychological dispositions and attributes. These are clearly prerequisites, but the
art of managing—that is of utilizing these attributes successfully, rather than sim-
ply of possessing them—is significantly determined by the cultural context of the
organization. Organizational culture is invisible. As such, it is often ignored, unex-
plored, or unrecognized. Nevertheless, organizational culture is the critical element
that moderates managerial behavior and decision making, and it is perhaps the most
important element in making the manager’s efforts successful or ineffective.
Schein [11], arguably the preeminent authority on the matter, remarked that
‘although culture is an abstraction, yet the forces that are created in social and organi-
zational situations that derive from culture are powerful’ (p. 3). These powerful forces
shape the context and expression of management; optimally, managerial actions and
behavior should align with organizational culture. Schein [12] also observed that ‘to
understand what goes on in organizations and why it happens in the way it does,
one needs several concepts. Climate and culture … [both] become two crucial build-
ing blocks for organizational description and analysis’ (pp. xxiv–xxv, emphasis in
original).
This chapter provides a brief insight into the nature of both organizational culture
and climate. It will explain the ways in which culture materializes within organiza-
tions, how it is manifested, and how—often unrecognized and ill-defined—it forms
a context within which the managerial process operates. The following section con-
siders the nature of culture and why it develops in all social groupings, including
organizations. Section three looks at national cultural systems, which inevitably have
an impact on organizational culture and which also become evident in cross-culture
managerial encounters. Section four considers the cultures and climates of organiza-
tions, both of which significantly shape managerial effectiveness. The section after
this provides an introduction to the classification of organizational cultures, consid-
ering typologies that can be of particular use to those who are have to make sense
of and manage within organizational settings. Section six suggests how organiza-
tional culture can be assessed and mapped. The final section reiterates some of the
chapter’s central themes and underscores the need for managers and aspiring man-
agers to recognize surrounding cultures and manage in ways that are appropriate for,
and supported by, those cultures.
2 What Is Culture?
Members of all social collectives—nation-states, tribes and clan, families, or corpo-

rations—possess and perpetuate a system of common attitudes, beliefs, and assump-
tions that provides the collective with an internal sense of integration, cohesiveness,
52 D. Starr-Glass
and behavioral predictability. This system is shared by members of the collective and
accessible to them. It provides an underpinning sense of common identity for mem-
bers of the collective, and it establishes a framework through which members can
develop a unique identity, identification, and sense of belonging. Although a com-
plex and contested construct, this shared system is simply referred to as culture. After
extensively reviewing the anthropological and sociological literature, Spencer-Oatey
[13] defined culture as:
a fuzzy set of basic assumptions and values, orientations to life, beliefs, policies, procedures
and behavioural conventions that are shared by a group of people, and that influence (but
do not determine) each member’s behaviour and his/her interpretations of the ‘meaning’ of
other people’s behaviour (p. 3).
Culture is learned within the group and from other members of the group; how-
ever, culture is usually transmitted incidentally and implicitly, rather than formally.
In many ways, culture is invisible. That is, cultural assumptions seem so obvious,
omnipresent, and natural that they are taken for granted and little considered. Lo
Bianco [14] notes that since we constantly see our world through our given cultural
lens, culture makes ‘the viewpoint and behavioral norms of the observer invisible,
rendering it as a natural or normal point from which others are scrutinized … [and
makes] the practices, lifestyles and values of the observed, overtly visible’ (p. 17,
emphasis in original). Our interest in this chapter is in looking at ourselves through
that cultural lens.
Although largely invisible, some elements of culture can materialize and become
physically manifest. They can take the form of tangible artifacts that possess signif-
icance and recognized meaningfulness within that culture, but which remain incon-
gruous, puzzling, or ambiguous for those outside it. Consider, the quite different
cultural meanings attached to the pyramids constructed by the ancient Egyptians and
to those erected by the Mayans—similar edifices, but each with its quite different
significance for the builder. Consider also the portrait of the firm’s founder that graces
the boardroom wall: Who put it there and why? What does it really represent?
Culture has a powerful influence on forming and perpetuating socially held
assumptions, values, and behavior; however, it is not the only force at work. Each
member of the social collective possesses a cluster of psychologically based person-
ality traits and characteristics that guide personal attitudes, dispositions, and behav-
ior. Our current understanding is that the ‘Big Five’ personality traits—extraver-
sion, agreeableness, conscientiousness, neuroticism, and openness—are universal
and independent of national culture [15]. However, individual psychological traits
and predispositions are expressed against a framework of culture and socially held
values. That cultural backdrop moderates and mediates the resulting behavior of the
socially embedded individual [16–18]. Individuals are conscious of the pressures
for cultural congruence—that is, behavior which ‘is consistent with cultural values
will be more acceptable and therefore more likely to be exhibited than behavior that
clashes with cultural values’ [19, p. 64]. Prevailing culture values of the national
grouping within individuals are embedded exert a powerful influence on moderating
personal behavior. Similarly—but more contentiously—the cultural values of the

organization also moderate the individual’s expressed attitudes and behavior.
3 Managing Within a National Culture
In understanding the organizational cultural implications for effective management,

it is important to appreciate that every organizational participant is subject to, or can
identify with, multiple cultures. These cultures connections result from the individ-
ual’s personal history, upbringing, and prior exposure to significant cultural experi-
ences—the culture of family, racial or ethnic group, or identification with a social
subgroup or class. Multiple cultures will have been experienced and potentially each
might be considered relevant or appropriate. An array of alternative cultural perspec-
tives and behavioral repertoires are nested within the individual, and each of these
may be activated, assume greater importance, or be considered salient depending on
the context that the individual presently experiences.
3.1 Scenario Two
Having been hired, you now set about understanding the cultural and operational
context of the organization. In time, you believe that you have come to some under-
standing of the values, assumptions, and beliefs that seem to glue the firm together.
You have successfully resolved some production issues, and senior management has
recognized your ability. Indeed, you have been selected to visit a foreign subsidiary
of the organization and to hopefully resolve some of its production problems. You
see this trip abroad as a significant milestone in your career and eagerly anticipate
bringing your skills to bear on this new set of management challenges.
Still a little jet-lagged, you arrive at the subsidiary and set up your first meeting with
the local production team. You select a room and have the chairs arranged in a circle.
You want to understand firsthand what local management sees as the problem. You
want to project an image of the team player—not of the visiting expert, judgmental
critic, or foreign outsider. When the other members of the group have assembled,
you introduce yourself and explain that you are trying to appreciate the problems
they have encountered. You invite discussion, asking each member of the group to
frame the production problems in his or her own words. You are eager to explore the
issues raised. You use open-ended questions to solicit alternative perspectives and
creative inputs. But the meeting is incredibly flat and unproductive.
You are struck by the reticence that many have in confronting the issue. They
constantly defer to you, seeking your analysis and recommendations. They are ill at
ease and seem unwilling to actively participate in exploring the problem. Frequently,
they seem to be saying ‘yes,’ but it is clear that they really mean ‘no.’ It is not at all
the kind of meeting that you have at headquarters, where there is always a collective
54 D. Starr-Glass
dynamic and an uninhibited desire to explore options and perspectives. Back there,
problem-solving meetings are usually intense, occasionally uncomfortable, and even
explosive. You find this difference strange because this is a production unit of the
same organization and yet it seems ‘foreign’—not just in location, but in attitude. The
meeting ends and you feel that you have learned very little. Through the grapevine,
you learn that members of the group felt that you were informal, unfocused, and
failed to display leadership qualities. What went wrong?
3.2 National Culture
National culture is particularly important in understanding the repertoire of cultural

approaches and behaviors that individuals possess and utilize in organizational con-
texts. Hofstede [20], in his classic but nevertheless controversial efforts to identify
and measure it, defined national culture as ‘the collective programming of the mind
which distinguishes the members of one group or category of people from another’
(p. 9). Often, the majority of members of an organization will have been born and
grown up within the surrounding national culture. Obviously, all current members
of that organization are also presently embedded in that national culture. It is to be
expected that many of the dominant values, assumptions, and beliefs of that environ-
ment will be imported into the value system of the organization.
National culture considerations have become even more important in a world
of global trade, multinational corporations, high levels of individual mobility, and
increased workforce diversity—all of which present challenges and opportunities for
management. In identifying and measuring national culture, Hofstede [20, 21] took
a static approach—specifically a statistical and factorial analysis approach—that
sought to uncover patterns and relationships rather than to explore the active dynam-
ics of culture systems, or to superimpose a particular theoretical perspective. Hofst-
ede’s approach has been extensively used and is arguably the dominant one taught in
business schools in North America and Europe. However, many scholars and prac-
titioners agree to the unintended, but inevitable, reification of national culture as a
static and shared ‘phenomenon’ has obscured the complexities of cultural shifts and
the depth of its expression. These dynamic and emergent aspects of national culture
are in danger of being neglected and being replaced by unproductive misconcep-
tions, fundamental misunderstandings, and plausible but self-limiting ‘sophisticated
stereotypes’ about the ‘other’ [22–24].
Hofstede identified a number of dimensions found, with varying degrees of inten-
sity, in most national cultures that have developed within relatively well-defined and
historically stable nation-states. Subsequent analysis by Hofstede—in collaboration
with De Mooij and with Minkov—has increased the number of identifiable, stable,
and differentiating national culture dimensions to six [25–28].
Power Distance: This dimension measures ‘the extent to which less powerful members of
a society accept and expect that power is distributed unequally’ [25, p. 89]. In high power
distance cultures status, hierarchy, and deference to power are anticipated and expected. In
these cultures, individuals are aware of what they understand to be their ‘rightful social place’.
They tend to accept power distributions and inequities as inevitable and perhaps justifiable.
By contrast, low power distance national cultures consider that society is—or at least should
be—democratic and egalitarian. In these national cultures, there is a prevailing sense that
power should be evenly distributed, negotiable, and legitimately acquired through merit,
rather than through inheritance or association with a particular social class. For example,
power distance is high in Russia, but relatively low in the United States.
Individualism Versus Collectivism: The difference between ‘people looking after them-
selves and their immediate family only, versus people belonging to in-groups that look after
them in exchange for loyalty’ [25, p. 89]. Individualistic cultures focus on the individual,
the uniqueness of the ‘I’, and on expressions of self. They value the efforts and aspirations
of the individual and recognize that individuals can legitimately express themselves and
break away from the collective. Collectivistic cultures focus on the group—the ‘We’, rather
than the ‘I’—and value team work, group-centered approaches, and collaborative efforts.
In collectivistic cultures overly self-centered behavior is seen as eroding the norms of soci-
etal cohesiveness, structures, and customs. For example the United States exhibits a very
high level of individualism in which the efforts, success, and uniqueness of individuals are
expected, recognized, and rewarded. By contrast, Japan has a very collectivist understanding
of behavior in which group affiliation and solidarity are strong, and where efforts, results,
and responsibility are considered to belong to the group and not its individual members.
Masculinity Versus Femininity: This dimension focuses on ‘the dominant values in a mas-
culine society are achievement and success; the dominant values in a feminine society are
caring for others and quality of life’ [25, p. 89]. Masculine cultures tend to adopt social roles
and preserve power structures that are gender-based (usually male-privileged). Similarly,
both the extent and the scope of role differentiation based on gender are more prominent
in masculine cultures than in feminine ones. For example, Mexico scores high on the mas-
culinity scale; whereas, Sweden has a low score on this culture dimension and a much less
gender-nuanced culture.
Uncertainty Avoidance: This is ‘the extent to which people feel threatened by uncertainty
and ambiguity and try to avoid these situations’ [25, p. 90]. In high uncertainty-avoidance
cultures there is a significant degree of reluctance and discomfort associated with engaging
in situations that involve change, innovation, or risk-taking. These cultures are risk averse and
often have an entrenched system of assumptions and beliefs that might be regarded as passive,
traditional, or conservative. The future is essentially considered unknown, unknowable, and
inevitable—which sometime causes concern, but more often resignation. High uncertainty-
avoidance cultures are often associated with a range of rules, practices, and beliefs that limit
the unexpected and reduce the unpredictable. Conversely, low uncertainty-avoidance cultures
are more willing to assume risks—that is, acknowledge uncertainty and accept ambiguity.
These cultures are also likely to engage efforts to define, structure, or restructure the future
in ways that present it as benign: values tend to shift and the society might be described as
fairly tolerant and generally progressive. For example, Russia and Greece score high on the
Uncertainty Avoidance scale; whereas, China and the United States both have low scores.
Long-Term Versus Short-Term Orientation: This dimension measures ‘the extent to which
a society exhibits a pragmatic future-orientated perspective rather than a conventional his-
toric or short-term point of view’ [25, p. 90]. Long-term orientation recognizes that the
social, political, and economic worlds are inevitably changing and that the individual should
focus on the future, accept change, and adopt a pragmatic mindset. There is a concern with
peace of mind rather than with the pursuit of instant and transient happiness. Long-term
orientation is also associated with a positive appreciation of future possibilities, strong and
continuing personal relationships, perseverance, and a higher propensity to save and invest.
By contrast, short-term orientated cultures favor the present and the immediate, seeing them
as the continuation of the past but not necessarily as the foundation of the future. They place
56 D. Starr-Glass
value on tradition and history. They tend to look for guidance, support, and moral direction
from the known past. Long-term orientation was not one of Hofstede’s original national
culture dimensions and emerged from a special focus on Asian cultures (particularly China)
and some see this dimension as mirroring a Confucian world-perspective [26, 29]. On this
scale, China and Japan score high, indicating a positive approach to change and a prag-
matic consideration of modernity. Australia and the United States score low, indicating a
higher respect for—and a greater appreciation of—conservative values and traditional ways
of doing things.
Indulgence Versus Restraint: This, the most recent dimension to have been identified,
considers the extent to which national culture values favor and allow ‘relatively free grat-
ification of basic and natural human desires related to enjoying life and having fun … or
controls gratification of needs and regulates it by means of strict social norms’ [27, p. 15].
Statistical analysis suggests that indulgence cultures are associated with a higher percentage
of the population expressing positive feelings about personal happiness and wellbeing, the
importance of friends, and the value of leisure. These cultures also place lower values on
the role of morality and the maintenance of state order. Restraint-based cultures place lesser
importance on personal wellbeing, satisfaction, and friendship. They value persistence and
effort, the work ethic, and moral discipline. On this dimension, Russia and China score low
suggesting a tendency for restraint; whereas, Mexico and Sweden score high and have a
much more indulgent outlook.
National culture plays a significant role in defining and shaping the culture that
arises within an organization. If this is the individual’s own national culture, the cul-
tural values that become part of the organization may seem so obvious and familiar
that they are essentially invisible. It is only when encountering other organization-
s—embedded in different national culture value systems—that the observer appre-
ciates differing national culture dimensions. Most organizations seek to promulgate
and maintain a uniform culture throughout all of their geographically separate and
spatially divided units in order to create a single, predictable, and homogeneous
environment. However, it is inevitable that some elements of the local culture will
be present in the local unit—sometimes, clearly evident; sometimes, muted and
nuanced.
Although national culture exerts a powerful force on non-domestic organizational
units and on those employed in them, several points are important to keep in mind.
• National Cultures do not Restrictively Define People: Identified national culture
dimensions are best understood as statistically generated and as providing general
dispositions and tendencies for those who constitute the populations of particular
countries. These cultural dimensions are of significance for managers who are
dealing with the different operating units of multinational corporations and for
managing situations in which there are sizeable numbers employees and organi-
zational members who come for disparate countries of origin. National culture
impacts the management of people and their work efforts, but it is also a signif-
icant issue in all aspects of marketing, consumer behavior, and communication.
However, it is important to keep in mind that national culture neither restrictively
defines nor inevitably determines the attitudes, values, or behavior of individual
members of that particular culture. Variability, exceptions, and individual unique-
ness are ever-present.
• Avoid Stereotypes, even Sophisticated Ones: Related to this last point, individ-
uals who possess a specific national identity should not be regarded as exemplars
of that culture. There is a vast, rich, and ever-complex expression of the individual
in social contexts and seeing individuals as reducible to national culture exem-
plars inevitably evokes and perpetuates stereotypes—crude ones, and sophisticated
ones—that circumscribe the authentic personhood of the individual and restrict
communication, understanding, and attempts to bridge cultural divides [23, 24].
• National Culture is Dynamic and Changing: There is an ongoing debate as to
whether national cultures are in the process of converging or diverging; however,
it is widely accepted that national cultures are dynamic, emergent in nature, and
undergoing constant shifts—especially at different generational levels. Accord-
ingly, there is a need to remain sensitive to ongoing cultural changes and to
understand Hofstede’s scores on a particular national culture dimension as being
suggestive (not definitive) and fluid (not immutable) [30–32].
4 Organizational Cultures and Organizational Climates
As mentioned, although culture is a critical element in understanding what happens

inside the organization and why it happens, there is another element at work: organi-
zational climate. As Schein [12] observed, ‘climate and culture, if each is carefully
defined … become two crucial building blocks for organizational description and
analysis’ (pp. xxiv–xxv). Like organizational culture, organizational climate has an
extensive history during which it has been variously regarded as complementing cul-
ture or competing against it. The scope of this present chapter does not provide for
an extensive exploration of organizational climate; however, there exists a rich liter-
ature dealing with its history, evolution and impact on organizational performance
and outcomes—a literature that the reader might wish to consult [33–35]. But what
is organizational climate and how does it differ from organizational culture?
4.1 Scenario Three
Although you were recently hired into the production department of a medium-sized
firm, you frequently interact with the customer service department. There seems to
be a problem there, but you are not sure what has caused it. The firm regards customer
service and satisfaction as a core value. It has always been like that, and there are
multiple stories of the length that the firm’s founder would go to make sure that
customers had an optimal experience buying and using the company’s products.
The last manager of customer service was totally devoted to providing customer
satisfaction, but she was also keen to ensure that this was done efficiently, effectively,
and in a cost-controlled manner. She overhauled the customer service process, ana-
lyzed customer interactions, and created an updated list of frequently asked ques-
58 D. Starr-Glass
tions. She re-trained those in her department to provide clear, well-scripted solutions
to common customer issues. She emphasized efficiency and effectiveness—setting
strict time limits on dealing with callers, monitoring and recording incoming calls,
and reprimanding those who exceeded these time limits. A monthly report showed
the number of customer service calls dealt with by those in the department—the
person at the top of the list received the customer service person of the month award
and a cash bonus.
It certainly looked as though the manager in that department had speeded up the
process of dealing with customers. But, over time, customer surveys started to indi-
cate a decline in purchase satisfaction and brand trust. Recent work with employees
in this department has also shown declines in morale and in job satisfaction, cou-
pled with an increase in employee turnover. You are not sure how this exciting new
program—which was implemented in order to increase operational efficiency and
effectiveness—has resulted in these seemingly negative and paradoxical results. You
are trying to make sense of the outcomes. Somebody has suggested that it might be
a lack of congruence between espoused and enacted values. Someone thinks that it
might be a case of a mismatch between organizational climate and culture [36–38].
What do you think and why?
4.2 Organizational Climate
Organizational climate is ‘the shared meaning organizational members attach to the

events, policies, practices, and procedures they experience and the behaviors they see
being rewarded, supported, and expected’ [35, p. 69]. This definition accentuates the
surface-level nature of organizational climate: clearly observable phenomena, actual
behaviors, and operational procedures that organizational members deal with on a
daily basis. Organizational climate describes what employees presently encounter
and the behavior they currently experience—the ways in which ‘things are done here’
and the ‘things to do and not to do.’ It is the experiential reality of organizational
participants and something that is likely to undergo shifts, changes, and reformations.
On the other hand, organizational culture is associated with deep-level assump-
tions, beliefs, and values that shape the behavior of organizational participants. Cul-
ture perspectives are ‘deep’ and easily overlooked or unnoticed by organizational
members. On reflection, however, these underlying values are evident and can be
readily identified and articulated. Organizational culture provides a latent frame-
work for self-identification with the organization and for the creation of individual
self-meaning in relationships with the organization. Because of its ‘depth,’ organi-
zational culture tends to be persistent and enduring, and it has been said that while
‘organizational climate resides within individuals in their perceptions of the organi-
zational context … [but] culture is a property of the collective … reflecting deeper
phenomena based on symbolic meanings … and shared meaning about core values,
beliefs, and underlying ideologies and assumptions’ ([39, p. 644], emphasis added).
At this point, it might be evident that organizational culture and climate are con-
nected and that to some degree they overlap. Alignment between culture and climate
is important because it allows members of the organization to recognize that the ways
in which they behave, and the practices that they see as being in place, are congruent
with the underlying nature and values of the organization. Significant inconsisten-
cies between the espoused culture (‘what we say when asked why we are doing
something’) and the experienced climate (‘what we do and see as being required’)
can bring about a sense of employee insecurity and growing cynicism. Ultimately,
a recognized misalignment between climate and culture can lead to the erosion of
motivation and workplace effectiveness.
Inconsistences between culture and climate can arise because of a managerial
misalignment of priorities, or because of a miscalculated implementation of work
policies and practices. For example, procedures may be set in place that misrepresent,
distort, or fail to mirror deep cultural values. Policies may be enacted that clearly
bypass the expression of cultural values; or operational practices may be implemented
that reward behavior which is at variance with the organization’s deeper cultural aspi-
rations. These misalignments—when recognized by organizational members—can
lead to a sense of tension, doubt, and confusion for those who have to implement
them. For management, the critical point is that ‘if the adopted practices do not reflect
the culture, or if practices are poorly implemented, climate perceptions may develop
that are counter to the underlying cultural values and assumptions’ [39, p. 657].
Climate perceptions that run counter to cultural values can obscure deeper cultural
assumptions without negating or replacing them. This can create an awkward degree
of conflict, unease, or dissatisfaction among the workforce. Optimally, the practices,
procedures, and policies enacted should clearly and unambiguously resonate with the
underlying cultural values of the organization. In other words, experienced climate
should reflect espoused culture. For example, the anticipated and rewarded practices
related to delivering customer service should reflect a deeper underlying culture that
places value on the customer. Then, and to the extent that ‘organizational members
perceive these practices to be consistent with a service focus and agree among them-
selves on their perceptions, a service-based organizational climate … [can truly be]
said to exist in the firm’ [39, p. 657].
5 Classifications and Typologies of Organizational Cultures
The cultures that develop and shape organizations can be significantly different for
one another. Their underlying assumptions, beliefs, and values can be wide-ranging
and eclectic, or they can be narrowly focused and idiosyncratic. Often, initial cul-
tures are specifically referenced: They may, for example, have been provided by
the founder of the organization and closely reflect his or her personal values. This
cultural legacy is often particularly evident: in micro-, small-, and medium-sized
enterprises; in family businesses; and in small enterprises during their growth trajec-
tory toward large-scale firms [40–42]. As noted previously, organizational cultures
60 D. Starr-Glass
will also resonate to some degree with the national culture system within which the
firm is embedded, even though national and organizational cultures are not isomor-
phic [43, 44].
But, given the diversity and uniqueness of organizational culture, is it possible
to develop an overview, or a system of classification, that recognizes organizational
individuality but which also acknowledges broad patterns and commonalities?
5.1 Scenario Four
A newly hired manager, you are eager to make your mark on the organization by
demonstrating your management skills and adding to the firm’s value. You have only
been in the job for a matter of days but have already formed an impression about
the work environment and feel that it needs to be restructured. You have a strong
technological background and have found that the key to effectiveness lies in clear
organizational structure, unambiguous lines of authority, personal accountability in
meeting operational outcomes, and individual responsibility for performance.
You are a little uncomfortable with the work environment that you are now con-
fronting, mainly because it seems to be relatively unstructured and free-flowing.
There is a great deal of talk about ‘creativity’ and ‘innovation.’ These are qualities
you admire, but you believe that genuinely creative and innovative outcomes are
exceptional and that the vast majority of successful outcomes emerge when there is a
high degree of organizational control over the process of decision making and imple-
mentation. Obviously, people represent one of the most valuable resources of any
organization, but you feel—and it has been your previous experience—that there are
other more important assets that need to be nurtured: increasing productive capacity,
coordinating workforce efforts, and stressing personal commitment, responsibility,
and accountability. You feel that a more structured work environment is needed, one
that emphasizes unit production rather than individual feelings.
You accept that people dislike change and prefer to do things in the ways that have
become routine and familiar. You anticipate that you will experience opposition as
you set about restructuring the work environment, and that opposition does indeed
materialize. People spend more time telling you why your changes are inappropriate
than they do in simply adopting those changes. Most of your workforce is unhappy
about your plans and you see that people are neither willing to adopt change nor
embrace it with any kind of enthusiasm or motivation.
You have always tried to negotiate change rather than impose it. You prefer nego-
tiation, but you are now having doubts and wonder whether you need to exert your
authority. You are frustrated that seemingly reasonable people cannot appreciate
the direction that you are advocating. Now, you hear that senior management wants
to discuss your agenda. You can defend and promote your approach, but are dis-
appointed that those whom you manage seem to have wrong-sided you and tried
to sabotage your initiatives. You wonder whether you could have handled things
differently.
5.2 Four Useful Cultural Models
Organizational cultures are unique. It can take a long time and considerable effort
to explore a particular culture and to manage effectively within it. Perhaps, in order
to shorten this culture-learning time, it might be possible to categorize or classify
cultures in ways that provide a broader understanding of their values—in ways that
differentiate, distinguish, and provide a starting point for a deeper exploration?
One classification emerged as a byproduct from work that was not intended to
consider culture as such. In 1983, Quinn and Rohrbaugh [45] published what was
to become a seminal paper that attempted to understand effectiveness not so much
as a concept, but as an operational reality and as a ‘socially constructed, abstract
notion carried about in the heads of organizational theorists and researchers’ (p. 374).
Effectiveness has a complex history in organizational literature and managerial prac-
tice; it has come to mean different things, to different people, in different circum-
stances. Quinn and Rohrbaugh [45] considered that effectiveness was contextual
and depended on the values that were adopted by the organization. Specifically, they
considered it was the interplay between two sets of competing values:
Flexibility Versus Control: This dimension measures the degree to which the organization
values its structural arrangement. Should it be an arrangement that accentuates flexibility and
change, or one which places more value on stability and control? Few viable organizations
could be purely one or the other: they will possess relative degrees of both flexibility and
control that can be assessed [45, 46]. Graphically, the flexibility dimension was represented
by an upward-pointing vector and control by a downward-pointing one. The relative degree
of flexibility and control can be determined either through a holistic consideration of the
organizational environment, or by answering the more structured questions to be found in
the Organizational Culture Assessment Instrument (OCAI), devised for this purpose by
Cameron and Quinn [46, pp. 26–30]. The OCAI requires responding to and then scoring
twenty-four items such as: ‘The organization is a very personal place. It is like an extended
family. People seem to share a lot of themselves’; and, ‘The organization is very results-
oriented. A major concern is with getting the job done. People are very competitive and
achievement-oriented’ (p. 26).
Internal Versus External: This dimension measures the degree to which the organization has
a focus that is centered on: (a) an internal, individual-based, and organizationally-directed
perspective; or (b) on an external, customer-based, and market-directed one. Again, it is
unlikely that an organization will focus exclusively on one or the other—they will do both, but
to different degrees. Graphically, the internal dimension was represented by a left-pointing
vector and the external dimension by a right-pointing one. The relative degrees of internal and
external focus can be assessed through a holistic consideration of the firm or by completing
the items associated with the OCAI [46, pp. 26–30]—items such as: ‘The organization
emphasizes competitive actions and achievement. Hitting stretch targets and winning in the
marketplace are dominant’; and, ‘The organization emphasizes permanence and stability.
Efficiency, control, and smooth operations are important’ (p. 28).
In their original article, Quinn and Rohrbaugh [45] never mention culture, using
instead ‘organizational values.’ It is easy to see how, following the publication of their
seminal work, attention began to focus on the broader cultural significance of their
work. Their key value dimensions—flexibility, control, internal, and external—were
regarded as proxies, describing underlying organizational culture. It was appreciated
62 D. Starr-Glass
that there might be other significant value dimensions which might give rise to
different cultural taxonomies. However, the power and influence of the original CVF
model has made it a commonly used way of approaching organizational culture
[46–49].
Connecting the scores on each of the four vectors produces a profile that is unique
for the organization [46, pp. 67–81]. Additionally, these four vectors—the verti-
cal flexibility versus control vectors, and the horizontal internal versus external
ones—map out four quadrants, each of which represents one of four distinctive
cultural models:
Clan Culture: This is a flexible organizational structure with an internal focus, originally
called a ‘Human Relations Model’ of culture. Here, managerial and organizational effective-
ness is characterized as having means (policies and procedures) that increase the cohesive-
ness and morale of the collective and ends (ultimate objectives and goals) directed towards
developing the human resources of the organization. This culture, later renamed Clan Cul-
ture [46, p. 35], is characterized by values of friendliness, similarity to an extended family,
loyalty, reliance on tradition, commitment, and a preference for collaborative participation.
Clan Cultures are based on ‘teamwork and employee development, customers … [with] the
organization in the business of developing a humane work environment … the major task
of management is to empower employees and facilitate their participation, commitment,
and loyalty’ (p. 41). This culture appreciates people and is sensitive to the human needs of
both those inside the organization (employees) and those who interact with it (customers
and suppliers). This cluster of values and assumptions has been described as a community
culture and in describing it the active verb is collaborating.
Adhocracy Culture: This culture maps a flexible organizational structure and an external
focus. Originally called the ‘Open System Model’ of culture, it acknowledges and accepts
openness to the external world—that is, to the environment that lies beyond the organization
and in which it is embedded and within which it operates. Here, managerial and organiza-
tional effectiveness is characterized by policies and procedures that stress the importance of
flexibility and a readiness to adapt to a changing external environment. The ultimate end goals
of the organization are centered on organizational growth, market expansion, and resource
acquisition. Subsequent renamed Adhocracy Culture [46, p. 35], it possesses a distinctive
cluster of cultural values: personal and leader dynamism, entrepreneurial approaches, inno-
vation and creativity, high to medium levels of risk-taking, a readiness for change and for
new challenges, and a focus on acknowledging and rewarding initiative. Cameron and Quinn
[46] noted that the choice of the word adhocracy emphasized that it was ad hoc (Latin: ‘for
this specific purpose’), and that this word choice implied ‘something temporary, special-
ized, and dynamic’ (p. 43). Adhocracy Cultures are regarded as ‘tents rather than palaces’,
because they can ‘reconfigure themselves rapidly when new circumstances arise … [support-
ing] adaptability, flexibility, and creativity where uncertainty, ambiguity, and information
overload’ (p. 43). The cultural is entrepreneurial, with risk-taking and creativity encouraged
and rewarded. The active verb associated with this culture is creating.
Hierarchy Culture: This third culture type is a control-based organizational structure with
an internal focus, and was initially called the ‘Internal Process Model’. Here, managerial and
organizational effectiveness are created through practices and procedures that accentuated
information management and communication, and which were enacted in order to serve
an ultimate purpose of ensuring internal stability and internal control. Later renamed Hier-
archy Culture [46, p. 35], this organizational environment is clearly structured, essentially
formal, often rule-governed, generally stable and predictable, and bureaucratic. Cameron
and Quinn [46] said of these cultural contexts that—because of their relative stability and
predictability—the tasks and functions within them ‘could be integrated and coordinated’
and that ‘uniformity in products and services was maintained, and workers and jobs were
under control. Clear lines of decision-making authority, standardized rules and procedures,
and control and accountability mechanisms were valued as the keys to success’ (p. 37). Hier-
archical Cultures have an internal focus, place high value on control, and are reminiscent of
classic bureaucracies. In these organizational cultures, the role of managers is understood in
terms of optimizing processes, cutting costs, and establishing policies and procedures. The
active verb associated with these cultures is controlling.
Market Culture: The final culture type has a control-based organizational structure and
an external focus, and was originally described as the ‘Rational Goal Model’ of culture.
Here, managerial and organizational effectiveness are characterized by policies and proce-
dures that prioritize planning and goal setting (both external and strategic), and by end goals
directed towards high productivity and increased efficiency. Subsequently renamed Market
Cultures [46, p. 35], they have values and belief systems that accentuate a result-orientation,
competitiveness, an emphasizing on winning and success, and a concern for advancing rep-
utational value. Later, Cameron and Quinn [46] explained that this culture was not restricted
to the marketing function of the organization, but rather to the organization as a totality. As
a market culture, the organization’s efforts are ‘oriented toward the external environment
instead of internal affairs … focused on transactions with (mainly) external constituencies
such as suppliers, customers, contractors, licensees, unions, and regulators’ (p. 39). They
further added that ‘not surprisingly, the core values that dominate market-type organizations
are competitiveness and productivity’ (p. 39). The pervasive concern of these organizations
is customer-focus, goal-orientation, and result-delivery. Efforts, policies, and procedures are
centered on fulfilling customer and client demands in what are perceived to be challenging
and highly competitive marketplaces. Competitiveness is the underpinning value and active
verb that resonates with these cultures is competing.
Other culture typologies have also been proposed, most of them based on opposing
value systems such as: concern for individuals, work structure, the distribution of
power, and the role of those within the organization [50]. For example, Handy [51]
grouped organizational cultures into four main types: (a) Power Cultures (with a
central concern for the function and distribution of power within the organization);
(b) Role Cultures (focused on structure, individuals, and personal performance);
(c) Task Cultures (emphasis on projects, coordination, and process); and (d) People
Cultures (in which participants are considered a loose collection of individuals, each
important, and each a valuable ‘star’).
Schneider [52] saw organizational culture as taking place against a framework
of two variables: one reflecting an oppositional personal versus impersonal under-
standing of human relationships; a second representing present realities versus future
possibilities orientation. This suggests four organizational cultures: (a) Collaboration
Cultures (primarily concerned with people, teams, affiliation, group synergies, group
harmony, and the experienced present); (b) Control Cultures (power, the firm’s inter-
ests, preservation of stability and order, enforcement of existing procedures, and the
present reality); (c) Competence Cultures (professionalism, personal achievement,
excellence, innovation that benefits the firm’s future, and future-orientated possibil-
ities); and (d) Cultivation Cultures (the future of organizational participants, devel-
opment of personal potentials, dedication to the firm, creativity, individual growth,
and self-expression through the firm).
Trompenaars [53] produced a model that utilized two oppositional dimensions:
one measuring egalitarian versus hierarchical perspectives; the second measuring
concern for people versus tasks. This typology generated four cultural possibili-
64 D. Starr-Glass
ties, each with its iconic name: (a) Incubator Cultures (characterized by shared
collective and collaborative experiences, a problem-centered approach, and driven
by final product or outcome); (b) Guided-missile Cultures (task orientated, with team
members working toward recognized goals; organizational participants recognized
as professionals or specialists and rewarded for their contribution to solving the
designated problem); (c) Eiffel Tower Cultures (formal bureaucratic and hierarchical
cultures; place a stress on divisions of labor, duties, and individual responsibility; and
reward logical and rational contributions by participants); and (d) Family Cultures
(close, respectful leadership and humane, responsive work environments; intuitive
and holistic inputs from participants are anticipated, valued, and rewarded).
Such typologies have considerable value because they classify organizational
cultures in ways that can be easily appreciated and comprehended. These models, and
the cultural domains that they identify, are ‘more focused on detecting and measuring
organizational practices than the beliefs or even the values of the individuals in
an organization … useful conceptual models for a comparative analysis of inter-
organizational environments’ [54, p. 29]. From a pragmatic perspective, Schein [11]
observed typological approaches ‘simplify thinking and provide useful categories
for sorting out the complexities we must deal with when we confront organizational
realities’ (p. 199).
However, typologies are problematic since they can lead to over-simplification,
blinkering the cultural exploration, and leading to a preformed and biased perception
of what is encountered. Schein [11] warned that a reliance on typologies can lead to
‘oversimplify these complexities and may provide us categories that are incorrect in
terms of their relevance to what we are trying to understand’ (p. 200). Although an
established typology may offer a convenient beginning for exploring organizational
culture, it is just as likely to ‘limit our perspective by prematurely focusing us on just
a few dimensions … [block] our ability to find complex patterns among a number of
dimensions, and … [obscure] what a given group feels intensely about’ [11, p. 200].
Nevertheless, although organizational culture is best regarded as ‘a multidimen-
sional, multifaceted phenomenon, not easily reduced to a few major dimensions’
[11, p. 109], many who approach organizational explorations find an existing tem-
plate—in the form of a standard typology—particularly helpful. This is often the case
when we enter an organization without any prior experience or skill in culture work,
but where we must quickly uncover the organization’s culture in order to manage
effectively. Given the importance of organizational culture for the manager—and the
impact that culture will have on his or her performance—the critical issue is to begin
the cultural exploration as quickly and carefully as possible. Typologies of organi-
zational culture can provide a useful beginning place in our cultural explorations,
and to the extent that they allow us to make that beginning their benefits may well
outweigh their deficiencies.
6 Beginning the Culture Exploration
Organizations can create, privilege, and conserve cultural environments with different
relative values of flexibility, control, internal, and external focus. For a given culture,
a context is created in which the practices and procedures adopted will be effective or
ineffective, depending on the degree to which they reflect, or clash with, that culture.
In time, organizations may wish to change their dominant values, but change will
come about slowly, with resistance, and will have to be carefully introduced. The point
is that effectiveness in an organization is neither a universal nor a unidimensional
outcome—it is a relative notion that is selectively defined by, and realized through, the
culture context of the organization. That operational context expresses the dominant
cultural values of the firm, so that any ‘judging the effectiveness of any organization
ultimately involves the question of values’ [45, p. 375].
6.1 Scenario Five
As a newly appointed manager you are eager to come to terms with the organization,
to understand how and why it works, and to manage effectively within your new
environment. You recall—perhaps from a college course in management or from
your prior experience—that there is no single ‘universal’ management approach
that is always applicable and always guaranteed to produce optimal results. You
appreciate that management is contextual and needs to be pursued in ways that are
flexible and which respond to your task environment. You are confident that you can
align your managerial and leadership skills with the context and that you possess
the professional competency, flexibility, and dexterity to perform effectively in it
[55–57].
But you are a manager, not an anthropologist or sociologist, and although you
need to develop an appreciation of the organizational culture that you are about to
enter, you are unsure of how best to explore it. Your goal is not to develop a deep
ethnographic understanding of the organization in which you work; rather, your
interests are pragmatic and focused. You need to explore the organization’s culture
to engage in styles of management and leadership that are effective [58–60]. Your
question is where and how to begin?
6.2 Mapping the Ps
You might start with the assumption that all four culture dimensions—flexible struc-
ture, control structure, internal focus, and external focus—are likely to be significant
and then measure each in order to decide whether the dominant culture is a Clan Cul-
ture, Adhocracy Culture, Hierarchy Culture, or Market Culture. To ascertain this, you
66 D. Starr-Glass
could use the twenty-four structured items in the OCAI [45, p. 26–30]. Alternatively,
you could create a cultural map through an exploration of areas of organizational
engagement and then form a holistic determination of the organization’s culture. If
you want to make a holistic determination, you can do so by exploring the following
areas of organizational life:
• Power: All organizations contain a network of formal and social connections
that link individuals with differing levels of power. In this context, power can be
regarded as the application of legitimate authority to further organizational objec-
tives and interests, and traditionally, ‘the power embedded in the hierarchy has
been viewed as “normal” and “inevitable” following from the formal design of
the organization’ [61, p. 624]. From this understanding, structures of power are
created through organizational culture and act to cement, consolidate, and con-
serve it. This static understanding is challenged by a more dynamic one, in which
organizations and their cultures represent the present and recognized ‘negotiated
order’ [62]—an order that is subject to an ongoing ‘re-ordering’ through the power
and influence of significant actors in the organization. In that reordering, the force
at work is not formal power but symbolic power. Symbolic power is ‘the power to
define the situation’ [63, p. 133]. Those within the organization select significant
actors and provide them with the legitimacy, credibility, and power to re-create
attitudes, re-define assumptions, and re-construct meaning. As you analyze power,
identify those who possess it, how it has been acquired, how widely or narrowly it
is distributed, and how it is employed. Be especially careful to consider not only
formal power and organizational power structures, but also symbolic power—why
only some actors seem to possess it, why they have been afforded legitimacy, and
the ends to which they are directing their power?
• Politics: Power may be regarded as an abstraction, but one of the ways in which
it can become manifest is through politics. Political discourse is a feature of most
social organizations. Within organizational contexts, political dynamics are gen-
erally termed micro-politics, defined as ‘the use of formal and informal power by
individuals and groups to achieve their goals in organizations’ [64, p. 11]. Micro-
politics are about the possession of power, its redistribution, and the ability to exert
influence rather than formal authority. Micro-political behavior is an understud-
ied organizational reality, but its prevalence and intensity is commonly linked to
change and resisting change [65, 66]. Consider the micro-politics in your current
organization: Who is involved, what is involved, and how is political power and
persuasion being exercised? If there is a micro-political effort to initiate or resist
change, what are the roots of the proposed change and how does change represent
a redefining of a core organizational ideology or of the culture? Keep in mind that
micro-political behavior can be restricted to promoting self-interest; therefore,
focus on the broader organizationally relevant questions: What can the nature
and content of micro-political activity tell you about the assumptions regarding
issues such as the degree of flexibility or control envisaged in the organization, the
internal focus or the external engagement of the organization, etc.?
• People: The way which in the organization engages with people—specifically

the people within it—will, to some degree, mirror its cultural values and beliefs.
Culture is not simply a socially created reality: It is a socially required necessity
for communication, identification, and behavior. Many of the culturally important
values of the organization are embedded in the ways that it considers its constituent
members; indeed, ‘one facet of the culture of the organization, as viewed by the
people in it, is that culture may affect the attraction and retention of competent
employees’ [67, p. 4]. Organizational culture is often reflected in how employ-
ees are considered, appreciated, developed, appraised, and rewarded. Normally,
the philosophies developed and policies enacted by the Human Resource (HR)
department will align with organization’s espoused culture values, while signif-
icant misalignment may give rise to negative employee perceptions, low levels
of trust and commitment, and high rates of absenteeism and turnover [68–70]. In
developing an insight into corporate culture, consider both the HR policies stated
and practiced: What are the assumptions, beliefs, and values about people pro-
jected in these policies? How do organizational participants regard the current HR
provisions? How do these people believe that they are viewed and treated by the
organization? What kind of behavior do organizational participants believe are
anticipated, encouraged, and rewarded?
• Policies, Procedures, and Practices: Whereas policies explain how things should
be done, procedures and practices describe how things are actually done. Policies
usually serve to express the organization’s espoused cultural assumptions, beliefs,
and values. Procedures and policies, however, are enactments of policy and that
the ways in which these enactments are perceived or interpreted by employees
give rise to the organizational climate—which may differ significantly from cul-
ture. Many scholars argue that policies, procedures, and practices should all be
congruent with the underpinning organizational culture and that it is operationally
optimal if they are in fact aligned or consistent [39, 71, 72]. In order to maximize
effectiveness, it is also desirable that policies, procedures, and practices should be
aligned with the organization’s strategic vision [73]. In mapping organizational
culture, examine the organizations policies (which might offer espoused cultural
values) and discuss current in-use procedures and practices (which might offer
confirming or additional cultural values, but which might also draw a sharper
focus on organizational climate). Focus on the relative values placed on flexibility
versus control and internal versus external focus that are inferred or reflected in
current policies, procedures, and practices.
• Processes and Products: There are two levels of analysis appropriate for process
and products. First, at a more abstract level, it has been argued that ‘corporate iden-
tity is not merely a projected image in the form of visual design and communication,
but is fundamentally concerned with “what the organization is”—encompassing
the strategies and culture specific to the organization in particular’ [2, p. S7]. Thus,
it might be productive to examine the processes involved in corporate identity and
the self-identification of those who are within it—processes such as recognizing
corporate values, evaluating them, and comparing them with other value sets that
employees have embraced. Do employees see this organization as ‘their’ organi-
68 D. Starr-Glass
zation? In what ways are ‘they’ manifested in the projected persona of the entity?
What are the products of the organization’s internal identity that are shared with its
external audience—its logo, publicly disseminated literature, marketing and pro-
motional communications, etc.? In what way might these artifacts point to deeper
underlying assumptions and beliefs that serve to define the organization’s cul-
ture? It has been claimed that corporate identity is ‘a bridge between the external
position of the organization in its marketplace and other relevant environments,
and internal meanings formed within the organizational culture’ ([74], abstract).
If so, what can the construction and architecture of that bridge tell you about the
organization’s culture? At a more concrete level, consider the actual products pro-
duced by the organization and the processes associated with this production. If
these products are also ‘bridges’ between the interiority of the organization and its
external markets: In what ways might these products and processes reveal funda-
mental organizational culture assumptions? To what degree do you think that the
projected corporate image (the products and the ways in which they are branded) is
an authentic window into organizational identity and culture paradigms [75, 76]?
• Publics: Organizations, particularly corporations, need to communicate and
engage with those beyond it. They will have to create an external organizational
image for these external publics and such creations might be initially driven by
‘superficial’ concerns such as public relations and brand image. However, in time
and with a growing external involvement, the organization will find it increasingly
necessary to ensure that the projected corporate identity resonates with—or at
least is not significantly at variants with—its internal culture. Often, there will be
a degree of inconsistency or lack of congruency; nevertheless, try to understand the
degree to which the projected image reflects, affirms, or reveals internal cultural
values. For example, in what ways does the organization project its unique self
and its mission? How does it go about creating and prioritizing its marketing com-
munications, customer service perspectives, and policies, and the way in which it
identifies and communicates its values in the market place? How does it deal with
suppliers and those in its supply chain? What values are revealed and projected in
dealing with the local community, shareholders, and other critical stakeholders?
Look for projected identities, underpinning cultures, and how multiple identities
are managed and reconciled [74, 77–79].
Mapping the ‘Ps’ provides an insight into organizational culture. No single ‘P’
should be considered in isolation; instead, explore each of them and aggregate the
results—you need a broad variety of perspectives to arrive at an understanding of the
dominant cultural values of your organization. Your aim—through a consideration
and integration of different perspectives—is to arrive at a holistic appreciation of
culture, and it is important to remember that it is easy to be unduly influenced by a
single factor. Questions asked should be broad and widely directed at the multiple
areas in which culture might be seen—approach all of the ‘Ps,’ not just the one or
two that might be easy to access or which you think might present the most direct or
obvious culture insights.
7 Conclusion
Management has been practiced for thousands of years, and organizations have
existed for almost as long. It is only in the last hundred years that theorists, aca-
demics, and researchers have attempted to uncover the ways in which management
is utilized and, potentially, how management as a process might be more effectively
used. Initially, these investigations diverged. European scholars considered organi-
zations and the management conducted within them as predominantly people-based
and socially directed—for example, Max Weber’s examination of bureaucracies and
Henri Fayol’s theories of management [80, 81]. Americans, however, favored a more
reductionist and ‘scientific’ approach, as exemplified by the work of F. W. Taylor
[82, 83]. In the century that followed these initial works, the emerging consensus on
both sides of the Atlantic is that management is not a ‘scientific’ endeavor—or, if it
is, it more closely resembles a social science. Rather, organizations and management
are now viewed as human and organic, as opposed to inert and mechanistic.
To claim that organizations possess and perpetuate a distinctive culture may seem
abstract and irrelevant for those beginning management, especially if they have not
been exposed to such notions in their undergraduate studies. However, once immersed
in an organizational context it soon becomes apparent to most that although organi-
zations are not persons, they ‘function through the agency of their individual mem-
bers—present and past—and the social norms and cultural products they create’ [84,
p. 19]. Organizational culture is ‘on display’ in the artifacts and rituals that are par-
ticular to the organization; however, these tangible manifestations may be initially
ignored, detached from an underlying culture, or misinterpreted. Manifestations of
culture have to be sought at all levels of organizational life and activity. Culture may
be illusive or enigmatic, but Lorsch [85] reminds us, it is the shared belief of top
managers ‘about how they should manage themselves and other employees, and how
they should conduct their business … these beliefs are often invisible … [and yet]
have a major impact on their thoughts and actions’ (p. 95).
An exploration of organizational culture is critical for managers and for those
who aspire to become managers. Their goal is not to mirror the explorations of
professional ethnographers or anthropologists; instead, it is to uncover the culture
systems of organizations in order to provide an insight and the ability to manage more
effectively [58–60, 86]. In these explorations, new manager might wish to rely on
broad organizational culture typologies, as suggested above. These provide pragmatic
ways of identifying general cultural assumptions, beliefs, values, and dispositions.
They also provide a map of the organizational culture that has enough detail to be
useful, but which is not so fine-grained as to be confusing or misleading. No matter
which approach is preferred or selected, the main thing is to begin exploring the
organization’s culture because, until its culture has been recognized and appreciated,
management will continue to be a perilous and probably ineffective endeavor.
70 D. Starr-Glass
References
1. John III, B. S. (2017). Public relations and the corporate persona: The rise of the affinitive
organization. New York, NY: Routledge.
2. Cornelissen, J. P., Haslam, S. A., & Balmer, J. M. T. (2007). Social identity, organizational
identity and corporate identity: Towards an integrated understanding of processes, patternings
and products. British Journal of Management, 18(1), S1–S16. https://doi.org/10.1111/j.1467-
8551.2007.00522.x.
3. Stuart, H. (1999). Towards a definitive model of the corporate identity management process.
Corporate Communications, 4(4), 200–207. https://doi.org/10.1108/13563289910299328.
4. Stewart, G. L., Dustin, S. L., Barrick, M. R., & Darnold, T. C. (2008). Exploring the handshake
in employment interviews. Journal of Applied Psychology, 93(5), 1139–1146. https://doi.org/
10.1037/0021-9010.93.5.1139.
5. Dipboye, R. L. (1994). Structured and unstructured interviews: Beyond the job-fit model. In
G. Ferris (Ed.), Frontiers of industrial and organizational psychology: Personnel selection
(pp. 79–123). San Francisco, CA: Jossey-Bass.
6. Barrick, M. R., Dustin, S. L., Giluk, T. L., Stewart, G. L., Shaffer, J. A., & Swider, B. W. (2012).
Candidate characteristics driving initial impressions during rapport building: Implications for
employment interview validity. Journal of Occupational and Organizational Psychology, 85(2),
330–352. https://doi.org/10.1111/j.2044-8325.2011.02036.x.
7. Barrick, M. R., Swider, B. W., & Stewart, G. L. (2010). Initial evaluations in the interview: Rela-
tionships with subsequent interviewer evaluations and employment offers. Journal of Applied
Psychology, 95, 1163–1172. https://doi.org/10.1037/a0019918.
8. Judge, T. A., Higgins, C. A., & Cable, D. M. (2000). The employment interview: A review
of recent research and recommendations for future research. Human Resource Management
Review, 10, 383–406. https://doi.org/10.1016/S1053-4822(00)00033-4.
9. Kristof-Brown, A. L., Zimmerman, R. D., & Johnson, E. C. (2005). Consequences of indi-
viduals’ fit at work: A meta-analysis of person-job, person-organization, person-group, and
person-supervisor fit. Personnel Psychology, 58(2), 281–342. https://doi.org/10.1111/j.1744-
6570.2005.00672.x.
10. Ostroff, C., Shinn, Y., & Kinicki, A. J. (2005). Multiple perspectives of congruence: Relation-
ships between value congruence and employee attitudes. Journal of Organizational Behavior,
26(6), 591–623. https://doi.org/10.1002/job.333.
11. Schein, E. H. (2004). Organizational culture and leadership (3rd ed.). San Francisco, CA:
Jossey-Bass.
12. Schein, E. H. (2000). Sense and nonsense about culture and climate. In N. M. Ashkanasy, C. P.
M. Wilderom, & M. F. Peterson (Eds.), Handbook of organizational culture and climate (pp.
xxiii–xxx). Thousand Oaks, CA: Sage.
13. Spencer-Oatey, H. (2008). Culturally speaking: Culture, communication and politeness theory
(2nd ed.). London, UK: Continuum.
14. Lo Bianco, J. (2003). Culture: Visible, invisible and multiple. In J. Lo Bianco, & C. Crozet
(Eds.), Teaching invisible culture: Classroom practice and theory (pp. 11–35). Melbourne:
Language Australia.
15. John, O. P., Naumann, L. P., & Soto, C. J. (2008). Paradigm shift to the integrative big-five trait
taxonomy: History, measurement, and conceptual issues. In O. P. John, R. W. Robins, & L. A.
Pervin (Eds.), Handbook of personality: Theory and research (pp. 114–158). New York, NY:
Guilford Press.
16. Church, A. T. (2000). Culture and personality: Toward an integrated cultural trait psychology.
Journal of Personality, 68(4), 651–703. https://doi.org/10.1111/1467-6494.00112.
17. Migliore, L. A. (2011). Relation between big five personality traits and Hofstede’s cultural
dimensions: Samples from the USA and India. Cross Cultural Management: An International
Journal, 18(1), 38–54. https://doi.org/10.1108/13527601111104287.
18. McCrae, R. R. (2002). Cross-cultural research on the five-factor model of personality. Online
Readings in Psychology and Culture, 4(4), Article 1. https://doi.org/10.9707/2307-0919.1038.
19. Seibert, S. E., & Zhou, H. (2006). The big five personality dimensions and entrepreneurial
status: A meta-analytical review. Journal of Applied Psychology, 91(2), 259–271. https://doi.
org/10.1037/0021-9010.91.2.259.
20. Hofstede, G. (1984). Culture’s consequences: International differences in work-related values.
Newbury Park, CA: Sage.
21. Hofstede, G. (2001). Culture’s consequences: Comparing values, behaviors, institutions, and
organizations across nations. London, UK: Sage.
22. Bird, A., & Osland, J. (2004). Global competencies: An introduction. In H. Lane, M. Maznevksi,
M. E. Mendenhall, & J. McNett (Eds.), The Blackwell handbook of global management: A guide
to managing complexity (pp. 57–80). London, UK: Blackwell.
23. Orr, L. M., & Hauser, W. J. (2008). A re-inquiry of Hofstede’s cultural dimensions: A call for
21st century cross-cultural research. The Marketing Management Journal, 18(2), 1–19.
24. Osland, J. S., & Bird, A. (2000). Beyond sophisticated stereotyping: Cultural sensemaking
in context. Academy of Management Executive, 14(1), 65–77. https://doi.org/10.5465/AME.
2000.2909840.
25. De Mooij, M., & Hofstede, G. (2010). The Hofstede model: Applications to global branding
and advertising strategy and research. International Journal of Advertising, 29(1), 85–110.
https://doi.org/10.2501/S026504870920104X.
26. Hofstede, G., & Minkov, M. (2010). Long- versus short-term orientation: New perspectives.
Asia Pacific Business Review, 16(4), 493–504. https://doi.org/10.1080/13602381003637609.
27. Hofstede, G. (2011). Dimensionalizing cultures: The Hofstede model in context. Online Read-
ings in Psychology and Culture, 2(1), Article 8. https://doi.org/10.9707/2307-0919.1014.
28. Hofstede, G., Hofstede, G. J., & Minkov, M. (2010). Cultures and organizations: Software of
the mind (3rd ed.). New York, NY: McGraw-Hill.
29. Fang, T. (2003). A critique of Hofstede’s fifth national culture dimension. Interna-
tional Journal of Cross-Cultural Management, 3(3), 347–368. https://doi.org/10.1177/
1470595803003003006.
30. Kwok-Bun, C., & Peverelli, P. J. (2010). Cultural hybridization: A third way between
divergence and convergence. World Futures, 66(3/4), 219–242. https://doi.org/10.1080/
02604021003680479.
31. De Mooij, M., & Beniflah, J. (2016). Measuring cross-cultural differences of ethnic groups
within nations: Convergence or divergence of cultural values? The case of the United States.
Journal of International Consumer Marketing, 9(1), 2–10. https://doi.org/10.1080/08961530.
2016.1227758.
32. Beugelsdijk, S., Maseland, R., & van Hoorn, A. (2015). Are scores on Hofstede’s dimensions
of national culture stable over time? A cohort analysis. Global Strategy Journal, 5(3), 223–240.
https://doi.org/10.1002/gsj.1098.
33. Denison, D. (1996). What is the difference between organizational culture and organizational
climate? A native’s point of view on a decade of paradigm wars. The Academy of Management
Review, 21(3), 619–654. https://doi.org/10.2307/258997.
34. Schneider, B., Ehrhart, M. G., & Macey, W. H. (2013). Climate and culture. Annual Review of
Psychology, 64, 361–388. https://doi.org/10.1146/annurev-psych-113011-143809.
35. Ehrhart, M. G., Schneider, B., & Macey, W. H. (2014). Organizational climate and culture: An
introduction to theory, research, and practice. New York, NY: Routledge.
36. Howell, A., Kirk-Brown, A., & Cooper, B. K. (2012). Does congruence between espoused
and enacted organizational values predict affective commitment in Australian organizations?
The International Journal of Human Resource Management, 23(4), 731–747. https://doi.org/
10.1080/09585192.2011.561251.
37. Amos, E. A., & Weathington, B. L. (2008). An analysis of the relation between employee—Or-
ganization value congruence and employee attitudes. The Journal of Psychology: Interdisci-
plinary and Applied, 142(6), 615–632. https://doi.org/10.3200/JRLP.142.6.615-632.
38. Da Silva, N., Hutcheson, J., & Wahl, G. D. (2010). Organizational strategy and employee
outcomes: A person-organization fit perspective. The Journal of Psychology: Interdisciplinary
and Applied, 144(2), 145–161. https://doi.org/10.1080/00223980903472185.
72 D. Starr-Glass
39. Ostroff, C., Kinicki, A. J., & Rubiah, S. M. (2013). Organizational culture and climate. In I. B.
Weiner, N. W. Schmitt, & S. Highhouse (Eds.), Handbook of psychology, volume 12: Industrial
and organizational psychology (pp. 643–676). Hoboken, NJ: John Wiley. https://doi.org/10.
1002/9781118133880.hop212024.
40. Chirico, F., & Nordqvist, M. (2010). Dynamic capabilities and trans-generational value creation
in family firms: The role of organizational culture. International Small Business Journal, 28(5),
487–504. https://doi.org/10.1177/0266242610370402.
41. Denison, D., Lief, C., & Ward, J. L. (2004). Culture in family-owned enterprises: Recognizing
and leveraging unique strengths. Family Business Review, 17(1), 61–70. https://doi.org/10.
1111/j.1741-6248.2004.00004.x.
42. Zahra, S. A., Hayton, J. C., Neubaum, D. O., Dibrell, C., & Craig, J. (2008). Culture of family
commitment and strategic flexibility: The moderating effect of stewardship. Entrepreneurship
Theory and Practice, 32(6), 1035–1054. https://doi.org/10.1111/j.1540-6520.2008.00271.x.
43. Reed, E. N., & Suresh, G. (2003). Do organizational cultures replicate national cultures? Iso-
morphism, rejection and reciprocal opposition in the corporate values of three countries. Orga-
nizational Studies, 24(7), 1115–1151. https://doi.org/10.1177/01708406030247006.
44. Gulev, R. E. (2009). Are national and organizational cultures isomorphic? Evidence from a
four country comparative study. Managing Global Transitions, 7(3), 259–279. Retrieved from
http://www.fm-kp.si/zalozba/ISSN/1581-6311/7_259-279.pdf.
45. Quinn, R. E., & Rohrbaugh, J. (1983). A spatial model of effectiveness criteria: Towards a
competing values approach to organizational analysis. Management Science, 29(3), 363–377.
https://doi.org/10.1287/mnsc.29.3.363.
46. Cameron, K. S., & Quinn, R. E. (2006). Diagnosing and changing organizational culture:
Based on the competing values framework. San Francisco, CA: Jossey-Bass.
47. Goodman, E. A., Zammuto, R. F., & Gifford, B. D. (2001). The competing values framework:
Understanding the impact of organizational culture on the quality of work life. Organization
Development Journal, 19(3), 58–68.
48. Kwan, P., & Walker, A. (2004). Validating the competing values model as a representation of
organizational culture through inter-institutional comparisons. Organizational Analysis, 12(1),
21–37. https://doi.org/10.1108/eb028984.
49. Lamond, D. (2003). The value of Quinn’s competing values model in an Aus-
tralian context. Journal of Managerial Psychology, 18(1/2), 46–59. https://doi.org/10.1108/
02683940310459583.
50. Maximini, D. (2018). Organizational culture models. In D. Maximini (Ed.), The Scrum culture:
Introducing agile methods in organizations (2nd ed., pp. 9–25). Berlin, Germany: Springer.
https://doi.org/10.1007/978-3-319-11827-7_2.
51. Handy, C. (1993). Understanding organizations (4th ed.). London, UK: Penguin Books Ltd.
52. Schneider, W. E. (1994). The reengineering alternative: A plan for making your current culture
work. Burr Ridge, IL: Irwin.
53. Trompenaars, F., & Hampden-Turner, C. (2003). Riding the waves of culture: Understanding
cultural diversity in business (2nd ed.). London, UK: Nicholas Brealey Publishing.
54. Machado, D. D. P. N., & Carvalho, C. E. (2008). Cultural typologies and organizational envi-
ronment: A conceptual analysis. Latin American Business Review, 9(1), 1–32. https://doi.org/
10.1080/10978520802189047.
55. Hersey, P., Blanchard, K. H., & Natemeyer, W. E. (1979). Situational leadership, perception,
and the impact of power. Group and Organization Management, 4(4), 418–426. https://doi.
org/10.1177/105960117900400404.
56. Blanchard, K. H., Zigarmi, D., & Nelson, R. B. (1993). Situational leadership after 25 years:
A retrospective. The Journal of Leadership Studies, 1(1), 21–36. https://doi.org/10.1177/
107179199300100104.
57. Avery, G., & Ryan, J. (2002). Applying situational leadership in Australia. Journal of Man-
agement Development, 21(4), 242–262. https://doi.org/10.1108/02621710210423784.
58. Bronson, C. (2015). Practical ethnography: A guide to doing ethnography in the private sector.
Journal of Organizational Ethnography, 4(3), 367–370. https://doi.org/10.1108/JOE-07-2015-
0018.
59. Fayard, A. -L., & Van Maanen, J. (2015). Making culture visible: Reflections on corporate
ethnography. Journal of Organizational Ethnography, 4(1), 4–27. https://doi.org/10.1108/JOE-
12-2014-0040.
60. Yanow, D. (2012). Organizational ethnography between toolbox and world-making. Journal
of Organizational Ethnography, 1(1), 31–42. https://doi.org/10.1108/202466741211220633.
61. Hardy, C., & Clegg, S. R. (2006). Some dare call it power. In S. R. Clegg, C. Hardy, T. B.
Lawrence, & W. R. Nord (Eds.), Handbook of organization studies (2nd ed., pp. 754–775).
Thousand Oaks, CA: Sage.
62. Strauss, A. (1978). Negotiations: Varieties, contexts, processes, and social order. San Fran-
cisco, CA: Jossey-Bass.
63. Hallett, T. (2003). Symbolic power and organizational culture. Sociological Theory, 21(2),
128–149. https://doi.org/10.1111/1467-9558.00181.
64. Blase, J. (1991). The politics of life in schools: Power, conflict, and cooperation. Newbury Park,
CA: Sage.
65. Starr, K. (2011). Principals and the politics of resistance to change. Educational Management
Administration & Leadership, 39(6), 646–660. https://doi.org/10.1177/1741143211416390.
66. Blase, J. (2005). The micropolitics of educational change. In A. Hargreaves (Ed.), Extending
educational change: International handbook of educational change (pp. 264–277). Dordrect,
Netherlands: Springer. https://doi.org/10.1007/1-4020-4453-4_13.
67. Jackson, J. H., & Mathis, R. L. (2012). Human resource management: Essential perspectives
(6th ed.). Mason, OH: South-Western.
68. Kotbra, L. M., Gillespie, M. A., Schmidt, A. M., Smerek, R. E., Ritchie, S. A., & Denison, D. R.
(2012). Do consistent corporate cultures have better business performance? Exploring the inter-
action effects. Human Relations, 65(2), 241–262. https://doi.org/10.1177/0018726711426352.
69. Harrison, T., & Bazzy, J. D. (2017). Aligning organizational culture and strategic human
resource management. Journal of Management Development, 36(10), 1260–1269. https://doi.
org/10.1108/JMD-12-2016-0335.
70. Hofstetter, H., & Harpaz, I. (2015). Declared versus actual organizational culture as indicated
by an organization’s performance appraisal. The International Journal of Human Resource
Management, 26(4), 445–466. https://doi.org/10.1080/09585192.2011.561217.
71. Carroll, W. R., Dye, K., & Wagar, T. H. (2011). The role of organizational culture in strategic
human resource management. In N. M Ashkanasy, C. P. M. Wilderom, & M. F. Peterson (Eds.),
Handbook of organizational culture & climate (2nd ed., pp. 423–440). Thousand Oaks, CA:
Sage.
72. Zohar, D., & Hofmann, D. A. (2012). Organizational culture and climate. In S. W. J. Kozlowski
(Ed.), Oxford handbook of organizational psychology (pp. 643–666). New York, NY: Oxford
University Press.
73. Chow, I. H. S., & Liu, S. S. (2009). The effect of aligning organizational culture and
business strategy with HR systems on firm performance in Chinese enterprises. Interna-
tional Journal of Human Resource Management, 20(11), 2292–2310. https://doi.org/10.1080/
09585190903239666.
74. Hatch, M. J., & Schultz, M. (1997). Relations between organizational culture, identity and
image. European Journal of Marketing, 31(5/6), 356–365. https://doi.org/10.1108/eb060636.
75. Hernes, T., & Schultz, M. (2017). A temporal understanding of the connections between orga-
nizational culture and identity. In A. Langley, & H. Tsoukas (Eds.), The SAGE handbook of
process organization studies (pp. 356–372). London, UK: Sage Publications. https://doi.org/
10.4135/9781473957954.n22.
76. Schultz, M., & Hernes, T. (2013). A temporal perspective on organizational identity. Organi-
zation Science, 24(1), 1–21. https://doi.org/10.1287/orsc.1110.0731.
77. Balmer, J. M. T., & Greyson, S. A. (2002). Managing the multiple identities of the corporation.
California Business Review, 44(3), 72–86. https://doi.org/10.2307/41166133.
78. He, H. W., & Balmer, J. M. T. (2007). Identity studies: Multiple perspectives and implications
for corporate-level marketing. European Journal of Marketing, 41(7/8), 765–785. https://doi.
org/10.1108/03090560710752393.
74 D. Starr-Glass
79. Hatch, M. J., & Schultz, M. (2002). The dynamics of organizational identity. Human Relations,
55(8), 989–1018. https://doi.org/10.1177/0018726702055008181.
80. Weiss, R. M. (1983). Weber on bureaucracy: Management consultant or political theorist? The
Academy of Management Review, 8(2), 242–248. https://doi.org/10.2307/257751.
81. Pryor, M. G., & Taneja, S. (2010). Henri Fayol, practitioner and theoretician—Revered
and reviled. Journal of Management History, 16(4), 489–503. https://doi.org/10.1108/
17511341011073960.
82. Grachev, M., & Rakitsky, B. (2013). Historic horizons of Frederick Taylor’s scientific man-
agement. Journal of Management History, 19(4), 512–527. https://doi.org/10.1108/JMH-05-
2012-0043.
83. Wagner-Tsukamoto, S. (2008). Scientific management revisited: Did Taylorism fail because
of a too positive image of human nature? Journal of Management History, 14(4), 348–372.
https://doi.org/10.1108/17511340810893108.
84. Kelman, H. C. (2006). Interests, relationships, identities: Three central issues for individuals
and groups in negotiating their social environment. Annual Review of Psychology, 57, 1–26.
85. Lorsch, J. W. (1986). Managing culture: The invisible barrier to strategic change. California
Management Review, 28(2), 95–109. https://doi.org/10.2307/41165187.
86. Luthans, F., Milosevic, I., Bechky, B. A., Schein, E. H., Van Wright, S., Maanen, J., et al.
(2013). ‘Reclaiming’ anthropology: The forgotten behavioral science in management histo-
ry—Commentaries. Journal of Organizational Ethnography, 2(1), 92–116. https://doi.org/10.
1108/JOE-04-2013-0008.
HRM in the Organization: An Overview
Deirdre O’Donovan
Abstract This chapter provides an overview of the Human Resource Management

(HRM) function. In particular, the historical developments that combined to shape
the modern HRM function are explored, and attention is paid to briefly overviewing
current HRM activities that are common across many organizations. Woven through-
out the chapter is the suggestion that HRM activities need to be viewed holistically,
both with regard to being parts of an overall system that impact each other, and also in
light of other organizational activities. An additional recurring theme concerns view-
ing people as one of the main determinants of achieving organizational goals. The
chapter concludes by reinforcing the relationship between HRM and organizational
success.
1 Human Resource Management: What Is It and Where

Did It Come from?
Human Resource Management (HRM) is essentially a philosophy about how people

should be managed [1]. It is a comprehensive, coherent approach to employing and
developing people, with a focus on both improving the effectiveness of an organiza-
tion through people, but also treating those people in a morally sound manner [1]. A
widely repeated definition of HRM is offered by Storey [2: 5], who proposes it is:
A distinctive approach to employment management which seeks to achieve competitive
advantage through the strategic deployment of a highly committed and capable workforce,
using an array of cultural, structural and personnel techniques.
More simplistically, Boxall and Purcell [3: 184] propose that HRM concerns:
Anything and everything associated with the management of the employment relationship
of the firm.
D. O’Donovan (B)
Department of Organization and Professional Development, Cork
Institute of Technology, Cork, Republic of Ireland
e-mail: deirdre.odonovan@cit.ie

76 D. O’Donovan
Regardless of how it is defined, it is worth remembering that for as long as there

has been business involving the employment of others, there has also been HRM,
or, more specifically, HRM activity. As discussed later in this chapter, HRM encom-
passes a number of activities, for example, recruitment, compensation and training.
Consequently, for as long as employees have been hired, paid and trained, HRM has
existed in some form, but was simply not termed as such.
The historical development of the HRM function varies across the globe. In the
context of many countries, particularly Ireland, the UK and the USA, however, the
modern term “Human Resource Management”, replaces the term “Personnel Man-
agement”. Personnel management replaced “Labour Management” (1940s), which
replaced “Welfare” (1920s) [1]. We can, therefore, trace the evolution of the modern
HRM function right back to the Industrial Revolution.
Beginning in Britain and spreading through Europe and North America, a crucial
foundation of modern HRM originated in the form of the factory system. This saw a
shift in industry towards factories, with owners of capital employing large numbers
of individuals to produce large quantities of standardized products for much bigger
markets [4]. Doing so set the scene for modern management practices, as these large-
scale activities required planning, organizing and control. Employees needed to be
sourced and directed, buildings and machinery needed to be maintained, production
needed to be controlled, and products needed to be sold. This all occurred on a much
larger scale than ever before. While business developed, however, working conditions
were poor for most workers, which they could do little to change until the arrival
of the trade union movement [4]. This period was a catalyst for Social Reform, a
driver of whom was Robert Owen. Owen, a factory owner, wrote about, and tried
to create, workplaces where employees were treated fairly and encouraged to reach
their potential [5]. Leading on from the factory system, and of great significance
to modern HR, two important developments surfaced in the late nineteenth/early
twentieth centuries, specifically;
1. The welfare tradition,
2. Scientific Management.
The first of the above developments, the welfare tradition, is largely considered
the “genesis” [4: 25] of HRM. As mentioned above, during the Industrial Revolution
workers were poorly treated and viewed as simply instruments of production. In a
few large companies in Britain, a series of voluntary initiatives were undertaken to
improve conditions, primarily concerning pay, working hours and health and safety
[4], which remain areas of concern for HRM today. During this phase, welfare offi-
cers, typically female, viewed as the forerunners of HR Practitioners (HRPs), were
first appointed, primarily in Quaker-owned food and confectionary firms in the late
1800s [4, 6]. World War I initially helped to drive the welfare tradition in factories
due to the need to increase the speed of production, yet, post-war, in the face of
widespread unemployment and economic depression, many welfare initiatives were
abandoned. While these initiatives were abandoned, however, the caring orientation
of welfare is still evident in modern HRM and can be seen in areas such as health
and safety and employee assistance programmes.
HRM in the Organization: An Overview 77
As the popularity of the welfare tradition waned in the face of post-war economic
depression, the second key development identified earlier, Scientific Management,
increased in popularity. Most closely associated with Frederick Winslow Taylor,
Scientific Management is often referred to as Taylorism. As employers sought ways
to improve industrial performance, Taylor’s notions of labour efficiency, based on
his work at the Bethlehem Steel Company in the early 1900s, became increasingly
popular [4]. Widely adopted in both Britain and the USA between World Wars I
and II, Taylor encouraged the adoption of more systematic approaches to job design,
employment and pay [4]. Systematic approaches to recruitment, selection and pay
are still evident in HRM today.
Under Taylorism, the activity of the emerging HRM function was expanded, as
attention was paid to time and motion studies, job analysis, incentive schemes and
training. This served to shift orientation from the caring focus of welfare officers
towards the efficiency focus of the “work study officer” [4] or “labour officer” [6].
The increased focus on job design, selection, training, work conditions and pay added
weight to the significance of the emerging HR function, even in the light of its shift in
orientation, as the function was required to undertake much of the responsibility for
the research and administration required to support these new initiatives [4]. While
Taylorism/Scientific Management assisted in significantly improving efficiency and
systematic approaches to employee management, it has also faced a number of criti-
cisms. It is, for example, associated with many problems still associated with indus-
trial work, including high turnover, absenteeism and low motivation. The next stage
in the evolution of the modern HRM function, the Behavioural Science Movement,
has its roots in these criticisms.
Similar to Scientific Management, but closer to a welfare orientation, the
Behavioural Science Movement also generated a body of knowledge on emerging HR
activities such as selection and training, motivation, and rewards, but also employ-
ment relations. This movement assisted in addressing some of the issues associated
with work in the new industrial era. Just as the origins of Scientific Management are
most closely associated with Frederick Taylor, the origins of Behavioural Science
are most closely associated with Elton Mayo, and Fritz Rothlisberger and William
Dickson. Mayo’s work in particular, based on research conducted in Western Elec-
tric’s Hawthorn Works (Chicago, US) between 1924 and 1932 [7], indicated that
employee performance is influenced not just by working conditions and payment,
but also by motivation and needs. This research highlighted the importance of social
factors, group dynamics and employee motivation on both individual performance
and organizational effectiveness [4]. Overall, conclusions from the body of work
have assisted the HRM function in better understanding drivers behind employee
motivation and performance. Conclusions include that:
• Employees are motivated by factors other than just pay and conditions,
• The need for recognition and sense of belonging are important,
• An employee’s attitude to work is shaped strongly by the group to which that
individual belongs to,
78 D. O’Donovan
• The ability of the informal group or clique to motivate an individual should not be
underestimated [7].
Overall, the studies underscored the powerful nature of social relations at work
and encouraged movement towards consideration of the interpersonal aspects of
organizing employees.
While the studies noted above were being undertaken, another development which
would go on to shape the HRM function of today was blossoming, specifically, Trade
Unionism. Although the trade union movement can be traced back to the early 1900s
[4], the changing face of production in the light of World War I spurred employees
on in their efforts to organize themselves to improve their pay and conditions. While
membership of trade unions has risen and fallen, and risen again, their increasing
size, and legitimacy as a result of various pieces of legislation (which vary across
countries), saw more activities added to the HRM function, including negotiation
and industrial relations.
The above developments provide a simple snapshot of events that contributed to
modern HRM. While a number of other events resulted in shaping the HRM function
of today, those described, albeit briefly, above highlight some of the more universal
contributions. These contributions can be seen in the activities of modern HRM
activities, as discussed in the next section.
2 An Overview of Common HRM Activities
HRM deals with a number of activities. The full list of HRM responsibilities varies
across organizations dependent on a number of factors, including organizational size,
culture, type and the organizational view of (or philosophy concerning) employees.
Additionally, while many HRM departments are responsible for developing and
coordinating activities, line managers are often responsible for their implementation.
This chapter will provide an overview of HR activities that are common across many
organizations, specifically;
1. People Resourcing,
2. HR Planning,
3. Learning, Training and Development,
4. Performance Management,
5. Reward Management,
6. Diversity and Inclusion,
7. Engagement and Branding,
8. Employee Relations,
9. Administration and Compliance.
Each of these activities interrelate to achieve HR goals, and, ultimately, organi-
zational goals. Much has been regarding these activities; however, the scope of this
chapter allows for an overview discussion, beginning with people resourcing.
2.1 People Resourcing
People resourcing is much more than simply “hiring and firing”. Employees are
arguably an organization’s most important asset, or certainly one of them, as, with-
out them, nothing can be achieved. We discuss organizations as entities in their own
right, but, an organization is actually a collection of people. Without that collec-
tion of people, the employees, goals cannot be achieved. As such, one of the most
important elements of employee resourcing is first attracting, i.e. Recruiting, the right
candidates. Recruitment refers to attracting the right people to apply to an organi-
zation. In order to ensure the right people are being attracted, there are important
pre-recruitment activities to be undertaken (see Fig. 1).
To ensure the right candidates are being hired to fill a position, we must first make
sure the right candidates are being attracted to that position. To do so, we need to
Job Analysis
Job Description
Person Specification Recruitment:
• Advertising choice and

candidate attraction
Selection:
• Sorting applications and

shortlisting
• Selection Procedures
• Filling the position
Retention Onboarding:
and • Induction activities
Engagement • Initial training
Fig. 1 Stages in people resourcing. Source Author (2019)

80 D. O’Donovan
know what the position the future candidate will be filling involves, as this helps
to form an advertisement that will be more successful in attracting the right people
for the position. Consequently, as Fig. 1 illustrates, the first step in sourcing is to
undertake a job analysis. Job analysis essentially tells us everything about the job
and concerns examining the job in question to identify;
• what it involves, i.e. the tasks and activities that make up the position,
• the human requirements of the job, i.e. what someone will need to be able to do
to successfully undertake the role,
• the context in which the job is performed.
Gathering and analysing data on the above allows for the development of the next
two important steps; the job description and person specification.
Based on the information gathered in the job analysis stage, a comprehensive list
of job specific tasks and associated responsibilities and requirements can be drawn
up. This details exactly what the job entails. Job descriptions also typically contain
the job title, how the job fits into the organization in terms of who the person in
the job will report to, who will report to them, the level of responsibility and salary.
Job descriptions are vitally important, as they form the foundation for contracts of
employment, and assist in Performance Management activities. In addition to the
aforementioned details, job descriptions clarify the skills and competencies required
for successful undertaking of the role. This assists in the next phase; development of
the person specification.
The person specification, stemming from the job analysis and the job description,
clarifies who the person undertaking the job should be i.e. what skills, knowledge,
experience and educational qualifications they will need to appropriately perform
the tasks required of the job. While the job description describes what the job is, the
person specification helps to pick the right candidate from the pool of candidates at
the selection phase. Once these three pre-recruitment phases have been undertaken,
attention can be turned towards recruitment.
Now that what the job entails and the skills and experience necessary to carry out
the job tasks are known, it is possible to create a job advertisement. Concurrently,
a decision must be made regarding the appropriate recruitment channels or media
to use. The aim of the recruitment stage, as discussed earlier, is to attract the right
people to apply. This requires the creation of a job advertisement that will attract the
right people, and choice of the right place to put the job advertisement. There are
a number of options available to organizations looking to place a job ad. The most
suitable approach should be based on the type and level of the position and include
the following:
• The organization’s own website/recruitment portal,
• The organization’s social media channels,
• Professional network sites (e.g. LinkedIn),
• Recruitment agencies,
• Headhunters,
• Online recruitment boards (e.g. Monster.com, Jobs.ie),
• Industry and trade-specific journals and magazines,

• Recruitment fairs,
• Traditional media.
As mentioned above, it is important to factor in both the type of job and level
when making a choice on where best to place the job advertisement, as it is important
to consider where the required pool of candidates would be likely to discover the
advertisement. If, for example, the role is entry level, a recruitment fair, social media
channels or the company’s website/recruitment portal may be appropriate. If the
role is senior, or perhaps the skills required are in short supply, then the use of a
recruitment agency or headhunter may be more appropriate. As important as this
choice is, creation of the advertisement is equally important.
The purpose of the job advertisement is to encourage the right candidates (i.e.
individuals possessing the skills and knowledge required for the job) to apply. This
requires the creation of an advertisement that is attractive to suitable potential can-
didates, but encourages non-suitable applicants to not apply. The primary method
of achieving this balance is by specifying the main tasks of the job and the main
skills and knowledge required to assist individuals in identifying whether the job
matches their capabilities. It should be noted, of course, that sometimes non-suitable
applicants may apply, and, while not suitable for that position, they may be suitable
for another, so organizations need to think of the “bigger picture” when it comes to
sorting applications. In general, job advertisements should include;
• the name and location of the organization,
• brief information on the company,
• the job title and level,
• salary or salary scale,
• the main tasks and activities of the role (drawing from the job description),
• the skills, experience and knowledge required (drawing from the person specifi-
cation),
• how, where and when to apply, and the closing date for final applications.
In writing the above, organizations should check that their draft advertisement;
• is not contrary to any anti-discrimination legislation,

• is not misleading with regard to potential benefits,
• is accurate with regard to the job requirements (drawing from the job analysis),
• is realistic in requirements (e.g. a job advertisement for a graduate role should not
be calling for many years of previous experience),
• avoids clichéd terms that do not add value (or could discourage some suitable
candidates from applying), for example “dynamic”, “assertive self-starter”,
• avoids terms that may be ambiguous and open to interpretation, for example “brand
evangelist” or “entrepreneurial spirit”.
Once the appropriate job advertisement has been written, and the best place to
advertise the job decided, the next stage, Selection, can begin.
82 D. O’Donovan
As Fig. 1 indicates, selection is more than simply hiring a person, although selec-
tion ultimately refers to picking the right person from the pool of applicants. Making
sure to pick the right person involves a number of steps. First, applications, whether
in the format of a curriculum vitae, application form or other, must be sorted. Sorting
applications requires use of the person specification again. This tool identified the
skills, knowledge, experience and education required in order to fulfil the job tasks
(as set out in the job description). Consequently, applications need to be matched
against requirements and “shortlisted”. Shortlisting concerns filtering the most suit-
able candidates from the unsuitable applications. It is critically important to ensure
that the candidates being brought forward to the shortlist are those that best match
the job requirements. First, being rigorous in the matching process makes it more
difficult for discrimination to occur, and easier for organizations to defend their deci-
sions. Second, the purpose of recruitment and selection is to hire the best person for
the job, and focusing on objective data during decision-making makes that a more
likely outcome. Once a shortlist has been developed, containing the applications
of the employees who seem to best match the requirements of the position, these
applicants can be invited forward for selection procedures.
There are a number of selection procedures, or techniques, that the organization
can make use of. These include
• Interviews (individual, group, panel),
• Ability tests,
• Aptitude tests,
• Psychometric tests,
• Presentations,
• Work samples,
• Assessment centres (which combine a number of tests).
Interviews are still the most commonly used selection technique, as they allow
for discussion of past experience, offer the candidate the opportunity to highlight
their fit for the role, and allow hiring managers to probe the interviewee’s responses.
Regardless of the tool selected, organizations should make sure to invite candidates
with sufficient notice, and clarify or identify a number of points, including:
• The location,
• Time,
• Date,
• Who they will be meeting,
• Whether travel expenses are reimbursed,
• The job title and level,
• Any documentation the candidate will be required to bring,
• The format of the process, i.e. whether it will be an interview, a psychometric test
etc.
Once each candidate has gone through the selection technique being employed,
they should, prior to leaving, be informed of the next step in the process (e.g. reference
checks, a medical or a second round of testing), and when they can expect to hear an
outcome. The selection procedures must be designed in such a way that the process is
measurable, i.e. a grading system that allows the hiring managers and those involved
to assign justifiable scores based on clear metrics should be used. This allows for
a distinction to be made between candidates and again aims to ensure the most
suitable person for the job is being hired based on their predicted ability to undertake
the necessary activities rather than any other factor. Once the most suitable candidate
has been identified, they should be offered the position, ideally in writing, whether
letter or email, and told how to accept (or reject) the offer, and the time frame they
have to do so. If the preferred candidate rejects the offer, the position can then be
offered to the next most suitable candidate. On occasion, however, it will be necessary
to re-advertise. Once the position has been offered and accepted, HRM can engage
in onboarding and induction.
While often used as interchangeable terms, there is a difference between induction
and onboarding. Induction tends to be a short-term, administration-oriented process.
The process typically concerns, for example, filling out forms, overviewing the con-
tract, benefits and practical integration of the employee into the organization by, for
example, setting up their email address, providing them with a staff ID card and
giving them a tour of the business. Onboarding is a longer process, the aim of which
is to assist employees in being successful. Onboarding aims to fully integrate the
employee into the organization, its culture and the role. This may be undertaken by
making sure the employee receives all necessary training, is given and asked for feed-
back, through the creation of development plans, and by one-to-one conversations
to acknowledge progress and work done well, and troubleshoot and potential issues
or errors. These activities assist in clarifying and reinforcing expectations and goals,
and can create engagement and inclusion. It is important, once a suitable employee
has been hired, that attention is paid to retention, as there is little point hiring the
best candidates if they cannot be retained.
2.2 HR Planning
While resourcing, discussed above, is concerned with attracting, hiring and keeping
the best people, HR Planning is concerned with ensuring that employees in the
organization are being used as effectively as possible to achieve organizational goals.
This requires holistic consideration of future and current demand for employees
and skills, training and development requirements, succession and continuity, and
business strategy. HR planning and business planning should happen in tandem,
given HR deals with the organizations current employees and sourcing of future
employees, and those employees impact the achievement of business goals. When the
organizations strategy has been decided, the task of HRM is to assist the organization
in meeting that strategy by having the right people, with the right skills, in the right
job, working in the right direction. Gunnigle et al. [4] made a number of arguments
to cement the importance of HR Planning, specifically it;
84 D. O’Donovan
1. Facilitates reduction of HR costs as both shortages and surpluses of employees

can be anticipated and corrected before they become unmanageable,
2. Provides a basis for planning employee development,
3. Helps to improve the business planning process,
4. Ensures equal opportunities are provided for all categories of employees,
5. Promotes greater awareness of the importance of having well-integrated HR
management policies and activities.
Regarding argument five in the above list, the suggestion is that HRM activities
need to be considered holistically with regard to how each activity impacts another,
rather than as stand-alone tasks. To assist HR Planning efforts, Gunnigle et al. [4]
have also proposed a four-stage planning process, with each stage interlinked. The
four stages are;
1. Stocktaking,
2. Forecasting,
3. Planning,
4. Implementing.
Stage 1, stocktaking, requires identification of variables that impact organizational
operations, which fall into two categories: the external and the internal environment
[4]. Considering the internal environment, HR needs to develop an accurate HR Pro-
file, classifying the workforce with regard to age, experience, abilities and skills. This
can be greatly assisted by up-to-date job analyses, as discussed earlier. HR can also
conduct a skills audit to keep track of core competencies and current skills of employ-
ees, as some jobs may have changed with regard to new or redundant activities, or
other employees may have engaged in Continuous Professional Development (CPD)
and so enhanced their skill set. Performance appraisal, as part of the Performance
Management Process, can be used to identify employee potential and future training
needs. Considering the external environment, HR should strive to keep up to date
with the skills and educational profile of the labour market to assist the organization
in making choices about where to recruit for future roles. If, for example, a core
skill required by the organization is not being taught in local colleges and universi-
ties, or is not typically present among the working population, the organization may
need to recruit oversees for that skill in the future, or use recruitment agencies and
headhunters.
Stage 2, Forecasting, involves forecasting both the supply of, and demand for,
labour [4]. It has been argued that this is the most difficult aspect of HR planning,
as it requires the organization to predict how many employees will be needed for
the future, and HRM to determine where these employees are likely to be sourced.
This reinforces the argument that HR Planning and Business Planning should be
undertaken in conjunction with each other, as it is difficult for HRM to accurately
forecast if they are not fully versed of future organizational strategy, and therefore
employee, requirements.
Another element of forecasting labour supply and demand relates to keeping
records on three supply indices; labour turnover, absenteeism and age [4]. A cer-
tain amount of employees will always be expected to leave in a given year. People
leave because of retirement, better opportunities elsewhere, illness or disciplinary

issues. These employees need to be replaced to maintain operations. This is termed
“turnover”. Some turnover is good, as it brings new thinking into the organization
or removes underperforming employees. Turnover becomes problematic, however,
when levels are high. High turnover carries costs, including recruitment and selection
costs, productivity gaps, and potentially damaged employer branding. As such, being
aware of the usual turnover rate is beneficial in two ways. First, it helps HRM to pre-
dict how many employees are likely to leave in a year, and, subsequently, where their
replacements may be sourced (whether internally or externally). Second, monitor-
ing turnover levels assists in identifying increases in turnover, which can be swiftly
investigated to prevent a bigger, more permanent staffing issue from occurring.
While turnover refers to employees leaving the organization, absenteeism relates
to employees who do not quit, but simply do not attend work. Forecasting current
levels of absenteeism can assist in predicting future levels, and trends. Absenteeism
refers to all absence from work other than paid holidays, meaning, similar to turnover,
a certain amount is inevitable. Individuals may be absent due to illness or accident,
may be late or face travel disruption. Alternatively, individuals may not attend work
because they simply dislike the organization or the role. This means that absenteeism
takes two forms; voluntary and involuntary, and is a function of two variables; moti-
vation and ability. Motivation to attend is linked with the employee’s feelings about
the organization and the job, and whether they feel a pressure to attend. When an
employee has negative feelings towards work, or does not feel pressure to attend, this
absence is termed voluntary. Ability is mainly concerned with illness or incapacity
that prevents an employee from attending work, and is usually termed Involuntary.
Both forms of absenteeism can be detrimental to organizational performance, and so
systems, including disciplinary and Performance Management procedures, need to
be in place to deal with both forms.
Finally, engaging in age analysis assists forecasting in three ways, specifically;
1. Identification of imminent retirement patterns,
2. Planning recruitment policies,
3. Identifying career and succession paths.
The third stage of Gunnigle et al.’s [4] model, planning, is focused on developing
actions in the light of Stages 1 and 2. In particular, this stage concerns identifying
the gap between supply of, and demand for, labour and skills, and deciding how to
address that gap. If a shortage of employee numbers or skills has been identified, a
recruitment or retraining plan can be developed. In contrast, if a future surplus has
been identified, HR can assess whether individuals can be retrained and redeployed
or, less ideally, made redundant. Whichever option is chosen to deal with a surplus,
there is likely to be an impact on employee relations and engagement.
The final stage, implementing, requires HR to implement their decided action
points, but also reviews their outcomes. Both internal and external environments are
subject to change, sometimes rapid, and so it cannot be assumed that because a plan
should work, it will.
86 D. O’Donovan
Organizational Strategy
Business Planning
Learning, Training HR Planning Employee

and Development Relations
Engagement and People Resourcing

Branding
Administration & Performance

Legal Compliance Management
Fig. 2 Relationship between HR planning and other HR activities. Source Author (2019)
The model discussed above indicates that HR Planning activities impact, and are
impacted by, a number of other HRM activities. While full discussion is outside
the scope of this chapter, Fig. 2 assists to illustrate the interrelationships between
activities. Figure 2 also serves as a reminder that HRM needs to be thought of
holistically, rather than as a set of independent activities.
2.3 Learning, Training and Development
Learning, Training and Development (LT&D) is a critical HRM activity. While some
organizations may have a dedicated LT&D function, LT&D typically falls under the
HRM umbrella. As discussed earlier, an important task for HRM is to ensure the
right individuals are in the right job. While recruitment and selection activities help
to attract and pick the right people, LT&D is critical to ensure those employees
are effective in their job, and continue to be. As jobs change in scope to reflect
business requirements, it is important to ensure that employees are being trained in a
manner that assists them in continuing in the organization. LT&D can also assist in
attracting potential employees to the organization, as cohesive LT&D practices signal
to future (and current) employees that the organization values them. In addition, as
identified in Fig. 2, LT&D is tied to HR Planning. When undertaking succession and
continuity planning, future training requirements of employees as they move up the
organizational ladder can be identified. When undertaking a stocktake or forecast
during HR Planning (see earlier discussion), and when holistically considering the
organization’s strategic direction, skills gaps and future skills needs not yet met by, or
in, the organization can be identified (i.e. a Learning Needs Analysis is conducted).
Ultimately, L&D is:
The process of ensuring that the organization has the knowledgeable, skilled and engaged
workforce it needs and that individual employees have the opportunity to develop their
abilities and maximize their potential [8: 315].
This definition again points to the argument that it is individual employees whose
collective performance combines to achieve the organizations goals. Before pro-
gressing, it should be noted that Learning, Training and Development are related,
but not interchangeable terms. Training is typically instructor led, while learning is
self-directed. Development implies a long-term focus, or a broader process [9].
Learning can be formal or informal, internal or external to the organization, and
individual or organizational led. Learning can also be blended, meaning a number
of approaches are combined. Regardless of approach and drivers, it is important to
remember that all employees learn differently, and so HR should aim to cater to as
many different learning styles as possible (Note: it is recommended that Kolb’s Learn-
ing Cycle (1974) and Honey and Mumford’s (1996) Learning Styles are reviewed for
deeper understanding of this point). There are a number of factors which will deter-
mine the appropriate learning or training method. CIPD [9] provides an extensive
set of factors to consider, specifically;
• the nature and degree of priority (importance) of the learning needs,
• the required impact on performance post learning or training intervention,
• the type of job and the respective needs and accessibility,
• the background of employees,
• the organization’s culture and LT&D budget,
• evaluation of the effectiveness of previous learning interventions,
• the complexity of knowledge, skill or behaviour the learning intervention deals
with,
• employee learning preference and perception.
For the purpose of this overview, approaches will be divided into internal and
external learning and training options. Internal options include:
1. On-the-job training and shadowing,
2. Internal development programmes,
3. Coaching,
4. Mentoring,
5. Job rotation and secondment.
External options include

1. Classroom training and courses,
2. Formal education,
3. Learning projects,
4. Distance and digital (online) learning,
5. Bitesize learning [9].
88 D. O’Donovan
Regardless of the learning or training intervention options chosen, it is impor-

tant to systematically plan for training events and to evaluate the success of training
post-event. Planning is important to ensure the right employees are being trained, or
having learning facilitated, in the right way, at the right time, to be more effective
in their performance, or to assist future planning and employee movement in the
organization. Evaluation is important to ensure the planned training has been suc-
cessful in achieving its purpose, as it cannot be presumed that attendance at training
automatically results in altered performance or an enhanced skill set.
A five pronged process for planning and delivering learning or training events
has been proposed. The five phases are analysis, design, development, implemen-
tation and evaluation. During the analysis phase, what employees will learn in, and
be able to do after, the training is identified, along with the learning environment
and the employee’s existing skills. The design phase concerns defining the subject
matter and choosing the right methods. Armstrong [10] advocates a blended learn-
ing approach, which involves the use of multiple methods, and also proposes that a
significant amount of learner participation should be factored in. In the third stage,
development, the design phase is expanded on, and the detailed training programme is
established. The programme outlines the plan for the session, the learning outcomes,
the outline content, the individuals involved in delivery, the methods of delivery and
preparation of aids (e.g. handouts, exercises, slides). All necessary facilities should
be decided on and booked at this stage, and a final version of the programme dis-
tributed to managers, and later to the employees taking part. Final costs should be
checked to ensure the budget is being kept to, and those delivering the training or
facilitating learning should prepare their individual sessions. The implementation
phase simply involves implementing the programme as it was planned. Finally, each
training session should be evaluated by the training programme director and by par-
ticipants. It is important to measure the impact of the training on performance and
assess whether the objectives originally laid out were met [8]. While sometimes
employees need time to digest new learning and properly apply it to their work, if
the learning outcomes were not achieved, or performance was not impacted in the
desired way, action must be taken. The HR function can seek feedback from trainers
and employees to ascertain whether the training approach chosen was appropriate,
further instruction is needed for some employees, or something occurred during
the event that negatively impacted the session. Once the root of the issue has been
explored, steps must then be taken (based on the aforementioned five-phase model)
to complete the training in an effort to improve both individual and organizational
performance. It should be noted, however, that while training can assist in improving
organizational functioning by enhancing branding and engagement, making some
employees feel rewarded, and overall enhancing skill sets, these benefits can often,
unless there is a dramatic difference, be difficult to prove.
2.4 Performance Management
Performance Management is much more than a yearly appraisal of an employee’s

work. Nor, indeed, is Performance Management solely focused on the performance of
individuals. Instead, Performance Management is a continuous process which seeks
to clarify expectations of both the organization and employees [11] while establishing
an understanding of what is to be achieved and how [12]. Performance Management
can therefore be viewed as an approach to managing people that increases the like-
lihood of organizational success [12] by improving the efficiency and effectiveness
of employees, and, through them, the organization. Performance Management can
be argued to be a vital process, as discussed at the beginning of this chapter, as it is
the individuals within the organization who combine to achieve organizational goals
(see Fig. 3). To clarify, DeNisi [13: 57] defined Performance Management as:
The range of activities engaged in by an organization to enhance the performance of a target
person or group, with the ultimate purpose of improving organizational effectiveness.
The overall aim of Performance Management is to set expectations, measure and

review results, and reward performance, to improve employee performance, with
the ultimate goal of positively affecting the organization’s success [14]. Achieving
this aim does not automatically mean there must be a complicated procedure put in
place. Additionally, what Performance Management looks like and its component
parts vary across organizations. There are, however, a number of component parts
that an effective Performance Management system comprises. These are;
• Performance appraisal/Review,
• Goal setting,
Organizational Strategy Organizational Goals
Strategic Goals
Tactical Goals
Operational/Individual
Goals
Fig. 3 Relationship between organizational strategy and individual goals. Source Author (2019)
90 D. O’Donovan
• Feedback,
• Reward.
Performance Management and performance appraisal are often used as inter-
changeable terms. They are not, however, the same, as appraisal is a component
of Performance Management [11]. Indeed, performance appraisal as a stand-alone
form of managing performance has been widely criticized [10]. To shift focus from
short-term performance to holistic and long-term performance, the term “appraisal”
has been replaced in some organizations to, for example, “analysis”, “assessment”
or “review”.
Performance appraisal serves multiple purposes. It can be used as a vehicle of com-
munication to provide feedback on current and recent performance, and reinforce
and clarify goals, expectations and standards, identify training needs and poten-
tial for development, and address job-related issues [15]. When properly under-
taken, appraisals can serve to motivate employees by acknowledging appropriate
performance and achievements. Additionally, from the perspective of the employee,
appraisals can be an opportunity to discuss their view of their performance and career
options, and to clarify and set future goals and performance plans. Appraisals can
also assist employees in identifying skills sets that need to be improved in order to
help them to improve their overall performance.
When conducting performance appraisal or analysis, it is important that analysis
of employee performance is based on clear and agreed standards, and supported by
evidence, rather than the reviewer’s opinion [10]. Additionally, all aspects of the
review should be documented. These details are critical, as they provide support for
any decision made or outcomes associated with the performance review process.
Appraisals which are not conducted well can result in legal costs for an organization
if decisions are challenged [16], or can see other costs in the form of diminished
performance.
While formal analysis may happen just once a year, analysis should also be under-
taken during informal conversations throughout the year, which offers the benefit of
both correcting and clarifying behaviours, but also reinforcing appropriate behaviours
by acknowledging good performance. During formal reviews, there are a number of
assessment options that can be employed, including;
• Rating,
• Graphic Rating Scales,
• The Critical-Incident Technique,
• Behaviourally Anchored Rating Scales,
• Behavioural Observation Scales,
• Results-Based Scales,
• Competency-Based Scales,
• Forced Ranking,
• Narrative Assessment [10: 81–99].
Regardless of the tool chosen, it is vital that managers are trained by the HRM
function in how to administer and operate assessments, as these often fall under their
remit. Indeed, while the HRM function designs most, if not all, of the elements of
Performance Management, it falls to line managers to implement them. This applies
to all HRM activities that have been delegated to line management.
In order to review and assess performance, goals and standards of performance
must be set. These can be assessed, communicated, added to or amended, and rein-
forced during performance assessment reviews. Without goals and established stan-
dards, it is more difficult for employees to perform appropriately. As highlighted in
Fig. 3, goals should stem from the organizations strategy, with a view to realizing
that strategy. Clear goals for individual employees are therefore important.
Goals and targets can be both task and developmentally related. In addition to
clarifying the performance required of the employee, goals, when stretching but
attainable, can be motivating. Overall, goal setting can be an effective method of
influencing performance [17]. For effective goal setting, goals should;
• Be short, simple and understandable,
• Be achievable but challenging,
• Have a time limit,
• Be arrived at through employee participation to ensure commitment,
• Clearly outline the reward(s) the employee will receive upon completion,
• Clearly communicated, and visible [18],
• Be revisable and a little flexible,
• Identify any possible constraints that may affect their achievement [19].
Another Performance Management component closely related to goal setting is
feedback. Without feedback on performance, employees are less likely to be aware
of to what degree they are reaching, or on track to reach, their goals, and whether
their general performance is acceptable. Feedback can occur formally as part of
Performance Management, generally at the time of performance review, but should
also occur informally. Informal, frequent feedback aids in continuously aligning
individual performance with goals and organizational needs, and also in reinforcing
desired behaviours while addressing non-desired behaviours. Feedback is important
not just for individual performance, but also for group/department and organizational
performance. Reflecting back on Fig. 3, if individual performance resulting in indi-
vidual goal achievement feeds into overall organizational goal achievement, then it
is important to ensure that performance is being continually monitored and aligned,
via feedback.
While feedback can therefore be argued to be of benefit to the organization as
a whole, it also carries a number of benefits for the individual employee. First,
it provides employees with insight into what they need to improve upon, which
ultimately helps them to perform better. Second, it can help employees to understand
how their performance is viewed by others [20] which can help them become a
better team member. Feedback can also encourage employees to take responsibility,
and motivate them to take steps to improve their performance [21]. The benefits
associated with feedback for both the organization and the individual are more likely
to be realized when feedback is based on job tasks and job-related performance rather
than the person.
92 D. O’Donovan
Reward as a HRM Activity is discussed more fully later, but first, Performance
Management in itself provides reward. First, non-financial rewards are provided in a
variety of ways. In particular, Performance Management involves recognition (both
formal and informal), gives employees the opportunity to succeed and develop their
skills, and assists in career planning. Performance Management can also enhance
both engagement and commitment [10]. Financial rewards may also be associated
with Performance Management, in the form of Performance-Related Pay (PRP). If
the organization decides to incorporate PRP into their Performance Management
System, a clear means by which increases or performance-related bonuses will be
decided is critical. This is commonly achieved via ratings based on the performance
review [10]. It is also critically important that managers are trained in use of ratings,
to avoid any unfairness, whether real or perceived, which may leave the organization
liable to legal claims. Reward as a HRM activity is discussed next.
2.5 Reward Management
As with Planning and Performance Management, reward also needs to be related to,
and based on, organizational strategy. Reward, whether in the form of compensation
or additional benefits and incentives, exists to ensure that employees are operating
in such a way that organizational strategy is more likely to be achieved, and to
reinforce appropriate, desired behaviour. Regarding the latter point, reward should
particularly reinforce behaviours that assist the organization in achieving its strategy,
and so reward strategy should flow from organizational strategy. Figure 4 highlights
that, in addition to having a relationship with organizational strategy, the reward
function of HRM also impacts, and is impacted by, other HRM activities.
The reward strategy concerns what is to be done about reward over the next few
years, and how, while the rewards system is the resulting set of policies and procedures
that are implemented to ensure reward management is conducted in such a way that
both the organization and its employees benefit [1]. Successful implementation of the
reward system requires training managers, as line managers are likely to be involved
in many reward-related activities. As mentioned in the Performance Management
section of this chapter, for example, managers may need to use performance review
data to make decisions on PRP.
The HRM function, in conjunction with senior management, has a number of
decisions to make regarding the type of rewards that will be offered by the organiza-
tion. A decision must be made as to whether rewards will be individual, communal,
extrinsic (or transactional) or intrinsic (or relational).
Individual reward is reward which primarily benefits the individual employee.
This may take the form of, for example, a bonus, commission or training. Communal
reward has a broader focus and tends to benefit a number of, if not all, employees.
These rewards may include work-life balance initiatives, health care and holidays.
Transactional rewards are usually financial, i.e. extrinsic, in nature. These rewards are
typically related to job performance and are easily copied by competitors. Transac-
Organizational Strategy
Reward Strategy
Reward System:
Policies and Procedures

Types of Reward
o Total Reward
Performance Learning, Training and HRM Budget (&

Management Development Finance)
Fig. 4 Relationship between reward and other activities. Source Author (2019)
tional rewards include, for example, base pay, bonuses and profit sharing. Relational,
i.e. intrinsic, rewards tend to be more difficult to copy. These include the communal
rewards already mentioned, and additional individually oriented rewards, including
training and development, performance management and career planning (based on
the well-known Towers Perrin Model of Total Rewards).
A trend that has been increasing in popularity concerns combining the above
options and focusing on total reward. This approach is not only more cohesive, but
emphasizes the importance of all aspects of the work experience and environment
for employees. There is, after all, little point in offering high levels of base pay if
employees are unhappy with every other aspect of their job, as base pay can easily
be matched by competitors.
As indicated in Fig. 4, reward interacts with performance management, training
and development and finance. With regard to interactions with performance man-
agement, both activities can reinforce and support each other. Through performance
management, goals can be set and desired behaviours clarified. Rewards can then
reward achievement of goals and expressions of desired behaviour, further reinforc-
ing them. In an opposite vein, the potential of reward receipt can assist in modifying
employee behaviour by encouraging them to work to achieve desired goals to achieve
said reward. This, however, requires the employee to attach valence to the reward.
Furthermore, Learning, Training and Development (LT&D) can, under total
rewards, be considered a reward in its own right. LT&D can be a potential outcome
of performance review, when a skills gap is identified, a desire to develop skills is
expressed, or potential for progression is identified. In the second and third of those
94 D. O’Donovan
scenarios, LT&D can be considered a reward, as the employee is being facilitated in

developing their skills, or assisted in their future progression.
Finally, at least given the scope of this chapter, it is important that rewards are
budgeted for, which requires liaising with the Finance Department/Function. There
is, for example, little point in developing a new incentives scheme that will require
increased HRM spending, if the money for that will not be provided in the budget.
Additionally, there needs to be consideration of long-term feasibility and sustain-
ability of rewards offered, specifically with regard to financial rewards. The HRM
function needs to ensure that if a new suite of financial rewards are developed and
implemented, funding exists to follow through on what has been promised. If not,
rewards activities will instead disengage and demotivate, achieving the opposite of
their purpose.
2.6 Diversity and Inclusion
Diversity means differences. As society is diverse, and organizational workforces are

made up of individuals from society, organizations are therefore also diverse, even
when they appear to be homogenous. Diverse employees bring different perspectives
and experiences to the organization, which can, if encouraged and utilized, present
a number of benefits to the organization, as indicated in Fig. 5.
Diversity in the organization can also potentially result in challenges, however, as
identified in Fig. 6. In order to capitalize on the benefits of diversity, while harnessing
some additional benefits and pre-emptively addressing the potential challenges, an
inclusionary approach to diversity management is advocated.
Inclusion refers to the extent an individual feels they belong in the organization and
can be themselves. Inclusion concerns how well organizations and their employees
fully connect with, engage and utilize employees across all types of differences [23].
Under an inclusionary approach to diversity management, the differences of indi-
viduals in the workplace are not just identified, rather are integrated into the very
fabric of the organization’s culture [24]. Employees are allowed to be their full
selves while at work, and their differences and similarities are leveraged to improve
the functioning and performance of the organization. Through diversity training,
organizations can encourage employees to consider what makes them different, not
to negatively highlight differences, rather to focus on how those differences can be
harnessed to enhance employee, team and organizational performance. A focus on
similarities, rather than just differences, among individuals who appear quite differ-
ent can assist in increasing understanding, group harmony and feelings of a shared
sense of purpose.
While diversity management and training are useful tools in beginning to address
diversity, they have the potential to be divisive, regardless of intent. Diversity manage-
ment and training can result in trying to, or appearing to try to, understand employees
by assigning them to a particular grouping (based on, e.g. gender, age, parental status,
country of origin). Rigidly categorizing employees in this manner potentially ignores
Cost Savings:
- Reducing
Turnover
- Reduce
Winning the Talent

War
Improved
Innovation and
Diversity Creativity
Increased Inclusion
Flexibility
More Effective
Leadership
Business Growth:
- Market Expansion
- Better
Understanding
Increased
Commitment
Enhanced
Employee
Confidence, Morale
and Job Satisfaction
Fig. 5 Advantages associated with diversity and inclusion. Source Author (O’Donovan [22])
other aspects of an individual’s diversity, which can result in them feeling marginal-
ized or misunderstood. For this reason, while organizations should build foundations
on diversity management and diversity training to help enhance understanding and
open channels for communication, it is advisable to do so with the ultimate aim of
creating inclusion.
Creating and maintaining inclusion is an ongoing process, but organizations can
capitalize on the identification of a number of contributory factors which can assist
in developing and maintaining employee perception of inclusion. Of course, it is
important to remember that as all employees are different, the factors about to be
discussed may not automatically make all employees feel included, as what consti-
tutes inclusion is different for different people.
96 D. O’Donovan
Fig. 6 Diversity and

inclusion challenges. Source Increased Costs
Author (O’Donovan [22])
Lack of Senior
Management Support
Change and Complexity
Diversity and Inclusion

Tension
Challenges
Group Agendas
Reverse Discrimination
Fears
Tokensim
The first factor that organizations can develop, encourage and maintain relates to
teams. Having a sense of being part of a team has been identified as important for
inclusion, therefore, organizations should identify ways in which a team orientation
can be created [24]. The structure of some organizations may more naturally result
in team working, for example small organizations or hospitals, but other organi-
zations can enhance this team feeling by scheduling “team” meetings or briefings,
or encourage inter- or cross-departmental problem solving. A team orientation can
also be encouraged from the earlier discussed onboarding stage in large organiza-
tions by grouping individuals from different departments together for a portion of
their onboarding, to allow the development of relationships across the organization’s
departments, allowing even individuals who typically work individually or as part
of a small group to feel part of a greater team. Organizations could also take advan-
tage of common training, such as legally mandated training or, of course, diversity
training, to bring individuals from different departments, or departments in which
performance is strongly individually based, together.
The second factor concerns stability, combining the related concepts of familiar-
ity (in a unit or department) and relationships (in the workplace). First, individuals
should be allowed form and maintain relationships in the workplace. To assist this,
organizations are advised to avoid unnecessary, frequent, transfers across depart-
ments or projects. If such transfers are necessary, organizations may find it useful
to facilitate cross-departmental relationship building, whether by formal or infor-
mal activities, in an attempt to create familiarity throughout the organization. Again,
engaging in group onboarding when appropriate will make familiarity throughout
the organization more likely.
Employee engagement, perceiving respect from colleagues, and being willing, and
believing the freedom is there, to offer opinions on work-related matters, are more
contributory factors that HR and organizations can work on. Feeling respected and
free to engage in dialogue in the workplace are elements of employee engagement,
meaning organizations should, in conjunction with inclusionary efforts, also focus
on employee engagement, as both engagement and inclusion arguably support and
reinforce each other. There is a need to be cautious here, however, cognizant of
diversity in personality and culture. In particular, for some employees, being asked for
their opinion directly or publicly can be quite uncomfortable, not because of inability,
but because of personality or cultural norms, leaving them feeling unincluded. As
such, if aiming to increase engagement through participation, it may also be useful
to allow individuals to give opinions or suggestions privately in some manner.
Finally, management also has a role to play in creating inclusion and in cham-
pioning diversity. If managers are seen to behave inclusively, and view diversity as
advantageous, this symbolizes the importance of inclusion throughout the organiza-
tion. If management is seen to encourage individuals to engage their differences to
assist in their work, this symbolizes acceptance and valuing of differences. Addition-
ally, managers have a role to play in reinforcing organizational culture, and so have
a role to play in reinforcing a culture of inclusion. Managers can also act as driving
forces for the other contributory factors identified in this section. Of course, in order
for managers to behave inclusively, they too must perceive inclusion. HR functions
therefore need to remember that when engaging in activities to inclusively manage
diversity, managers must be included in, committed to, and trained in implementing,
those activities.
The HR function ultimately needs to remember that all employees are different,
and, while employees are hired by the organization for the purpose of achieving orga-
nizational goals and strategy, proactively thinking practically about what diversity
might mean for different employees in the organization can assist in trouble shoot-
ing issues which may prevent employees from working to their potential. Table 1,
adapted from O’Donovan [22], identifies and offers a brief overview of some possible
implications associated with diversity. In addition, the importance of diversity train-
ing, both awareness and skills based, should not be overlooked by HR functions, as
it can greatly assist in developing and maintaining an inclusively diverse workplace.
98 D. O’Donovan
Table 1 Practical implications of diversity

Area of diversity Possible implications
Gender • There is a potential for perceived tokenism or reverse discrimination,
particularly when large numbers of new hires into a traditionally
gender homogenous organization are another gender
• Continuing issues with low levels of female participation at senior
levels, and the presence of pull factors, may result in high levels of
female turnover or lower levels of self-investment
• Any inexplicable gap in the salary of female employees will likely
pose problems
Gender identity • Heteronormativity often means presumptions are made regarding
gender. Confusion and a lack of understanding surround many gender
identities, and so employees of differing identities may feel isolated
• A lack of understanding with regard to transgenderism can result in a
reactive approach to employees who decide to transition, rather than a
pre-prepared approach
• Employees of differing gender identities may have a preference for
different pronouns, e.g., may gender neutral terms
Sexual orientation • Heteronormativity can result in assumptions being made regarding the
gender of individual’s partners or spouses, which can result in
individuals feeling excluded, or feeling unable to bring partners to
events
• Homophobic oriented “jokes” can make it difficult for some
individuals of non-heterosexual sexual orientation to disclose their
sexual orientation (if they want to) or to feel included
• There can be friction, real or perceived, between individuals of
particular religious faiths and individuals of non-heterosexual
orientation
Religion and beliefs • Different religions have different days that are important, potentially
causing difficulties for rostering, or perceived unfairness regarding
rostering
• Different religions and belief systems have differing teachings
regarding a variety of topics (e.g. appropriate dress or gender roles)
which can result in friction among employees
• Individuals and organizations can be assumptive and presumptive
about an employee’s religion or belief system, or the extent to which
they practise, based on where the employee or their parents came
from, which can result in misunderstandings or employees feeling
marginalized
Race and ethnicity • Misguided presumptions are often made about individuals based on
their racial or ethnic background, which may result in individuals who
do not fit the presumed categorization feeling marginalized
• Conflicts may exist between employees of different racial or ethnic
backgrounds stemming from historical events
• Racism may be in an issue in an organization which employs
individuals from a variety of races and ethnicities which can be
difficult to deal with if ingrained in employee’s psyches
(continued)
Table 1 (continued)
Culture • Culture can influence:
– How employees perceive their and their managers role;
– Work ethic and expectations;
– Communication style;
– Whether there should be a large or small gap between those who are
in power and those who are not;
– The extent to which they feel they should be involved in
decision-making or performance reviews (and whose);
– The extent to which they accept risk, or need structure and rules;
– Values and preferences with regard to rewards and incentives;
– Desire for work-life balance;
– Preferences for working as an individual or as part of a team
[25–29]
Age • Dependent on their personal views on age, conflict may arise between
some younger and some older employees
• Similarly, age discrimination against older or younger employees on
the part of management can impact both performance and
recruitment/retention
• Different age demographics are purported to have different
preferences with regard to, for example, management styles,
flexibility, work-life balance [30] and rewards
• Older employees may have a desire to reduce working hours or change
job roles
Abilities/disabilities • While many countries now have anti-discrimination legislation in
place, individuals with disabilities may still be discriminated against in
the recruitment process, leaving organizations open to law suits
• New employees with disabilities may be perceived by existing
employees to have been hired as part of a quota, potentially resulting
in perceived tokenism
• Assumptions about the ability of employees with disabilities to do the
job they were hired for can result in those employees feeling
marginalized or feeling forced to accept help that they do not require,
resulting in frustration
Learning style • People learn differently, and in different speeds, meaning some
employees may take longer to learn new process or adapt to change
• Some forms of training may be less effective for some employees,
which, if not recognized, can be frustrating for the employee, the team
and management
Communication • Employees may have different perceptions regarding what constitutes
style an appropriate amount or type of communication, meaning some
employees may expect formal, some may expect informal, and some
more that others
• Employees may also have differing perceptions regarding what
constitutes appropriate media for communication
• Some employees may seek work-life balance and become frustrated
by communication outside of working hours
(continued)
100 D. O’Donovan
Table 1 (continued)
Personality type • Personality can impact the extent to which employees are involved in
their job, committed to the organization, the manner in which they
perform [31] or how they perceive their own performance levels
• Differing personality types can result in both inter-team friction and
personality conflicts
• Some personality types may be more likely to engage in presenteeism
which can result in burnout, or result in spreading illness
Parental status • Employees without children may feel that availing of flexible working
options is frowned upon [32] which can result in feelings of inequity
and frustration, negatively impacting turnover and performance
• Assumptions can be made with regard to whether employees who are
parents desire promotions or increased workload, which can result in
such employees feeling overlooked, which can impact retention
• Employees during, and returning post, maternity leave or parental
leave may feel forgotten about or unsure of new organizational
developments, increasing turnover potential
• Employees availing of flexible schedules to assist in balancing work
and parental responsibilities may also feel “out of the loop” if not kept
up to date with events
Source Author (adapted from [22])
2.7 Engagement and Branding
Employee engagement and employer branding may be dealt with as separate activi-
ties, but this chapter suggests that HR functions should consider them related, as they
can serve to reinforce each other. Engagement concerns the extent to which employ-
ees are committed to their work, their department and their organization (ideally to
all). This commitment is purported to make employees more motivated to strive for,
and achieve, high levels of performance. When employees are engaged, a number of
positive outcomes are possible, including:
• lower absenteeism rates,
• lower turnover intent and higher retention levels,
• increased productivity and higher profitability,
• lower error and waste levels,
• improved customer satisfaction and loyalty,
• enhanced likelihood of realizing organizational strategy and business success [8].
There is, however, a possible negative outcome that HR functions need to be aware
of in the form of presenteeism. Employees who experience high levels of commit-
ment to their job or the organization may end up either overworking or attending
while ill. Continuously working beyond required hours can, even for committed
employees, result in burnout. Attending while ill, in particular while contagious, can
result in making other employees unwell, negatively impacting overall organizational
performance.
Engagment
Activity
and Branding
Performance
Benefits and Assists: LT&D R&S Inclusion
Management
Helps to Organizational
Achieve: Strategy
Fig. 7 Beneficial impact of engagement and branding. Source Author (2019)
The employer brand relates to how the organization differentiates itself in the
labour market to assist in recruiting, retaining, and, as inferred earlier, engaging
employees [33]. Evidently, branding is concerned with both potential and current
employees. The organization’s employer brand should connect the organizations
values, people strategy and HR policies. Effective branding efforts can:
• help the organization to compete for talent,
• drive loyalty through effective recruitment, retention and, again, engagement [33],
• assist the organization in achieving its strategy via the attraction and retention of
the best talent.
It should be noted that engagement can assist in the above. Engaged employees,
given they likely perceive their organization in a positive light, can be viewed as brand
ambassadors, spreading positive stories about the organization. This has the potential
to attract talent to the organization over its competitors. Moreover, the presence of
engaged employees can create an engaging culture, facilitating the perception of
engagement among new hires, subsequently aiding in their retention.
To develop an effective employer brand, CIPD [33] has identified a four-step
approach. The first stage is discovery, which concerns collecting data to explore how
the brand is currently perceived by employees and other stakeholders. Next, HR
should engage in analysis, interpretation and creation, by building a clear picture of
what the organization “stands for”, and both require and offer as an employer. Third,
the picture established in step two must be communicated and implemented in the
organization. Finally, the HR function needs to measure and maintain the employer
brand.
Both individually and as related concepts, engagement and branding activities
can positively impact other HR activities, as highlighted in Fig. 7. As also indicated
in Fig. 7, engagement and branding are also arguably linked to the organization’s
strategy.
First, consider Learning, Training and Development (LT&D). Engaged employ-
ees are typically more committed to the organization and its success. Consequently,
engaged employees may be more likely to seek out training that assists in improving
their performance. Additionally, engaged employees, as a result of their commit-
ment, may be more willing to informally train and develop new hires, reducing
formal LT&D costs and facilitating on-the-job training, mentoring and coaching.
Development for the purposes of succession planning may be more successful when
102 D. O’Donovan
employees are engaged and therefore more committed to staying. A strong brand
may assist in easing the pressure on LT&D activities by helping to ensure that the
right candidates (i.e. with the right skill set) are applying to begin with. Furthermore,
training spending may be easier to justify outside the HR function when turnover is
relatively low as a result of employee buy-in to the brand. Of note, LT&D can also
enhance engagement, and support branding initiatives, as employees who feel the
organization is investing in them via training may feel more committed.
The relationship between engagement, branding and recruitment has already been
introduced at the beginning of this section, but is worth some further discussion.
Recruitment and selection is a costly activity. While some turnover is to be expected,
and in some cases desired (e.g. when underperforming employees leave), in general,
high turnover levels are to be avoided. Employee engagement can assist in keeping
turnover levels at a low level, as engaged employees are more likely to stay in
the organization. Additionally, strong branding efforts that attract employees to the
organization, and are then supplemented by engagement and inclusion activities,
can, when maintained, help employees to feel part of a “bigger picture” and a unified
team, again assisting in retention, thereby lowering R&S costs. In another vein,
existing employees who are engaged and buy in to the employer brand can aid
recruitment efforts by recommending the organization as a great place to work,
making it attractive to talent in their network, whether their personal network or their
professional network (e.g. by posting on platforms such as LinkedIn).
Regarding inclusion, engagement has been identified as a factor which contributes
to employees perceiving the concept [22]. It has been noted that engagement and
inclusion support and reinforce each other. Elements of engagement, such as employ-
ees feeling respected and able to participate and engage in open dialogue, can enhance
perceived inclusion in the workplace. In turn, perceiving inclusion can result in
enhanced morale, feelings of support and job satisfaction, bolstering engagement
levels [34].
Finally, Fig. 7 notes that engagement and branding can benefit and assist perfor-
mance management activities. First, it can be argued that engaged employees are
more likely to be committed to, and therefore more likely to strive to achieve, the
goals set for them. Similarly, employees who buy in to the employer brand may
be more committed to helping the organization to achieve. Next, it is possible that
engaged, committed employees will be more willing to fully engage in the perfor-
mance management process, identifying issues that may prevent goal attainment,
seek clarity on required behaviours, and take feedback on performance in a positive
light, rendering the performance management process more effective. Employees
striving to perform at high levels can aid the performance management process in
identifying employees suitable for progression in the organization. Finally, it was
noted earlier in the Performance Management section of this chapter that perfor-
mance management can enhance engagement. As per Fig. 7, the positive impact of
engagement and branding on the four HRM areas discussed above can combine to
assist in achieving organizational strategy, in this case by reducing costs, increasing
ad hoc and informal training, enhancing perceived inclusion and reaping its benefits,
and rendering performance management more effective.
2.8 Employee Relations
The area of employee relations (ER), or employment relations, is concerned with

managing the psychological contract and the employment relationship. This term
refers to the methods organizations use to deal with employees, whether individually,
collectively, or through a trade union. Employee relations is wider than industrial
relations (IR), which refers to interactions between management and trade unions
involving collective bargaining and agreements and dispute resolution [8].
Armstrong and Taylor [8] note that ER policies express the organization’s philos-
ophy on the sorts of relationships that are wanted between managers and employees,
and identifies four approaches, specifically
1. Adversarial: The organization decides what it wants to do, and how. Employees
are expected to align with the organization, and only exercise power via refusal
to cooperate.
2. Traditional: A relatively good day-to-day working relationship exists, but man-
agement makes proposals which are reacted to by employees via their represen-
tatives (if they exist), and employees either accept the proposals, or leave.
3. Partnership: Employees are involved in developing and executing policies, but
the organization retains the right to manage.
4. Power Sharing: The organization involves its employees in both day-to-day and
strategic decisions/decision-making.
Effective communication in the workplace is central to good ER. Focusing on
positive, desired, behaviours and outcomes, and taking a proactive, problem-solving
approach to issues and recommending viable, appropriate solutions are also critical
factors [35]. This requires a specific set of HRM competencies, including consulta-
tion, surveying (and interpreting) employee’s attitudes, identifying potential conflict
and early efforts of resolution of management and employee differences. Indeed,
conflict is inherent in ER. CIPD [35] note that the increased popularity of Alterna-
tive Dispute Resolution (ADR) techniques, including mediation and early neutral
evaluation, represents an important shift from the more traditional industrial relation
(IR) framework. The traditional IR approach tended to place emphasis on formal
disciplinary and grievance procedures. ADR, however, is more reflective of a desire
for a “win-win” outcome or stopping negative outcomes from conflict at an early
stage.
Contracts are the foundation of the employment relationship. The relationship
begins with an employee undertaking to provide inputs, which the organization will
return with remuneration. While this relationship is initially formed by a legal con-
tract drawn up at the commencement of employment, the psychological contract
becomes as significant to the employment relationship. It is important to note that,
in many countries, a lack of written contract does not mean there is no contractual
relationship as there are typically still legal rights and responsibilities pertaining to
both employees and employers. The purpose of the formal, legal contract is to clarify
and solidify expectations regarding the job, required employee inputs, and resulting
organization remuneration [8].
104 D. O’Donovan
In contrast to the legal contract, the psychological contract is neither a legal docu-
ment or even necessarily expressed. Instead, it is a set of unwritten expectations on the
part of both the employer and the individual employee. Essentially, it concerns what
employees believe is expected of them and what they believe they should receive in
return for fulfilling those expectations, and what the employer believes is expected
from them, and what they should get from employees in return for fulfilling those
expectations [8, 36]. Offering a stark warning, CIPD [37] caution that the psycholog-
ical contract can significantly impact both the length and quality of the employment
relationship. Organizations can ill-afford to ignore this warning as, as discussed
earlier, retention and engagement of talented employees is crucial to organization
success. In order to manage the psychological contract, and align employee expec-
tations, the organization must be clear regarding what is expected of the employee
and what they offer [37]. The performance management system can assist HR in this
effort via use of performance review and feedback. Rewarding desired behaviours
via the rewards system can also further reinforce actual requirements.
Regardless of how it is achieved, it is important to manage the psychological
contract, as employees who perceive fairness in terms of their inputs and what they
receive for them are more likely to be committed and engaged, which, as discussed in
earlier sections of this chapter, can result in a number of benefits for the organization.
Consequently, it is important to create a climate of fairness and trust. Trust will, or is
more likely to, be perceived by employees when managers act fairly and consistently,
their actions are transparent and justifiable, and decisions are communicated, and
other HR tools are effectively employed. If trust is lost via a breach or violation of
the psychological contract, it is important to attempt to mend that break. Indeed, it
is important to take swift action, as violation can result in strong negative reactions
ranging from anger to withdrawal of effort [38] and breaches have been found to
have a significant impact on work-related outcomes [39].
A psychological contract breach is an event that triggers affective reactions in
employees, while a violation is the emotional response (e.g. frustration and anger)
that follows a breach [39]. To avoid a breach to begin with, managers and HRM
• Should not make unrealistic promises during recruitment, induction and onboard-
ing, and daily interactions,
• Pay close attention to the emotional state of employees and aim to proactively
address issue to prevent negative outcomes and behaviour occurring.
When a breach occurs, to prevent movement towards negative reactions (viola-
tions), managers and HRM can;
• Listen to employee’s concerns when an issue arises and explain how the issue is
out of management, HRM or organizational control.
• Assess employee’s needs and make a sincere effort to fulfil obligations when
reasonable [39].
Breach does not have to result in violation. If the breach can be shown to not be
the employer’s fault, or intended, the impact on loyalty, engagement, commitment
and productivity can be small and short-lived. As such, open communication and
speedy action are important.
2.9 Administration and Compliance
The final activity, or more appropriately set of activities that have been grouped
together for the purpose of this overview chapter, as they fit nicely together, con-
cerns Administration, Compliance and Safety. Administration is the act or process of
administering something [40], or the range of activities associated with organizing
and supervising the manner in which the organization functions [41]. HR engages
in a significant amount of administration. Indeed, many organizations have individ-
uals employed in a HR Administration role. Each of the activities discussed in this
chapter thus far require administration of policies and procedures, the purpose of
which is to manage how the organization functions. Table 2 provides some examples
of administration duties related to each activity (not an exhaustive list). An important
note relates to the last administration duty identified in Table 2, specifically “Keep
records on all of the above up to date”. A crucial activity concerns maintaining
“paperwork” (whether in an electronic or paper format). The reason this is impor-
tant is that maintaining paperwork allows organizations to prove they have been
fairly and consistently applying policies and procedures, and have been dealing with
their employees in a legally sound manner. This is of vital importance if ever a case
regarding unfair or constructive dismissal, discrimination or harassment is brought
against the organization. This signifies the importance of HR Compliance.
Compliance concerns adhering to law. Employment law varies across country.
Common areas include anti-discrimination, harassment and bullying, pay, work-
ing hours, leave entitlements, immigration, union interactions, health and safety,
grievances and discipline. These broad areas each cover a number of other areas.
While most of these areas have been already addressed (either mentioned or dis-
cussed) in this chapters, two areas not yet discussed but certainly important are
health and safety and grievance and discipline.
HRM functions today need to think beyond physical health and safety to also
consider mental health and employee well-being. This notion has its roots in the
welfare tradition, discussed in the opening pages of this chapter. Organizations have
a duty of care to look after the physical and mental well-being of their employees,
and to operate in such a way that their health is not compromised. This may take
the form of training employees in how to identify and manage stress, use of an
Employee Assistance Programme (EAP), or training on harassment, discrimination
and bullying. One-off training on these areas alone is insufficient, however. Instead,
refresher training should be frequent, and all employees should be made aware of the
channels to follow if experiencing something in the workplace which is detrimental
to their physical or mental well-being. There needs to be two avenues to follow. While
many HRM activities are undertaken by line managers, it can unfortunately be the
case that issues resulting in potential physical or mental injury may be caused by the
106 D. O’Donovan
Table 2 HRM administration activities

Activity Administration duties
People resourcing • Undertake job analysis
• Develop and place job advertisements
• Develop metrics to effectively screen and shortlist
• Arrange selection interviews/activities
• Arrange induction and develop onboarding
HR planning • Analyse current and future skills and demands
• Act on business planning needs
Learning, training and • Undertake training needs analysis
development • Plan to deliver, and coordinate, learning and training
activities
• Evaluate activities
• Create policies for progression
Performance management • Develop and implement a performance management system
• Create forms for performance review, ratings, formal
feedback, etc.
• Train managers on the implementation of performance
management activities
• Collate data for decision-making (e.g. PRP, training,
progression) and use in future reviews (e.g. agreed
objectives for the period)
Reward management • Administer remuneration
• Administer bonuses, incentives, perks
• Maintain an analysis of market rates
Diversity and inclusion • Undertake diversity audits
• Arrange and run diversity training initiatives
• Develop and implement inclusion activities
Engagement and branding • Undertake engagement surveys and analyse results
• Communicate engagement initiatives
• Maintain and communicate the employer brand to existing
and new employees
Employee relations • Draw up clear contracts for new hires that articulate
expectations
• Use other activities, for example performance review,
feedback and reward, to reinforce and align expectations
• Maintain the psychological contract by engaging in timely,
honest communication
Administration and • Keep abreast of changes in employment legislation and
compliance implement required changes
• Maintain a work environment that adheres to current
employment law
• Enforce health and safety policies and procedures
• Develop and follow grievance and disciplinary procedures
• Undertake health and safety audits and risk assessments
• Keep records on all of the above up to date
Source Author (2019)
manager. As such, in these cases, employees need to be aware of a process by which

this can be addressed which can be used if raising the issue with their manager does
not resolve it, or they have genuine reason to fear addressing the issue with their
manager. Table 2 identifies other areas of HRM compliance regarding health and
safety.
While health and safety practices are, in most countries, a legal requirement, it
also makes good business sense. Needlessly engaging in practices that might cause
injury to employees can result in being sued or high turnover. Not having a focus on
well-being can damage engagement, commitment and inclusion, which can result
in decreased productivity, and again potentially result in being sued and facing high
turnover. Being sued or experiencing high turnover can negatively affect the business
in terms of increased costs, reduced profits and stakeholder pressure, all of which
detracts from achieving the business strategy. Beyond this, looking after employee
health, in as much as is possible, is a morally sound way to conduct business.
As mentioned, employees need to know how to go about raising grievances. This
falls under the umbrella of grievance and disciplinary procedures. A grievance pro-
cedure details the organization’s policy on handling grievances, while a disciplinary
procedure details the stages through which disciplinary actions should proceed [8].
Assisted by the initial employment contract, disciplinary procedures;
• Make employees aware of what is expected of them.
• Make employees aware of the consequences of continually failing to meet expected
standards.
• Identify obstacles preventing standards being achieved.
• Enable agreement to be reached regarding goals and timescales for improvement.
• Try to resolve issues rather than escalating issues to external dispute resolution.
• Prove fairness in that an appropriate process was followed if an employee brings
a case against the organization post-dismissal [42].
Grievance procedures;
• Offer employees a course of action if they have a complaint that they cannot resolve
through discussion with the relevant party (e.g. their manager, colleague).
• Identify points of contact and timescales to resolve the matter.
• Again, try to resolve issues rather than escalating issues to external dispute reso-
lution [42].
Adhering to these policies is crucial, as is accurately recording their use, as they

can support the organization’s position if a case is brought against them. It is impor-
tant, therefore, that HR trains managers on their use. Organizations are cautioned
that correct procedures show employers to be acting fairly, and reduce the possibility
for inconsistencies in dealing with employees. If grievances are not properly dealt
with, they can damage ER [43].
Having overviewed the common HRM activities across the organization, the final
section of this chapter offers concluding remarks on the importance of the HRM
Function.
108 D. O’Donovan
3 Conclusion: The Importance of the HRM Function
This chapter has provided an introductory overview to the development of HRM and
brief discussion of its common core activities. There are a number of strategic HRM
concepts to be considered, including Best Fit versus Best Practice HRM, Shared
Services, Ulrich’s Model of HRM etc., which are beyond the scope of this current
chapter, but worthy of further reading.
Overall, this chapter has identified a number of current themes which signify the
importance of HRM in the organization, whether as a distinct function in a large
organization or activities under the remit of some managers in smaller organizations.
First, a link between HRM and performance for the achievement of organizational
strategy and goals has been identified. In particular, it has been established that the
ability to perform and achieve rests in the organization’s people: its human resources.
As HRM activity can be used to communicate desired behaviours, shape and reinforce
performance, HRM contributes to goal achievement.
In addition to moulding and guiding performance, HRM can further contribute
to organizational success by decreasing certain costs. The chapter has discussed
how effective recruitment and selection, retention, engagement, inclusion and per-
formance management practices can result in reduced turnover, training and legal
costs. Reduced costs mean higher profits which can be used to the benefit of the
organization.
Furthermore, HR Planning, inclusion, engagement and development activities
assist in sustainability. Identifying future skills needs and developing employees to
move into new roles, and ensuring they are committed and so stay, is beneficial for
organizational longevity.
Finally, both in summation of the above latter three themes, and indeed speaking to
the overall theme of the chapter, people are important. Without them, an organization
cannot function. Given people are important, so too is HRM, the People Function.
References
1. Armstrong, M., & Taylor, S. (2014). Armstrong’s handbook of human resource management
practice (13th ed.). United Kingdom: Kogan Page.
2. Storey, J. (Ed.). (1995). Human resource management: A critical text. London: Routledge.
3. Boxall, P., & Purcell, J. (2003). Strategy and human resource management. Basingstoke: Pal-
grave Macmillan.
4. Gunnigle, P., Heraty, N., & Morely, M. J. (2017). Human resource management in Ireland (5th
ed.). Dublin: Institute of Public Administration.
5. Carlton, F. T. (1910). Robert Owen—Educator. The School Review, 18(3), 186–191.
6. Legge, K. (2005). Human resource management: Rhetorics and realities (Anniversary ed.).
Great Britain: Palgrave Macmillan.
7. Tiernan, S. D., Morley, M. J., & Foley, E. (2001). Modern management: Theory and practice
for Irish students (2nd ed.). Dublin: Gill and Macmillan.
8. Armstrong, M., & Taylor, S. (2017). Armstrong’s handbook of human resource management
practice (14th ed.). United Kingdom: Kogan Page.
9. CIPD. (2017). Learning methods. Online: https://www.cipd.ie/knowledge/hr-fundamentals/

development/learning-methods-factsheet. Last accessed 24.10.18.
10. Armstrong, M. (2018). Armstrong’s handbook of performance management: An evidence-
based guide to delivering high performance (6th ed.). Great Britain: Kogan Page.
11. Armstrong, M. (2009). Armstrong’s handbook of human resource management practice (11th
ed.). London and Philadelphia: Kogan Page Limited.
12. Weiss, T. B., & Hartle, F. (1997). Re-engineering performance management: Breakthroughs
in achieving strategy through people. Boca Raton, FL: St. Lucie Press.
13. DeNisi, A. S. (2000). Performance appraisal and performance management: A multilevel anal-
ysis. In K. J. Klein & S. Kozlowski (Eds.), Multilevel theory, research and methods in organi-
zations (pp. 121–156). San Francisco: Jossey-Bass.
14. Mondy, R. W., Noe, R. M., & Premeaux, S. R. (2002). Human resource management (8th ed.).
Upper Saddle River, NJ: Prentice Hall.
15. Torrington, D., & Hall, L. (1998). Human resource management (4th ed.). Hertfordshire:
Prentice Hall Europe.
16. Jenks, J. M. (1991). Do your performance appraisals boost productivity? Management Review,
80(6), 45–47.
17. Erez, M., Earley, C. P., & Hulin, C. L. (1985). The impact of participation on goal setting and
performance: A two-step model. Academy of Management Journal, 28(1), 50–66.
18. Galpin, T. (1994). How to manage human performance. Employment Relations Today, 21(2),
207–225.
19. Evenden, R., & Anderson, G. (1992). Making the most of people. Workingham: AddisonWesley.
20. Estep, T. (2004). Taming the feedback nightmare. T&D, 58(11), 71–72.
21. Zofi, Y. S., Meltzer, S., & Sasanian, J. (2008), Turning negative feedback into positive results.
Long-Term Living: For the Continuous Care Professional, 57(4), 49–50.
22. O’Donovan, D. (2018). Diversity and inclusion in the workplace. In C. Machado & P. Davim
(Eds.), Organizational behaviour and human resource management: A guide to a specialized
MBA course. Germany: Springer International Publishing.
23. Ferdman, B. M. (2013). Frameworks for understanding inclusion. In B. M. Ferdman & B. R.
Deane (Eds.), Diversity at work: The practice of inclusion. Jossey-Bass.
24. O’Donovan, D. (2015). Diversity, inclusion and organizational citizenship behaviours: A study
of nurses in the Irish healthcare sector (Unpublished Ph.D. thesis). Cork Institute of Technol-
ogy.
25. Hofstede, G. (2017). National culture. Online. https://geert-hofstede.com/national-culture.
html. Last accessed: 27.6.2017.
26. Hofstede, G. (1999). Think locally, act globally: Cultural constraints in personnel management.
Management International Review, 38(2), 7–26.
27. Hofstede, G. (1993). Cultural constraints in management theories. Academy of Management
Executive, 7(1), 81–94.
28. Hofstede, G. (1991). Cultures and organizations: Software of the mind. London: McGraw-Hill.
29. Hofstede, G. (1983). National cultures in four dimensions. International Studies of Management
& Organization, 13(1–2), 46–74.
30. CIPD. (2015). Managing an age-diverse workforce: What employers need to know. London:
Chartered Institute of Personnel and Development.
31. Awadh, A. M., & Wan Ismail, W. K. (2012). The impact of personality traits and employee
work-related attitudes on employee performance with the moderating effect of organizational
culture: The case of Saudi Arabia. Asian Journal of Business and Management Sciences, 1(10),
108–127.
32. Kent, P., & O’Donovan, D. (2016). What is the impact of flexible working on the worker and
the workplace? Paper presented at the Irish Academy of Management Conference Proceedings,
University College Dublin, August 31st to September 2nd.
33. CIPD. (2017). Employer brand: An introduction to employer branding, why it’s important, and
how organizations can develop a strong brand aligned with their values. Online: https://www.
cipd.ie/knowledge/hr-fundamentals/recruitment/brand-factsheet. Last accessed 19.10.2018.
110 D. O’Donovan
34. O’Donovan, D. (2017). Inclusion: Diversity management 2.0. In C. Machado & J. P. Davim
(Eds.), Managing organizational diversity: Trends and challenges in management and engi-
neering. Germany: Springer International Publishing.
35. CIPD. (2018). Employee relations: An introduction. Online: https://www.cipd.co.uk/
knowledge/fundamentals/relations/employees/factsheet. Last accessed 23.10.2018.
36. Rees, G., & Smith, P. E. (2017). Strategic human resource management: An international
perspective (2nd ed.). United Kingdom: SAGE.
37. CIPD. (2018). The psychological contract: An examination of the history, state and strate-
gic implications of the psychological contract. Online: https://www.cipd.ie/knowledge/hr-
fundamentals/communication/psychological-factsheet. Last accessed 24.10.2018.
38. Rousseau, D. M. (2004). Research edge: Psychological contracts in the workplace—Under-
standing the ties that motivate. The Academy of Management Executive (1993–2005), 18(1),
120–127.
39. Zhao, H., Wayne, S. J., Glibkowski, B. C., & Bravo, J. (2007). The impact of psychologi-
cal contract breach on work-related outcomes: A meta-analysis. Personnel Psychology, 60,
647–680.
40. Administration. (2018). In Merriam-Webster.com, https://www.merriam-webster.com/
dictionary/administration. Retrieved 26.10.2018.
41. Administration. (2018). In CollinsDictionary.com, https://www.collinsdictionary.com/
dictionary/english/administration. Retrieved 26.10.2018.
42. CIPD. (2018). Discipline and grievance at work. Online: https://www.cipd.co.uk/knowledge/
fundamentals/emp-law/discipline/factsheet. Last accessed: 26.10.2018.
43. IBEC. (2018). Grievance and disputes procedures. Online: http://www.ibec.ie/IBEC/ES.
nsf/vPages/Employment_law~During_employment~grievance-and-disputes-procedures. Last
accessed: 26.10.2018.
Desirable Characteristics of the Human
Resources Director
S. Gutiérrez-Broncano, P. Jiménez Estévez, J. Opute and Q. Pittendrigh
Abstract This chapter presents the desirable characteristics of the human resources
director. Starting from the base that human resources director needs a great respon-
sibility in the decision-making, a series of necessary characteristics that facilitate
their work are established. Among them is justified the need to have great humility,
technical knowledge, initiatives, knowledge of their employees and extensive human
training, command capacity, and exercise true leadership. All of them contribute to
the improvement by the manager of the company’s human capital and therefore of
its business competitiveness.
1 Introduction
The success of organizations over their competitors is primarily achieved when the
managers who direct them choose superior decisions, specifically when these are
taken rapidly and when the managers who direct them make superior decisions, and
specifically when these are taken rapidly and when the degree of decision imple-
mentation is extensive [1]. Therefore, the role that the company director plays, in
the present period, constitutes one of the factors that most greatly impact on the
competitiveness of the firm.
To achieve this, the manager must have the skills to identify and solve problems,
to collect and evaluate information in the process of delegating responsibilities, and
to take responsibility for their own tasks; this also includes choosing what actions to
carry out and practicing consistency with the rest of any activities implemented [2].
S. Gutiérrez-Broncano (B) · P. Jiménez Estévez

Department of Business Administration, University of Castilla-La
Mancha, Ciudad Real, Spain
e-mail: santiago.gutierrez@uclm.es
J. Opute
Division of Business/Management, Marketing and People, London
South Bank University, London, UK
Q. Pittendrigh
Michigan State University, East Lansing, USA

112 S. Gutiérrez-Broncano et al.
In this chapter, we have focused on the qualities of the human resources director,
considering that such a figure has direct dealings with the rest of the workforce and
therefore constitutes the greatest factor for transmitting knowledge and values that
strengthen group identification with the company and favor the upward progression
of the organization.
First, we analyze the functions and responsibilities that human resources direc-
tors perform in order to establish what virtues we consider essential for improving
the implementation of those responsibilities. Second, we establish other typically
needed skills and qualities, including technical training and initiative, the director’s
knowledge of the employees and human capital formation, the capacity to command
a workforce, and charismatic elements involving the exercise of authority, personal
and professional ethics, and the exercise of practical and effective (true) leadership.
2 Roles and Responsibilities of the Human Resource

Director
We must initially highlight the importance of exercising a profession. The personal

behavior of an individual who has a sense of responsibility differs vastly from that
of a person who lacks this quality. For this reason, if we wish to comprehend the
scope of a director’s responsibility, we must first perform a meticulous analysis of
the director’s functions.
Responsibility derives from the Latin “respondere” or “the ability of the human
being to respond to the acts he performs and the consequences of those acts in their
ethical content.” In this sense, we can see the relationship between responsibility
and freedom. Each person must take responsibility for the actions they undertake
and freely chosen decisions. We must not ignore that, because the professional work
of a manager includes governance over the actions of other people, this role incurs a
greater responsibility. The director is more responsible for the actions that he orders
others to put into practice precisely because the subordinates have less freedom (to
choose not to do the action). Responsibility therefore falls directly on the decision-
taker.
What does the human resources director require? It is evident, in this case, which
we are referring to the management of “people” who make up an organization that has
adopted the concrete form of a company. Therefore, the management processes prac-
ticed are part of the overall management of the company, expressing and specifying
in this way the specific tasks that each member of the organization must perform in
order to achieve the goals of the company. Therefore, to “direct” is to “decide” (with
regard to both the technical and the humane within the organization), but it is also to
“educate” (in the sense of “drawing out” new knowledge or practices from people
and “driving, guiding, accompanying” their further development). Directing, then,
differs fundamentally from “manipulating.” To draw out the qualities that another
Desirable Characteristics of the Human Resources Director 113
has hidden inside, the director has to see them and has to discover them first as it is
something that is normally veiled and hidden for even the bearer of the qualities.
The first etymological meaning of educating, “educere,” signifies drawing out a
wealth (of understanding) that a person already carries within themselves, allowing
it to externalize not because it is forced out but more through the application of
maieutics. This art and process (characteristic of the Socratic Method) of drawing
out an interlocutor’s truths through a midwifery of questioning, a method that makes
apparent to another knowledge that they had not yet recognized or formulated. This
is, figuratively speaking, like the educator who teaches reading not by granting the
ability to the student but encouraging the development of the skill of reading. Or
similarly, to learn to swim is not exactly or only taking theoretical swimming lessons
without application but requires the learner also to practice it in the water. In these
same ways, the director educates by first knowing (intuitively or through objective
tests for personnel selection previously made) that an individual has the desired or
needed qualities and then offering adequate possibilities for the person to develop
(practice) those skills.
The second meaning of the verb educate is “I will lead,” which means to guide, to
accompany, to lead as a concrete way of directing, and/or to change the behavior of
that person in order to improve them—all of which implies that these goals are based
on human values for improving coexistence and work in the business organization.
It is, therefore, crucial to act and behave in a manner that is extremely respectful of
the freedom of others, regarding their decisions, executions, and responsibilities. In
contrast, to be demanding implies obliging, forcing, or coercing another that would
lead effectively to dictatorship and the corresponding paths of submission, reaction,
subversion, or rebellion, and thus never leads to the organizational maturation of
the other. Instead, any sense of being “demanding” must involve and identify with
practices of tolerance and patience, and with the maintenance of decisions that also
know how to adapt to each case, person, and circumstance, given that the rate and
timing of learning and personal maturation differ from person to person. What is
called for is to educate while respecting individual freedoms, which implies that the
director provides the right instructions at the right time such that the subordinate,
with that information and interpersonal communication in mind, chooses, decides,
and takes responsibility for the act as well. Moreover, as the employee decides and
is free in choosing to do so, if they decide to take the correct decision, then they
share in the responsibility such that credit is shifted toward them as well. Similarly,
the decision-taker has a responsibility to make decent decisions, as they are the
one as well who grants the possibility of making mistakes and then rectifying and
learning from those mistakes. Educating in and for freedom consists precisely of
such a process: to trust in the other and to promote personal development. The
one who accompanies the decision-taker not only exposes the basis of the behavior
sought but also constitutes the content of human values in play. These behaviors
require that the decision-taker not acts out of fear or the hope merely to look good.
Rather, the director forthrightly proposes and explains the reasons and rationales for
decisions—something that a manipulator would never do.
Therefore, we can clearly see that directing people is not like running machines
by following an “instruction manual.” Decisions are proposed, not imposed, such
that the desire to act on the part of others is respected. Therefore, the management
of people can be considered one of the most sublime and rewarding tasks, yet also
the most difficult to perform because—although the company seeks to maximize
economic objectives that are built on a value of unity among employees oriented
toward tasks given by management—trying to coordinate the different actions and to
distribute certain tasks to different people such that this process leads to enrichment
and synergy, instead of confrontation, disparity, dispersion is difficult. Sometimes,
while the skills that employees possess may have no bearing on what others possess,
the total pool (of skills) among all employees is already at the disposal of the director;
as such, the director need not possess certain skills. This is the great advantage
of human groups that under appropriate management produces synergies within
the framework of the business organization. Therefore, the solutions provided by
management must be usable not only for the current situation in the present, but also
for any specific problem as contextualized by its respective companies’ situation,
including the labor force of the firm at the moment—this is because these are the
people who can improve the company and use whatever limited physical capital the
company possesses for useful applications.
From what we have previously stated, it becomes clear that if the human resources
director must take decisions for the here and for the now, being able to “educate” their
workers in the broadest sense of the term requires that the director has a personality
rich in human values and, at the same time, a balanced and harmonious personality
as it is not possible to teach what is not known and, above all, what is not practiced.
If we ponder what qualities we wish to find in a good director, we may discover what
human values he should have, what he can have, and what, in fact, he already has.
This reflection is what we intend to develop in the following work, adding that such
qualities are essential to achieve the objectives and goals that we have proposed in
the firm.
3 Fundamental Virtues of the Human Resource Director
Most likely, if we carry out a consultation among those who have to work with the
director to inform us with regard to the aspects that they would like to see practiced, it
is possible that we would find affirmations such as the following: he does not impose
his points of view, he always listens to others, accepts that another may be right or
have a better opinion than his own, positively receives the suggestions of others,
is open to what others can bring to the table in order to learn from them, accepts
that he can be mistaken like any other person, we feel understood by him, he has a
dialoguing mood, he is not arrogant, and many others opinions that we could note.
However, in the end, they always lead to the same statement: the director must be a
humble person if we wish to develop decent relations, since humility is to recognize
the truth and the reality of events or deeds (such that the humble recognizes his error,
while the resentful rejects the facts), to distinguish the valuable from what is not,
without making sense of people or pre-judgments about the goodness or courage of
something or someone [3].
This human value, which implies a whole attitude and spirit, is essential and basic
if we want to develop a dialogue with others because, although not everything is
negotiable, one can and should discuss everything, listen to others, and accept and
recognize what is good in others and give us freely, recognizing in this way that
we are neither the only nor the best in everything, something that is vital to avoid
falling into arrogance or sufficiency. This is how mutual trust is built, the basis of all
economic activity and of all coexistence and authority, because by it we can grant
credibility to the other.
This virtue is the fundamental one that the director must practice, no matter how
much it surprises us, if we wish things to work well within the organization. It is
based on all of the human behavior in the company that allows the way of the unity of
the people, the approaches, and, therefore, of the actions in teams duly coordinated.
Humility is based on two great human virtues: justice and sincerity. Justice requires
different treatment to be given to those that, in themselves, are different, but this
different treatment must be weighted so that unequal treatment is reasonably different
and does not give rise to clear discriminations that generate hurtful inequalities. On
more than one occasion, when human beings speak of justice and we ask that justice
to be done, we are proposing, almost without realizing, a request for revenge, which
is something quite different but that nests and springs many times from our hearts.
On the other hand, sincerity consists of knowing how to tell the truth that the other
can understand and to phrase it to them in a way that helps them improve on a
personal level. It has nothing to do with the arrogance or the rudeness of “climbing
the scaffold” and, from above, “read the book to others” to “sink into misery.” It is
also not about saying “half-truths” but about exposing the truth with the form and
content that the other is capable of grasping and utilizing toward the organization’s
advantage. Therefore, it is not about telling the other the first thing that comes to
mind but something that helps you clarify and improve phrased in a way that is
comprehensible.
Humility is based, then, on justice as well as sincerity, and therefore, the humble
person knows how to value his subordinates in which he can find truths greater than
within himself, a position that is essential to be able to listen and learn from others:
to be open to the truth of another, to the outsider, to the goodness of others … even
if that person is of another political, religious, cultural, or ethnic group than my
own. The humble never falls into arrogance or self-sufficiency. The humble always
generates mutual trust because he offers what he is—specifically, he offers himself
to the other and welcomes all that is good within the other. His position of justice
and sincerity makes his proposals credible because he knows how to always adapt
to the level of the listener, the one he receives, and furthermore to not downplay the
other but instead to do more, to help him improve, knowing that we can all learn
from others besides bringing to the table what we know and are. The humble knows
very well that “if you cheat me, you do not cheat on me but you deceive yourself”
because the biggest loser with that action is not me but you: the most important thing
is not that I believe you know or you can do it, but that you know it and know how
to do it as that is the fundamental issue: what you are, not what I think and I believe
about you.
4 Technical Training and the Person with Initiatives
We refer here to the appropriate training as a variable dependent on the company

that you choose to manage. We hope, then, that the manager is a person prepared
and intelligent such that they are not a braggart or presumptuous. Their preparation,
experience, culture, and knowledge are not used to “make less” of others, but instead
they use these qualities to behave as a humble person who knows how to “catch up”
with each of their subordinates, instead of demanding that they “go up”—“Up to
his position to follow him and understand him: because” it is the one above who
should and can catch up with the one below and not demand the one below to grow
up to reach his own in order to understand him. Furthermore, this applies to both the
physical stature and the intellectual stature or human experience found in each of
us. The excellent director knows how to clearly distinguish between erudition and
wisdom; thus, he is aware that, in many cases, erudition prevents access to wisdom:
it penetrates the essence of people and things, to value situations appropriately. The
superior director does not presume of what he knows, yet instead he communicates
it to others when necessary and shares it with those who need it since, acting in this
manner, he will never lose credibility: neither as a person nor for the good of his
company.
On the other hand, the human resources director must be innovative, which goes
beyond having ingenious ideas: the process of innovation involves knowing how to
adapt to each worker what is intended to be achieved globally, since it is impossible
to apply the same standards to different people. It is essential that the initiatives taken
by the director do not block those that others are able to take, and instead, the ideal
goal is to stimulate them. For example, if in a situation I pose a question with regard
to what happens to others and, given the difficulty of the case, they find few initiatives
after reflecting on it, and I then formulate a large number of possible and realistic
proposals: what will they perform in the future, is to refuse to think if something
happens to them and they will prefer to “take advantage of the opportunity” of what
I offer later. With this I have not managed to encourage and strive to have personal
initiatives but, on the contrary, I am encouraging them with my way of proceeding
to adopt a passive stance and to be carried away by my future proposals [4]. That
is to say, the issue is not about making my proposals succeed but about provoking
situations that allow others to have initiatives that propose to the group (maieutic
process) so that “you learn and commit yourself, such that you do not have the
feeling that others compromise your ideas.”
The director must also be open to receiving the proposals of others, knowing how
to communicate their own ideas and motivating their workers, to which they must
convey enthusiasm and encouragement, which is not exclusively based on words but
fundamentally associated with their position, attitude as well as their adequate and
humane treatment, which implies practicing a position of active pedagogy as we have
previously indicated.
5 Knowledge of Your Employees and Extensive Human

Training
We shift our focus away from theoretical psychology and toward practical psychol-
ogy, which may be considered more tangible and intuitive, in order to understand
how to relate to subordinates and to obtain the most out of their qualities such that
they feel useful and valuable to the extent that they also recognize your successes.
Additionally, the human resources director must comprehend, through his intu-
ition and experience in dealing with others, what qualities and potential may be found
in his subordinates that are not yet practiced and which do not exist but are likely to
be acquired, ergo allowing us to express with great clarity how we can consider an
authentic integral human development. To achieve this, rather than giving lectures
and instructions, it is preferable that specific tasks are assigned, directed, supervised,
and oriented in each case, manifesting to the worker that our interest refers to him as
a person much more so than the task he performs or the results that he may obtain.
In this way, by achieving them, the development of these values and qualities is
achieved as a result of their personal effort, which leads them to feel protagonist of
their own lives, ergo causing them grow in self-esteem and thus, being aware of how
everything has come about, is born in the worker an attitude forged in recognition,
gratitude, trust, and credibility toward his superiors with whom he does not feel
indebted but instead grateful to them because they have trusted him. Therefore, from
now on he will trust and go to his superiors on his own initiative. It is more likely
that an employee believes, introduces, and applies new ideas for the benefit of the
organization when the relationship with their managers is positive [5].
Obviously, this form of learning, which incorporates little theory and much prac-
tice, often requires that the management of the company makes risky decisions which
must be cautiously and carefully evaluated before applying them. This confronts us
with a way of resolving conflicts: some must be resolved immediately, confronting
the person with the truth of facts and situations, while others require a process of a
medium or longer term, which forms and prepares that person and then allows him
the opportunity to perform such tasks.
Human formation is essential for the achievement of what we are proposing.
Furthermore, human formation cannot merely be defined as culture, but is instead,
above all, a spirit that is acquired incrementally and involves cultivating a personality
rich in human values, both quantitatively and qualitatively, which at the same time
must be balanced, ergo leading us to recognize that we are facing a mature person.
Such a person shows in his life a position that is coherent (what may be claimed
as reasonable) and consequent (what he says is what he does) for what goes beyond
the intellectually trained, who knows how to combine tolerance or flexibility in

his actions with firmness. Both human virtues are equally important and necessary,
yet they fulfill different missions. Flexibility is necessary because, otherwise, we
would be applying the same criteria to all people and circumstances and we must
know how to adapt the decision made in each case. And the firmness is equally
necessary to never lose sight of the objective that we intend to achieve and that will
continue to be maintained: precisely, flexibility aims to make it possible to achieve
it and never lose sight of it diffused between changing circumstances. Therefore,
flexibility without firmness leads to chaos and disorientation; however, firmness
without tolerance ceases to be firmness and transforms into stubbornness, which
is curiously the position of the insecure, who do not want to lend their hand to
twist nor want to their plans to vary so much, as then they feel lost and unable to
elaborate new ones or to adapt the ones he already had and, for that reason, they react
aggressively to defend what they had and not to modify it, thus manifesting their fear
and uncertainty toward the new and unknown along with their inability to adapt to
changing situations, such that this is not firmness.
It should be highlighted in all of this that the human being, by his own condition,
is limited, insecure, and imperfect and makes mistakes. Therefore, this must be
assumed with gallantry that human error will never be a problem if one knows
it, accepts it, recognizes it, knows how to coexist joyfully with its condition as a
creature, and simultaneously, strives to surpass himself without confusing perfection
with perfectionism, as this becomes the problem of the perfectionist and the solution
is to accept that “the best can be the enemy of the good.” Thus, we must count on
imperfection and admit as realistic the limitations of ourselves and others to move
toward what is possible today, in the here and now, with the people that we have and
with the available means, enjoying the achievements we achieve instead of lamenting
that which we have not yet achieved.
Note that, regardless what is usually thought, an insecure person always tries to
apologize, which is to blame others or what surrounds them, instead of recognizing
their own mistakes or errors: it is a false pose of sufficiency, of false perfection that
has its roots in pride regardless of how painful it is to recognize this. The perfectionist
finds it difficult to accept facts and reality; therefore, he seeks explanations and ratio-
nalizations to apologize. The problem is that the excess of insecurity not only makes
it difficult to become humble but leads to intransigence and dogmatism, developing
fundamentalist and intolerant positions “for the good of others.” This is so because
we are dealing with people who “hold on to the norm” as “sure of perfection,” and
instead of being sympathetic to their own limitations and those of others to “learn
to live with others in a real world,” they demand perfection from others according
to their own opinion and criteria, so that others adapt to what they understand as
the ideal world. We therefore realize that, when encountering an insecure position,
these factors lead to intolerance, to dogmatism, and to radicalism: of the right, of the
left, of Islamic fundamentalism, or of any other extremist ideology because, in as
mentioned and in summary, it is the world, it is the others who are wrong and they
have to adapt to the extremist and his criteria, which are the only ones that are true,
correct, and valid. The problem is that this person demands that others respect their
freedom but he does not respect the freedom of others and wants to impose his point
of view.
6 Ability to Command
The ability to command is manifested in the way of organizing the company and in
decision-making, which implies the exercise of authority, something that is distinct
from the exercise of power. We must bear in mind that authority is proposed, and one
becomes creditor, while power is imposed. Therefore, authority is something that
arises in the informal organization of the company (what exists but is not designed or
formulated in writing), while the power appears in the formal organization through
the hierarchical design of the company, which grants power to each member of the
group according to the position held by the employee.
The proof that you have authority is that you do not have to appeal to the power
you have in order to have a specific action executed. Therefore, the authority already
acquired and that others recognize in a director will increase with correct or fair use
of power that is had, which will generate mutual trust and credibility in the intentions
of the boss.
In order to practice authority, first of all it is necessary to practice true commu-
nication and to make an effort on the part of all, since it is necessary to develop an
interior position that welcomes with enthusiasm the proposals that made to the direc-
tor since, as the executor of orders may do so automatically or unconsciously, even
reluctantly, etc., if in all cases the employee does not obey, it is because they lack
the internal position of acceptance that underlies every human act: to obey is not to
execute mechanically an action or to submit to a person, but instead it consists of the
realization of a human act, which by definition is free and voluntary, in affective tune
with another person to whom they recognize authority, of which they trust, in which
I trust and to which I entrust myself. Only when a person knows (from his intuition
or from his personal experience) that his own good, evaluated through “rationality
plus the ability to execute or achieve it,” is not indifferent to the other person who
sends me, which will be fair, considered, and prudent in what it asks of me; it can
be said that they have found the basis to recognize authority and accept “a priori” a
superior’s decision, which is to say: accept it before knowing what that decision can
be. Obedience constitutes, in this way, the definitive proof of my trust in the other.
Therefore, practicing obedience is not easy, nor is having authority.
Mutual trust also plays an important role. Having the human certainty that at least
the established pacts will be fulfilled is crucial—without remaining exclusively in
the evaluation of the results because, if I only contemplate this, I must admit that
I dedicate myself exclusively to assigning tasks to obtain results which is the only
thing I look for. This, which is what we call functional operational trust, is clearly
insufficient to base interpersonal relationships on it and, if applied to someone, the
most reliable employees in this sense are machines. Functional operational trust is
security in one’s own power to control the behavior of the other. How is this achieved?
Through “affective block” and personal deprogramming and through learning of

directed behaviors that take place in a closed environment, free of other influences.
If we isolate young children from their natural environment and subject them to a
“behavior learning” in which actions that coincide with our wishes are rewarded
and the initiatives they take are severely punished, over time we generate unhappy
automata that feel the desire to be loved but reject it because they “fear” it based on
their own experience. Every manifestation of their personal interests and affections
has been brutally punished.
From what we have just explained, it follows that, in order for me to grant the
other a high degree of credibility, I will have to base myself on my own experiences:
trust in the other will be based on the rationality of his decisions (which implies the
proper design and assessment of the same) together with the ability or virtuosity to
expose and propose it, so that he who receives such a proposal is able to execute it
for personal improvement and not for human deterioration. For this, it is required
that I have developed a trust in the intentions of the other and not only in their
professional or technical skills, which, overall I trust and, therefore, I trust him
because I am already convinced, by my own experience, that he seeks my good: this
is interpersonal trust, which has to be mutual, that is, structural. It is the confidence
that the patient places in the doctor: he trusts in his operative virtues (professional
knowledge) and in his moral virtues (prudence, justice, strength and temperance and
others derived from them) which lead him to have interpersonal trust and confidence.
“Getting in their hands” is willing to do what I ask before knowing what it is, as I
trust their intentions and I know that they work toward my best interests. Also of
note is that we must not forget that people are the same at home, in organizations,
with friends, with customers, etc., although sometimes we reflect relatively different
images.
From all this, it is deduced that the person who makes himself heard by what he
is, by his way of being, by his way of acting (testimony), by his worth and personal
prestige, has authority; his interest, dedication, and effort to defend and promote the
good of other colleagues and subordinates, for his respect and defense of the values
and rights of others, even when this costs him and complicates his own life. From
whom it proceeds, we say that he has “moral authority” and, therefore, attracts the
attention and interest of others, whether or not they share their points of view, because
these are always taken into account, although sometimes they are followed and they
respect by assuming them, what we call obedient posture (which is not submission),
while others fight giving rise to disobedience.
When one speaks of crisis of authority, the serious difficulties in the exercise of
it are revealed and we can ask ourselves about the origin of this crisis: is it due to
lack of knowledge regarding it? Lack of energy due to fear or laziness? Influence
of the environment? Perhaps because of all of this, given that there are limitations
that come from within the person, for to exercise authority in a non-arbitrary way
it is necessary to strive to overcome personal limitations, especially passivity and
ignorance, such that one does not want to complicate life by sending or wondering
what to do. There may also be lack of energy, perseverance, serenity, human or
transcendent criteria may be lacking … To get rid of these obstacles, it is necessary
to practice the human virtues, assuming the constant need to overcome one’s defects
with permanent effort, demanding from oneself and others what one wants to demand.
And we must overcome, also, the inconsistencies manifested, sometimes, in that we
acquire information about something important and then we do not practice it while,
at other times, the crisis comes from the arbitrary exercise of authority when we act not
for the needs of improvement of others, and instead depending on one’s own tastes,
whims or personal manias, which in turn triggers the rebelliousness of the other. There
are also limitations that come externally or derived from environmental pressures,
“what is now trending,” the lack of training and human maturity that do not assume
the content or consequences that imply values such as austerity, effort, the spirit of
service, sobriety. Also, there are, likewise, environmental pressures that are directly
precisely against the exercise of authority in various social levels that consider that
“everything new is good and the old is bad,” thus fostering attitudes of irresponsibility,
disloyalty, and arbitrariness. We argue this because in every organization there are
always some goals ( the values and objectives that are sought) together with some
means ( norms and customs). Someone must take care that these ends are achieved
and that those norms and customs are lived, such that, that someone is the one who
holds the authority.
However, exercising authority correctly and effectively is a personal challenge.
How do I gain or lose prestige in front of others? First, by my way of behaving:
good humor, naturalness, serenity, and optimism are all necessary. Second, by my
way of acting: my way of working, effort, ability to rectify, and others which may
be considered. In third place, by the way of relating to others that manifests itself in
loyalty.
We will later discuss how authority is acquired and how it is exercised, lost, and
recovered, but we must be aware that it is not sufficient to exercise authority. Instead,
it is necessary to teach others to obey because obedience is the essential counterpart
of authority: the education of obedience is part of the education of freedom and is
the main basis of support for the exercise of authority. Furthermore, obedience is
taught by example, specifically by the attitude toward life. He who obeys must know
the reason for his obedience, precisely because obeying does not consist in its mere
execution nor of a mandate or an action. The motives may be extensively diverse:
from a necessary regulation of operation to a transcendent purpose, however, we will
always find that teaching obedience means teaching to serve others in small things and
doing such an action for love. Learning to obey, in a paralleling fashion as learning to
be free, is a long and arduous process. This learning must be considered in the wide
field of participation since the authority of the superior consists on, among other
things, directing the participation of the subordinates to building toward a common
cause.
The entire process requires exigency and sacrifices, yet we know that people live
safely and more happily in an environment of demanding and clear objectives, as
such an environment demands more from the one that loves or cares more: the simple
path is to allow one to create and to do. For this, due importance must be given to
personal effort, demanding from each person an amount of output in accordance
with their possibilities. Not everyone is equal in every ability, yet inequality does not
equate to inferiority, and thus, we may refer to inequality as the diversity of skills. On
the other hand, it is necessary to know how to reinforce the prestige of others without
causing harm, belittling or criticizing them destructively. Also, since the success of
authority is more dependent on how one governs instead of over what one governs, it
is necessary to order what can reasonably be demanded, avoiding promises that will
not be fulfilled or sanctions or threats that are not executed afterward. It is therefore
important to strive continually toward setting a good example so that the subordinate
sees that what we ask is also what we strive to practice daily: what is done is always
much more important than what is said.
Similarly, we must show the subordinates that dependence can make a person freer,
where freedom is understood as what it is: capacity for self-determination oriented
to assume an individual’s own responsibility. Therefore, an individual does not lose
freedom if he depends on something good and he seeks it, while that individual loses
freedom if he depends on or becomes enslaved by something which has negative
impacts on him. Freedom is not the same as liberation as understood by one who
evades and lacks commitment.
As mentioned, the entire process takes time, as you cannot educate someone from
a distance; attentiveness is necessary because things cannot be achieved through
screaming and slapping; joy is crucial because we need it to sustain life as somber
faces and frowns cannot transmit knowledge; and faith in who can correct our defi-
ciencies. However, we must be willing to win and, at times, lose: human beings are
free, and thus we can move away from what we propose and can also return to what
we state. You must trust and have patience because exercising authority is a difficult
task, and thus it is naive to think that it can be achieved without believing in the other
and in who (WHO) can expand our own limitations.
For all this, we see that whoever has authority is heard, loved, and respected such
that the binomial authority–obedience relationship arises. However, it is possible to
have authority and not have power (and vice versa), which is a source of conflict in
the human group and leads to confrontation between the formal organization (power)
and the informal (authority): the one that can impose himself does not enjoy our trust,
and whoever has that confidence cannot make decisions for the group.
The one who obeys in some way adopts a position in which, freely and voluntar-
ily, he wants what the other wants, trusting that what the leader wants is good for
himself and ergo trusting the leader, while the one who disobeys apparently rejects
the proposal that has been made to him, yet, as we said, not only rejects what his
superior says, but also rejects his superior on a personal level, with its implications
and what such an act represents. This inner rebellion, which expresses the subordi-
nate’s rejection of the other, is sometimes produced because the leader’s behavior
and performance expose the repeated failures that the subordinate has committed,
such that this bothers the subordinate, especially when these failures are intentional
on the subordinate’s part. But this rebellion against the leader can also occur because
his behavior lacks credibility and confidence in the eyes of the subordinate, either
because of the leader’s human nature or because of their professional incompetence,
so that the employee does not contribute his spontaneous collaboration to the leader’s
proposals.
The term obedience comes from the Latin “ob-audience” which means to listen
(he who asks for an audience is in essence asking to be heard), and it must be pointed
out that the one who obeys does not submit but respects and assumes what the leader
has said in a responsible and prudent way, to the extent that he trusts and confides
in the one who has authority, ergo he takes into consideration the proposal that has
been made to him and he accepts it within himself with enthusiasm. This is to say: he
believes the other, trusts in the other, and places trust in the other. We are not before
a subjection of our way of being to that of another, to their tastes or whims, but
instead, we are before a conscious, free, and voluntary human act of the subordinate,
based on knowledge and personal decision. It is not about a mercantile negotiation
in which one group wonders if an action interests him, but instead it is the individual
who wants it: nobody compels him or imposes a decision on him. Therefore, the act
of obedience is not unreflective or irrational and is instead based on the individual
wanting to obey and decide as a person. Who obeys is willing to make an effort to
understand, through their own experience, that what they propose is for their good
and that of the community, a vital position that leads to a cooperative spirit aimed at
facilitating advancement, far from the mere act of fulfilling or executing to avoid a
penalty ( I fulfill and I lie).
This occurrence comes about because those who obey rely on the intentions of
others much more than on their technical abilities (which are also necessary), which
leads the individual to be sure in the knowledge that if the other is wrong, they will
rectify their mistake and, before firmly taking a decision or stance, the other will
inform himself as best as possible. Therefore, the individual who obeys is not afraid
to ask because he does not question in order to oppose, but instead does so to clarify,
as he wishes to assume his commitment responsibly. Power generates “submission”
(formal organization) while authority generates “obedience” (informal organization).
Thus, as previously explained, obedience is the definitive proof of trust. Therefore,
an individual trusts someone when he believes that their actions are just, where an
action is not simply defined as just due to its consequences being just but instead
because it is based on the virtue of justice, in the same way that a person is not moral
or immoral for actions performed (because they can have the right intentions and err
involuntary) but is such because they are ethical or unethical due to their intentions,
and thus they perform such actions that are virtuous or perverse because the ethical
person that is mistaken recognizes and rectifies the bad, ergo he rejoices internally
even if he disguises it. Disagreeing with another’s ideas does not imply rejecting the
other as a person or taking such an event as a “pretext” to act as one pleases.
6.1 How Authority Is Acquired
Authority is the ability to effectively appeal to transcendent reasons and is based on

the free acceptance of orders by those who obey, who recognize the “leadership”
quality in the manager. This quality of a director depends on the degree of “potestas”
that he needs so that his mandates are obeyed. If he lacks authority, he needs a high
degree of “potestas” for his subordinates to follow his orders, but if he enjoys great
authority, his orders will be obeyed without any kind of coercion.
The exemplariness of a manager is a necessary condition to achieve authority,
as a result of one person having authority over another forms the basis of the latter
relying on the intentions of the former when evaluating them positively (i.e., the other
person has my best interests in mind), although trust in the professional capacities
of the executive is also necessary, as it constitutes the sufficient or complementary
condition of the previous one, the first being much more important than the second
one.
It becomes a difficult task to develop this type of relationship in practice and even
more difficult to live it intensely. In effect, we are accustomed to thanking another
person for the proposals he makes once they are known and, even more so, once
we have verified the results and consequences they have caused for us, all of which
resembles a commercial relationship. However, deep interpersonal trust causes an
especially distinct reaction: because an individual knows that the other trusts him
and truly appreciates him, it is that individual who starts by thanking the other for
the answer that is given to him or the proposal that is given to the individual before
he has asked his question or filed a request, before he knows the answer, and that
individual knows that this is the best gift that the other may bestow upon him.
Authority, understood as a sign of recognition, may be expressed as in the fol-
lowing table:
As indicated by Aristotle, authority is acquired through personal credibility, hon-
esty, and one’s way of acting. Personal credibility therefore constitutes, from the
Aristotelian point of view, the fundamental element on which authority is based: the
person in whom we believe is valued, respected, and inspires us with confidence not
only because of his professional training but above all due to his personal nature,
since it is more common to fear a competent person with unethical intentions than
an incompetent person full of good intentions. Furthermore, this confidence in the
personal nature of the boss is a consequence of his personal kindness, which is the
most effective means of persuasion.
The importance that this conveys for the company, in reference to the management
of employees and the productivity of the tasks carried out, is fundamentally men-
tioned by Huete [6]. In fact, in a labor contract, certain rules can be agreed on with
regard to schedules, functions to perform, remuneration, etc., yet you cannot agree
that an employee does his work in a spirit of service, with joy, responsibility, sense
of duty, desire to please the recipients of his work, or desire to learn and become
more efficient in his performance of tasks, as an example. The previously mentioned
issues, which are of the utmost importance in the world of personal and professional
services and which constitute around 95% of total economic activity, are situated in
a world where the worker always has the last word, where, “if he feels like it” or not,
he in fact decides to do or to not do so many other tasks throughout his working hours
and in the course of his life, said issues being not only limited to the professional,
but also the personal.
This type of behavior, which we refer to as spontaneous in order to differentiate it
from the normative or regulated behavior, plays an essential role of the first magnitude
in the achievement of high productivity as commonly understood, without causing

detriment to the normative behavior that provides method, rationality, and order but
that should not monopolize the behavior of people. It is a matter of knowing how to
harmonize and combine the goodwill of spontaneous behavior with the application
of rules and methods so that the worker, feeling recognized and valued as a person,
freely and voluntarily decides to join the project of the company because he wishes
to lend his collaboration. It is not, therefore, that the company “traps” a worker for
their projects, but it is instead that the offer made by the company is perceived as
coinciding with what the employee seeks and desires as a worker and, ergo, the
employee freely decides to contribute to this project to the best of his abilities, with
which productivity increases rapidly.
In this business concept, it is assumed that spontaneous behavior favors the com-
pany when analyzing cases in which the aforementioned spontaneous actions are
expected to go against business interests. The first of these possibilities requires that,
beginning with the basis of trust, supervision is understood as the opportunity that is
given to us to learn and improve as individuals and as professionals, which leads to
an increase in mutual trust. On the contrary, when the second hypothesis is adopted,
not only does the situation deteriorate day by day due to the absence of an active
position that encourages and supports spontaneous behavior and integrates it into
the progress of the business organization, but rather, mistrust is institutionalized by
creating a dangerous divide between good (supervisors) and bad (supervised), which
the system itself augments by granting the first multiple privileges and depriving the
latter of the necessary attention for their professional and personal development.
The conclusion reached is that productivity is not exclusively increased with
norms and procedures that impose order and rationality, but also, and especially,
with the free will of the collaborators in the areas of decision making in which they
are sovereign as, for example, the situation where each person ends up wanting to
demonstrate initiative in the task, is educated in the deal, has a spirit of service, acts
with joy, works with responsibility, wants to please the client, shows willingness to
learn, behaves with diligence, wants to set a good example, makes an appropriate
use of resources, has order in their work material, etc. It is thus evident that in this
spontaneous behavior of workers lies the key to intense productivity.
This trust in the other, the origin of the authority–obedience relationship, develops
and arises when there is credibility. Thus, credibility, in turn, is the result of an
integral, mature, and generous character linked to professional competence. Both
things require time and coherence: trust is not something that can be imposed on
others nor can it be bought or “invested” in. It diminishes when credibility is wreaked
and when the ultimate intentions of the people with whom one works or maintains
a professional relationship are placed in doubt. Therefore, trust takes a long period
of time to reach, yet it can be lost in an instant. Ergo, this credibility has two main
aspects: credibility in people and credibility in the management systems that we
discuss further.
With regard to the credibility of people, Covey has popularized it in his works
by pointing out that integrity is nourished by six financial products that affect the
accounting balance of the same, as we describe below:
– Listen and understand. When a person feels understood there has been a profound
communication. Communication requires people who know how to listen. This
type of communication involves a certain emotional connection. When a person
feels understood, he is provided with sustenance from a psychological point of
view.
– Take care of the details. One detail may convey interest and concern for the other
person. Sometimes, small details can have a great impact on the people who receive
them.
– Keep promises. The promises made to another person create an expectation that,
if not fulfilled, degenerates into frustration. Likewise, when a person fulfills what
he has promised, he generates a remarkable sense of confidence and security.
Promising and not fulfilling is a character flaw that causes many distortions in
interpersonal relationships. It implies, in the person who does such an action, a
search for immediate gratifications (by promising, he receives a positive feedback
from the person to whom he promises something) without doing the work (fulfilling
the promise). Obviously, this little scam is not viable. Over time, not only is
immediate gratification lost, but also a part of the ability to be a trusted person.
– Clarify expectations about the role to be played and the objectives to be met. The
opposite always leads to many misunderstandings. When a person knows what is
expected of them, they are filled with security and confidence. In this situation,
they are much more inclined to take the initiative and feel ownership of the work
they do.
– Act with integrity. This principle implies actions such as loyalty to the absent
person (not criticizing other collaborators when they are not present), behaving
in accordance with the principles that govern the direct coexistence between peo-
ple (not making concessions for the gallery) and avoiding discrimination of the
weakest (to not recreate with the weaknesses of the clumsy). The lack of integrity,
although it may initially begin as “fun” and even be laughed at by the rest of the
group, ends up becoming an outlet in the current account of mutual trust.
– Apologize when mistakes have occurred. It is an evident and critical proof of a good
character trait in a person. Knowing how to rectify and attending to new approaches
without mixing personal pride provide a more attractive image of the person who
does it. The opposite implies living under a certain regime of arbitrariness, which
always makes people shrink from the point of view of their potential.
We may indicate, finally, that the achievement of trust influences not only the
credibility of the people but also the management systems used in the company,
which, when acted upon, achieve efficiency and send signals to their members that
end up transforming into incentives or stimuli for the behavior of the human team. In
this sense, the collective evaluation systems that the members of the group perform
anonymously and whose results are made public periodically have been successful.
The honesty of the people who make up the organization is another element that
encourages the emergence and development of authority. Furthermore, honesty is
the result of three great human virtues, namely:
Justice, which consists of giving to each what they deserve. Therefore, a different
treatment to those that are different is necessary such that, at the same time, this will
have to be weighted so as not to make the differences a reason for discrimination.
Truthfulness, which involves telling the truth to the other so that he can understand
it in order to achieve what is best for him. Therefore, this factor is about communicat-
ing the truth in accordance with prudence, not in order to satisfy the curiosity of others
or to transmit the unnecessary information that manages to confuse and discourage
the other by causing their disorientation or provoking the collapse of their state of
mind from our condescension. Obviously, this way of “using and manipulating” the
content of the truth to gain personal advantage and achieve personal convenience
constitutes the corruption of power and leads to the instantaneous loss of authority
that is impossible to recover in the future.
Responsibility, which means that a person commits himself and keeps his word
on what was promised: they have learned, from the position of superior, of what the
subordinate has told them, while the others in the group know what he has asked
of the superior and everyone can see how the manager takes concrete and effective
measures (most important of all) in relation to such events. It would therefore be
especially negative that, knowing that the others have knowledge of what happened,
for them to contemplate how the manager continually abandons his functions.
How the manager proceeds and behaves is another way of acquiring authority,
since, as the one who commands and the one who obeys are on a different plane,
they must still act as if they were on an equal level in such a way that the one
who commands does not appeal to his authority or power and the one who obeys
is not considered to be in a lower plane but cooperates as one such that everyone
feels comfortable because the other’s intentions are trusted by their own experience.
The necessary condition for this interpersonal mutual trust to be possible is that the
manager actss rationally in search of the good of others and not out of sentimentality.
The sufficient condition is that the other acts in the same way with respect to the
manager, that is to say: behaves as if he knew with certainty (and does not know and
cannot know) that the manager acts rationally in looking out for the subordinate’s best
interests, specifically before executing an action or taking a decision and seriously
considering the repercussions that it will have for him and for others.
Obviously, this degree of trust or interpersonal credibility requires real experi-
ments in which one subject interacts with another. Furthermore, in these cases, the
critical issue is not “to be successful,” and it is not “to have achieved the desired
result” since what is debated in these interpersonal relationships is the growth of
mutual credibility as well as trust, and therefore, the fundamental issue is to have
been able to carry out the experiment and to have risked for each party, which may
be considered an important cost. Therefore, when someone trusts the manager, the
important thing is not the economic result that is achieved, which can confirm or
disappoint their expectations, but the fact that the other has decided to trust the man-
ager, assuming previously the risks and costs that it carries with it: that the manager
can defraud him and betray him or simply fail him in one instance as the manager
is, after all, human, and he makes mistakes and has limitations and defects. In this
sense, the exercise of authority is very similar to the process that is followed when
educating others: in both cases, it becomes a requirement that those who practice
it act with sobriety. Therefore, the manager must see everything, correct little, and
disguise a lot, providing the latter part in a skillful and discreet way that optimizes
the opportunities for human development and improvement, for which the active
pedagogy then develops from learning through concrete tasks becomes very useful,
entrusted to that end and duly supervised. It is thus possible to develop “essential”
qualities and human values on which behaviors are based, through this “learning
provoked by situations” that we have created.
Consequently, the essential factor is that someone has previously decided to trust
another, with all of the resulting consequences. The manager may accept or reject
the challenges or tests provided to him by the other as the questions become; how
does the manager know that someone is his friend or appreciates him? The answer
is simply giving the other the opportunity to do so and accepting as valid the tests
they give the manager in their way of behaving with him. Indeed, it is possible
that he betrays the trust placed in him by the manager, but if the manager does not
accept such proof of friendship and affection, he will never have the possibility of
knowing. In this situation, there is no mathematical certainty such that we are left
with the certainty of interpersonal trust in the good intentions of others, based on
repeated real interpersonal experiences in which we put at stake the past credibility
to confirm and increase it. Therefore, this trust requires an extensive amount of time
to be reached but can be lost in an instant because, when the manager places trust
in another, what he does is that he confides in the other and trusts what that other
does as well as what he is, that is, the manager trusts in him. This is not exempt from
personal difficulties because human nature is of such a condition that we hesitate to
entrust ourselves to that person from whom we have the most proof so as not to doubt
him, because “it makes us dizzy” to really and truly “put ourselves in their hands”
with everything we are and have.
In summary, this type of action makes the one who has authority to lead the other
toward the truth and the ethical so that, with his way of proceeding, he promotes
his maturity and personal fulfillment. It is what we call a transforming leader that
promotes awareness of the problem or the new situation we have in the other, offers the
appropriate motivation for its execution and promotes and facilitates the overcoming
of the problem and the development of the appropriate personal qualities.
6.2 How Authority Is Exercised
As previously indicated, the exercise of authority requires that the person in question
“be an authority” and, in addition, “have authority.” The latter will keep it as long
as he is able to exercise authority correctly, so in this case it will continue to be
recognized based on the manager’s competence and personal qualities. The correct
exercise of authority is based on the fact that, having personal styles of exercising
it, every person begins by thinking about what to send or proposing to the other and
tries to be thoroughly informed about that issue as well as, depending on all of this,
makes a decision where his failure will never be blamed on others and his success
will never include him as the sole protagonist. At this point, it is then necessary to
communicate to the recipient the order or proposal that has been made (knowing that
an order plus a countermand is a disorder) to, finally, take care of enforcing what
has been said: to positively sanction the correct compliance of the order and to do so
negatively if the order has been breached. It should be noted here that it is essential
to carry out the express approval of what has been correctly executed; thus, there are
those who place all the emphasis on recriminating what has been done wrong and
do not recognize what has been done well, and such individuals argue that whoever
proceeds in this way “has fulfilled his duty” and we should not contribute to his pride.
This position is clearly wrong, because it is a much worse and more serious issue
when a person is discouraged and falls into pessimism and discouragement. The
incorrect argument can be mentioned as, in other words, that the fact that, for now,
the person has a small amount of encouragement yet, with enthusiasm, he moves
forward: this second “problem” is much easier to solve than the first, because we all
experience our limitations at some point in life and we see the realities of life such
that, as God always takes into account, human beings occasionally fail while nature
never does so.
The prestige or loss of prestige before the subordinates of those who exercise
authority is modified according to the manager’s behavior or personal attitude with
which he acts, the way in which the manager relates to others and the way in which
the subordinates perform their work or essential duties, which forms the available
means to encourage personal initiative in others and to develop trust through personal
experiences. What is evident is that both authoritarianism and permissiveness always
provoke the disobedience of others.
6.3 How Authority Is Lost
Authority can be lost by one of the following paths:

– The unjust use of power or “corruption of power” when it is used to obtain personal
advantages and benefits at the expense of others. Aristotle himself indicated that
power corrupts, and absolute power corrupts absolutely, because it is very easy to
exploit for one’s self the advantages and prerogatives that power puts within our
reach. The unjust use of power (nepotism, for example) entails an automatic loss
of power where recovery of power is nearly impossible.
– To not use power when it should be used, which is known as abandonment of func-
tions. Those who have power do not use it to guarantee a minimum of discipline,
respect, order, etc., in the coexistence between the people of a group in essence
provoke anger and rejection toward their person on the part of those who wish to
act with a responsible, coherent position and realize that this is not only facili-
tated but, in practice, it is prevented on the part of a superior who is inhibited and
wants to defend himself in the neutral and uncommitted position of his decisions
which, in fact, are not neutral and tolerate or protect very specific behaviors, which
implies in fact a “very committed” position so that everything remains unchanged.
Therefore, if this situation starts to become relatively frequent, it leads to the first
problem: the unjust use of power, which is no longer a mistake but instead, a
frequent result: favoritism toward the privileged, which thus maintains the man-
ager’s position and the damage that is caused to others, especially to the excluded,
marginalized, and vilified.
– Useless use of power, which means establishing too many complications in the
regulation of tasks and functions, or, in other words, creating unnecessary compli-
cations. In summary, the useless use of power manifests a position of “awkward-
ness” on the part of whoever exercises it.
6.4 How Authority Is Recovered
The lost authority is not, necessarily, forever gone because it can be recovered once
again. There are four essential elements that must be practiced in this case. In the first
place, it is necessary to recognize the mistakes made without trying to disfigure them
toward any extreme. This requires a great dose of humility, which is the human virtue
that leads us to recognize and accept the truth of the facts. Second, we must rectify
the decisions for the future with will, determination, and strength, in order to ensure
that such events of the past will not be repeated for the future. However, everything
said above does not go beyond proclaiming a declaration of good intentions, which
accomplishes a minimal amount if we do not decide to repair the damage caused by
our past performances and practice justice: it is of little use to acknowledge having
stolen and to commit one’s self to not repeat the same error. Finally, to recover the
credibility and trust of others, it is not enough to simply follow the aforementioned
steps outlined above, which are a necessary but insufficient condition. A manager
must show the other that he really loves and appreciates him with works, gestures,
and words, without underestimating any of these aspects because the measure of
all of this is put in order to restore the subordinate’s confidence. Because love is
demonstrated with actions and not words, it should not be put only into works but
also in words and not only in words but also in works. One thing cannot and should
not exclude the other.
7 Personal and Professional Ethics of the Manager
The main function of the manager is to make decisions, but these decisions always
affect people, whether workers, customers, shareholders, suppliers, as well as others.
For this reason, every decision always has an ethical component that we must never
forget.
The manager must be responsible for his own actions before others but also before
himself, such that he will not make decisions without considering the repercussions
of these for others. The manager should also be aware that all positions assume
responsibility, and thus he cannot fall into the error of assuming that doing nothing
exempts him from responsibility, since not doing anything also means a decision that
is taken freely and that he is therefore responsible for.
At this point, we can ask ourselves the following question: what are we responsible
for? In order to answer this, we can cite several positions:
– Maximalist posture. This position defends that everyone is responsible for all
social problems and comes to this conclusion because the responsibility that falls
on everyone ends up being the responsibility of no one.
– Minimalist posture. Here it is argued that each one is solely responsible for the
immediate and intended consequences of the individual. Yet one must be careful
because, if this theory is followed, is it, for example, the responsibility of a weapons
manufacturer only that his product works well and that deadlines are met?
For this, you have to have two things quite clear: first of all, the responsibility is
always based on an individual, and thus we cannot blame the organization or soci-
ety for a certain action; second, that the negative consequences of an action, when
foreseeable and avoidable, are voluntary and therefore the individual is responsible
for them. Therefore, whenever the negative consequences of an action can be elim-
inated or diminished with reasonable means and not done, the individual is directly
responsible for that action.
We have already made the distinction between personal ethics and professional
ethics, emphasizing the importance that the latter acquires as it affects a greater
number of people. The fundamental objective in decision making is to develop the
human virtues on the part of the manager since, in this way, he will behave ethically.
However, we have to be aware that a manager will behave in this way only and
exclusively when their personal behavior is also ethical. It is difficult to behave with
employees in an ethical way and not with one’s own children, and thus we argue that
ethics must be practiced in one’s personal life if that person is to fulfill the ethical
standards expected of them in a workplace environment.
Finally, all managers must ask themselves a series of questions for reflection:
– What are we responsible for?
– To what extent do we not look for responsibilities? Or do we elude them?
– Can we fall into an excess of responsibility?
– What consequences would this have for the manager and for others?
We leave these questions open for study in specific cases.
8 Does a Real Leader Operate in This Way?
The director therefore practices true leadership through authority, communication

and interest in the improvement of others that he hears and wants. We may summarize
this as follows: the manager makes it come true through his personal mood, as we
must grow more in humanity to be able to feel at ease with those around us. In this
sense, the leader is very clear about what he should propose to others because what is
good for them is what they need and what suits them, regardless of whether they like
it or not. Also, the manager operates in this manner because he knows very well what
the fullness of the human being consists of and will decide to promote professional
fulfillment, which is the most directly visible in the company; personal fulfillment,
which encompasses all other facets of the human being in its physical, intellectual,
and moral segments, which have a clear influence on the professional dimension and,
finally, even if he himself is not a believer, knows how to promote and facilitate the
other in a scope of religious plenitude as something that clothes, links, and integrates
all of the above and not as viewing the other as an addition unit of labor than could
easily be disposed of.
Ultimately, the leader draws more from what he proposes and what he does than
from what he says: he does not defeat but instead convinces employees by giving
those employees the opportunity excel above his previous self (convince) not through
reasons but by his own experience, since the human being does things, as we men-
tioned, with reasons but not for reasons, with motives but not for motives. The leader
knows that, if there are human values, there are behaviors, but if there are only pre-
established behaviors, we cannot assure that there are values that remain into the
future. That is why the leader surpasses himself daily through serving others and
through his way of being and acting, which is not learned in books but, instead, in
real life, alongside others and based on personal effort: firm in what he wants and
flexible at the time of obtaining it. The leader, fundamentally, is based on this per-
sonal effort and, properly speaking, not born but is built from his own peculiarities,
which are exhibited uniquely by each human being, while their potentialities and
qualities, that are fostered, are enriched based on overcoming personal challenges.
For example, this occurs in an excellent athlete or an Olympic champion. Therefore,
there will never be two equal leaders because each one will be formed from what he
is and from his own experiences that never coincide with those of another person.
The leader is not a magical figure but is present in each one of the people who,
having others at their side, develop with them this human spirit and put at their
disposal the best of their person to contribute to the development in fullness of the
other. The leader “is not the one who takes power over others without knowing why,”
but is an excellent friend although that may often go unnoticed or his treatment may
seem very demanding, as he will always be demanding of himself and in defense
of the rights of others. Personal differences do not lead, then, to confrontation, but
instead to complementation and collaboration for the enrichment of the group with
what each one is and what each contributes, so that we can learn greatly from the other
by seeing their peculiarities. This is how two very different people can encourage
mutual personal enrichment of each other as what occurs, for example, in the marriage
between a man and a woman, sharing what they are and what they have.
9 Conclusions
From the above it is clear that, in a company, not all are called to make decisions,
and leadership itself is not the most important hierarchical position that is occupied
because it is important to command as well as to obey and develop diverse tasks, yet
it is also true that all are called to be leaders through the exercise of communication,
authority, humility, and motivation, and thus, when all of this is missing, we do not
have a company, we do not have an organization, and we do not have a human group.
The leader thus promotes an atmosphere of acceptance, of himself, and of other
people‘s acceptance, of understanding, of pleasant treatment that makes possible an
attractive work climate, a product of unity, which is to say: “it makes attractive what
is necessary (the unit) so that we can all make the vocation (work) a vacation.”
Finally, this always translates into greater profitability, not as an objective but as
a consequence. Happiness and joy are then presented as the result of how things
are made, with joy being a manifestation of happiness. We promote, in this way,
the organization and the development of free human persons (educated in freedom
and for freedom) who are happy and we do it on the basis of recreational–ambitious
relationships aimed at fostering the interpersonal love of friendship, cooperation,
collaboration, and team spirit freely and voluntarily accepted that lead to personal
satisfaction and the fullness of human life, as we experience the joy of working with
that team of people in which we feel accepted and in which each one is integrated
with hope, thanking the manager for being well received by others, who have wanted
to trust the manager and who offer him their friendship and support. That is why we
say that “it is not the manager who makes an opinion about you, but you are the one
who you insists on your way of proceeding in that the manager has a certain opinion
about you,” for better or for worse.
In fact, why does someone decide to change? Simply put, by how he is treated. If
we look, therefore, beyond the mere economic results that are possible, and we begin
by loving the other, we become capable of understanding and comprehending him.
It is this personal experience that the manager experiences before the one who loves
him, the one that leads him to re-know and accept his past without disguising it and
without fears, being then willing to change his life because he has also changed his
position: he is not on the defensive, to try to excuse or justify himself, but he does
not fear to re-know and accepts his past and, because another loves him, he looks
for another future for himself because he wants it as well and he decides it: nobody
decides for him nor is anything imposed on him. He is the one who chooses it freely
and voluntarily.
It is understood that the leader achieves all of this through the implementation of
human values.
References
1. Harrison, E. F., & Pelletier, M. A. (2000). The essence of management decision. Management
Decision, 38(7), 462–470.
2. Gilmore, A. (1998). Quality in management decision making within a changing context. Journal
of management development, 17(2), 106–120.
3. Gómez-Fernández, J. M. (2010). Recursos humanos: Fundamentos del comportamiento humano
en la empresa. Madrid: Encuentro.
4. Grušovnik, D., Kavkler, A., & Uršič, D. (2017). Dimensions of decision-making process qual-
ity and company performance: A study of top managers in Slovenia. Naše gospodarstvo/Our
Economy, 63(4), 66–75.
5. Agarwal, U. A., Datta, S., Blake-Beard, S., & Bhargava, S. (2012). Linking LMX, innova-
tive work behaviour and turnover intentions: The mediating role of work engagement. Career
Development International, 17(3), 208–230.
6. Huete, L. M. (2001). Servicios & Beneficios: La Fidelización de Clientes y Empleados. Deusto:
La inteligencia emocional en los negocios.
Age Management in a Formal Caregiving
Organization: An Exploration
of Managers’ Perceptions
Filipa Luz, Regina Leite and José Alvarelhão
Abstract This chapter addresses issues related to age management and active age-
ing in Portuguese non-profit associations that provide care and lifelong support for
persons with disabilities. It focuses on managers’ perceptions about the caregiving
activity, the human resource management practices that have been recently adopted,
and the perceived importance of such practices in those organizations. The findings
highlight managers’ awareness of the challenging and adverse effects of caregiving.
It was also found that some human resource practices perceived as relevant are not
being implemented in this type of organizations.
1 Demographic Ageing
The Portuguese age pyramid reflects the growing ageing of the population, a phe-
nomenon that increased dramatically in the last decades. The global population age-
ing is posing several problems and challenges to countries, due to the economic, social
and work consequences [1]. This trend is particularly evident in Europe, namely Por-
tugal that ranked fifth among the oldest countries in the world [2]. According to the
National Statistical Institute of Portugal, the rate of population ageing raised from
27.5% in 1965 to 155.4% in 2017 [3]. The demographic trends bring about several
consequences for both the government and private organizations, namely in terms
of social protection (financial sustainability), healthcare, education, and overall eco-
nomic growth and population well-being [4, 5].
In the European context, the demographic ageing emerges as a consequence of
societal developments that resulted, on the one hand, in low fertility levels and, on
the other hand, in the increase of life expectancy [5]. The Portuguese reality presents
F. Luz (B) · R. Leite

Escola de Economia e Gestão, Universidade do Minho, Braga, Portugal
e-mail: filipasousaluz@gmail.com
F. Luz
Associação do Porto de Paralisia Cerebral, Porto, Portugal
J. Alvarelhão
Escola Superior de Saúde, Universidade de Aveiro, Aveiro, Portugal
136 F. Luz et al.
a similar trend, putting the ageing issue on the political and social agenda [2], given
the urgent need to understand the complexities and demands placed on the individual,
family, community and society at large.
In the short run, the demographic changes will impact severely on the work-
ing age population and workforce composition [6, 7], not only in Portugal but also
in the European Union countries [7]. In this context of demographic changes, the
contribution of older workers seem essential for ensuring the European Union com-
petitiveness, especially in comparison with North America and Asia [8]. According
to Eurofound [9], the economic development, competitiveness and efficiency will
grow positively or negatively depending on the organizations’ ability to maximize
and deal with the ageing of their workforce. In the same vein, Fabisiak and Prokurat
[10] claim that the organization’s competitiveness will increasingly depend on the
use of older people competences, their productivity and performance.
In the European Union, the phenomenon of population ageing lead government
agencies to consider the raise in the retirement age in order to extend the participation
of older workers and promote the financial sustainability of social protection systems
[2]. Additionally, other measures have been implemented by governments, such as
direct and indirect financial and tax incentives to companies, the maintenance or
creation of employment for older workers, and the adoption of legislation to combat
discrimination [11].
In the Portuguese context, the demographic changes also entail some particu-
larities in what concerns the social composition of the labour force, namely the
feminization and increasing educational levels of the population, growing use of
outsourcing, intensification of job precariousness, instability and insecurity, rise in
unemployment rates and the persistence of pay inequalities [11]. The Portuguese
government has mobilized a set of instruments planned as part of the active age-
ing Strategy of the Ministry of Labour and Social Solidarity [12]. Those measures
include, among others: the extension of the working time in the life cycle, penalties
for early retirement and modifications in the formulas used to calculate pensions and
its updating.
2 Age Management
The European Foundation for the Improvement of living and working conditions
(Eurofound) and other entities have been warning the government institutions to the
need of increasing older workers’ participation in the labour market [9]. Some orga-
nizations have implemented measures aimed at fostering the employability of older
workers and increasing the return on human capital investment; preventing the short-
fall of qualifications in the workforce; promoting the recruitment potential; address-
ing the demographic changes; and promoting workforce diversity [13]. Although
most employers seem aware of this problems and challenges, only few organizations
are adopting specific measures in this domain [14]. Given this scenario, Tillsley
and Taylor [15] urge organizations to change their attitudes and policies regarding
Age Management in a Formal Caregiving Organization … 137
older employees, and underline the need to conduct more research on this issue to
get a deeper understanding of how human resource management is addressing older
employees issues.
In this regard, age management in organizations emerged as an approach aimed
to foster (i) knowledge and awareness on population ageing; (ii) fair attitudes regard-
ing older employees; (iii) age management as a core task and duty in managers and
supervisors’ role; (iv) integration of age management in HR policy; (v) ability to
work and productivity of all workers; (vi) lifelong learning; (vii) work environments
conducive to ageing; (viii) safe and dignified transition to retirement [16]. Age man-
agement refers to the integration of specific (human resource) management measures
intended to mitigate the consequences of ageing, allowing the individual to remain
active, regardless of his/her age.
2.1 Dimensions of Age Management
The literature highlights the multidimensional nature of age management and the
integrative approaches. Based on Casey, Metcalf and Lakey, Walker [17] defines five
practices under the age management concept umbrella, as follows: (i) recruitment
(and exit); (ii) training, development and promotions; (iii) flexible working practices;
(iv) ergonomics and job design; (v) changing attitudes towards ageing workers. To
these practices, Armstrong-Stassen [14] adds performance appraisal and recogni-
tion and respect, considered the most critical and valued aspects for an individual to
remain in the organization. According to Pinto et al. [18], the practices highly val-
ued by employees are rewards, recognition, participation and training. The human
resource practices developed within the age management paradigm are described
below.
Recruitment (and exit). Good practice in recruitment entails a set of measures
designed to ensure equal access to job opportunities, regardless of the candidates’
age [17], with a focus on abilities, competences, experience and the potential of
each job applicant [19]. With regard to exit, good practice means a decision-making
process that makes use of objective criteria and job-related aspects, and that offers
the employee a set of exit options, including partial retirement.
Training, development and promotion. The good practice in these domains
means assuring the non-discrimination of older employees in accessing training and
development opportunities, and career advancement opportunities [17]. Is also aims
to allow older workers to acquire of new competences, as well as ease the access
of older workers to new technologies [14]. Kooij and Voorde [20] argue that the
provision of such opportunities will impact positively on commitment and perception
of organizational support, and consequently increase older workers intention to stay
in the organization.
Flexible working practices. These measures include some adjustments in work-
ing hours [17, 19], transition to retirement [17] and other practices with a positive
impact on performance and family responsibilities [19]. Armstrong-Stassen [14]
138 F. Luz et al.
claims that organizations can also enable, among other flexible work arrangements,
part time schedules or working from home, unpaid leave (due to family and informal
care).
Ergonomics and job design. Drury [19] describes this domain as the organization
of work processes aimed at promoting good performance and the optimization of
health and capacity for work. These initiatives combine hygiene and safety at work
measures with the improvement of health and the adoption of healthy lifestyles,
and can take the form of preventative or compensatory actions. The adjustment in
the workstations is considered a preventative measure [17] in the sense that in can
mitigate illness and incapacity, particularly of those with physical demanding jobs.
Other measures are introduced as compensation for loss of physical abilities (e.g. poor
eyesight, by changing lighting levels) in order to help employees maintaining their
productivity and remain in the organization [17]. Armstrong-Stassen [14] reinforces
the importance of the workers’ involvement in the adjustments to be introduced in
the work design.
Changing attitudes towards ageing workers. Walker [17] considers this as a
prerequisite to an effective age management in the context of human resource man-
agement. According to Drury [19], it entails educating the entire workforce on how
the stereotypes related to age and the discriminatory attitudes develop and should be
addressed. Some studies demonstrate the changing attitudes towards older employees
over the last years. For example, Conen et al. [21] show the increased investment in
older employees (recruitment and retention) between 2000 and 2008. Kooij et al. [22]
argue that HRM cannot ignore the perceptions underlying discriminatory practices,
since they can contribute to capacity and competences obsolescence and jeopardize
the self-concept of older employees.
Performance appraisal. This tool aims to assess and measure employees’ per-
formance against predefined organizational goals [18]. In the context of age man-
agement, performance appraisal presupposes (i) the involvement of older employees
in the definition of performance standards, (ii) equity and justice in the assessment
procedure and (iii) communicating the employees their performance in a solidary
way [14].
Recognition and respect. According to Armstrong-Stassen [14], this dimension
entails recognizing and valuing the role, experience, competences and knowledge
of older workers. Existing research shows that practices that enhance recognition
tend to be highly valued by older workers [14, 18]. Perceived organizational support
seems to implicitly contribute to justify such finding in the sense that it refers to the
degree to which employees believe that the organization cares about their well-being
[23]. The feeling of being valued by the organization, namely though recognition,
is positively related to perceived organizational support [24]. Armstrong-Stassen
and Ursel [25] found out that training and development practices adjusted to the
needs of older workers have a positive effect on perceived organizational support
and consequently on their intention to remain in the organization.
Integrative and multidimensional approaches. Such approaches mean consid-
ering the various HRM practices put in place by the organizations, regardless of age.
According to Eurofound [9], they are characterized, on the one hand, by the pre-
Table 1 Age management

Individual Prevention of premature ageing
levels of analysis
Healthy lifestyle
Organizational Working conditions adjusted to age
Management specialization on age issues
Societal Prevention of age discrimination (i.e.
ageism)
Facing demographic changes
Source Adapted from Fabisiak and Prokurat [10]
ventative initiatives associated with age that go beyond the older workers, targeting
all age groups. On the other hand, in the short run, they will progressively include
corrective measures aimed at employees with limited functional ability in their pro-
fessional practice (e.g. injuries and occupational diseases). Such an approach will
make it easier for organizations to develop a policy and an organizational culture that
can more effectively fit the socio-economic changes [9].
Age management focuses primarily on the quality of work. The practices in
this domain include the improvement in the qualifications of workers, the access to
vocational training in a lifelong perspective, flexible working hours, diversity and
career advancement wherever possible [17]. In addition, Combs, Liu et al. [26] and
Schalk et al. [6] argue that the human resource practices influence the way people
with different ages behave in organizations. In the same vein, Walker [17] claims
that such age management approach can be an effective mechanism for promoting
workplace diversity, taking into account the specificities of each age group, namely
the older ones.
Moreover, age management can increase labour protection, and consequently
reduce labour costs whilst maximizing the utility of older workers, resulting not
only in increased productivity but also organizational competitiveness and shared
value [27]. To make an effective use of age management, Fabisiak and Prokurat [10]
suggest that there are three levels of analysis that should be taken into account, as
follows: individual, organizational and societal (Table 1).
3 Active Ageing in the Workplace
Organizations are currently facing major challenges derived from demographic

changes that impose on them the need to adjust to transformations in the com-
position of the workforce [28]. According to Eurofound [28], the study of ageing
in organizations can imply different analytical frameworks, namely working condi-
tions, health conditions, attitudinal aspects of work (e.g. job satisfaction, recognition,
among others), work-family balance and socio-economic conditions.
In this context, new expressions have emerged, such as active ageing [17], pro-
ductive ageing [29, 30] and successful ageing [31, 32] with growing popularity in
140 F. Luz et al.
the academic and organizational domains [32]. Nevertheless, there is still a lack of
consensus regarding the theoretical structure and premises underlying those concepts
[32]. The diversity of terms used to describe the ageing trend reflects the multiplicity
of criteria used to explain the phenomenon. The term active focus on the levels of
involvement in significant activities (i.e. social participation) whilst the terms suc-
cessful and healthy refer to the physical and mental well-being of individuals [32, 33].
The relation between age management practices and the paradigm of active age-
ing has not been extensively studied. Active ageing can be defined as ‘the process
of optimizing opportunities for health, participation and security in order to enhance
quality of life as people age’ [34, p. 12]. The strategy inherent to active ageing has to
adopt a multidimensional nature when it comes to operationalization, focusing the
individual and the society, in an integrated way [34]. In this regard, Conen, Henkens
and Schippers [21] claim for a broader approach that recognizes the important role of
the behaviours of different actors in the promotion of this new paradigm: employers,
organizations, civil society and governments. The authors argue that such compre-
hensive approach also means promoting the participation of older workers and their
involvement in productive activities in the retirement period, as well as the commit-
ment of the whole civil society towards this goal.
Active ageing in the workplace emerges as one of the pillars of the European
Year of Active Ageing and Solidarity between Generations—2012, that aimed to
promote the quality of life within European countries, focusing mainly on older
people. Walker [33] sustains that both the employers and employees have to adopt a
lifelong approach since individual abilities vary according to age. The main goal of
active ageing in the workplace is to conceive and design work settings where people
can explore their potential, regardless of their age [33, 34].
Given the importance of the various levels of analysis—individual, organizational
and macroeconomic—Fabisiak and Prokurat [10] argue that it is crucial to integrate
the responsibilities of all participants in the implementation of this paradigm. Walker
[33] describes the duties of both parties, namely the employer’s duty to create the
conditions to enable the extension of careers and the employee’s duty to develop
the potential based on the opportunities that they have been offered. Kooij [31]
reinforces this idea of joint responsibility, arguing that the continuous adaptation of
intrinsic ability and the contextual demands of work is crucial to maintain health,
work ability and motivation. Nonetheless, individual accountability is viewed as a
key element for the successful ageing in the workplace [31]. The study conducted
by Robson and Hansson [35] identified seven major strategies used by employees
that are likely to foster successful ageing in organizations: relationship development,
security, continuous learning, stress relief, skill extension, career management and
conscientiousness.
4 Social Economy Organizations and Formal Caregivers
The social economy organizations play a decisive role in job creation, promoting
health and well-being, and inclusion of the most vulnerable groups [36]. According
to Morris [37], such organizations are defined by: the nature of the resources; the
outcomes and the nature of the goods and services supplied; and the form of sharing
the surplus that they generate. The social economy organizations are those that take
over responsibilities in matters that the state is not willing to solve as well as areas
that are not seen as profitable for pursuing private interests [36]. Such organizations
develop activities that work for the common good, on the initiative of individuals
that create collective entities aiming at pursuing a social mission without a lucrative
purpose [38].
The Portuguese civil society sector includes two types of organizations: those
that offer services intended to supplement or complement public services in the
domains of health, education and social services; on the other hand, organizations that
provide individuals with the mechanisms to jointly meet the needs of the community,
participate in the political life and pursue individual and group interests [39, p. 8].
Such organizations have a growing visibility in the Portuguese context; they differ
from public and private sector organizations and receive quite different labels that
are often used as interchangeably, such as ‘non-profit organizations or institutions’,
‘social and/or solidarity economy’, ‘non-governmental organizations’, ‘third sector’,
‘third system’ and ‘alternative economy’ [40].
Social economy organizations can take the form of Private Institutions of Social
Solidarity (IPSS), that present special conditions regarding rights, duties and benefits,
namely tax advantages [38]. By legal definition, IPSS are non-profit institutions with
the purpose of fulfilling the moral duty of welfare and justice among individuals [41].
This legal document establishes that the services provided by IPSS status organiza-
tions adopt specificities concerning the functioning and organization, the constitution
and management of the staff, based on the need to guarantee the accomplishment
of rights of their target public, namely disabled people. IPSS status organizations
provide continued care (e.g. residential home) and the development of occupational
activities (e.g. occupational activities centre) for people with disabilities. Such social
responses require formal carers, as provided by the law [42, 43].
In this context, the formal caregiver assumes a particular relevance, due to the
representation in the composition of IPSS staffing, and the functional content of
caregiving. The daily exposure to biological, chemical, ergonomic and psychosocial
risks can result in increased work-related accidents and occupational diseases [44],
hindering the quality of the services provided.
The Organization for Economic Co-operation and Development [45] defines the
personal care worker as paid staff that provides long-term care and/or assistance to
people with limitations in their daily activities, at home or in institutions, excluding
hospitals. Most personal care workers do not have qualifications or certification on
nursing, and carry out tasks concerning basic activities of daily living of people with
disabilities (disabled people, older people, among others).
142 F. Luz et al.
There is a shortage of studies regarding the profile of the formal caregiver and
the impact of the caregiving activity in the context of disability. The national and
international literature focus mainly on the profile and attitudes of formal carers of
elderly people and people with dementia [46, 47]; the working conditions of direct
action helpers [44], the quality of life, mental health and satisfaction at work [48,
49], as well as general needs of this professional group [50, 51].
Previous research has shown that caring for disabled or elderly adults may present
several risks of occupational injuries and increase the potential of occupational dis-
eases [44]. Our limited knowledge about age management of formal carers of people
with disabilities poses problems for policies and practices regarding the protection
of those workers’ health.
To address this gap, the present study investigated how the above-mentioned
institutions are addressing the age management challenge. This chapter is a part of
a larger investigation concerning age management and active ageing of formal care-
givers working in Portuguese Associations of Cerebral Palsy. The data presented in
this chapter refer to the quantitative study that has been conducted with managers.
The objectives are twofold: (i) firstly, to analyse how those in managerial/technical
positions perceive the professional activity of formal caregivers. Secondly, it aims
to identify the human resource practices that have been developed to support for-
mal caregivers, and the managers’ perceptions concerning the relevance of those
practices.
5 Methodology
The present exploratory study was conducted within the partner institutions of the
National Federation of Portuguese Cerebral Palsy Associations that provide typical
services (residential homes and occupational activities centres) targeted for adult
people with disabilities in the North of Portugal. Data were collected using a ques-
tionnaire that was designed to be completed by the respondents (self-administered).
5.1 Sample and Procedures
The sample is limited to 30 participants that belong to the management bodies of

ten Portuguese Associations of Cerebral Palsy, with roles focused on tasks of a
managerial and/or technical nature. We have chosen managers since the majority
of non-profit organizations do not have an institutionalized and professional human
resource management. In general, the responsible managers accumulate managerial
and technical roles within the above-mentioned associations.
5.2 Measures
The sections of the questionnaire used in this chapter can be described as follows: (i)
characterization of the respondents; (ii) participants’ perception of formal caregivers’
professional practice; and (iii) human resource (HR) management practices. The last
section is divided into two groups of questions aimed at identifying the HR activities
adopted by the organization over the last year, and assessing the perceived importance
of those activities as facilitators of caregivers’ completion of tasks and individual
outcomes attainment. Recruitment and selection has not been analysed in this chapter,
since it was subjected to a separate analysis in the broader study.
The survey inquired the managers about the perceived frequency of some situa-
tions regarding the professional activity of formal caregivers, using 11 items drawn
from Eurofound [28] and Berg et al. [52] study. These items used a four-point Likert
response scale, as follows: (1) Never, (2) Rarely, (3) Often and (4) Very often.
Respondents were asked to report the HR activities developed over the last year
by their organization, using 15 items drawn from the literature review [14, 18, 52,
53]. These items used a nominal scale (yes/no/not applicable).
Items assessing the perceived importance of each of the 15 above-mentioned
activities used the following four-point Likert scale: (1) Not important, (2) Somewhat
important, (3) Important and (4) Very important.
5.3 Data Analysis
Data analysis was carried out with the use of SPSS, version 23. Managers’ per-
ceptions concerning the professional activity of formal caregivers are described in
terms of frequencies and percentages. Correlation analysis was utilized to analyse the
collected data, specifically the relations between the demographic and professional
variables and the items relating to the perceived professional activity characteristics.
The identification of the HR activities implemented over the last year and the per-
ceived importance of those activities are reported in frequencies and percentages.
Bivariate analysis is presented whenever statistically significant results are found.
6 Results
This section summarizes the main findings concerning the perceptions of those in
managerial and technical positions (hereafter referred to as managers) concerning
the activities performed by formal caregivers, the identification of human resource
practices developed specifically for formal caregivers over the last year and the
perceived importance of those activities.
144 F. Luz et al.
6.1 Sample
The demographic profile of the respondents is presented in Table 2. The sample is

predominantly female (n 24; 80.0%). The majority of participants ranged from
36 to 45 years of age. Fifty percent (n 15) had a post graduation course and 43%
(n 13) had completed their graduation. The two respondents that completed the
secondary education work as volunteers. Most participants are in the current role (n
13; 43.3%) and in the organization (n 17; 56.7%) for 6–15 years, respectively.
The majority has a permanent contract (n 23; 76.7%), four work as volunteers (n
4; 13%), and two of them (n 2; 7%) have a service agreement contract, and one
of the participants did not specified the employment relationship.
Table 2 Demographic
Demographic variables n (%)
profile of the respondents
Gender Female 24 (80)
Male 6 (20)
Age (years) 26–35 6 (20)
36–45 13 (43)
46–55 3 (10)
56–65 2 (7)
>66 3 (10)
No answer 3 (10)
Education Secondary 2 (7)
Graduation 13 (43)
Post 15 (50)
graduation
Seniority (years) ≤05 12 (40)
06–15 13 (43)
16–25 4 (13)
26–35 0 (0)
>36 0 (0)
No answer 1 (3)
Organizational tenure (years) ≤05 5 (17)
06–15 17 (57)
16–25 6 (20)
26–35 2 (7)
Employment relationship Permanent 23 (77)
Volunteer 4 (13)
Service 2 (7)
agreement
Other 1 (3)
6.2 Managers’ Perceptions of the Professional Activity

of Formal Caregivers
Table 3 describes the perceptions of managers concerning some consequences of

the professional activity of formal caregivers, namely some health-related aspects
and other with a professional content. The percentages on each item are shown. In
addition, the statistically significant correlations observed between those items and
demographic and professional variables are also presented.
Nineteen respondents (63.3%) believe that the activity of formal caregivers only
rarely result in increased effort in balancing family and work-life. Correlation anal-
ysis show that women in managerial roles (r 0.368; p < 0.05; n 29), younger
(r −0.453; p < 0.05; n 26) and with less organizational tenure (r −0.432; p
Table 3 Manager’s perceptions of the professional activity of formal caregivers

Perception of the Never n (%) Rarely n Often n (%) Very often n No answer n
professional (%) (%) (%)
activity
Increased effort in 0 (0) 19 (63) 9 (30) 1 (3) 1 (4)
balancing family
and work-life
Decreased 3 (10) 19 (63) 4 (13) 2 (7) 2 (8)
participation in
social activities
Subjective 3 (10) 11 (37) 15 (50) 0 (0) 1 (4)
complaints
regarding reduced
well-being
Higher risk of 2 (7) 8 (27) 16 (53) 3 (10) 1 (4)
occupational
diseases
Fatigue/emotional 0 (0) 5 (17) 20 (67) 4 (13) 1 (4)
distress
Sleep disorders 2 (7) 21 (70) 4 (13) 1 (3) 2 (8)
Physical 0 (0) 9 (30) 15 (50) 5 (17) 1 (4)
exhaustion
Less involvement 2 (7) 10 (33) 15 (50) 2 (7) 1 (4)
in assigned tasks
Physical 0 (0) 12 (40) 16 (53) 1 (3) 1 (4)
limitation that
hinders job
performance
Lack of specific 10 (33) 13 (43) 4 (13) 2 (7) 1 (4)
training
Absenteeism 1 (3) 21 (70) 6 (20) 1 (3) 1 (4)
146 F. Luz et al.
< 0.05; n 29) perceive that the occupational activity of formal caregivers requires
more effort to achieve work-family balance.
The majority of managers think that caregiving does not prevent formal caregivers
from participating in social activity since 63,3% (19 out of 30) of managers have
chosen the response option ‘Rarely’.
When it comes to the subjective complaints regarding reduced well-being, the
findings show that half of the participants surveyed consider that it is a frequent
situation. Bivariate analysis reveals that this perception is positively associated with
the level of education (r 0.378; p < 0.05; n 29).
Twenty respondents consider physical exhaustion of formal caregivers to be fre-
quent or very frequent. More than half of the respondents hold the belief that formal
caregivers present frequently physical limitations that impact negatively on their job
performance. This perception seems more evident on female managers (r 0.431;
p < 0.05; n 29).
Nineteen managers (63.3%) believe that caregiving, often and very often, consti-
tutes an increased risk to those professionals, since they are more prone to develop
occupational diseases. According to bivariate analysis, the ones with fewer years in
the role tend to perceive increased risk (r −0.570; p < 0.01; n 28).
With regard to sleep disorders, 70% (n 21) have chosen the option ‘Rarely’.
Nonetheless, 80% (n 24) believe that formal caregivers are often exposed to fatigue
and emotional distress in their professional activity.
Seventeen respondents (56.7%) admit a decrease in the caregivers’ involvement,
often and very often. This perception seems more likely for women managers (r
0.500; p < 0.01; n 29). Ten respondents (33.0%) do not perceive lack of specific
training, and the majority of them have chosen the option ‘Rarely’ with regard to
perceived absenteeism.
6.3 Adoption of Human Resource Management Practices
Managers were asked about the human resource practices adopted by their orga-
nizations in the last year (yes, no, not applicable), targeting formal caregivers (see
Fig. 1).
With regard to activities aimed at promoting the qualification and professional
development of formal caregivers, 24 respondents (90%) reveal that his/her organi-
zation provides training activities and 26 (86.7%) indicate that those are based on a
training needs assessment.
According to eighteen respondents (60.0%), performance appraisal is adopted
in their organizations. When asked about the transition to retirement, none of the
participants confirm the existence of programs in that domain.
In the area of health and well-being, 80% (n 24) of the surveyed managers refer
that the organization provides technical aid/support and 43.3% (n 13) indicate the
development of programs aimed at promoting the workers’ well-being. The evalu-
Fig. 1 HRM practices implemented (Rot—Rotation; Ment—Mentoring;

Appraisal—Performance appraisal; Ind Plan—Individual plan; Training—Development of
training activities; Needs—Training needs assessment; Tech Sup—Investment in technical
support; Well-being—Development of well-being programs; Capacity—Functional capacity for
work; Retire—Transition to retirement programs; Night—Fixed night shift; Shifts—Shiftwork;
Flex—Flexible working hours; W-F—Work-family balance practices; Retrain—Retraining)
ation of worker’s functional capacity for work was mentioned by fourteen (46.7%)
respondents.
In the domain of working arrangements, the results indicate that half of the orga-
nizations opt for shift work (n 15; 50.0%). 14 respondents mention rotation among
services, mainly those in organizations with a higher number of services (r 0.525;
p < 0.01; n 27).
In the area of work-family balance, eighteen respondents (60%) recognize the
existence of practices under this umbrella, and twelve respondents (40%) name the
possibility of flexible schedules.
The managers were also asked about the measures adopted in the face of any
functional impediment that prevents the formal caregiver to perform their tasks. The
findings indicate that some organizations tend to prefer retraining of workers (n 16;
53.3%) in order to keep them, whilst five managers (16,6%) mention early retirement.
It should also be noted that eight respondents refer that the measures to be adopted
148 F. Luz et al.
should consider the individual situation of each worker (e.g. age of the formal
caregiver), reinforcing the inexistence of specific measures in their organizations.
6.4 Perceived Importance of Human Resource Management

Practices
This section aims to analyse the manager’s responses to the perceived importance
attributed to each practice as facilitator of caregivers’ completion of tasks and indi-
vidual outcomes attainment. Variables were dichotomized and the ‘Very important’
and ‘Important’ answers were coded as 1 and the ‘Somewhat important’ and ‘Not
important’ were coded as 0. Table 4 presents the frequencies and percentages on the
perceived importance surveyed managers attached to each item.
The HR practices that managers attach greater importance (highest percentages
in ‘Very important’ and ‘Important’ categories) are: developing training activities (n
30; 100.0%), training needs assessment (n 30; 100.0%), investing in technical
support (n 30; 100.0%), promoting well-being programs (n 30; 100.0%), per-
formance appraisal (n 29; 96.7%), evaluating functional capacity for work (n
28; 93.3%), and adopting work-family balance practices (n 27; 90.0%).
The measures less valued (highest percentages in ‘Somewhat important’ and ‘Not
important’) are transition to retirement programs (n 19; 63.3%), work arrangements
(fixed night shifts) (n 17; 56.7%), rotation among services (n 10; 33.3%), and
mentoring (n 10; 33.3%).
Bivariate analyses shows that the perceived importance attributed to those prac-
tices vary according to the profile of the surveyed managers, namely age and edu-
cation. Younger managers place greater value on flexible working hours (r −
0.429; p < 0.05; n 29) and managers with a higher level of education attach more
importance to retirement transition programs (r 0.363; p < 0.05; n 30).
The respondents’ tenure (both in position and organization) seems to influence
the perceived importance of human resource management practices. Managers with
fewer years in the current position tend to attribute greater value to some practices
related to work arrangements, namely shiftwork (r −0.396; p < 0.05; n 27), and
fixed night shifts (r −0.448; p < 0.01; n 27), rotation among services (r −
0.452; p < 0.05; n 27), and practices concerning the workers’ development, such
as retraining (r −0.389; p < 0.05; n 28). Participants with less organizational
tenure attribute greater importance to shiftwork (r −0,405; p < 0.05; n 28) and
retraining (r −0.479; p < 0.01; n 29).
Table 4 Managers’ perceptions of the importance of HR practices

Importance Very Somewhat No response n (%)
attributed to HR important/important important/not
practices n (%) important n (%)
Rotation among 18 (60) 10 (33) 2 (7)
services
Mentoring 19 (63) 10 (33) 1 (3)
Performance 29 (97) 1 (3) 0 (0)
appraisal
Individual plan 25 (83) 5 (17) 0 (0)
Development of 30 (100) 0 (0) 0 (0)
training activities
Training needs 30 (100) 0 (0) 0 (0)
assessment
Investment in 30 (100) 0 (0) 0 (0)
technical support
Development of 30 (100) 0 (0) 0 (0)
well-being programs
Functional capacity 28 (93) 2 (7) 0 (0)
evaluation
Transition to 11 (37) 19 (63) 0 (0)
retirement programs
Work arrangements 11 (37) 17 (57) 2 (7)
(fixed night shifts)
Work arrangements 19 (63) 9 (30) 2 (7)
(shiftwork)
Flexible working 26 (87) 4 (13) 0 (0)
hours
Work-family balance 27 (90) 3 (10) 0 (0)
practices
Retraining 24 (80) 6 (17) 1 (3)
7 Discussion
This study sample is predominantly female, which is in line with the reality of social
economy organizations, as evidenced by the literature [e.g. 54, 55]. The feminiza-
tion of the third sector is justified by (i) the nature of services provided (its caring
content) that has traditionally attracted more women than man; (ii) the work-family
balance practices that are usually made available in smaller organizations make this
work more appealing for women; (iii) the chances of moving into a management
role make it easier for women to take up family responsibilities. Additionally, the
feminization in the third sector seems to translate into stereotypical conceptions of
women’s values and expectations in the workplace. Women tend to put more emphasis
150 F. Luz et al.
on communication, commitment to employee’s, flexibility, and work-family balance,

that might have a positive impact on strategic human resource management [55].
7.1 Manager’s Perceptions of the Professional Activity

of Formal Caregivers
The managers that participated in our research seem to be aware of the negative
consequences of caregiving on caregivers’ health. Prior research shows accumulating
evidence that caregiving impact negatively on caregivers’ health, both on physical and
psychological well-being [44]. The highly demanding functional content and daily
exposure to ergonomic and psychosocial factors increases the risk of injuries and
occupational diseases. In this scenario, it is of utmost importance to adopt measures
envisaging health promotion and disease prevention at work, in order to prevent and
minimize the negative effects of the functions carried out by caregivers [56].
Participants consider that caregivers are less involved in their jobs, which should
be a matter of concern for those organizations, specifically for the HR managers.
Employees in non-profit organizations are attracted and motivated by intrinsic
aspects, such as the accomplishment of the organizational mission, the opportunity
to put their individual values into practice, and participation in decision-making [57].
Therefore, some authors claim that non-profit organizations should invest on HRM
in order to professionalize the function, promote motivation at work and alignment
between individual and organizational values, and make a better/strategic use of its
main asset—people [54, 58].
7.2 HR Practices Adopted and Perceived Importance
The research findings show that the organizations seem to privilege the practices in the
domain of qualifications and professional development of formal caregivers, as well
as those aimed at promoting health and well-being. Conversely, the least preferred
practices are the transition to retirement programs, mentoring and the development
of an individual plan. With regard to the perceived importance, the participants place
great importance on most of the practices, except for transition to retirement pro-
grams, mentoring, rotation among services, and workplace arrangements (namely
fixed night shifts).
Formal caregivers qualifications and professional development are considered
one of the biggest challenges facing organizations operating in the social sector [57]
particularly in a planned approach to organizational management [59]. Costa [60]
argues that investing on employees’ qualifications and professional development is
an imperative for those organizations that aim to provide ‘a quality work with social
impact, towards the accomplishment of its mission, and bring about an effective an
concrete transformation in the (internal and external) environment in which they

operate’ (p. 55).
On the other hand, the study suggests that although the organizations are not
implementing an individual plan for each employee, the managers’ point of view is
that this is an extremely important measure that can facilitate caregivers’ completion
of tasks and the attainment of personal outcomes. The surveyed managers value this
practice; however, they recognize that their organizations fail to implement it. The
mismatch between perceived importance and lack of implementation may suggest
an administrative rather than strategic HRM [58]. The implementation of an indi-
vidual plan has implicit adoption of a strategic orientation regarding the employees’
professional development, whilst the inexistence of such planning can mean more
attention to administrative tasks with a short-sighted focus [54, 58]. Our findings are
consistent with the prevailing view that career planning and management are still
incipient in social economy organizations [54].
Another finding worthy of note in the context of age management and active
ageing is the lack of investment in retirement programs and correspondent perceived
importance. Transition from work into retirement is an issue of particular importance
for formal caregivers and their organizations, in so far as it is a highly demanding
occupation, both physically and emotionally [44]. Consequently, it can jeopardize
the caregiver health condition to develop heavy and difficult work activities over time
[52, 61].
It is imperative that organizations are aware of the working conditions—past and
current—since they impact on the workers’ perceived incapacity for work when
they are older, and their intent to leave the organization [62]. Findings suggest that
managers use retraining of formal caregivers in the face of functional incapacity to
continue performing caregiving tasks, in order to ensure their permanence within
the organization. Some participants also envisage the possibility of early retirement.
These findings, coupled with the fact that early retirement of older workers is asso-
ciated with their own perception of poor health [63], reinforce the relevance of
developing individual plans and managing the career of those workers, including the
adoption of measures facilitating a gradual transition to retirement. Hence, promoting
health and safety at work is one of the preconditions for protecting and guaranteeing
the sustainability of working life, and facilitating active and healthy ageing after
retirement [64].
8 Conclusion
This chapter sought to understand the age management practices adopted within
the paradigm of active ageing in the context of Portuguese non-profit organizations
providing lifelong support for persons with disabilities. There is a lack of knowledge
about HR practices in the field of caregiving activity and roles, mainly in non-profit
organizations. Because empirical research on active ageing of formal caregivers is
missing, there are gaps particularly challenging to fill due to the specificities of
152 F. Luz et al.
those organizations. To help close this gap, we have analysed the perception of the
responsible managers about the caregiving activity, and asked them about the HR
practices implemented and the importance attached to those practices.
The surveyed managers seem aware of the challenges and risks associated with the
caregiving roles and tasks. In view of the results obtained in this research regarding
the perceived effects of the professional activity of formal carers of persons with
disabilities, we believe it is imperative that organizations change the way they manage
their human resources. Our findings suggest that the organizations where the surveyed
managers belong to are far from pursuing a strategic human resource management,
as evidenced by the extant literature documenting HRM in non-profit organizations
[54, 58]. Various aspects contribute to this situation, namely the inexistence of a
human resource manager responsible for peoples’ management issues, and the fact
that some HR practices have not been implemented despite the importance assigned
to them (e.g. the worker individual plan).
Moreover, the managers have emphasized the adoption and relevance of some HR
practices in the context of age management, namely those related to qualifications and
professional development of formal caregivers, and those aimed at enhancing their
health and well-being. These practices have been suggested in the literature review on
age management, and integrate some of its dimensions, such as recruitment, training,
development and promotion, flexible working practices and ergonomics/job design
(Casey, Metcalf and Lakey, as cited in [33]). Other practices seem practically non-
existent in those organizations, namely transition to retirement programs, and some
workplace arrangement (fixed night shifts).
Formal caregivers play a critical role in service provision, working one on one
with disabled persons and their families. Besides that, the daily exposure to people
with special needs poses significant physical challenges to formal caregivers. There-
fore, the ageing of these workers requires more attention to be given to managerial
practices, and changes to the human resources management of formal caregivers.
References
1. Davoudi, S., Wishardt, M., & Strange, I. (2010). The ageing of Europe: Demographic scenarios
of Europe’s futures. Futures, 42, 794–803.
2. United Nations. (2015). World Population Ageing 2015.
3. Instituto Nacional de Estatística. (2018). Índice de envelhecimento.
4. Organization for Economic Cooperation and Development. (2018). Elderly Population Indica-
tor.
5. Valente Rosa, M. J., & Chitas, P. (2010). Portugal: Os números, Fundação Francisco Manuel
dos Santos.
6. Schalk, R., Veldhoven, M., Lange, A. H., Stamov-Roßnagel, C., Tordera, N., Heijden, B., …
Zacher, H. (2010). Moving european research on work and ageing forward: Overview and
agenda. European Journal of Work and Organizational Psychology, 19, 76–101.
7. Winkelmann-Gleed, A. (2011). Demographic change and implications for workforce ageing
in Europe. Contemporary Readings in Law & Social Justice, 3.
8. Morschhäuser, M., & Sochert, R. (2006). Healthy Work in an Ageing Europe: Strategies and
Instruments for Prolonging Working Life. Federal Association of Company Health Insurance
Funds.
9. Eurofound. (2006). Guide to good practice in age management. In European foundation for
the improvement of living and working conditions.
10. Fabisiak, J., & Prokurat, S. (2012). Age management as a tool for the demographic decline in
the 21st century: An overview of it’s characteristics. Journal of Entrepreneurship, Management
and Innovation, 8, 83–89.
11. Dias, I., & Rodrigues, E. (2012). Demografia e sociologia do envelhecimento, Manual de
Gerontologia: aspetos biocomportamentais, psicológicos e sociais do envelhecimento. Lisboa:
Lidel.
12. MTSS. (2007). Plano Nacional de Emprego: Estratégia Nacional de Envelhecimento Ativo.
13. Taylor, P., & Walker, A. (1998). Employers and older workers: Attitudes and employment
practices. Ageing & Society, 18, 641–658.
14. Armstrong-Stassen, M. (2008). Organisational practices and the post-retirement employment
experience of older workers. Human Resource Management Journal, 18, 36–53.
15. Tillsley, C., & Taylor, P. (2017). Managing the third age workforce: A review and agenda for
research. New York: Routledge Revivals.
16. Ilmarinen, J. (2012). Promoting active ageing in the workplace. In: European agency for safety
and health at work.
17. Walker, A. (2005). The emergence of age management in Europe. International Journal of
Organisational Behaviour, 10, 685–697.
18. Pinto, A., Ramos, S., & Nunes, S. (2015). Managing an aging work-force: What is the value of
human resource management practices for different age groups of workers?. TÉKHNE—Review
of Applied Management Studies.
19. Drury, E. (2001). A European code of good practice on age and employment (for older workers).
The Geneva Papers to Risk and Insurance, 26, 611–622.
20. Kooij, D., & Voorde, K. (2015). Strategic HRM for Older Workers. Berlin: Springer.
21. Conen, W. S., Henkens, K., & Schippers, J. (2011). Are employers changing their behavior
toward older workers? An analysis of employers’ surveys 2000-2009. Journal of Aging and
Social Policy, 23, 141–158.
22. Kooij, D., Lange, A., Jansen, P., & Dikkers, J. (2008). Older workers’ motivation to continue
to work: Five meanings of age. Journal of Managerial Psychology, 23, 364–394.
23. Eisenberger, R., Huntington, R., Hutchison, S., & Sowa, D. (1986). Perceived organizational
support. Journal of Applied Psychology, 71, 500–507.
24. Rhoades, L., & Eisenberger, R. (2002). Perceived organizational support: A review of the
literature. Journal of Applied Psychology, 87, 698–714.
25. Armstrong-Stassen, M., & Ursel, N. D. (2009). Perceived organizational support, career sat-
isfaction, and the retention of older workers. Journal of Occupational and Organizational
Psychology, 82, 201–220.
26. Combs, J. G., Liu, Y. Y., Hall, A., & Ketchen, D. (2006). How much do high-performance work
practices matter? A meta-analysis of their effects on organizational performance. Personnel
Psychology, 59, 501–528.
27. Barnett, K., Spoehr, J., & Parnis, E. (2008). Exploring the Impact of an Ageing Workforce
on the South Australian Workers’ Compensation Scheme. The South Australian WorkCover
Corporation.
28. Eurofound. (2012). Sustainable work and the ageing workforce. In European foundation for
the improvement of living and working conditions.
29. Kumashiro, M. (2000). Ergonomics strategies and actions for achieving productive use of an
ageing workforce. Ergonomics, 43, 1007–1018.
30. Matz-Costa, C. (2016). Productive aging in the workplace: Under-standing factors that promote
or impede subjective well-being at work. Best Practices in Mental Health, 12, 43–62.
31. Kooij, D. T. A. M. (2015). Clarifying and discussing successful aging at work and the active
role of employees. Work, Aging and Retirement, 1, 334–339.
154 F. Luz et al.
32. Zacher, H. (2015). Successful aging at work. Work, Aging and Retirement, 1, 4–25.
33. Walker, A. (2006). Active ageing in employment: It’s meaning and potential. Asia-Pacific
Review, 13, 78–93.
34. World Health Organization. (2002). Active ageing: A policy framework. Geneva: World Health
Organization.
35. Robson, S. M., & Hansson, R. (2007). Strategic self-development for successful aging at work.
The International Journal of Aging and Human Development, 64, 331–359.
36. Caeiro, J. M. (2008). Economia social: Conceitos, fundamentos e tipologia. Revista Katálysis,
11, 61–72.
37. Morris, S. (2000). Defining the nonprofit sector: Some lessons from history. VOLUNTAS:
International Journal of Voluntary and Nonprofit Organizations, 11, 25–43.
38. Lopes, A., Marcos, V., & Parente, C. (2014). Entre o Estado e o terceiro sector: Modos de regu-
lação. O terceiro sector português em foco, Empreendedorismo Social em Portugal. Faculdade
de Letras da Universidade do Porto: Porto.
39. Franco, R. C., Sokolowski, S. W., Hairel, E. M. H., & Salamon, L. M. (2005). O sector não
lucrativo português numa perspectiva comparada, Faculdade de Economia e Gestão da Uni-
versidade Católica Portuguesa & Johns Hopkins University, Lisboa.
40. Franco, R. C., & Salamon, L. M. (2005). Defining the Nonprofit Sector: Portugal. Johns Hopkins
University Center for Civil Society Studies.
41. Decree-Law N.º 119/83 enacted on 25 February, Diário da República N.º 46/1983 – I Série,
Ministério dos Assuntos Sociais: Lisboa.
42. Decree-Law N.º 18/89 of 11 January. Diário da República N.º 9/1989 – I Série. Ministério do
Trabalho e da Solidariedade Social: Lisboa.
43. Ordinance N.º 59/2015 of 2 March. Diário da República N.º 42/2015 – I Série. Ministério da
Solidariedade, Emprego e Solidariedade Social: Lisboa.
44. Pinto, M. (2012). Estudo das condições de tarbalho dos ajudantes de ação direta em estabelec-
imento de apoio social, Master’s thesis, Universidade do Porto.
45. Organization for Economic Cooperation and Development. (2018). Personal Care Workers.
46. Ribeiro, M. T. D. F., Ferreira, R. C., Ferreira, E. F., Magalhães, C. S., & Moreira, A. N. (2008).
Perfil dos cuidadores de idosos nas instituições de longa permanência de Belo Horizonte. MG,
Ciência & Saúde Coletiva, 13, 1285–1292.
47. Zimmerman, S., Williams, C. S., Reed, P. S., Boustani, M., Preisser, J. S., Heck, E., et al.
(2005). Attitudes, stress, and satisfaction of staff who care for residents with dementia. The
Gerontologist, 45, 96–105.
48. Cabral, M. V., & Ferreira, P. M. (2013). O envelhecimento activo em Portugal: Trabalho,
reforma, lazer e redes sociais, Fundação Francisco Manuel dos Santos.
49. Castle, N. G., Degenholtz, H., & Rosen, J. (2006). Determinants of staff job satisfaction of
caregivers in two nursing homes in Pennsylvania. BMC Health Services Research, 6, 60.
50. Infante, M. A. F. M. (2016). Ajudantes de ação direta: Necessidades em contexto institucional.
Master’s thesis, Universidade de Lisboa.
51. Pereira, S. A. S., Corte, A. E., & Marques, E. M. (2014). Dificuldades dos cuidadores formais de
idosos institucionalizados. International Journal of Development and Educational Psychology,
1, 133–140.
52. Berg, T. I. J., Elders, L. A. M., Zwart, B. C. H., & Burdorf, A. (2009). The effects of work-
related and individual factors the work ability index: A systematic review. Occupational and
Environmental Medicine, 66, 211–220.
53. Crawford, J. O., Graveling, R. A., Cowie, H. A., & Dixon, K. (2010). The health safety and
health promotion needs of older workers. Occupational Medicine, 60, 184–192.
54. Marcos, V. (2016). A gestão de recursos humanos nas organizações não governamentais de
cooperação para o desenvolvimento portuguesas: Uma análise interpretativa exploratória, Soci-
ologia, Revista Da Faculdade de Letras Da Universidade do Porto (Vol. XXXII, pp. 61–81).
55. McMullen, K., & Schellenberg, G. (2002). Mapping the non-profit sector. Ottawa: Canadian
Centre for Philanthropy.
56. Ng, T. W., & Feldman, D. C. (2008). The relationship of age to ten dimensions of job perfor-
mance. Journal of Applied Psychology, 93, 392–423.
57. Akingbola, K. (2006). Strategy and HRM in nonprofit organizations: Evidence from Canada.
The International Journal of Human Resource Management, 17, 1707–1725.
58. Ridder, H. G., & McCandless, A. (2010). Influences on the architecture of human resource
management in nonprofit organizations: An analytical framework. Nonprofit and Voluntary
Sector Quarterly, 39, 124–141.
59. Pynes, J. E. (2009). Human resources management for public nonprofit organizations: A strate-
gic approach (3th ed.). San Francisco: John Wiley & Sons, Inc.
60. Costa, S. F. (2002). Gestão de pessoas em instituições do terceiro setor: Uma reflexão necessária.
Revista Terra e Cultura, 35, 40–58.
61. World Health Organization. (1993). Vieillissement et capacité de travail: Rapport d’un groupe
d’étude de l’OMS. Geneve: World Health Organization.
62. Barros, C., Carnide, F., Cunha, L., Santos, M., & Silva, C. (2015). Will I be able to do my work
at 60? An analysis of working conditions that hinder active ageing. Work, 51, 579–590.
63. Berg, T., Schuring, M., Avendano, M., Mackenbach, J., & Burdorf, A. (2010). The impact of
ill health on exit from paid employment in Europe among older workers. Occupational and
Environmental Medicine, 67, 845–852.
64. Eurostat. (2012). Active ageing and solidarity between generations: A statistical portrait of the
European Union 2012. Eurostat European Commission.
Social Customer Relationship
Management in Small and Medium
Enterprises: Overcoming Barriers
to Success
Nuttaneeya (Ann) Torugsa, Kritcha Yawised and Wayne O’Donohue
Abstract This study uses a blended form of multiple theories to identify three
specific capabilities—proactive engagement, learning and change management,
and managerial support—which when leveraged by small and medium enterprises
(SMEs) may make more likely the successful implementation of social customer
relationship management (SCRM). We explore how these capabilities are related
to perceptions of barriers to SCRM and the impact they have on the beneficial out-
comes of SCRM. Using data from a sample of 540 Australian SMEs that implemented
SCRM and employing ordered probit and multivariate probit models, we find that
lack of time and knowledge are important stumbling blocks to successful SCRM
implementation, while security risks are not insurmountable impediments as SMEs
appear able to work effectively around these particular obstacles. The results show
that SMEs, even when faced with implementation barriers, are able to realise the
high-value benefits from their SCRM efforts when the above three capabilities are
deployed and leveraged in tandem. The novel contributions of this study lie in its
provision of empirical theory-based evidence of the basic building blocks for SCRM
success in SMEs.
N. Torugsa (B)
Ratchasuda College, Mahidol University, Nakhon Pathom, Thailand
e-mail: Nuttaneeya.Torugsa@utas.edu.au
N. Torugsa
Tasmanian School of Business and Economics, University of Tasmania, Hobart, Australia
K. Yawised
Faculty of Business, Economics and Communications, Naresuan University, Phitsanulok,
Thailand
W. O’Donohue
Department of Employment Relations and Human Resources, Griffith University, Gold Coast,
Australia
e-mail: w.odonohue@griffith.edu.au

158 N. Torugsa et al.
1 Introduction
Building brand reputation and gaining customer trust and loyalty is among the tough-
est challenges faced by small and medium enterprises (SMEs), the driving force of
most economies accounting for over 90% of business and more than 50% of employ-
ment worldwide [1]. The traditional approach to customer relationship management
(CRM) is to segment and manage customers who have had transactions with a com-
pany, thus enabling the company to better understand and serve the needs of those
customers [2, 3]. Yet in today’s Internet-based business world, a more innovative
management approach is essential. Customers now seek out members of the larger
community through social networking technologies (e.g. Facebook, LinkedIn, and
Twitter) and obtain previously unavailable information about a company and its
offerings before engaging in a relationship with that company [4]. As the social
networking landscape continues to change rapidly, companies that do not integrate
Internet-based technologies into their CRM to interact, engage, and communicate
with existing and potential customers can find themselves at a competitive disadvan-
tage to those companies that do [5–8].
Social customer relationship management (SCRM) is an innovative, strategic
business approach that combines social networking technologies with CRM to bring
about a superior engagement with customers and a concomitant increase in profitabil-
ity [7, 9, 10]. Because having strong close links to their customer base is generally
fundamental to the competitive advantage of SMEs, this heightens their need for
strategies and related capabilities that enhance customer relationship orientation and
facilitate regular interactive communication with customers; in this light, SCRM is
particularly relevant to SMEs [2, 11].
Notwithstanding this need, scholarly empirical research into how SMEs can effec-
tively implement SCRM and reap its benefits is in its infancy. Much of the research
on SCRM has been done in the context of large firms which are well resourced and
thus well equipped to benefit from SCRM [7]; so far little attention has been given
to the challenges that the implementation of SCRM poses for SMEs [3, 12]. Indeed,
given the absence of persuasive empirical research, the question of whether SCRM is
or is not worthy of consideration by SMEs remains unresolved [13]. While the con-
ventional wisdom is that SMEs confront daunting resource-related constraints that
prohibit the significant investments required for SCRM [14, 15], some researchers
contend that SMEs prefer to invest whatever limited resources they have in ways
(or activities) that yield immediate benefits [16]. This line of reasoning implies that
SME uptake of SCRM will remain less likely until such investment is perceived to
offer a viable return on an acceptable timescale [2, 3]. Indeed, examination of possi-
ble conditions for achievement of gains from SCRM in SMEs, given the paucity of
research, is a key challenge for researchers.
The current study, which is to a large extent exploratory in character, takes a small
but significant step towards addressing this challenge by presenting research evidence
of how SCRM is implemented in SMEs. Drawing on the resource-based view (RBV)
theory [17, 18], blended with theories of strategic entrepreneurship [19], organisa-
Social Customer Relationship Management … 159
tional learning [20], and resource management [21], we consider how three specific
capabilities—namely proactive engagement, learning and change management, and
managerial support—might be leveraged by SMEs as a basis for the implementation
and acquisition of benefits from SCRM. Using data from a sample of 540 Australian
SMEs, this study explores how these three capabilities are linked to perceptions of
barriers to SCRM and their impact on the beneficial outcomes of SCRM. Because
non-SCRM adopters have no experience with and therefore are not able to report on
the capabilities, barriers, and benefits of SCRM, the analyses are restricted to SMEs
that adopted SCRM.
Our findings reveal that SMEs, even when faced with impediments to SCRM,
are able to implement SCRM successfully when the three capabilities are deployed
and utilised in tandem. These capabilities, which derive from the distinctive char-
acteristics that SMEs share (such as closer interaction within a firm, and greater
flexibility, innovativeness and responsiveness to customer needs), can play a role in
helping SMEs overcome implementation barriers (imposed by resource constraints
related to size) and achieve successful SCRM. As imitating what works successfully
elsewhere is encouraged in SMEs [13], those SMEs considering adoption of SCRM
would do well to imitate the capabilities deployed by successful SCRM adopters
reported on here. This study therefore advances current understanding of how
SMEs can obtain high-value benefits from SCRM, with insights carrying signifi-
cant theoretical and practical implications.
2 Literature Review
2.1 Social Customer Relationship Management (SCRM)

in SMEs: Benefits and Barriers
The emergence and rapidly growing usage of Internet-based technologies for social
interaction, particularly in ways that foster interactive communication and collabo-
rative information sharing, have changed the way customers and business interact
[15, 22, 23]. As reported by the European Publishers Council [24], globally there
are over two billion user accounts for social networking, representing two-thirds
of all Internet users. In Australia, a survey-based report by Sensis [6] shows that
around 75% of Australian consumers and slightly over 50% of Australian SMEs use
social networking technologies. This trend towards online-based social interaction
has wrought fundamental changes in the world of business, especially in relation to
CRM [7].
In essence, the use of a traditional CRM approach built simply on a dyadic
sender–receiver interaction and mono-directional communication model, while
ignoring the opportunities offered by online technologies for creating multiparty
communication links that connect to and open up a larger, more diverse markets,
is considered no longer sufficient if SMEs wish to prosper. Instead, research sug-
gests that SMEs need to mainstream and embed social networking in their CRM
activity and thus embrace SCRM [12, 13]. In doing so, SMEs can reach and commu-
nicate with social media communities (where people share information and experi-
ences about companies and their offerings), get a real-time sense of customer needs
and expectations, and thereby provide a complete experience that engages customers
[10, 25]. As asserted by Greenberg [25, p. 34], SCRM is designed to “engage the
customer in a collaborative conversation in order to provide mutually beneficial value
in a trusted and transparent business environment”. On this basis, SCRM is more
than simply a technology upgrade. It entails the production of a fundamental and
positive change in the quality and effectiveness of a company’s interactions with its
customers, with the ultimate goal of making such interactions more meaningful for
the customers and more profitable for the company [26–29].
Generally, SCRM implementation proceeds with the expectation of benefits such
as access to a wider customer base; strengthened brand reputation; enhanced trust,
customer loyalty, and retention; reduced customer service costs; knowledge of future
market trends and customer behaviours; creation of new business opportunities; and
increased sales revenue [2, 7, 9, 12]. Indeed, two distinctive organisational advan-
tages of SMEs—greater responsiveness to change in customer needs and more flex-
ible organisational structures—arguably position them well to benefit from SCRM
[2, 11]. However, effective implementation of SCRM that creates high-value bene-
fits is not an easy task for SMEs. For example, as mentioned briefly above, SCRM
implementation is often made problematic by resource constraints related to firm size
[8, 30] and the often long time delay before a return from SCRM is achieved [3, 25].
Previous research showing a significant gap existing between expected and realised
benefits for SMEs [3, 12, 31, 32] suggests that a variety of barriers are frequently
experienced on the path to successful SCRM.
In relation to SCRM implementation, the barriers faced by SMEs can be broadly
classified into five interrelated categories: cost, time, knowledge, culture, and secu-
rity [2, 12, 27, 33, 34]. With regard to cost-related barriers, although social network-
ing platforms offer SMEs the possibility of “a virtually cost free and easy way to
reach customers” [35, p. 243], proper development of an integrated system that com-
bines the customer database with multiple social networking platforms, a foundation
component for an SCRM system, can be capital intensive and costly [2, 25]. In addi-
tion, the development of social networking systems can be costly for SMEs since
they may have to “recruit and keep personnel with specific know-how or outsource
this task outright” [13, p. 274]. For some SMEs, such implementation costs may
consume an unacceptably large proportion of limited financial resources, thus negat-
ing the likelihood of an acceptable return on investment in the short term to midterm
[3, 30].
Time- and knowledge-related barriers to the implementation of SCRM are closely
linked and often cited as critical barriers in SMEs [11, 12, 30]. These barriers are
often associated with the simple centralised organisational structure characteristic of
SMEs, in which ownership and decision-making control usually rest with owner—
managers [36, 37]. The often limited number of skilled managerial staff within an
SME typically results in the owner–manager being responsible for numerous aspects
of management and including a broad range of SCRM-related functional activities

[6, 13]. As effective SCRM requires real-time and collaborative engagement with
customers in rapidly changing competitive and technological environments, man-
agement of SCRM (especially maintaining a company’s online social networking
presence) is time-consuming and demands specialised skills and knowledge, both of
which can prove difficult to find in the SME business context [11–13].
Successful uptake of SCRM requires the creation of a shared customer-centric
culture among staff members [10, 27, 38]. While the ownership characteristics of
SMEs allow owner–managers a greater degree of autonomy and scope for action in
allocating resources for SCRM, these characteristics can also mean that an owner—
manager may work less effectively with employees (e.g. in terms of exchanging ideas
and resources) and thus be more likely to fail to achieve the shared enduring sense
of customer centricity required for successful SCRM, a failure made more likely
in situations where a strong but insufficiently customer-oriented culture is already
entrenched [39].
Security and data privacy risks linked to sharing information on social networking
platforms represent the last of the five aforementioned barriers to SCRM implemen-
tation in SMEs [2, 40, 41]. However, while security-related barriers are perceived
as risks and obstacles in SCRM implementation, they may not necessarily be insur-
mountable, given previous research that shows SMEs implementing new social tech-
nologies is characterised by a greater willingness to take risks and is typically able to
find ways to circumvent and overcome such barriers [13, 42]. This could be because
implementing SCRM makes companies highly visible to the public, and if executed
poorly, their reputation would be tarnished. Therefore, in order to strengthen cus-
tomer confidence, companies of all sizes often have well-established mechanisms
for managing the problem of uncontrolled information disclosure and minimising
the negative effects of security and data privacy risks [43].
In the light of these five resource-related barriers to SCRM implementation, the
full realisation of expected benefits from SCRM is unlikely to be the case for all
SMEs. In this study, we argue that while smaller firm size—a common proxy for
limited resources [37]—imposes barriers to SMEs making the significant investments
in SCRM that can be required, a lack of resources may not be a deterministic condi-
tion for SCRM implementation in SMEs. Rather, the ability of SMEs to bring their
limited resources together and manage them strategically to develop SCRM-related
organisational capabilities could potentially enable them to minimise or circumvent
those resource-related barriers and hence make the acquisition of high-value benefits
from SCRM more likely. We discuss these capabilities in the next section.
2.2 Capabilities for SCRM in SMEs
The primary pursuit of business is to create value to customers and gain competitive
advantage [44]. From a RBV perspective [17, 18, 45, 46], resources (i.e. the stocks
of available tangible and intangible factors owned by a firm) and capabilities (i.e. a
firm’s ability to bring its resources together and deploy them advantageously) provide
the basis for successful strategy implementation and value creation, which in turn
bolster competitive advantage and superior performance. In essence, it is the way a
firm uses and manages its resources to develop capabilities that form the main source
of its competitive advantage [18, 45].
The RBV suggests that maintaining competitive advantage requires a strategy that
fits to the opportunities available in the competitive environment, makes the most
effective use of the firm’s existing capabilities, and supports the development of new
capabilities arising out of strategy implementation [18]. In other words, competitive
advantage and superior performance (i.e. the high-value benefits from SCRM) result
from a strategy (i.e. SCRM) efficiently exploiting and enhancing a firm’s capabilities.
RBV theory is thus considered particularly useful for analysing and understanding
the organisational capabilities for implementing SCRM in SMEs, which given their
limited resource base are likely to follow different paths (based on their distinctive
characteristics, see [13, 37, 47]) from large firms in developing these SCRM-related
capabilities.
Recognising the limitation of the adoption of a single theoretical perspective in
making sense of reality [48], we use RBV theory in tandem with the three comple-
mentary theories that capture the strategic advantages associated with SME distinc-
tive characteristics, to provide a theoretical “capability-based” framework for the
study. These include the theories of strategic entrepreneurship [19, 49], organisa-
tional learning [20, 50], and resource management [21]. Using this multitheoretical
framework, we identify three organisational capabilities for SCRM implementation
(i.e. proactive engagement, learning and change management, and managerial sup-
port) that could enable SMEs to leverage their (limited) technological, human, and
other business-related resources effectively and efficiently to overcome barriers to
managing customer relationships and thus make successful SCRM in SMEs more
likely.
2.2.1 Capability of Proactive Engagement
Drawing on the theory of strategic entrepreneurship that emphasises taking

entrepreneurial actions with strategic perspectives and embracing both opportunity-
seeking and advantage-seeking behaviours [19, 51], and on the seminal work of [52]
suggesting that strategically managed firms develop entrepreneurial, engineering,
and administrative processes that integrate external information and opportunities,
we define “proactive engagement” as the capability to initiate strategic policies and
actions aimed at shaping the external business environment to a firm’s own advan-
tage and facilitating the creation and exploitation of new opportunities emerging
from changes in that environment [37]. This capability thus has an external focus
and involves a forward-looking, opportunity-seeking, and risk-taking perspective
[13]. The greater level of flexibility and speed of response to rapidly changing sig-
nals from the marketplace generally characteristic of SMEs as organisations [37, 47]
can serve as enablers for a proactive engagement capability. By leveraging such a
capability, SMEs can connect and interact more speedily with existing and potential
customer communities in ways that: facilitate close customer–company interactions;
integrate front-office engagement and back-office information activities; and create
new and meaningful ways to serve customers [11, 30]. Once SCRM information
generated by customer–company interactions is collected and processed, customer-
and market-specific knowledge can be generated and applied to respond to customer
needs in a timely and decisive manner [53]. Given that a proactive orientation asso-
ciates with adoption of technological change [54], proactive SMEs generally have
a stronger tendency to use social networking technologies to uncover and satisfy
unarticulated customer needs when compared to their reactive counterparts [13].
2.2.2 Capability of Learning and Change Management
Drawing on the theory of organisational learning which emphasises the “acquisition

of new knowledge by actors who are able and willing to apply that knowledge in
making decisions or influencing others in the organization” [20, p. 486] and on the
concept of absorptive capacity for learning [50, 55], we define “learning and change
management” as an internally directed capability aimed at putting in place routines
and processes that generate and disseminate knowledge within a firm and enable
smooth adoption of new and changing technologies and systems [3, 38], thereby
providing firms with capacity for “strategic flexibility and the degrees of freedom to
adapt and evolve” [50, p. 185]. The less hierarchical nature of organisational struc-
tures that characterise SMEs offers opportunities for direct communication and close
interaction between employer and employees, thereby facilitating creation of a more
unified culture and making the exploitation of learning resources for new knowledge
creation more straightforward [37, 47, 56]. Within the SME context, therefore, an
effective “learning and change management” capability could serve as a means for
building commitment to a SCRM-supportive culture, inculcating behaviours sup-
portive of SCRM, and ensuring new SCRM-related knowledge is rapidly and widely
disseminated [12]. This capability is, arguably, of great importance in helping SMEs
adapt and maintain a good fit with a dynamic environment while seeking to satisfy
their customers’ needs.
2.2.3 Capability of Managerial Support
Drawing on the theoretical lens of resource management (also referred to as “resource

orchestration”—[57]) that stresses the importance of managerial actions for manag-
ing and orchestrating the use of a firm’s resources to enhance firm performance [21,
49], we define “managerial support” as an internally directed capability that reflects
the competence of management to bundle and leverage a firm’s resources in support
of the firm’s strategies. Simply put, the quality and scope of this capability are at least
as important as the resources a firm possesses [49, 58]. We suggest that only when
managers demonstrate overt and full support for a continuing strategic commitment
to SCRM implementation [2, 12], can the creation of value for the firm be achieved.
In the SME context, owner–managers are often the sole driver and implementer of
change initiatives and thus have the onus solely on them to demonstrate to their
staff a strong ongoing commitment and involvement in SCRM [3, 11, 42]. On this
basis, a deep commitment by management to harnessing the necessary resources for
implementing SCRM-related processes and systems is deemed critical for success-
ful engagement in such an initiative in the SME context [13]. As noted by Yawised
et al. [12], SME managers, given a scarcity of their organisational resources, often
are pragmatic in choosing a flexible and nimble (i.e. fitting the market and customer
demographics) approach to managing resources for SCRM.
3 Methodology
This study used a quantitative approach based on a survey questionnaire

administered via the Internet during July–November 2013. The online survey
tool—‘SurveyMonkey’—was used to sample 9000 Australian SMEs with less than
200 employees across all sectors, randomly selected from the population of Aus-
tralian private companies listed in the Dun & Bradstreet (Australia) database. As
SCRM is closely associated with IT and marketing functions [59, 60], the survey
questionnaire was distributed to the Chief Executive Officers or senior managers
who could reasonably be expected to have responsibilities covering IT management,
marketing management, or both types of management combined.
As there is no publicly available data on SCRM activities, related factors, and
outcomes for the targeted sample population in Australia, a survey questionnaire was
developed based on the extant literature [2, 25–27, 33, 34, 61], and discussions were
held with senior academic researchers in the fields of IT and marketing with expertise
and knowledge of SCRM in Australian SMEs. The questionnaire was also pretested
with three SME owner–managers with responsibilities in both IT and marketing
management areas; their responses were not used in the final study. While the pretest
sample is small, it was deemed adequate for the study purpose given the high level
of survey fatigue observed in Australian companies especially in SMEs [62, 63];
moreover, the small pretest sample allowed meaningful feedback to be gathered while
at the same time maximising the number of survey responses that could be included
in the final analysis. Discussion with pretest SME owner–managers indicated that:
(1) SCRM implementation was characterised by high levels of informality, personal
knowledge, and experiment (involving a trial-and-error learning process); (2) the
most commonly used approach to implementation involved observation of the SCRM
activities of other firms, and imitation and customisation of the activities to best fit
business needs; (3) SMEs developed specific processes for effective management
of the changes associated with SCRM implementation, and top management (e.g.
owner–managers) played a key role in determining the success of such processes;
and (4) SCRM enabled SMEs to deal with the “intangibility” of customer service
and the associated difficulties in measuring SCRM benefits. The pretest resulted in
editorial amendments to the initial questionnaire to improve clarity, content validity,

and ensure that the survey tool adequately measured key elements of SCRM.
Responses were received from 1064 SMEs, from the total of 9000 SMEs invited to
participate. After eliminating 97 responses with missing values, a total of 967 SMEs
remained in the sample, representing a 10.7% response rate. This response rate,
although somewhat low, is similar to that in other survey studies [63, 64]. Of the 967
SMEs that responded, 540 reported SCRM adoption. As only SCRM adopters were
subsequently to be asked questions about the barriers, capabilities, and outcomes of
SCRM implementation, the study sample was therefore limited to those 540 SMEs.
Around 90% SMEs in the final sample were owner-managed, and approximately
50% of respondents were the owner–managers.
The possibility of non-response bias was assessed through Armstrong and Over-
ton’s [65] time-trend extrapolation procedure; the analysis revealed no significant
difference between early and late respondents in terms of business size, sector, and
decision to engage in SCRM. Also, although the use of cross-sectional, self-reported
data based on assessments by single informants in each company is common in
organisational research, the potential for common method bias may cause concern
[66]. To test whether this was a problem, Harman’s single factor test was performed
through an exploratory factor analysis using a polychoric correlation matrix applied
on ordinal and binary measures. Results showed the presence of eight distinct factors
with eigenvalues greater than 1, with the largest factor accounting for 37% of the
total variance. Since there was no single factor emerging from the analysis and the
largest factor did not account for the majority of the variance [66], common method
bias was adjudged as not a substantial concern in this study.
Two regression techniques were employed for data analysis: ordered probit and
multivariate probit. Ordered probit regression was used to explore the effect of dif-
ferent barriers on each of the three specific capabilities for SCRM. An ordered probit
model was considered appropriate because these capabilities were measured on an
ordinal scale (details on the variable construction are given below). Multivariate pro-
bit regression was used to examine the influence of the set of capabilities for SCRM
on different types of SCRM beneficial outcomes. A multivariate probit model was
considered suitable because it “simultaneously models the effect of the set of inde-
pendent variables on each of the dependent variables, while controlling for mutual
correlations between their unobserved factors (error terms)” [67, p. 208]. If there
are significant correlations among the equations’ error terms, estimates of separate
equations for each dependent variable (i.e. each SCRM outcome) are inefficient and
could be misleading.
3.1 Variables
Note for the information of survey respondents; CRM was described in the introduc-
tory section of the survey questionnaire as “a business strategy that drives functional
plans, processes, and actions towards establishing relationships with customers”. In
addition, SCRM was described as “the use of social networking or social media
(e.g. Facebook, LinkedIn, and Twitter) to enhance CRM”. As mentioned above, the
definitions of CRM and SCRM, as well as the items used to construct each of the
study’s variables (exact quotations are provided below for relevant survey questions),
were drawn from the extant literature [2, 25–27, 33, 34, 61] and initial discussion
with pretest SME owner–managers.
3.1.1 Barriers to SCRM
Five types of barriers related to SCRM were considered—cost, time, knowledge,

organisational culture, and security—with each treated as independent variables hav-
ing a scale from 1 to 5. Specifically, respondents were asked to indicate how important
each factor was as a constraint on their company’s implementation of SCRM using a
five-point scale (1 ‘factor not experienced’, 2 ‘low’, 3 ‘medium’, 4 ‘high’,
and 5 ‘very high’).
The variable for cost-related barriers was measured by an average of the two
factors: “estimated financial cost is too high”, and “costs outweigh the benefits”. The
variable for time-related barriers was measured with one factor: “timeconsuming
to manage and monitor social media”. The variable for knowledge-related barriers
was measured by an average of the three factors: “lack of qualified personnel or
sufficient skills”; “lack of information on how to select social media tools that suit our
audience of customers”, and “lack of information on how to effectively implement
SCRM”. The variable for culture-related barriers was measured with one factor:
“organisational culture not aligned to the new strategy”. The variable for security-
related barriers was measured by an average of the two factors: “security problems”
and “data privacy problems”.
3.1.2 Capabilities for SCRM
As previously stated, three specific capabilities for SCRM (i.e. proactive engagement,
learning and change management, and managerial support) were considered. Each of
these capabilities was treated as a dependent variable for ordered probit regression.
The proactive engagement variable was measured as the sum of the nine activities
for SCRM implementation: “learning about social media in the context of our cus-
tomers”; “monitoring social media sites for comments and conversations regarding
our company”; “planning and identifying ways of analysing and aggregating data
from social media in order to yield summary usable data regarding our customers
and our products and services”; “developing organisational policies and guidelines
for the use of social media by employees in responding to or jointing customer com-
ments and conversations”; “regularly and systematically listening to and possibly
responding to customer comments and considerations on social media regarding our
company and its products and services”; “using social media sites to collaborate
and co-create content with our customers in order to increase brand engagement”;
“finding ways to use the data that we have uncovered in conversations and/or that
our customers have volunteered through their use of social media”; “evaluating or
measuring social media’s impact on business results”; and “proactively looking for
new ways of using social media to engage with customers”. This variable thus had a
scale from 1 (one specified activity implemented) to 9 (all specified SCRM-related
activities implemented).
The learning and change management variable was measured using two items
presented as statements related to the company: “our company places a high priority
on the learning and development of employees in implementing SCRM”, and “the
changes brought about by the adoption of SCRM are managed well in our company”.
For each item statement, respondents were asked to rate their level of agreement on a
five-point scale (from 1 “strongly disagree” to 5 “strongly agree”). The latent variable
was constructed by multiplying these two items, with values ranging from 1 to 25.
The managerial support variable was measured using two items presented as
statements related to the company: “there is strong support from our senior manage-
ment for the SCRM initiative”, and “our senior management has made a significant
resource commitment in terms of IT, human, and finance towards SCRM”. For each
item statement, respondents were asked to rate their level of agreement on a five-
point scale (from 1 “strongly disagree” to 5 “strongly agree”). The latent variable
was constructed by multiplying these two items, with values ranging from 1 to 25.
3.1.3 Beneficial Outcomes of SCRM
As found from the initial discussion with pretest participants, and consistent with the
literature [12, 27, 33], SMEs rarely collected high-quality quantitative data on the
beneficial outcomes of SCRM, reflecting the fact that most SCRM benefits are intan-
gible (non-monetary) and difficult to measure. Therefore, the survey asked respon-
dents “has implementing SCRM in your company had a “positive” effect on any of the
following”: “long-term trust-based relationships with customers” (trust-based rela-
tionship); “customer loyalty and retention” (customer loyalty); “costs of customer
services” (service costs); “company’s brand perception and reputation” (brand rep-
utation); “creation and capture of customer values” (customer values); “customer
advocacy of your company and its products and services” (customer advocacy);
“knowledge of market trends and opportunities” (market knowledge); and “sales
revenue through cross-selling and upselling” (sales revenue). The response cate-
gories used a five-point scale from “very high [positive] effect” to “no [positive]
effect”. Since these eight outcome variables were all significantly correlated (corre-
lation coefficients ranging from 0.455 to 0.869, p < 0.001), which if not controlled
can cause a model estimation problem [67], the ordinal five-point scale was trans-
formed to binary (1/0) values and a multivariate probit model was used to control for
positive correlations in the dependent variables. For each SCRM beneficial outcome,
a survey response of either a “very high effect” or a “high effect” was assigned a value
of 1, while other survey responses were allocated a value of 0. All eight outcomes of
SCRM were included as the dependent variables for multivariate probit regression.
3.1.4 Control Variables
Several control variables were included to account for other factors that may influ-
ence the estimation results. First, we controlled for the method of implementing a
SCRM system: coded as 1 if the SCRM system was developed and implemented
in-house only, i.e. by the company’s IT department (in-house development only) and
0 if the company hired outsourcing vendors or consultants to help in the development
and implementation of the system. Second, a dummy variable for business size (1
medium size with 20–199 employees and 0 small size with less than 20 employ-
ees) was included as a control variable (medium-sized companies). Third, since the
benefits from SCRM might only be realised over the long term, the models con-
trolled for the duration of experience in managing SCRM, measured by the natural
logarithm of the number of months that the company had used SCRM (experience in
SCRM). Fourth, a maximum number of nine social networking sites (SNSs) active
at the time of data collection and used in association with SCRM (i.e. Facebook,
Google+ , LinkedIn, Twitter, YouTube, Instagram, MySpace, SlideShare and Flickr)
were also included as a control variable (number of SNSs). Finally, to control for
heterogeneity in SME characteristics across industry sectors, the models included
six sector dummies (natural resources; manufacturing; infrastructure; retail, whole-
sale, accommodation and food services; health, education, public administration and
safety; and other services) with knowledge-intensive business services as the refer-
ence category (Sector dummies).
4 Results
Table 1 provides descriptive results for the variables included in the analyses. The
results indicate that lack of time and knowledge was the two most common barriers
to SCRM reported by SMEs as of high or very high importance (the mean scores
of 3.572 and 3.047, respectively). Almost half (45%) of the SMEs indicated that
SCRM system development and implementation were conducted in-house only. This
result suggests, not surprisingly, that in a resource-constrained context SMEs rely in
large part on in-house methods and resources for SCRM system development and
implementation.
On average, respondents reported deployment of their SME’s “proactive engage-
ment” capability to engage in four SCRM-related activities. The mean scores for
the “learning and change management” and “managerial support” capabilities were
10.843 and 14.094, respectively. In addition, a very high or high positive association
with brand reputation (31.3%), customer advocacy of the company (22.2%), cus-
tomer loyalty (21.5%), and trust-based relationships with customers (20%) were the
most frequently reported outcomes of SCRM. Medium-sized companies (20–199
employees) accounted for 42.8% of the sample. More than 70% of the sampled
SMEs were in the service sectors and had less than three years’ experience in
Table 1 Descriptive results for the analysed variables

Variables Mean S.D. Min Max
Barriers to SCRM Cost-related barriers 2.343 1.049 1 5
Time-related barriers 3.572 1.027 1 5
Knowledge-related barriers 3.047 0.927 1 5
Culture-related barriers 2.420 1.077 1 5
Security-related barriers 2.435 1.086 1 5
Capabilities for SCRM Proactive engagement 4.098 2.161 1 9
Learning and change 10.843 5.537 1 25
management
Managerial support 14.094 6.524 1 25
Beneficial outcomes of Trust-based relationship 0.200 0.400 0 1
SCRM Customer loyalty 0.215 0.411 0 1
Service costs 0.113 0.317 0 1
Brand reputation 0.313 0.464 0 1
Customer values 0.176 0.381 0 1
Customer advocacy 0.222 0.222 0 1
Market knowledge 0.191 0.393 0 1
Sales revenue 0.085 0.279 0 1
Control variables In-house development only 0.450 0.498 0 1
Medium-sized companies 0.428 0.495 0 1
Experience in SCRM 2.905 0.989 1 5
(natural log)
Number of SNSs 3.181 1.534 1 9
Sector dummies Natural resources 0.046 0.210 0 1
Manufacturing 0.074 0.262 0 1
Infrastructure 0.093 0.290 0 1
Knowledge-intensive 0.313 0.464 0 1
business services
Retail, wholesale, 0.309 0.463 0 1
accommodation, and food
services
Health, education, public 0.106 0.308 0 1
administration, and safety
Other services 0.059 0.236 0 1
managing SCRM. Across the study sample, respondents reported use of an aver-
age of three types of SNSs in relation to SCRM.
4.1 Ordered Probit Results
Table 2 presents the ordered probit results for the three types of SCRM-related capa-
bilities. Of the five types of barriers to SCRM, time-related barriers were the only
obstacle found to have a significant negative relationship to all three SCRM-related
capabilities. In other words, SMEs which have high levels of capability develop-
ment across all three SCRM-related capabilities were found to have low levels of
perceived time-related barriers (the reverse was also the case). Knowledge-related
barriers were found to be negatively related to proactive engagement and learning
and change management, but not related to managerial support. The latter result may
be because SMEs receiving strong support from top management were more likely
to acquire specialist SCRM system development skills and knowledge from sources
external to the company such as outsourcing vendors and consultants (evidenced
by a significant negative association between “managerial support” and “in-house
development only”).
Culture-related barriers were found to have a negative relationship with manage-
rial support and learning and change management (both internally directed capabil-
ities), but no relationship to proactive engagement, a result possibly reflecting that
capability’s external focus on exploiting opportunities in the business context within
which an SME operates. Cost-related barriers were found to have no relationship
with any of the three capabilities for SCRM. One possible explanation here may be
that Internet-based social networking sites (SNSs) provide SMEs with cost-effective
channels for advertising their business and products/services and for connecting with
customers, thereby making cost factors less relevant to the deployment of the three
capabilities for SCRM considered in this study.
Interestingly, security-related barriers were found to have a positive association
with the “proactive engagement” and “learning and change management” capabili-
ties. In other words, the greater the perceived security risks associated with SCRM,
the more likely these capabilities contributed to the circumvention of such risks. This
result is consistent with data security being widely recognised as the most pressing
issue organisations need to address in SCRM.
In regard to control variables, the results show that SMEs that had only followed
an in-house SCRM system development pathway had lower levels of capability
development across all three SCRM-related capabilities than those SMEs that out-
sourced system development and implementation. In addition, the duration of an
SME’s experience with the management of SCRM was positively associated with a
proactive engagement capability. Moreover, the greater the number of SNSs used by
SMEs for SCRM, the more likely an SME had high levels of all three capabilities for
SCRM. This suggests SMEs should use multiple SNSs to engage and communicate
regularly and interactively with customers.
Table 2 Ordered probit results for SCRM-related capabilities (n 540)

Capabilities for SCRM
Proactive Learning and Managerial support
engagement change
management
Unstandardised Unstandardised Unstandardised
coefficient (b) coefficient (b) coefficient (b)
Barriers to SCRM
Cost-related barriers 0.021 (0.049) −0.016 (0.048) 0.014 (0.049)
Time-related barriers −0.111 (0.054)* −0.183 (0.053)*** −0.246 (0.054)***
Knowledge-related −0.116 (0.061)* −0.115 (0.060)* 0.105 (0.061)
barriers
Culture-related barriers 0.018 (0.051) −0.107 (0.050)* −0.136 (0.050)**
Security-related barriers 0.139 (0.049)*** 0.171 (0.049)*** 0.054 (0.049)
Control variables
In-house development −0.255 (0.093)** −0.356 (0.092)*** −0.327 (0.093)***
only
Medium-sized companies 0.075 (0.099) 0.051 (0.097) −0.051 (0.098)
Experience in SCRM 0.197 (0.048)*** 0.010 (0.047) 0.058 (0.047)
Number of SNSs 0.184 (0.031)*** 0.190 (0.030)*** 0.173 (0.030)***
Sector dummies (included) (included) (included)
Log-likelihood −1072.082 −1163.860 −1168.927
Wald X 2 (df 15) 107.55*** 77.96*** 64.05***
Pseudo R2 0.048 0.033 0.027
***p < 0.001; **p < 0.01; *p < 0.05. Robust standard errors in parentheses. Bivariate correlations
between variables were below 0.45, suggesting no multicollinearity problems
4.2 Multivariate Probit Results
Table 3 presents the multivariate probit results for the SCRM outcome model. Show-
ing statistically significant and positive correlations between all pairs of the equa-
tions’ error terms (Rho) (correlation coefficients ranging from 0.406 to 0.838, p <
0.001), the results suggest that all eight SCRM outcomes are interrelated and com-
plementary. Moreover, the finding of significant positive correlations indicates that
testing of all eight outcomes in a simultaneous model (for instance, through the use
of a multivariate probit model rather than through separate regression equations) is
the most appropriate approach.
Different capabilities for SCRM produce different beneficial outcomes. The
“proactive engagement” capability found to have the broadest positive benefit. It
was also the only capability positively related to sales revenue, as well as being
an important contributor to all beneficial outcomes of SCRM with the exception
of reduced costs of customer services, a beneficial outcome to which the “learning
Table 3 Multivariate probit results for SCRM beneficial outcomes (n 540)
172
Beneficial outcomes of SCRM

Trust-based Customer loyalty Service costs Brand reputation Customer values Customer Market Sales revenue
relationship advocacy knowledge
Capabilities for SCRM
Proactive engagement 0.076 (0.035)** 0.079 (0.033)** 0.050 (0.042) 0.200 (0.032)*** 0.142 (0.035)*** 0.144 (0.034)*** 0.094 (0.034)** 0.114 (0.040)***
Learning and change 0.029 (0.015)* 0.036 (0.014)* 0.034 (0.018)* 0.032 (0.013)* 0.024 (0.015) 0.008 (0.014) −0.002 (0.015) 0.006 (0.018)
management
Managerial support 0.032 (0.013)** 0.027 (0.012)* 0.016 (0.016) 0.024 (0.011)* 0.026 (0.013)* 0.042 (0.012)*** 0.023 (0.012) 0.024 (0.016)
Barriers to SCRM
Cost-related barriers 0.027 (0.073) 0.053 (0.069) 0.036 (0.094) −0.006 (0.066) −0.043 (0.076) −0.083 (0.071) 0.094 (0.073) 0.077 (0.092)
Time-related barriers −0.050 (0.075) −0.029 (0.075) −0.279 (0.100)*** −0.063 (0.073) −0.083 (0.079) 0.095 (0.077) −0.140 (0.078) −0.035 (0.096)
Knowledge-related barriers −0.081 (0.097) −0.007 (0.090) 0.079 (0.124) 0.004 (0.085) −0.019 (0.100) −0.174 (0.091)* 0.008 (0.091) −0.088 (0.112)
Culture-related barriers 0.016 (0.078) 0.032 (0.074) 0.109 (0.100) 0.074 (0.068) 0.035 (0.078) 0.081 (0.073) 0.024 (0.075) −0.038 (0.100)
Security-related barriers 0.013 (0.076) 0.059 (0.071) 0.230 (0.093)** 0.034 (0.068) 0.216 (0.078)*** 0.100 (0.070) −0.026 (0.076) 0.010 (0.094)
Control variables
In-house development only −0.202 (0.144) −0.058 (0.135) −0.369 (0.177)* 0.080 (0.128) 0.118 (0.144) 0.230 (0.136) −0.070 (0.138) −0.035 (0.166)
Medium-sized companies 0.099 (0.147) 0.220 (0.137) 0.280 (0.179) −0.047 (0.130) −0.164 (0.149) −0.222 (0.138) −0.081 (0.143) −0.215 (0.180)
(continued)
N. Torugsa et al.
Table 3 (continued)
Beneficial outcomes of SCRM
Trust-based Customer loyalty Service costs Brand reputation Customer values Customer Market Sales revenue
relationship advocacy knowledge
Experience in SCRM 0.197 (0.079)** 0.125 (0.073) 0.118 (0.097) 0.066 (0.066) 0.034 (0.079) 0.103 (0.072) 0.178 (0.075)* 0.028 (0.090)
Number of SNSs 0.049 (0.044) 0.033 (0.043) 0.149 (0.055)** 0.053 (0.041) 0.093 (0.044)* 0.036 (0.042) 0.105 (0.042)** 0.092 (0.050)*
Sector dummies (included) (included) (included) (included) (included) (included) (included) (included)
Constant −2.272 (0.487)*** −2.621 (0.462)*** −2.866 (0.606)*** −1.924 (0.413)*** −2.371 (0.493)*** −2.404 (0.462)*** −2.412 (0.479)*** −2.602 (0.597)***
Correlations (error terms) Rho1 Rho2 Rho3 Rho4 Rho5 Rho6 Rho7
(Trust-based (Customer (Service costs) (Brand (Customer (Customer (Market
relationship) loyalty) reputation) values) advocacy) knowledge)
Rho2 (customer loyalty) 0.838***
Rho3 (service costs) 0.437*** 0.491***
Rho4 (brand building) 0.712*** 0.693*** 0.406***
Rho5 (customer value) 0.699*** 0.695*** 0.417*** 0.750***
Social Customer Relationship Management …
Rho6 (customer advocacy) 0.699*** 0.702*** 0.393*** 0.763*** 0.802***

Rho7 (knowledge of market) 0.651*** 0.574*** 0.465*** 0.682*** 0.674*** 0.617***
Rho8 (sales revenue) 0.666*** 0.609*** 0.406*** 0.603*** 0.755*** 0.632*** 0.549***
Log-likelihood −1278.567
Wald X 2 (df 109) 257.74***
***p < 0.001; **p < 0.01; *p < 0.05. Robust standard errors in parentheses
Likelihood ratio test of Rho21 Rho31 Rho41 Rho51 Rho61 Rho71 Rho81 Rho32 Rho42 Rho52 Rho62 Rho72 Rho82 Rho43
Rho53 Rho63 Rho73 Rho83 Rho54 Rho64 Rho74 Rho84 Rho65 Rho75 Rho85 Rho76 Rho86 Rho87 0; X 2 (28) 889.225;
Prob > X 2 0.000
173
and change management” capability was most strongly associated. In addition, the
results reveal the importance of using the three capabilities for SCRM in tandem and
in a complementary way, in order to achieve the high-value SCRM-related benefits
of enhanced brand reputation, stronger trust-based relationships with customers, and
greater customer loyalty.
Of the five types of barriers to SCRM, a lack of time and knowledge was the
only two barriers found to have a negative association with service costs (for time
barriers) and on customer advocacy (for knowledge barriers). This finding supports
the view that time and knowledge barriers impede SME adoption of SCRM and limit
access to its beneficial outcomes. Interestingly, security-related barriers had a posi-
tive and significant relationship with the costs of customer services and the capture
of customer values, suggesting this type of barrier may not be an insurmountable
obstacle to SCRM implementation. This result makes plausible the possibility that
SMEs are aware of the security risks involved in SCRM and can deploy or acquire
the necessary means to manage and circumvent such risks effectively.
With regard to the control variables, data analysis shows a negative relationship
between developing SCRM solely in-house and customer service costs. The duration
of an SME’s experience with SCRM was positively correlated with the benefits
of trust-based relationships with customers, and knowledge of market trends. In
addition, the number of SNSs used was positively correlated with sales revenue,
along with service costs, customer values, and market knowledge.
5 Discussion and Conclusions
In presenting the results of our exploratory investigation of SCRM in SMEs, we

address an important business topic on which there is a paucity of empirical research
from which the consequence is a lack of understanding of how SCRM could best be
implemented effectively to capture its high-value benefits [2, 3, 11, 12]. Drawing on
multiple theoretical perspectives and using data from 540 Australian SMEs practising
SCRM, we explore the link between the barriers, organisational capabilities (i.e.
proactive engagement, learning and change management, and managerial support)
and outcomes of SCRM implementation in SMEs. The study findings reveal that
SMEs often experience serious difficulties in overcoming implementation barriers
and accessing the potential benefits that SCRM offers. Time and knowledge barriers
represent significant challenges for SMEs, given that they are often managed by a
single dominant owner/manager unable to devote the necessary time to develop the
required skills for the effective use of SCRM-related technologies [3, 11, 13, 42].
The study findings indicate that perceived time and knowledge barriers in SMEs
can stifle SCRM and limit acquisition of its benefits (in terms of customer advocacy
and service costs), unless the three SCRM-related capabilities are applied in tandem
and in a complementary way (e.g. proactive engagement and managerial support are
conducive to increased customer advocacy, and learning and change management is
conductive to reduced service costs). Interestingly, the empirical evidence presented
in this study also suggests that SMEs appear not to be without the ability to risk
manage and circumvent or work effectively around security-related barriers, and so
leverage SCRM-related capabilities to achieve SCRM benefits. For example, the
use of social networking technologies involves inherent security and data privacy
risks which if not managed effectively can severely damage brand reputation [68];
SMEs often display careful, risk-taking behaviour by finding ways to minimise and
manage such risks when adopting such technologies (e.g. having well-established
risk management frameworks based on a risk-aware approach) [13, 68]. With regard
to cost- and organisational culture-related barriers, while these types of obstacles
can present challenges to SME implementation of SCRM, the study results reveal
no significant association with SCRM benefits. A plausible explanation for the non-
significant effect of cost-related barriers is that SCRM adoption by SMEs is linked
more to technology maturity, market type, and demand, rather than the availability
of new technologies perceived as too costly [69].
Based on the study findings, a well-thought-out and multifaceted approach to
capability development for SCRM appears essential if SMEs are to take advantage
of the new business opportunities offered by social networking platforms. In the SME
context characterised by constraints on resources and knowledge, and a structural
coincidence of ownership and control [37, 47, 56], the development of capabilities for
SCRM is most often likely to be driven by the experiences and interests of one person,
the owner–manager [3, 30, 42]. On this basis, to successfully implement SCRM, SME
owner–managers need to foster an atmosphere of proactivity and innovativeness that
encourages employee creativity and supports organisational learning and change
at the interface between the social networking phenomenon, the rapidly changing
customer environment, and their CRM system [13]. Due to their limited resource
base and constrained organisational learning opportunities [37], and as evident in
our discussion with pretest SME owner–managers, the most practical “capability
development” approach for SMEs is to learn from what other similar (successful)
firms have done and adapt those approaches to fit their own business context. By
strategically managing and leveraging (limited) resources to develop SCRM-related
capabilities, we contend that SMEs will be able to engage and involve the customer
in a way that delivers an enhanced level of mutually beneficial value. Our findings
hence have significant implications for theory, management and policy.
5.1 Implications for Theory
SCRM is a nascent area of empirical research that has yet to mark out its own theoret-
ical territory [23]. This study contributes to a more comprehensive understanding of
SCRM implementation within the context of SME capability development by blend-
ing RBV theory [17, 18] with theories of strategic entrepreneurship [19], organisa-
tional learning [20], and resource management [21]. On this basis, the findings carry
important theoretical implications. Specifically, the literature to date has assumed
that a lack of resources makes it difficult for SMEs to integrate new technologies
into CRM [70] and thus to implement SCRM successfully. However, the findings
of this study call this assumption into question by revealing that how the resources
are “strategically” managed to form capabilities are potentially more important than
what resources are possessed [21]. This suggests that a scarcity of resources is a rel-
evant but not deterministic factor for the implementation of SCRM in SMEs. Rather,
in line with RBV theory [17, 18], the effective integration of limited resources to
create capabilities is what drives SCRM and its beneficial outcomes.
Specifically, faced with resource constraints, SMEs can overcome the barriers
to success by developing and deploying SCRM-related capabilities that best fit the
opportunities available in the market and reflect distinctive SME characteristics (e.g.
closeness of manager–staff interaction, flexibility to respond rapidly to changes in the
business environment, entrepreneurial alertness and judgment, and innovativeness)
[13, 37]. Moreover, the centralised (ownership) structure characteristic of SMEs
makes the expertise and role of top management critical in supporting organisational
learning for SCRM and creating a shared vision among organisational members, as
well as identifying “resource gaps” that need to be filled for capability improvement
[18].
Of the three SCRM-related capabilities examined in this study, the importance
of proactive engagement is reinforced by its status as the only capability found
to have a positive influence on sales revenues and almost all other beneficial out-
comes. On this basis, an SME might need to consider how best it might deploy what
“learning and change management” and “managerial support” capabilities it has to
support its “proactive engagement” capability to gain the greatest competitive ben-
efits. The study findings also suggest that there could be several equally effective
(equifinal) ways of combining the three SCRM-related capabilities to overcome bar-
riers to SCRM implementation and improving customer relationship performance.
These findings, we believe, provide a basis upon which further research grounded
in “configurational thinking” might build. The use of configurational thinking (i.e.,
viewing firms as complex systems characterised by combinations of multiple interre-
lated attributes, see [48, 71]) provides an ideal foundation for testing and revitalising
resource-based theories of SCRM that can significantly improve our understanding
of the way in which SMEs can develop.
5.2 Implications for Practice and Policy
The study findings have practical implications for SME owner–managers wishing to
manage their resources strategically to create value for customers through implemen-
tation of SCRM. Specifically, the findings suggest that SMEs wishing to implement
SCRM successfully should give priority in resource allocation to the development
of “proactive engagement”, “learning and change management” and “managerial
support” capabilities. Deployment of all three capabilities (with a greater emphasis
on proactive engagement) in tandem and in a complementary fashion is necessary
(although it may not be sufficient) for the positive benefits of SCRM, such as building
trust-based relationships, customer loyalty, and brand reputation, to be fully realised.
Since a lack of available knowledge and time for implementing and utilising
SCRM constitutes major impediments to successful adoption, government policy-
makers should consider the provision of appropriate information and support tailored
to suit the distinctive organisational characteristics of SMEs (e.g. owner–manager
operated, flexible, responsive, and entrepreneurial). Such support should aim at min-
imisation of the knowledge- and time-related barriers and assist SMEs in the plan-
ning, execution, and ongoing management of SCRM initiatives. Supportive assis-
tance of this kind would make a valuable contribution by enabling SMEs to close the
gap between expected and realised benefits from their SCRM strategising efforts.
5.3 Limitations and Future Research Directions
Most studies have limitations, and ours is no exception. Given our study is limited
by its focus only on SMEs that adopted SCRM, the use of cross-sectional data, the
use of self-reported measures, and a focus on a single national economic context, the
generalisability of our findings, and the identification of causality are limited. Apart
from replication of this exploratory study in other economies, future research could
examine in greater depth, using multiple sources of data based on a longitudinal
research design, the challenges and hindrances facing SMEs implementing SCRM,
especially in relation to the integration of multiple social networking platforms into
an all-in-one-place system to capture customer needs and market trends accurately
and efficiently. Future research using set-theoretic methods to explore the asym-
metric relationships between barriers, capabilities, and outcomes of SCRM would
produce rigorous findings better reflecting business situations and multiple realities.
Also, since many of the SCRM benefits are intangible and difficult to measure, quan-
tifying and translating these benefits into financial value present an exciting research
challenge that must be addressed if the business case for SCRM is to be made more
persuasive for SMEs.
References
1. UNIDO. (2005). Technical working paper series: Small and medium enterprises branch. Work-
ing paper 5, United Nations Industrial Development Organization.
2. Cappuccio, S., Kulkarni, S., Sohail, M., Haider, M., & Wang, X. (2012). Social CRM for
SMEs: Current tools and strategy. In V. Khachidze, T. Wang, S. Siddiqui, V. Liu, S. Cappuccio,
& A. Lim (Eds.), Contemporary research on e-business technology and strategy (pp. 422–435).
Berlin Heidelberg: Springer.
3. Newby, M., Nguyen, H., & Waring, S. (2014). Understanding customer relationship manage-
ment technology adoption in small and medium-sized enterprises: An empirical study in the
USA. Journal of Enterprise Information Management, 27(5), 541–560.
4. Zhang, M., & Luo, N. (2016). Understanding relationship benefits from harmonious brand
community on social media. Internet Research, 26(4), 809–826.
5. Choudhury, M. M., & Harrigan, P. (2014). CRM to social CRM: The integration of new
technologies into customer relationship management. Journal of Strategic Marketing, 22(2),
149–176.
6. Sensis. (2016). How Australian people and businesses are using social media (Sensis Social
Media Report 2016).
7. Trainor, K. J., Andzulis, J., Rapp, A., & Agnihotri, R. (2014). Social media technology usage
and customer relationship performance: A capabilities-based examination of social CRM. Jour-
nal of Business Research, 67(6), 1201–1208.
8. Yawised, K., & Torugsa, N. (2014). An exploration of the factors influencing social CRM
adoption: Evidence from Australian firms. Academy of Taiwan Business Management Review,
10(1), 24–31.
9. Greenberg, P. (2010). The impact of CRM 2.0 on customer insight. Journal of Business &
Industrial Marketing, 25(6), 410–419.
10. Woodcock, N., Green, A., & Starkey, M. (2011). Social CRM as a business strategy. Journal
of Database Marketing & Customer Strategy Management, 18(1), 50–64.
11. Harrigan, P., & Miles, M. (2014). From e-CRM to s-CRM: Critical factors underpinning the
social CRM activities of SMEs. Small Enterprise Research, 21, 99–116.
12. Yawised, K., Torugsa, N., & O’Donohue, W. (2017). Exploring social customer relationship
management in Australian small and medium enterprises. International Journal of Globalisa-
tion and Small Business, 9(4), 222–251.
13. Eggers, F., Hatak, I., Kraus, S., & Niemand, T. (2017). Technologies that support marketing
and market development in SMEs—Evidence from social networks. Journal of Small Business
Management, 55(2), 270–302.
14. Boyles, T. (2011). Small business and Web 2.0: Hope or hype? Entrepreneurial Executive, 16,
81–96.
15. Carson, M. (2013). An expanding network of risk and opportunity: How UK SMEs and under-
estimating the growing complexity of technology. Zurich: The Economist Intelligence Unit.
16. Beaver, G., & Jennings, P. (2000). Editorial overview: Small business, entrepreneurship and
enterprise development. Strategic Change, 9(7), 397–403.
17. Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Manage-
ment, 17(1), 99–120.
18. Grant, R. M. (1991). The resource-based theory of competitive advantage: Implications for
strategy formulation. California Management Review, 33(3), 114–135.
19. Ireland, R. D., Hitt, M. A., & Sirmon, D. G. (2003). Model of strategic entrepreneurship: The
construct and its dimensions. Journal of Management, 29(6), 963–989.
20. Miller, D. (1996). A preliminary typology of organizational learning: Synthesizing the litera-
ture. Journal of Management, 22(3), 485–505.
21. Sirmon, D. G., Hitt, M. A., & Ireland, R. D. (2007). Managing firm resources in dynamic
environments to create value: Looking inside the black box. Academy of Management Review,
32(1), 273–292.
22. Mosadegh, M. J., & Behboudi, M. (2011). Using social network paradigm for developing a
conceptual framework in CRM. Australian Journal of Business and Management Research,
1(4), 63–71.
23. Yawised, K., & Marshall, P. (2015). Social CRM: A review of the literature and the identi-
fication of new research directions. International Journal of Virtual Communities and Social
Networking, 7(1), 14–20.
24. Stone, M. (2009). Staying customer-focused and trusted: Web 2.0 and customer 2.0 in financial
services. Journal of Database Marketing & Customer Strategy Management, 16(2), 101–131.
25. Greenberg, P. (2009). CRM at the speed of light: Social CRM strategies, tools, and techniques
for engaging your customers. USA: McGraw-Hill Osborne Media.
26. Acker, O., Grone, F., Akkad, F., Potscher, F., & Yazbek, R. (2011). Social CRM: How companies
can link into the social web of consumers. Journal of Direct, Data and Digital Marketing
Practice, 13(1), 1–12.
27. European Publishers Council. (2015). Global social media trends. UK: European Publishers
Council.
28. Ang, L. (2011). Is SCRM really a good social media strategy? Journal of Database Marketing
& Customer Strategy Management, 18(3), 149–153.
29. Evans, D., & McKee, J. (2010). Social media marketing: The next generation of business
engagement. Hoboken, N.J: Wiley.
30. Harrigan, P., Ramsey, E., & Ibbotson, P. (2011). Critical factors underpinning the e-CRM
activities of SMEs. Journal of Marketing Management, 27(5–6), 503–529.
31. Ismail, H. B., Talukder, D., & Panni, M. F. A. K. (2007). Technology dimension of CRM: The
orientation level and its impact on the business performance of SMEs in Malaysia. International
Journal of Electronic Customer Relationship Management, 1(1), 16–29.
32. Reijonen, H., & Laukkanen, T. (2010). Customer relationship oriented marketing practices in
SMEs. Marketing Intelligence & Planning, 28(2), 115–136.
33. Baird, C. H., & Parasnis, G. (2011). From social media to social CRM: Reinventing the customer
relationship, the second in a two-part series. USA: IBM Global Business Services.
34. Dutot, V. (2013). A new strategy for customer engagement: How do French firms use social
CRM? International Business Research, 6(9), 54–67.
35. Augar, N., & Zeleznikow, J. (2014). I just saw this on Facebook, I need it now: Exploring small
business use of Facebook. Australasian Journal of Information Systems, 18(3), 243–255.
36. Tocher, N., & Rutherford, M. W. (2009). Perceived acute human resource management prob-
lems in small and medium firms: An empirical examination. Entrepreneurship Theory and
Practice, 33(2), 455–479.
37. Torugsa, N., & O’Donohue, W. (2013). Strategic capabilities for successful engagement in
proactive CSR in small and medium enterprises: A resource-based view approach. In C.
Machado & J. P. Davim (Eds.), Management and engineering innovation (pp. 37–69). UK:
Wiley-ISTE.
38. Hosseinianzadeh, M. (2015). A framework for e-CRM implementation in health service indus-
try of a developing country. International Journal of Engineering and Innovative Technology,
4(8), 20–26.
39. Iriana, R., Buttle, F., & Ang, L. (2013). Does organisational culture influence CRM’s financial
outcomes? Journal of Marketing Management, 29(3–4), 467–493.
40. Askool, S., & Nakata, K. (2011). A conceptual model for acceptance of social CRM systems
based on a scoping study. AI & SOCIETY, 26(3), 205–220.
41. Tan, X., Qin, L., Kim, Y., & Hsu, J. (2012). Impact of privacy concern in social networking
web sites. Internet Research, 22(2), 211–233.
42. Molok, N. N. A., Chang, S., & Ahmad, A. (2010). Information leakage through online social
networking: Opening the doorway for advanced persistence threats. In Proceedings of the 8th
Australian Information Security Management Conference 2010 (pp. 70–80).
43. Conner, K. (1991). A historical comparison of resource-based theory and five schools of thought
within industrial organization economics: Do we have a new theory of the firm? Journal of
Management, 17(1), 121–154.
44. Day, G. S. (1994). The capabilities of market-driven organizations. Journal of Marketing, 58(4),
37–52.
45. Peltier, J., Schibrowsky, J., & Zhao, Y. (2009). Understanding the antecedents to the adoption
of CRM technology by small retailers: Entrepreneurs vs owner-managers. International Small
Business Journal, 27(3), 307–336.
46. Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2),
171–181.
47. Yu, T. F. (2001). Towards a capabilities perspective of small firm. International Journal of
Management Reviews, 3(3), 185–197.
48. Torugsa, N., & O’Donohue, W. (2016). Progress in innovation and knowledge management
research: From incremental to transformative innovation. Journal of Business Research, 69(5),
1610–1614.
49. Hitt, M. A. (2011). Relevance of strategic management theory and research for supply chain
management. Journal of Supply Chain Management, 47(1), 9–13.
50. Zahra, S. A., & George, G. (2002). Absorptive capacity: A review, conceptualization, and
extension. Academy of Management Review, 27(2), 185–203.
51. Hitt, M. A., Ireland, R. D., Camp, S. M., & Sexton, D. L. (2002). Strategic entrepreneurship:
Integrating entrepreneurial and strategic management perspectives. In M. A. Hitt, R. D. Ireland,
S. M., Camp, & D. L. Sexton (Eds.), Strategic entrepreneurship: Creating a new mindset
(pp. 1–16). Oxford: Blackwell Publishers.
52. Miles, R., & Snow, C. (1978). Organizational strategy, structure and process. New York:
McGraw Hill.
53. Diffley, S., & McCole, P. (2015). Extending customer relationship management into a social
context. The Service Industries Journal, 35(11–12), 591–610.
54. Bruque, S., & Moyano, J. (2007). Organisational determinants of information technology adop-
tion and implementation in SMEs: The case of family and cooperative firms. Technovation,
27(5), 241–253.
55. Cohen, W. M., & Levinthal, D. A. (1990). Absorptive capacity: A new perspective on learning
and innovation. Administrative Science Quarterly, 35(1), 128–152.
56. Jones, O. (2003). Competitive advantage in SMEs: Towards a conceptual framework. In O.
Jones & F. Tilley (Eds.), Competitive advantage in SMEs: Organising for innovation and
change (pp. 15–33). England: Wiley.
57. Sirmon, D. G., & Hitt, M. A. (2009). Contingencies within dynamic managerial capabilities:
Interdependent effects of resource investment and deployment on firm performance. Strategic
Management Journal, 30(13), 1375–1394.
58. Sirmon, D. G., Hitt, M. A., Arregle, J. L., & Campbell, J. (2010). Capability strengths and
weaknesses in dynamic markets: Investigating the bases of temporary competitive advantage.
Strategic Management Journal, 31(13), 1386–1409.
59. Olszak, C., & Bartus, T. (2013). Multi-agent framework for social customer relationship man-
agement systems. Issues in Informing Science and Information Technology, 10, 367–387.
60. Payne, A., & Frow, P. (2005). A strategic framework for customer relationship management.
Journal of Marketing, 69(4), 167–176.
61. Zyl, A. S. V. (2009). The impact of social networking 2.0 on organisations. Electronic Library,
27(6), 906–918.
62. Birch, D. (2002). Corporate citizenship in Australia: Some ups, some downs. Journal of Cor-
porate Citizenship, 5, 73–84.
63. Galbreath, J., & Galvin, P. (2008). Firm factors, industry structure and performance variation:
New empirical evidence to a classic debate. Journal of Business Research, 61(2), 109–177.
64. Simons, T. L., Pelled, L. H., & Smith, K. A. (1999). Making use of difference: Diversity, debate
and decision comprehensiveness in top management teams. Academy of Management Journal,
42(6), 662–673.
65. Armstrong, J., & Overton, T. (1977). Estimating nonresponse bias in mail surveys. Journal of
Marketing Research, 14(3), 396–402.
66. Podsakoff, P. M., MacKenzie, S. M., Lee, J., & Podsakoff, N. P. (2003). Common method
variance in behavioral research: A critical review of the literature and recommended remedies.
Journal of Applied Psychology, 88(5), 879–903.
67. Torugsa, N., & Arundel, A. (2016). The nature and incidence of workgroup innovation in
the Australian public sector: Evidence from the Australian 2011 State of the Service survey.
Australian Journal of Public Administration, 75(2), 202–221.
68. Steinman, M. L., & Hawkins, M. (2010). When marketing through social media, legal risks
can go viral. Intellectual Property & Technology Law Journal, 22(8), 1–9.
69. Wang, R., & Owyang, J. (2010). Social CRM: The new rules of relationship management. US:
Altimeter Group.
70. Alshawi, S., Missi, F., & Irani, Z. (2011). Organisational, technical and data quality factors in
CRM adoption–SMEs perspective. Industrial Marketing Management, 40(3), 376–383.
71. Torugsa, N., & Arundel, A. (2017). Rethinking the effect of risk aversion on public sector
innovation. Research Policy, 46(5), 900–910.
Operations Research and Emergent
Technologies
Gema Calleja, Jordi Olivella and Mariona Vilà
Abstract The unstoppable rise of computer power and technological innovation in

all aspects of everyday life is changing the way organizations function and make
decisions. Artificial intelligence, big data analytics and blockchain are some of the
emergent technologies that are impacting every industry, raising new challenges and
enabling important opportunities in the development and application of operations
research (OR). Many innovation paths arise from the hybridization between OR
and these emergent technology domains: (i) using new technologies to apply OR,
(ii) adopting new approaches to enrich OR methods and (iii) applying OR methods
to enhance emergent technologies. Based on the scientific literature, this chapter
explores the synergies between OR and emergent technologies, and highlights note-
worthy application horizons and areas of research arising from their hybridization.
1 Introduction
Emergent technologies can be defined as technical innovations that are currently

being developed and/or nearing deployment that have the potential to exert a consid-
erable impact on business processes, organizations, cultures and interactions among
those. Its most prominent impact, though, lies in the future, and therefore, in this
phase these technologies are still somewhat uncertain and ambiguous [1].
Simply stated, operations research (OR) is the discipline of applying advanced
analytic methods to help make better (informed, effective and efficient) decisions.
More specifically, OR is an interdisciplinary branch of applied mathematics that
G. Calleja · J. Olivella (B)

Department of Management, Institute of Industrial and Control
e-mail: jorge.olivella@upc.edu
M. Vilà
Department of Management, Universitat Politècnica de Catalunya,
Barcelona, Spain
M. Vilà
EAE Business School, Barcelona, Spain

184 G. Calleja et al.
uses models, either quantitative or qualitative, to aid decision-making in complex

problems [2]. In the last few years, the disruptive innovation trends in science and
technology have interested the operations research (OR) community and new promis-
ing areas of research and application horizons have been opened for OR scientists.
The maturity of this field of research provides a solid background for the develop-
ment of models and applications, and on the other hand, challenges and opportunities
arise from the explosion of data available today and the strong need to turn them into
actionable insight.
Additionally, many innovation paths in OR arise from the intersection of several
diverse disciplines such as data science, analytics, mathematics, economics and engi-
neering, opening possibilities for new and original approaches by exploiting syner-
gies through cross-discipline hybridization. Bringing these diverse fields of research
together will require the OR community to address many intellectual challenges to
connect the realms of data, models, and decisions.
Today, OR is being used in virtually every field where complex decisions must be
made, playing important roles in a variety of industries, as well as in the government
and society at large. Examples of application fields of OR include business, engi-
neering, management, economics, manufacturing, government, health care, trans-
port, geographic information systems, scheduling, marketing, inventorying and oth-
ers [3]. Regardless of the application where the problem of study arises, selecting an
appropriate alternative has become extremely difficult in our increasingly complex,
dynamic and uncertain world. Faced by scarcity, contemporary organizations must
decide how to use optimally their resources more than ever now.
The field of OR encompasses a wide range of problem-solving techniques and
methods. While originally OR borrowed techniques from other scientific fields, the
growing scope of the problems addressed by this discipline has led to the growth of
special analytic methods, including such now-familiar terms as simulation, mathe-
matical optimization, queuing theory, data analysis, neural networks, expert systems
and decision analysis. In essence, these techniques are used to create and analyze
scientific models that attempt to study the mathematical structure of human activity
[4].
The discipline of OR, however, differs greatly from other sciences in the sense
that it aims not only to explain real-world phenomena but also to guide decision-
making. For that matter, OR assists decision-makers in evaluating the given problems,
identifying the alternative solutions and selecting the preferred solution. Likewise,
OR also provides a quantitative aid so that it will become easier for the decision-
maker to predict the future outcomes of the solutions [5].
Naturally, OR both as discipline and as professional activity is deeply connected
with the environment in which it develops. Today, OR and technology are more and
more intertwined, each pushing forward and stimulating the other. New problems
lead to the formulation of new models which require new and powerful computing
methods (the technology), but the design of these computing methods requires and
motivates new theoretical work. What makes this interaction a self-reinforcing loop is
that new and more advanced theories and new and higher-performance technologies
Operations Research and Emergent Technologies 185
enlarge the area of tractable problems suggesting the possibility of new applications
[6].
In a world that has been reported to be in the middle of an industrial revolution
[7], new technologies progress is a critical factor to consider. In particular, the inter-
relation between OR and emergent technologies deserves to be taken into account.
This interaction between OR and new emergent technologies adopts different forms
that are highlighted next.
(1) Use of new technologies to apply OR
Due to the nature of its methods, a great majority of the OR solutions require
data manipulation and calculations. In the first years of OR, calculations were per-
formed by hand and, in spite of this, its methods were implemented to real problems
and improved substantially the previous procedures [8]. In spite of this, the present
development of OR cannot be understood without the great improvement in the man-
agement and processing of data. In effect, OR would have not expanded as it has
without the development of high-performance computers and sophisticated software
technologies [9]. Nowadays, computational capacity goes on increasing and we can
assume that it will continue influencing OR uses and possibilities.
(2) Using new approaches to enrich OR methods
Some of the so-called emergent technologies are not in fact artefacts or systems,
but analysis procedures. This is the case of machine learning (ML) and artificial
intelligence (AI). Thus, it is not surprising that some of these approaches are taken
into account in the OR procedures itself. Actually, AI-based techniques are widely
used to address OR problems. It has been reported the frequent use of methods such
as Tabu search [10] and simulated annealing [11], among many others. Similarly,
branch-and-bound procedures, for example, are taking advantage of machine learning
approach [11, 12].
(3) OR contribution to emergent technologies
As new technological innovations continue to arise, they create challenges and
opportunities for operations researchers to enhance the utilization of such innova-
tions.
The objective of this chapter is to draw attention to the relation of OR and emer-
gent technologies based on the scientific literature. With this aim, Sect. 1 refers to
several concepts involved, including emergent technologies and the different OR and
emergent technologies relations; Sect. 2 reports some specific relations between a
set of emergent technologies and OR, and Sect. 3 is devoted to present some final
remarks.
2 OR and Different Emergent Technologies
2.1 Big Data Analytics
Big data has been defined as an umbrella term applied to data sets whose size,
velocity and complexity are beyond the ability of available tools to undertake their
acquisition, store, analytics and application in a reasonable amount of time [12]. This
abundance of complex data is mostly being generated from a variety of digital sources,
flowing from the increasingly chaotic mix of competitors, customers, the general
public (through social networks and user-generated content), connected machines
and products (the Internet of things) and the business itself [13].
Big data analytics (BDA) (also called advanced analytics) has multiple definitions
and interpretations. The common denominator of all these definitions is that big data
analytics is the encapsulation of all mechanisms that help convert data into actionable
insight for better and faster decision-making [14, 15]. This potential for insight and
enhanced decision-making is leading organizations to embrace BDA and shift to
fact/evidence-based decision-making, in order to measure trends more precisely,
create more accurate predictive models, target more effective interventions, optimize
business processes and, ultimately, achieve a decisive competitive advantage [16, 17].
Both in OR and BDA, the quantitative decision science methods can be grouped
into two main categories: data-driven and problem-driven approaches [18]. Whereas
the goal of the two approaches is to help decision-makers make better decisions, the
way they tackle the problem is different. Data-driven approaches aim to gain new
insight from the data about the problem of interest. Contrastingly, problem-driven
approaches do not focus on data, but on the business problem itself. The goal is to
translate the business problem into a well-defined analytical problem that can be
modeled and solved [19].
Analytics methods can be thought of as consisting of three levels of modeling:
descriptive methods (to mimic the system or process studied and answer the ques-
tion of what is happening), predictive methods (to project the system or process
performance into the future and answer the question of what will be happening) and
prescriptive methods (to prescribe to the decision-maker the best or preferred set of
policies and answer the question of what should be done) [20]. Generally, descriptive
analysis is conducted via data-driven approaches; prescriptive analysis is performed
by problem-driven techniques; and both data-driven and problem-driven approaches
are utilized for predictive analysis [19].
Because of the volume, variety and velocity that characterizes big data, an efficient
extraction of useful knowledge from these data becomes a huge challenge, and thus,
modern-day analytics techniques can require extensive computation. As a result,
the tools, techniques and algorithms used for BDA arise in a wide variety of fields
that include OR, computer science, statistics, data science, artificial intelligence and
mathematics [14].
Fueled by increased computer power and the availability of data, organizations are
shifting the way they solve problems towards a more data-driven and more informed
approach. The early history of OR was data-driven, where repeated observations

about a specific system led to models and decisions [21, 22]. Over the years, though,
the OR community has drifted away from being data-driven to being problem-driven,
and the challenge today for the OR community is to reorient itself and emphasize
data-driven models using extensive real-world data, as suggested by Simchi-Levi
[21].
At the outset, it would seem the practice of BDA would fall squarely within the
domain of OR. However, while the work of these two fields is inherently analytical
[23], their purposes are different. The goal of OR is to optimally solve decision
problems arising in real-world applications, with a focus on prescriptive modeling,
whereas BDA is aimed at the transformation of large amounts of data to gain insight
for better decision-making. Such a process can be initiated by the desire to address
specific problems or the need to explore and learn from the existing data [24].
Both OR and BDA are multidisciplinary and application focused. They drive
decision-making via modelling, optimization and statistics, and are used in almost
every domain like logistics, manufacturing, health care, marketing, human resources
or finance [25]. For this reason, synergies can be achieved by integration of OR
optimization techniques into BDA and vice versa, especially since in both cases very
large search spaces of solutions need to be explored [14].
One of the BDA techniques that benefits from integration with the OR solving
methodology is data mining (DM) [25]. DM is concerned with abstracting the consid-
erable amount of knowledge that is often hidden in databases. The synergy between
OR and DM is bidirectional. On the one hand, OR can be useful to increase DM effi-
ciency. In this context, metaheuristics, and particularly multi-objective metaheuris-
tics, have been widely proposed, which all tend to deal with an NP-hard optimization
problem that arises in a DM task [26]. On the other hand, less research has been done
to understand how DM techniques can enrich OR methods, but significant such work
is emerging, with the objective to either improve the quality of results obtained by
OR approaches, or to speed up the execution of algorithms [27].
2.2 Artificial Intelligence
Artificial intelligence (AI) is the branch of computer science that enables machines to
mimic human behaviour, such as learning or problem-solving. AI is used in multiple
areas as science, engineering, medicine, business and weather forecasting [28]. The
progress in the field is highlighted by computers beating human world champions
in chess and Go [29]. Some of the most significant application areas within AI are
solution search at combinatorial problems, knowledge-based systems or expert sys-
tems, natural language processing, pattern recognition, robotics, machine learning,
interference functions and automatically programming [28].
Actually, the field of AI is an umbrella term that encompasses three fields of
research: artificial intelligence (AI), machine learning (ML) and deep learning (DL).
ML refers to the software research area that enables algorithms to learn without
human intervention. In turn, DL is an offshoot of ML that tries to emulate the function

of inner layers of the human brain in order to create knowledge from multiple layers
of information processing.
The interaction between the fields of OR and AI has been active and fruit-
ful, stemming from interdisciplinary advances in several research areas. The first
crossroads where OR has met AI is combinatorial optimization. In particular, lin-
ear and integer programming, constraint-based optimization and stochastic local
search approaches have been proposed [30]. Another area of intersection is sequen-
tial decision-planning. Planning has been at the core of AI since its inception. In this
time, Markov decision processes have become the conceptual model that has enabled
the shift from the traditional deterministic, goal-based model, to tackle problems
with uncertainty in action effects and in knowledge of the system state, and multiple,
conflicting objectives [30, 31]. For example, AI approaches using Markov decision
processes can be found in varied applications such as in health care to approximate
optimal treatment decisions over time [32], in robotics to reduce uncertainty in object
sorting and manipulation [33], in ecology to select the best course of management
actions for conservation of biodiversity [34], and in aviation to guide unmanned
aircraft in uncertain environments [35].
OR and AI techniques have also been successfully applied is the assessment of
bank performance [36]. Numerous applications of data envelopment analysis can be
found, which is the most widely OR technique in the field, along with multicriteria
decision aid. AI techniques such as neural networks and support vector machines
have also been used in recent years, to predict bank failure and to assess bank cred-
itworthiness and underperformance. However, the integration of techniques arising
from OR and AI in this field seems to be an area of research that needs further
attention.
Another synergy where the OR and AI communities have much of value to
exchange with one another is in the abstraction/relaxation methods they use for state
space search. State space search is a problem-solving technique used for various
optimization problems such as the travelling salesman problem (TSP). The gen-
eral notion of state space abstraction/relaxation is identical in both cases and often
provides the key technology for state-of-the-art performance. However, the routing
problems studied in OR, when formulated as dynamic programs, have special prop-
erties compared to the generic state spaces studied by AI. Therefore, the OR routing
problems would be challenging tests of the more generic AI abstraction methods
deserving of close study by the AI community [37].
Enhancements originating from the integration of OR and AI techniques have
been highlighted in the study of intelligence transportation system (ITS), an effec-
tive way to alleviate traffic congestion and improve transportation efficiency, which
synthesises a variety of technologies, including information, computer, data commu-
nication, sensor, automatic control theory, OR and AI [38]. OR models and math-
ematical programming techniques are largely in use to support a variety of tasks
involving traffic analysis, signal timing and evaluation of alternative traffic manage-
ment strategies. On the other hand, AI techniques can significantly contribute in two
directions: (1) to overcome the major limitations of traffic control technology and
extend the range of situations the control system is able to deal with and (2) to pro-
vide traffic operators with better support to cope with the increasingly complexity
and flexibility of technology [39].
2.3 Machine Learning
The past few years have witnessed a proliferation of literature in the overlap between
OR and machine learning (ML), both in terms of research and practice. ML can be
defined as a type of artificial intelligence in which a machine is capable to learn and
adapt itself to any change in data without being explicitly programmed [40]. More
specifically, ML uses data mining techniques and other learning algorithms to build
models of what is happening behind some data so that it can predict future outcomes.
In many fields, researchers are beginning to use its techniques to understand their
systems and solve broader, more complex problems. ML has been applied across
a wide range of empirical sciences, from biology to cosmology to social science.
For example, astrophysicists are classifying galaxies [41], and data scientists are
working to analyse literary text [42]. Recent applied success examples in areas of
technology and science include robotics and autonomous vehicle control, speech
processing and natural language processing, neuroscience research, and applications
in computer vision. Similarly, the effects of ML have also been felt broadly across a
range of industries concerned with data-intensive issues, such as consumer services,
fault diagnosis in complex systems and the control of logistic networks [43].
Within OR, the domain of optimization—and particularly, mixed integer pro-
gramming (MIP) optimization—is closely tied to the domain of ML. The boundaries
between those two domains can be somewhat blurry because MIP techniques can be
used to solve ML problems, and ML tools can be used to solve MIP problems [44]. In
that sense, some of the MIP for ML works is highlighted next. Deep neural networks
(DNNs) are popular architectures in ML based on learning data representations. Fis-
chetti and Jo [45] use MIP to model DNNs with application to adversarial ML, a
research field that aims to enable the safe adoption of ML tools in adversarial set-
tings, such as spam filtering, malware detection and biometric recognition. Support
vector machines (SVMs) are classification techniques widely used in ML. For the
classic VSM problem, [46] present a reformulation to tackle the M-big constraints.
The recent work [47] solves this problem by framing it as a MIP model.
On the other hand, ML has proven useful for MIPs as well. The branch-and-bound
procedure involves a number of parameters that are tuned to the needs of the specific
classes of problems. These parameters decide what should be done next at a certain
node of the procedure. Recently, several works explored how ML can be used to
tune these parameters and predict whether making a decision at a node will improve
the overall run-time of the procedure [48, 49]. These works are promising both for
generic MIP solvers and for exploring their success in specific classes of problems
[50].
During the last years, metaheuristics have been used to enhance the performance of
machine learning problems [51]. In the incorporation of machine learning techniques
into metaheuristics, the major interest of this hybridization scheme is to extract useful
knowledge from the history of the search in order to improve the efficiency and
effectiveness of metaheuristics [52, 53].
2.4 Renewable Energy Resources
As a result of the humanity’s technological, economic and societal progress, one of the
greatest challenges today is how to power the world sustainably while minimizing
environmental harm [54]. Indeed, this global progress has led to a fast growth of
greenhouse emissions along with high and unstable fuel prices, which are the driving
forces to utilize renewable energy resources (RER) more efficiently.
Despite the advantages of RER, including increased energy safety reduction in
dependence on fuel fossil resources and the reduction of greenhouse emissions to the
atmosphere, RER also presents important drawbacks, such as the discontinuity of
generation, as most RER depends on the climate. For this reason, their use requires
complex design, planning and control optimization methods [55].
Big data is revolutionizing the way of energy production and the pattern of energy
consumption. With the advent of smart grids, electrical networks are using intelligent
systems and information technologies to facilitate the deployment and integration
of RER, smart consumer devices, automated systems, electricity storage and peak-
saving technologies.
Fortunately, recent advances in big data analytics and computer technologies are
enabling the OR research community to deal with these optimization challenges in
renewable and sustainable energy applications [56]. A considerable research effort
has been made on optimization methods to solve renewable energy problems, espe-
cially for wind and solar energy systems [55]. Following the increasing worldwide
demand for energy, a primary research interest is the expansion of distribution net-
works. Because of the high investment costs needed for creating a renewable energy
installation, a critical issue for the design and long-term planning of energy systems
is to select the best alternative among several renewable energy systems [57].
At the community level, renewable energy system planning is a complex problem
involving the allocation patterns of energy and services, formulation of local policies
of energy consumption, economic development and energy structure, and considera-
tion of the relationships among economic cost, system reliability and energy-supply
security. In this sense, several optimization approaches based on mathematical pro-
gramming have been proposed in order to obtain the RER allocation and capacity
expansion solution with a minimized cost, and maximized system reliability and
energy security [58].
Short-term energy planning is a challenging problem due to the existence of mul-
tiple uncertainties. In large-scale scenarios, it is crucial that the electric system is
able to compensate the effects of the variability of the wind, solar or hydropower
availability. In this sense, researchers have used artificial neural networks (ANNs)
for the prediction of energy demands [59], simulation techniques for the optimization
of the standby plant or grid connection [60], and heuristic algorithms for timetabling
and labour scheduling with excellent results [61]. Energy planning problems involve
multiple decision-makers and criteria, and thus, multicriteria decision-making meth-
ods have been proposed for multi-objective distributed energy resources planning
[62].
From the point of view of control, one of the main problems is determining
the impact of renewable energy on distribution networks [55]. Optimization meth-
ods have been presented for solving the problem of new renewable energy sources
penetration and congestion [63], optimal bidding strategy [64] and optimal opera-
tion management of distribution networks [65]. Further, there has been considerable
interest in the use of RER for water pumping [66] and the design of energy-based
greenhouses [67].
According to the survey presented by Baños et al. [55], some of the OR methods
applied to tackle renewable energy problems are based on traditional approaches,
such as mathematical programming, Lagrangian relaxation, and Nelder–Mead sim-
plex search. Heuristic approaches have been increasingly proposed, especially
genetic algorithms and particle swarm optimization. Finally, Pareto optimization
techniques and parallel processing have been pointed as promising research areas in
the field of renewable and sustainable energy.
2.5 Internet of Things
Following the International Telecommunication Union (ITU) approach, the Internet

of things (IoT) has been considered to be based on pervasive presence around us of
a variety of things or objects—such as radio-frequency identification (RFID), tags,
sensors, actuators, and mobile phones—which, through unique addressing schemes,
are able to interact with each other and cooperate with their neighbours to reach
common goals [68]. The designing of such systems requires considering the elements
that will constitute them and how the information will be obtained, transmitted and,
finally, analyzed.
The design of the IoT systems has been addressed by using OR methods. When
designing an IoT system, the selection of the set of smart objects that will form the
systems is one of the critical tasks to perform. Factors such as energy consumption
and quality of service have to be taken into account. This problem has been addressed
by using OR methods. Particularly, it has been characterized as a bi-objective shortest
path optimization (BSPO) problem [69], a multi-dimensional multi-choice knapsack
problem (MMKP) [70] and a multi-constraint shortest path (MCSP) problem [71].
The transmission of the information obtained is one of the biggest challenges of
the IoT. The huge number of sources of information and data to transmit requires low
bandwidth, lossy and low-power network protocol. With this aim, the ROLL (routing
over low power and lossy) working groups defined in 2008 the RPL routing protocol
[72]. The RPL routing protocol has been characterized as a robust shortest path tree
(RSPT), a robust variation of the shortest path tree [73]. In order to define a routing
protocol for RPL, RPL routing problem with uncertainties has been characterized as
a robust shortest path tree (RSPT), a robust optimization variant of the shortest path
tree problem. A mixed integer linear programming formulation has been used to test
the quality of proposed algorithm [73].
How to effectively analyze the information obtained through the IoT is a big
challenge and, at the same time, generates big opportunities. As for example, concepts
as optimization of supply chain can be redefined by considering the importance of
risk, which makes the results obtained much more applicable to real-life problems
[74].
2.6 Blockchain
Ever since the appearance of blockchain-based cryptocurrency in 2009 [75], this

concept has been studied both as an opportunity for investment and as a means of
decentralized banking and finance. However, research on other aspects and applica-
tions of Blockchain is a very new field that has started to develop only in the last five
years.
Simply put, blockchain is an open, distributed ledger used to record all transactions
performed. To do so, subsequent blocks are added—hence the term blockchain. Such
ledger is accessible to all. This fact guarantees that every unit of currency traded
disappears from its origin and reaches its destination. Consequently, it can be used
as a decentralized banking system. Additionally, users validating transactions in the
ledger are rewarded with more cryptocurrency, in a very memory and processing
power-expensive procedure known as mining [75].
Due to the nature of blockchain-based cryptocurrency, OR applications have been
useful in order to understand, analyze, predict and also optimize different aspects of
the mining process, the characteristics of Blockchain or the value of cryptocurrency.
The mining process has also been modeled and optimized by means of OR appli-
cations, by assimilating it to more widely studied problems. A commodity extraction
problem is presented as a stochastic switching problem [76], in which the decision-
maker wants to maximise profit, labeling the switch of different mining spots as either
open, closed or abandoned. Each of the options has associated costs and incomes. A
path-wise approach to dynamic programming is presented for the resolution of this
commodity mining problem. However, the authors indicate that this method can also
be applied to the optimization of cryptocurrency mining [76].
The allocation of cryptocurrency mining resources has also been compared to
classical problems and solved using OR techniques. For instance, in the allocation
of limited edge computing power to miners for mobile Blockchain networks are
assimilated to a resource assignment problem [77]. The proposed solution procedure
is based on finding the optimal auction, in which bidders are the miners and the
auctioneer is the edge computing service provider that assigns the limited edge com-
puting power. A deep learning algorithm that uses a multi-layered neural network is
applied in this case, with very promising results.
3 Closing Remarks
The wide array of quantitative OR methods offers tremendous capabilities to best

compete in the fast-paced, data-rich, highly connected organizations of the twenty-
first century. This chapter describes several innovation trends in science and technol-
ogy, provides examples of how they are being utilized and hybridized with the OR
field and identifies potential synergies for future research. Here, we close with some
additional thoughts on how OR can be used in today’s technological, data-driven
world.
It can be argued that in the new age of uncertainty, we can be sure only that breath-
taking change will continue [78]. Today’s business ecosystem consists of very com-
plex problems that play an important part in our daily life, science and economy [14].
Thus, understanding such complex problems, describing them mathematically, using
them for prediction and ultimately controlling them are one of the major challenges
of our century. This is where OR coupled with advanced sciences and technologies
provide significant utility. However, for OR to thrive in ever-changing times, it should
adapt and evolve as fast as the business ecosystem is changing. The key to this fast
adaptation would be a strong curiosity about development in these systems and a
willingness to experiment with original hybrids of OR techniques with information
and decision technologies.
The trend towards data-driven and analytical decision-making presents important
opportunities for OR professionals, because their optimization and modeling knowl-
edge, along with their analytical skills will be in high demand [23]. However, to
succeed in this new paradigm it is necessary to recalibrate the focus from applying
analytical methods to solve individual problems to a broader view of developing
end-to-end analytical solutions integrating the use of data, processes and systems,
since analytics solutions are often implemented within enterprise systems [78].
Optimization and simulations models are often considered the core of OR appli-
cations. With the advance of big data analytics, these OR models are just a part of the
analytics toolkit and will likely be hybridized with other kinds of analytical models
and methods, such as statistical and artificial intelligence models, with the objective
to address an expanded model [24].
In the descriptive–predictive–prescriptive framework, OR is a part of the pre-
scriptive analytics. This is the most impactful game-changer opportunity when it
comes to solve problems using analytic methods. As discussed in [24], few organi-
zations incorporate models in their analytics effort. Given that optimization models
often offer strategic value to organizations, this is a tremendous opportunity for the
OR community, since decision optimization has been always at the core of the OR
discipline.
The list of synergies and decision problems described in this chapter is not exhaus-
tive, and new developments and technologies will sure give rise to more interesting
decision-making challenges. Still, it seems clear that there are significant opportu-
nities stemming from the hybridization of OR and the research fields highlighted in
the chapter, which arise across the full methodological spectrum of OR. Therefore, a
broader participation of OR researchers in the interdisciplinary fields where emergent
technologies arise would be beneficial to exploit such synergies in the future.
References
1. Rotolo, D., Hicks, D., & Martin, B. R. (2015). What is an emerging technology? Research
Policy, 44, 1827–1843.
2. Monks, T. (2016). Operational research as implementation science: Definitions, challenges
and research priorities. Implementation Science, 11, 1–10. https://doi.org/10.1186/S13012-
016-0444-0.
3. Cochran, J. J., Cox, L. A., & Keskinocak, P. (Eds.). (2011) Wiley encyclopedia of operations
research and management science. New York: Wiley.
4. Hooker, J. N., & van Hoeve, W. J. (2007). Constraint programming and operations research.
Constraint Programming Letters, 1, 21–32. https://doi.org/10.1007/s10601-017-9280-3.
5. Tiwari, N. K., & Shandilya, S. K. (2006). Operations research. Prentice-Hall.
6. Gallo, G. (2004). Operations research and ethics: Responsibility, sharing and cooperation.
European Journal of Operational Research, 153, 468–476.
7. World Economic Forum. (2015). The fourth industrial revolution: What it means, how to
respond. Glob Agenda. https://doi.org/10.1080/0308569042000238082.
8. Lustig, I. (2001). Interwiev to George Dantzig.
9. Kirby, M. W. (2001). History of early British OR. In: S. I. Gass & C. M. Harris (Eds.) Ency-
clopedia of operations research and management science (2nd ed., pp. 366–369). Boston:
Springer.
10. Glover, F. (1986). Future paths for integer programming and links to artificial intelligence.
Computers & Operations Research. https://doi.org/10.1016/0305-0548(86)90048-1.
11. Siddique, N., & Adeli, H. (2016). Simulated annealing, its variants and engineering applica-
tions. International Journal on Artificial Intelligence Tools, 25, 1630001. https://doi.org/10.
1142/S0218213016300015.
12. Tien, J. M. (2013). Big data: Unleashing information. Journal of Systems Science and Systems
Engineering, 22, 127–151. https://doi.org/10.1007/s11518-013-5219-4.
13. Mortenson, M. J., Doherty, N. F., & Robinson, S. (2015). Operational research from taylorism to
terabytes: A research agenda for the analytics age. European Journal of Operational Research,
241, 583–595. https://doi.org/10.1016/j.ejor.2014.08.029.
14. Delen, D., & Ram, S. (2018). Research challenges and opportunities in business analytics.
Journal of Business Analytics, 1, 2–12.
15. Davenport, T. H., & Harris, J. G. (2007). Competing on analytics: The new science of winning.
Boston: Harvard Business Press.
16. Hazen, B. T., Skipper, J. B., Boone, C. A., & Hill, R. R. (2018). Back in business: Operations
research in support of big data analytics for operations and supply chain management. Annals
of Operations Research, 270, 201–211. https://doi.org/10.1007/s10479-016-2226-0.
17. McAfee, A., Brynjolfsson, E., Davenport, T. H., Patil, D. J., & Barton, D. (2012). Big data: The
management revolution. Harvard Business Review, 90, 61–67. https://doi.org/10.1007/s12599-
013-0249-5.
18. Rose, R. (2016). Defining analytics: A conceptual framework. OR/MS Today, 43, 36–41.
19. Caglayan, C. (2018). The use of quantitative methods with two different perspectives: Data-
centric versus problem-centric. ORMS Tomorrow, 6–8.
20. Souza, G. C. (2014). Supply chain analytics. Business Horizons, 57, 595–605. https://doi.org/
10.1016/j.bushor.2014.06.004.
21. Simchi-Levi, D. (2014). OM forum—OM research: From problem-driven to data-driven
research. Manufacturing & Service Operations Management. https://doi.org/10.1287/msom.
2013.0471.
22. Morse, P. M., & Kinball, G. E. (1951). Methods of operations research, Cambridge, MA,
Technology Press of MIT (Reprinted in 2003 by Dover Publications, Mineola, NY).
23. Robinson, A., Levis, J., & Bennet, G. (2010). INFORMS to officially join analytics movement.
OR/MS Today, 37, 59.
24. Liberatore, M. J., & Luo, W. (2010). The analytics movement: Implications for operations
research. Interfaces (Providence). https://doi.org/10.1287/inte.1100.0502.
25. Meisel, S., & Mattfeld, D. (2010). Synergies of operations research and data mining. European
Journal of Operational Research, 206, 1–10. https://doi.org/10.1016/j.ejor.2009.10.017.
26. Corne, D., Dhaenens, C., & Jourdan, L. (2012). Synergies between operations research and data
mining: The emerging use of multi-objective approaches. European Journal of Operational.
https://doi.org/10.1016/j.ejor.2012.03.039.
27. Jourdan, L., Dhaenens, C., & Talbi, E. G. (2006). Using datamining techniques to help meta-
heuristics: A short survey. In: International Workshop on Hybrid Metaheuristics (pp. 57–69).
Berlin: Springer.
28. Kumar, J. (2016). Applications of artificial intelligence. International Journal of Research in
Engineering and Applied Sciences, 6, 42–49.
29. Silver, D., Huang, A., Maddison, C. J., Guez, A., Sifre, L., Van Den Driessche, G. … Dieleman,
S. (2016). Mastering the game of go with deep neural networks and tree search. Nature. https://
doi.org/10.1038/nature16961.
30. Boutillier, C. (2000). Decision making under uncertainty: Operations research meets AI (again).
In: American Association for Artificial Intelligence (pp. 1145–1150).
31. Sigaud, O., & Buffet, O. (2013). Markov decision processes in artificial intelligence. London:
Wiley.
32. Bennet, C. C., & Hauser, K. (2013). Artificial intelligence framework for simulating clinical
decision-making. Artificial Intelligence in Medicine, 57, 9–19.
33. Monsó, P., Alenyà, G., & Torras, C. (2012, October). In: 2012 IEEE/RSJ International Con-
ference on Intelligent Robots and Systems.
34. Nicol, S. C., Chadès, I., Linke, S., & Possingham, H. P. (2010). Conservation decision-making
in large state spaces. Ecological Modelling. https://doi.org/10.1016/j.ecolmodel.2010.02.009.
35. Dadkhah, N., & Mettler, B. (2012). Survey of motion planning literature in the presence of
uncertainty: Considerations for UAV guidance. Journal of Intelligent Robotic Systems, 65,
233–246.
36. Fethi, M. D., & Pasiouras, F. (2010). Assessing bank performance with operational research
and artificial intelligence techniques: A survey. European Journal of Operational Research,
204, 189–198.
37. Holte, R., & Fan, G. (2015). State space abstraction in artificial intelligence and opera-
tions research. In: Workshops at the Twenty-Ninth AAAI Conference on Artificial Intelligence
(pp. 55–60).
38. Chen, X., Wei, Z., Li, Z., Liang, J., Cai, Y., & Zhang, B. (2017). Ensemble correlation-based
low-rank matrix completion with applications to traffic data imputation. Knowledge-Based
Systems. https://doi.org/10.1016/j.knosys.2017.06.010.
39. Bielli, M., & Reverberi, P. (1996). New operations research and artificial intelligence
approaches to traffic engineering problems. European Journal of Operational Research, 92,
550–572. https://doi.org/10.1016/0377-2217(96)00010-0.
40. Gupta, A., Jain, A., Yadav, S., & Taneja, H. (2018). Literature survey on detection of web
attacks using machine learning. International Journal of Scientific Research Engineering &
Information Technology, 3, 1845–1853.
41. Hocking, A., Geach, J. E, Sun, Y., & Davey, N. (2018). An automatic taxonomy of galaxy
morphology using unsupervised machine learning. Monthly Notices of the Royal Astronomical
Society, 473(1), 1108–1129. https://doi.org/10.1093/mnras/stx2351
42. Aggarwal, C. C. (2018). Machine learning for text. https://doi.org/10.1007/978-3-319-73531-
3.
43. Jordan, M. I., & Mitchell, T. M. (2015). Machine learning: Trends, perspectives and prospects.
https://doi.org/10.1126/science.aac4520.
44. Sra, S., & Wright, S. J. (2011). Introduction: Optimization for machine learning. In: Sra, S.,
Wright, S. J., & Nowozin, S. (Eds.) Optimization and machine learning (pp. 1–17). MIT Press.
45. Fischetti, M., & Jo, J. (2018). Deep neural networks and mixed integer linear optimization.
Constraints, 23, 1–14.
46. Belotti, P., Bonami, P., Fischetti, M., Lodi, A., Monaci, M., Nogales-Gómez, A., et al. (2016).
On handling indicator constraints in mixed integer programming. Computational Optimization
and Applications, 65, 545–566. https://doi.org/10.1007/s10589-016-9847-8.
47. Labbé, M., Martónez-Merino, L. I., Rodríguez-Chía, A. M. (2018). Mixed integer linear pro-
gramming for feature selection in support vector machine. arXiv e-prints.
48. Kruber, M., Lübbecke, M. E., & Parmentier, A. (2017). Learning when to use a decomposi-
tion. In: International Conference on AI and OR Techniques in Constraint Programming for
Combinatorial Optimization Problems (pp. 202–210). Springer.
49. Khalil, E. B., Le Bodic, P., Song, L., Nemhauser, G. L., & Dilkina, B. N. (2016). Learning to
branch in mixed integer programming. In: Proceedings of the Thirtieth AAAI Conference on
Artificial Intelligence (pp. 724–731).
50. Swany, R. (2018). Mixed integer programming and machine learning. ORMS Tomorrow, 4–5.
51. Dhaenens, C., & Jourdan, L. (2016). Metaheuristics for big data. London: Wiley.
52. Talbi, E. (2015). Combining metaheuristics with mathematical programming, constraint pro-
gramming and machine learning. Annals of Operations Research, 11, 171–215. https://doi.org/
10.1007/s10479-015-2034-y.
53. Calvet, L., De Armas, J., Masip, D., & Juan, A. A. (2017). Learnheuristics: Hybridizing meta-
heuristics with machine learning for optimization with dynamic inputs. Open Mathematics,
15, 261–280. https://doi.org/10.1515/math-2017-0029.
54. Dieterich, J. M., & Carter, E. A. (2017). Opinion: Quantum solutions for a sustainable energy
future. Nature Reviews Chemistry, 1, 32.
55. Baños, R., Manzano-Agugliaro, F., Montoya, F. G., Gil, C., Alcayde, A., & Gómez, J. (2011).
Optimization methods applied to renewable and sustainable energy: A review. Renewable and
Sustainable Energy Reviews, 15, 1753–1766. https://doi.org/10.1016/j.rser.2010.12.008.
56. Al-Falahi, M. D., Jayasinghe, S. D. G., & Enshaei, H. (2017). A review on recent size opti-
mization methodologies for standalone solar and wind hybrid renewable energy system. Energy
Conversion and Management, 143, 252–274.
57. Soroudi, A., Ehsan, M., & Zareipou, H. (2011). A practical eco-environmental distribution
network planning model including fuel cells and non-renewable distributed energy resources.
Renewable Energy, 36, 179–188.
58. Cai, Y., Huang, G. H., Yang, Z. F., Lin, Q. G., & Tan, Q. (2009). Community-scale renewable
energy systems planning under uncertainty—An interval chance-constrained programming
approach. Renewable and Sustainable Energy Reviews, 13, 721–735.
59. Yokoyama, R., Wakui, T., & Satake, R. (2009). Prediction of energy demands using neural net-
work with model identification by global optimization. Energy Conversion and Management,
50, 319–327.
60. Das, S., & Akella, A. K. (2018). Power flow control of PV-wind-battery hybrid renewable energy
systems for stand-alone application. International Journal of Renewable Energy Research, 8,
36–43.
61. Alvarez-Valdés, R., Crespo, E., Tamarit, J. M., & Villa, F. (2008). GRASP and path relinking
for project scheduling under partially renewable resources. European Journal of Operational
Research, 189, 1153–1170.
62. Kumar, A., Sah, B., Singh, A. R., Deng, Y., He, X., Kumar, P., et al. (2017). A review of
multi criteria decision making (MCDM) towards sustainable renewable energy development.
Renewable and Sustainable Energy Reviews, 69, 596–609.
63. Franco, A., & Salza, P. (2011). Strategies for optimal penetration of intermittent renewables
in complex energy systems based on techno-operational objectives. Renewable Energy, 36,
743–753.
64. Löhndorf, N., & Minner, S. (2010). Optimal day-ahead trading and storage of renewable
energies-an approximate dynamic programming approach. Energy Systems, 1, 61–77.
65. Nikham, T., Meymand, H. Z., & Nayeripour, M. (2010) A practical algorithm for optimal
operation management of distribution network including fuel cell power plants. Renewable
Energy, 35, 1696–16714.
66. Campana, P. E., Leduc, S., Kim, M., Olsson, A., Zhang, J., Liu, J. … Yan, J. (2017). Suitable
and optimal locations for implementing photovoltaic water pumping systems for grassland
irrigation in China. Applied Energy, 185, 1879–1889.
67. Chinese, D., Meneghetti, A., & Nardin, G. (2005). Waste-to-energy based greenhouse heat-
ing: Exploring viability conditions through optimization models. Renewable Energy, 30,
1573–1583.
68. Atzori, L., Iera, A., & Morabito, G. (2010). The internet of things: A survey. Computer Net-
works. https://doi.org/10.1016/j.comnet.2010.05.010.
69. Alsaryrah, O., Mashal, I., & Chung, T. Y. (2018). Bi-objective optimization for energy aware
internet of things service composition. IEEE Access, 6, 26809–26819. https://doi.org/10.1109/
ACCESS.2018.2836334.
70. Yu, T., Zhang, Y., Lin, K. J. (2007). Efficient algorithms for web services selection with end-to-
end QoS constraints. ACM Transactions on the Web. https://doi.org/10.1145/1232722.1232728.
71. Llinas, G. A. G., & Nagi, R. (2015). Network and QoS-based selection of complementary ser-
vices. IEEE Transactions on Services Computing. https://doi.org/10.1109/tsc.2014.2299547.
72. Vasseur, J., et al. (2011). RPL: The IP routing protocol designed for low power and lossy
networks, Internet Protocol for Smart Objects (IPSO) Alliance, San Jose, CA, USA.
73. Carvalho, I. A, Noronha, T. F., Duhamel, C., Vieira, L. F. M. (2016). A scenario based heuristic
for the robust shortest path tree problem. IFAC-PapersOnLine. https://doi.org/10.1016/j.ifacol.
2016.07.649.
74. Dunke, F., Heckmann, I., Nickel, S., & Saldanha-da-Gama, F. (2018). Time traps in supply
chains: Is optimal still good enough? European Journal of Operational Research, 264, 813–829.
https://doi.org/10.1016/j.ejor.2016.07.016.
75. Narayanan, A., Bonneau, J., Felten, E., Miller, A., & Goldfeder, S. (2016). Bitcoin and cryp-
tocurrency technologies: A comprehensive introduction. Princeton: Princeton University Press.
76. Hinz, J., Tarnopolskaya, T., & Yee, J. (2018). Efficient algorithms of pathwise dynamic pro-
gramming for decision optimization in mining operations. Annals of Operations Research,
1–33. https://doi.org/10.1007/s10479-018-2910-3.
77. Luong, N. C., Xiong, Z., Wang, P., & Niyato, D. (2018). Optimal auction for edge computing
resource management in mobile blockchain networks: A deep learning approach. In: 2018
International Conference on Communications (pp. 1–6).
78. Geoffrion, A. M., & Krishnan, R. (2001). Prospects for operations research in the e-business
era. Interfaces (Providence), 31, 6–36. https://doi.org/10.1287/inte.31.2.6.10628.
Institutional Factors
and High-Performance Work
Organisations (HPWOs) in Sub-Saharan
Africa (SSA)
Raphael O. Oseghale, Richard B. Nyuur and Yaw A. Debrah
Abstract This chapter focuses on the institutional factors that facilitate or impede
the development of high-performance work organisations (HPWOs) in sub-Saharan
Africa (SSA). It is based on the premise that the adoption of institutional perspec-
tive across regional hubs is pertinent in revealing and capturing the various factors
influencing the creation of high-performance organisations in Africa. We argue that
regulatory, normative, sociocultural institutional factors facilitate but also impede the
development of HPWOs in SSA. Building on the high-performance work practice
(HPWP) model, we uncover the interactive relationship between HPWPs and the
ability, motivation and opportunity (AMO) model of human resource management
and how organisations can deploy them for the attainment of HPWO status.
1 Introduction
The last decade has been particularly favourable for the emerging market of Africa in
terms of economic growth. Apparently, the key drivers of this growth include a boost
in the services sector, opening of new markets, technological advancements, regional
economic integration (economic blocs) and infrastructural development. With the
recent level of economic success, a population of more than 1 billion people [1] and
several business opportunities in different flourishing sectors, the global economy is
now looking at Africa for resources to sustain its development [2]. For this, Africa is
beginning to capture the interest of management scholars and business leaders alike
as an emerging market of new growth opportunities [2].
Despite the huge success of the last decade in Africa, most economies in the region
still face some challenges. For example, some economies on the continent are largely
agrarian, dominated by informal sectors and underpinned by resource-driven growth
[2]. But it is possible for African countries to sustain their recent success as well as
R. O. Oseghale · Y. A. Debrah (B)

School of Management, Swansea University, Swansea, UK
e-mail: y.a.debrah@swansea.ac.uk
R. B. Nyuur
Newcastle Business School, Northumbria University, Newcastle upon Tyne, UK
200 R. O. Oseghale et al.
address their present challenges to become prosperous middle-income economies [3].

Indeed, some writers have identified the role of high-performance work organisations
in contributing to the development of the strong economy needed to drive a stable
and enduring middle-income nation [4] in Africa [3]. Unfortunately, only a few of
these high-performance organisations exist in the emerging market of Africa—a
development that may perhaps have inspired the Africa Academy of Management
to focus its Fourth Biennial Conference on ‘building high-performing organisations
in Africa’. In this instance, more research is required to provide new insights into
the factors that facilitate and/or impede the development of high-performance work
organisations in Africa.
Earlier studies suggest that the weak institutions in most African countries both
facilitate and impede the effectiveness of organisations operating in the region [1].
Thus, institutions reflect another perspective for understanding and extending exist-
ing psychological, historical and sociocultural theories of organisational effective-
ness in Africa. It is argued that a strong institutional framework is essential for the
development of Africa [5]. Although a few studies (see [1]) have examined the drivers
of organisational effectiveness in Africa, more work is required to develop a robust
knowledge of the institutional factors that facilitate and/or impede the development
of high-performance work organisations in Africa. This chapter seeks to address this
gap and propose a framework to explain how organisations can enhance their high-
performance work organisation status through high-performance work practices.
This work departs from the existing literature in two ways. First, while the existing
literature focuses on the entire Africa, this research specifically focuses on sub-
Saharan Africa. For instance, despite the tremendous diversity among most African
countries, the extant literature [1] does not highlight any theoretically important
difference among African countries in treating Africa as a single block. Treating
Africa as a single block is, however, justified since their research is one of the
first to examine institutional dynamics and organisational effectiveness in Africa.
Moreover, it makes an open call for more studies to critically examine the subject
matter in the other parts of Africa to substantiate the existing knowledge and to
provide new insights. Second, the research also departs from the existing literature
by providing insights into how SSA firms might deploy effective high-performance
work practices to overcome the strong institutional barriers in Africa and enhance
their high-performance work organisation status. The question of how HPWPs may
work in promoting mutual gains for firms and their employees [6] has received little
attention in the HPWO literature. The existing work by Zoogah et al. [1] provides
insight into how organisations in Africa can develop resources and capabilities to
overcome the unpredictable and complex institutional environment in Africa in order
to become high-performing organisations.
Thus, the contribution of this research to the burgeoning Africa management
research is twofold. First, in SSA, this research is among the first to examine the insti-
tutional factors that facilitate and/or impede the creation of high-performance work
organisations in detail. As such, the paper contributes theoretically to our understand-
ing of the factors that drive and/or impede the development of effective organisations
in SSA. Second, taking the ability, motivation and opportunity (AMO) perspective
Institutional Factors and High-Performance Work Organisations … 201
which is pertinent on the mutual gain perspective (MGP) the research provides the-
oretical insights into how SSA firms can (in partnership with SSA governments)
deploy HPWPs to facilitate their development into HPOs.
2 High-Performance Work Organisations
The number of high-performance organisations has increased significantly in many

industrialised nations and the emerging markets of Brazil, China, India and South
Africa in recent decades [7]. HPOs are important from both growth and employment
point of view in that more innovative firms with highly skilled employees are better
placed to provide quality services and/or products as well as more bespoke solutions
to clients [4]. In HPOs, growth is measured by different organisational outcomes
such as employees’ equity and company efficiency [8]. Thus, several definitions and
characteristics of HPOs abound in the HPO literature (see, e.g., [9, 10]). In general
terms, HPOs are defined as organisations with the capabilities to achieve sustained
growth, and adapt and react to changes, performing at a level higher than that of
their peers [3]. HPOs also tend to have management processes linked with overall
organisational strategy, spend considerable time and resources developing its people
and focus on long-term orientation [3]. Although none of these themes or description
of HPO alone offers a detailed description of the term, they all provide important
insights into the activities and outcomes of HPOs.
Of the several key themes associated with HPOs, researchers have uncovered
continuous improvement and renewal of business strategies, openness and action
orientation, high management quality, long-term orientation and constant improve-
ment of workforce quality as key elements of HPOs [3]. A study of HPOs, for
example [11], found that high-performance organisations constantly update their
outdated strategies by renewing them and making them unique. In other words, these
companies continuously improve, simplify and align their processes, innovate new
services or/and products, and create new sources of sustained competitive advantage
to respond to the fast-changing needs of customers [3].
HPOs embrace an open culture. For instance, management, in this type of organi-
sation, values the opinion of their talented employees and involves them in important
organisational processes [11]. Employees are allowed to spend valuable time dia-
loguing, learning and exchanging knowledge in order to develop new ideas aimed
at increasing their performance and that of their organisations [3]. In doing this, the
employees are allowed to make mistakes and such mistakes are regarded as oppor-
tunities to learn by management. The managers have great trust and belief in their
employees, although employees are made to be accountable for their actions because
of the action-focused decision-making style in operation in HPOs [11]. Importantly,
the managers are highly competent, open to learning, respectful, trustworthy, enthu-
siastic and committed [12].
In HPOs, commitment to different stakeholder groups is usually long term. For
instance, vacancies are often filled by high potentials mainly from within (the external
labour market may be used as a last resort) and employees are encouraged to take
up leadership roles [3]. In view of this long-term commitment, HPOs create a safe
and secure environment for their employees to work and can only dismiss them
as a last resort. Moreover, performance and productivity such as sales and customer
satisfaction are also viewed from a long-term perspective [1]. Lastly, HPOs are talent-
oriented. Thus, management in these types of organisations identify and recruit a
diverse and complementary team of employees who are highly trained to perform
well and achieve extraordinary results [12].
A well-developed literature demonstrates that to attain high-performance organ-
isation status, organisations must identify and hire employees with the right knowl-
edge, skills, abilities and mindset. Of course, the absence of talent means that organ-
isations may not have the right skills to design and implement strategies relevant
for creating sustained competitive advantage. In their study of HPOs, Lawler et al.
[13] found that the implementation of high-performance work practices is essential
for the development of a high-performance work organisation. In essence, HPWPs
enable active employee participation in organisational decision-making and encour-
age employees to utilise their firm-specific human capital in ways that will benefit
their organisations [6]. As a result, employees experience a great sense of meaningful-
ness, become more engaged and demonstrate significant commitment to work [14]. In
another study of HPOs, Gould-Williams [15] found significant relationships between
the implementation of high-performance work practices and desirable employees’
outcome such as organisation citizenship behaviour [15]. It is, however, important
to note that organisational activities with the potential to reduce employee trust such
as employee lay-off and early retirement programmes are not HPWPs [16]. This
is perhaps because HPWPs are practices that drive organisational performance by
enhancing employees’ well-being [16]. According to Lawler et al. [13], core HPWP
practices include extensive training, worker empowerment, performance-based pay,
teamwork, promotions based on merit (rather than seniority) and careful recruitment
and selection of highly skilled and knowledgeable employees. Despite the several
benefits associated with the use of these HPWPs, earlier studies observe that formal
and informal institutional frameworks may facilitate or hinder the successful appli-
cation of HPWPs and thus facilitate or hinder the development of high-performance
organisations in emerging markets where the institutions are reportedly weak [1, 16].
3 Institution Theory
Organisational effectiveness largely depends on the institutional environment where

an organisation operates [1]. As a result, institutional theory plays a significant role
in the study of organisations [8] and occupies a central position in management
research [17]. According to institutional theory, organisations pursue their business
interests within institutional constraints that can potentially influence their capability
to become high-performance work organisations [1, 18]. In other words, institutions
are man-made constraints that regulate human and business interactions in three main
dimensions [19]. According to Scott [20], these dimensions include the regulative,
normative and sociocultural dimensions. The regulatory dimension refers to rules
and laws that can restrict certain type of business behaviours and promote others in
a specific national environment [21]. Sociocultural dimension refers to the common
way of thinking among members of a particular society. This common way of thinking
and behaviour is usually propagated through formal and informal social interactions
[13]. To a large extent, such behaviour impacts on business activities and the way
employees behave in their workplaces. Normative dimension refers to the beliefs
and actions of important stakeholders such as employers’ association. Lawler et al.
[13] observe that business decision-makers are expected to adhere to these beliefs
of what is proper and improper even though they do not completely align with the
decision-maker’s desires and values.
Institutional theory suggests that organisations must conform to the rules and
requirements of the local environment where they operate to attract some legitimacy
[22]. In this instance, it is the institutional frameworks in these environments that
specify the organisational structure and activities that are publicly viewed as legit-
imate and socially acceptable [13]. Within this framework, organisational survival
does not mainly depend on the quality and quantity of organisational economic out-
put, rather on their conformity to acceptable norms, beliefs and rules [23]. Thus,
organisations that comply with these formal regulatory, informal cultural and nor-
mative rules in the foreign institutional environment where they operate in are more
likely to be successful. Of course, conformity to environmental requirements by
firms will prompt acceptance and support in the form of clientelism (the distribu-
tion of rewards to clients) and incentives from the surrounding society where the
organisations are embedded [24]. Organisations leverage on this support in the form
of clientelism and incentives to create and sustain the competitive advantage they
require to transform into high-performing organisation [1].
On the other side, failure to conform to these institutional requirements and the
accompanying lack of acceptance and support from an organisation’s social envi-
ronment can jeopardise an organisation’s chances of becoming a high-performance
organisation [25]. Going forward, organisations should be able to respond creatively
to the various institutional forces in the environment where they operate and, specif-
ically, in institutional environments where institutional forces do not support the
implementation of certain high-performance practices. Urban and Hwindingwi [26]
have identified clientelism, the rule of tribe and corruption as key informal political
institutional forces that can adversely affect organisational activities. They concluded
that the high levels of corruption, red tape and archaic processes put in place by gov-
ernment agencies discourage the growth of high-performance organisations in these
emerging markets.
Earlier studies indicate that regulatory, normative and cultural ‘rules of the game’
and their legitimacy pressures and demands on organisations require great attention
in the emerging context of Africa, as the institutional environment in this region is
significantly different from those in the developed [26]. Hence, building successful
formal institutions and mitigating fundamental institutional voids can be intuitive for
African emerging markets [AEMs] [27]. Urban and Hwindingwi [26] note that public
policy-makers in AEMs should improve their institutional frameworks to support

organisational activities by developing a country-specific mix of business-friendly
institutions and legislations. While much has been said concerning the institutional
context in SSA, only limited attention has been paid to the institutional factors that
impact on the development of HPOs in the region [26].
4 Institutional Factors and High-Performance

Organisations in SSA
The extant literature on HPWPs suggests that the context plays a significant role in the
field of management research. In management research, contexts link observations
to a set of relevant point of views, facts and events that drives research and theory
development [28]. According to Johns [29], a differentiating feature of context is its
ability to ‘theoretically’ explain the relational meaning of a given setting. The level
of uncertainty, exogenous influences and unpredictability in SSA seem unequalled
and higher than those of the developed regions [30]. As a result, the SSA context
influences the effectiveness of organisations operating in the region in ways that
are also different from other regions, particularly, those of the Western developed
context. A major area of difference is that while the Western context is largely
individualistic in orientation, in contrast, the emerging market of sub-Saharan Africa
is mainly collectivist in orientation. These differences in orientation have a way of
impacting the behaviour of employees and organisational outcomes in SSA firms
[1]. In the SSA context, business activities are influenced by regulatory, normative
and sociocultural institutional systems as shown in Table 1.
Few studies on African institutional environments have examined political regu-
lations, and normative and sociocultural institutional structures (see [1, 26]). From
these studies, it is anticipated that the adoption of institutional perspectives across
regional hubs is apt in revealing and capturing the various factors influencing the
development of high-performance organisations [26]. We proceed to discuss the
institutional factors that facilitate but also impede the development of HPOs in SSA.
4.1 Institutional Factors that Facilitate HPOs in SSA
4.1.1 Normative Institutional Factors
Formal institutions such as banking institutions and exchange commissions incen-

tivise and regulate investments, business transactions and exchanges. In SSA, these
institutions are usually legalised, although some may be weak when compared to
institutions in the developed Western contexts [1]. Obviously, strong financial insti-
tutions influence the development of HPOs by providing the needed funds for busi-
Table 1 Formal and informal institutional factors that influence firm effectiveness in SSA
Dimensions of Regulatory systems Normative systems Sociocultural
institutional influence on systems
HPOs
Facilitators of HPOs – Industrial – Support from – Collective
training financial behaviour that
incentives institutions promotes
– Regulations that – Willingness to teamwork
promote equal adopt ‘best HPW – Collective
pay for practices’ from behaviour that
employees peers promotes shared
– Policies that – Union promotion learning
facilitate of policies that
reduction in tax support
rates employment
stability
Inhibitors of HPOs – Quota system – Union activities – Nepotism and
policies that that can impede tribalism which
negatively impact the adoption of hinder effective
on the performance- recruitment and
recruitment and related selection of
selection of pay highly skilled
highly skilled – Union activities workforce
individuals that can impede – Collective
– Local content the adoption of ideologies that do
policies that extensive use of not support the
negatively impact performance extensive use of
on the sourcing management performance
of human systems management
resources – Financial systems
institution bias – Engagement with
(clientelism) traditional
– Union activities activities at a cost
that can impede to organisations
the adoption of
merit/performance-
related
promotions
Source Compiled from Adams et al. [31] and Zoogah et al. [1]
nesses to invest in order to enhance productivity [31]. By deploying the funds received
and other organisational resources to good use, SSA organisations can transform into
HPOs. In Nigeria, for example, credible organisations continue to benefit from the
fairly efficient financial institutions as they provide these organisations with the funds
they need to undertake profitable investments at affordable interest rates [26].
A second normative institutional force that can impact organisational effective-
ness is labour union. In most SSA countries, employee unions promote policies
such as egalitarian compensation practices that can support employment stability
[13, 32]. Employment stability, in turn, enhances employees’ commitment which
has the potentials to positively reinforce performance and thus high-performance

work organisations. In this instance, performance and HPO status are moderated
by employee human capital accumulated over a long period of employment with
the company. In a recent study, for example, Jin et al. [33] found that employees
acquire more firm-specific human capital that can increase their ability to perform
in employment with an organisation over time.
4.1.2 Regulatory Institutional Factors
At the regulatory level, traditional political institutions establish legislations to reg-

ulate the operation of businesses. In some SSA countries such as Nigeria, the pro-
motion of equal pay legislation [1], legislations facilitating the reduction of taxes
and legislations providing training incentives to organisations, for example, facili-
tate the development of HPOs. First, providing the opportunity for all employees to
earn equal pay in view of their capabilities and performance can help organisations
secure the commitment of their employees. Apparently, employees’ commitment
moderated by job satisfaction can positively impact on performance and thus help
transform these organisations into HPOs.
The second regulatory factor that can drive HPOs is tax reduction. Tax reductions
may prompt organisations into channelling money recovered from such reductions
into profitable projects that can transform a firm into HPO. For instance, money
realised from tax reductions can be used for human capital development projects in
order to drive the human capital base of the company. Debrah et al. [34] observe
that SSA firms can become highly effective with a pool of employees with the right
human capital and motivation relevant to innovation. Finally, policies that provide
training incentive for organisations in SSA countries also facilitate the development
of HPOs. Government provision of training incentives can encourage organisations
to provide training for their employees as part of training cost will be taken care of
by the state. Specifically, training and development of employees will help develop
the relevant workforce that firms require to make the right decisions, innovate and
enhance performance and thus productivity [34] to become HPOs.
4.1.3 Sociocultural Institutional Factors
Traditional sociocultural institutions comprise of both the cultural and the social
norms in existence in SSA countries [35]. At another level, sociocultural forces
include the cultural rule of the game such as nepotism and tribalism that creates
shared expectations about business patronage. Tribalism is the tendency for man-
agers to favour people from their own ethnic groups or tribes during recruitment,
selection, promotion, compensation and dismissal [30]. On the other hand, nepotism
refers to a network of support among groups connected by blood, kin, community
and/or religion [36]. Surprisingly, both nepotism and tribalism facilitate the teamwork
required to drive performance in firms [37] and thus HPO in developing contexts. Of
course, performance and HPO status will be moderated by shared learning among
members of the network of support. Success, however, is dependent on two princi-
ples. First is the firm’s ability to develop relevant human resource policies to acquire
the best of both nepotism and tribalism [37]. For example, SSA firms can develop
human resource policies that will allow managers to recommend one of their family
members or friends for employment on attaining a certain standard. Second is the
firm’s ability to develop human resource practices with in-built advantages for all
employees [38]. Perhaps, this will help address any negative employee behaviour
that may result from nepotism and tribalism.
Another interesting sociocultural force in sub-Saharan Africa is the ‘Ubuntu’. The
word ‘Ubuntu’ literarily means ‘I am who I am through others’ [39]. Although this
concept originated from Zulu, it is widely used in the continent [39]. ‘Ubuntu’ is a
strong form of collectivism which helps to integrate members of a community into
a strong and cohesive in-group [39]. In SSA, members of in-groups share resources
and support each other in exchange for unquestionable loyalty, care and respect
that ensure high-quality community life [1]. ‘Ubuntu’ creates networks of social
obligations that link managers to their extended families, tribes and ethnic groups.
This lays out the foundation for organisational relationships with potentials to develop
the teamwork needed to gain sustained competitive advantage [40] and drive HPOs
[1]. Moreover, collectivism in the form of ‘Ubuntu’ can foster the development of
HPOs through shared learning and transfer of knowledge among employees. For
example, past studies have shown that managers in collectivist societies support
their underperforming colleagues (who were meant for dismissal after employee
evaluation) through mentoring programmes to acquire the relevant competencies
required to perform well [39].
4.2 Institutional Factors that Impede HPOs in SSA
4.2.1 Normative Institutional Factors
A number of normative institutional factors also impede the development of HPOs

in SSA. In this regard, union activities in SSA could impede the development of
HPOs. A union presence might, for instance, be indicative of a greater likelihood of
conflict for organisations seeking to pursue HPWS implementation, thus precluding
or undermining effective HPWS implementation. For example, unions in many SSA
emerging markets are often suspicious of merit-based employment system (which is
the result of an effective performance management system) but support employment
practices that allocate opportunities and rewards based on seniority. It is our opinion
that although seniority-based promotion and pay may promote equity, it has the
potential to impede the development of high-performance organisations as highly
skilled employees may not be willing to improve performance since promotions
and pay are based on seniority and not performance. Existing studies suggest that by
rewarding performance with promotions and increment in pay, organisations motivate
as well as secure the commitment of highly skilled employees [41] and thus create the
advantage to transform into HPO. To strike a balance in this type of environment, SSA
firms supplement seniority-based pay with performance-related pay with potential
to drive employees’ performance.
As expected, weak formal institutions such as banking institutions also impede
the development of HPOs in SSA. Indeed despite the far-reaching reforms in the
financial sector of many SSA countries including Nigeria, Ghana and Tanzanian,
some challenges still remain. Weak financial institutions in some of these countries
are usually unable to provide the funds that organisations need to invest and improve
productivity [42]. In some cases, these weak financial institutions provide funds
to organisations at very high interest rates that can stall profit maximisation. With
high interest rates or a lack of funding to make the right investments, SSA firms
may not be able to make the relevant investments required to drive HPOs. Thus, we
conclude that the weak financial institutions in some of these SSA countries [31] also
impede the development of HPOs. In view of this, Adams et al. [31] concluded that
the relationship between the private sector and the financial systems in sub-Saharan
Africa has not been effectively reinforced.
4.2.2 Regulatory Institutional Factors
Apparently, legislations can also impede the development of HPOs. In SSA coun-
tries, legislations that promote corruption as well as coerce organisations to abide by
legal restrictions that are sometimes not conducive to the efficient implementation
of HPWPs in firms impede the development of HPOs [43]. A notable regulation
that indirectly impedes the development of HPOs is the workforce localisation poli-
cies in many SSA countries such as Nigeria. In countries where such policies are
in operation, organisations are required by law to hire a percentage of locals during
recruitment [44]. Workforce localisation policies are good in that they seek to pro-
mote the employment and development of local talent but the case remains that the
existing shortage of talent in the SSA region [34] undermines the effectiveness of
such policies. Of course, given the poor state of human capital in many SSA coun-
tries, organisations may not be able to acquire the best talent needed to create the
sustained competitive advantage required to transform into HPOs. Thus, according
to Harry [45] private sector responses to localisation policies have usually been that
of resistance and when pushed hard by the government they undertake small-scale
employment programmes. Al Qudsi [46] reiterates this view when he pointed out
that some employers find localisation policies a burden and that most of them have
resorted to the use of ghost workers through creating employment on paper just to
wade off sanctions.
Quota system in many SSA countries can also impede the development of HPOs.
In multi-ethnic societies, such regulation requires organisations to hire a number of
applicants from every section of the society during recruitments [46]. In Nigeria, for
example, government regulations expect large organisations to hire job candidates
from the six geopolitical zones in the country irrespective of whether they can get
the best from all zones during recruitment [47]. In a recent study, Adisa et al. [48]
found that quota system policies adversely impacted recruitment and selection in
Nigeria. While quota system is a good practice in that it provides equity and fairness
in a highly diverse society like Nigeria, it defies the merit principle (i.e. an instance
where companies hire the best available talent wherever they are available) and as
such can impede the creation of HPOs [49]. Of course, organisations cannot create
competitive advantage and transform into HPOs without the needed talent. In this
respect, organisations and governments in these SSA countries should embark on
a massive human capital development projects to address the challenges associated
with attracting quality job candidates if localisation policies and quota system are to
operate effectively and foster the development of HPOs.
Going forward, informal political institutions such as clientelism, rule of the
tribe and corruption also affect the smooth operation of companies and thus the
development of HPOs [50]. In Ghana and Nigeria, for example, chiefs and their
council members wield great influence over economic, social and cultural issues [51].
For example, this traditional political pressure influences organisational activities
through mandatory cultural practices [52]. Businesses are pressured into honouring
festivals and other traditional celebration by closing up their business ventures—an
act that hinders productivity [1] through absenteeism.
Additionally, firms operating in SSA often have to grapple with unfriendly legisla-
tive requirements [43]. In response and to avoid these harsh legislative requirements,
some organisations offer bribe to government enforcers [50]. Indeed, Chironga et al.
[53] found that some organisations obtain contracts, acquire resources and accom-
plish goals through corrupt practices and the accompanying clientelism. In the short
run, these organisations get undue advantage when they offer inducement to people
in positions of authority. However, Zhou and Peng [50] found that such practices
negatively impact on profit maximisation and can stall the development of HPOs.
Of course, corrupt practices and clientelism hinder the competition that is supposed
to drive organisations towards the development of capabilities that can stimulate the
development of the competitive advantage relevant for creating HPOs.
4.2.3 Sociocultural Institutional Factors
Notably, sociocultural force such as societal norms can also hinder the development
of HPOs. Indeed, societal norms regulate the social activities of individuals, groups
and organisations in a society. Norm refers to accepted standard or way of doing
things that most people in a society agree with [35]. With more than 1000 ethnic
groups, Africa (including the SSA) has more ethnic groups than any other continents
around the world [54]. In SSA, ethnic beliefs about work are derived from traditional
practices and this differs from European work structures [55]. Sociocultural forces
such as days of work and non-work such as holidays and days of festivals affect
organisational productivity through absenteeism and turnover [56].
Other sociocultural factors that can also impede the development of HPOs include
tribalism and nepotism. Unsurprisingly, tribalism often leads to organisational inef-
fectiveness [55] in that it promotes the hiring and retention of mediocre at the expense
of highly talented people with potentials to drive company success [37]. In the case
of nepotism, senior managers offer support to friends and/or family members dur-
ing recruitment, training, promotions, compensation and retention. Like tribalism,
nepotism has been linked with poor firm performance [37] in that managers also use
non-objective measures in the recruitment, promotion and retention of employees
[57]. Of course, inefficiencies result from running the business with incompetent
hands [37]. Another problem is that nepotism may also result in negative employee
attitude on the part of the other employees who are not members of this network of
support [37]. We aver that negative employee attitude will, in turn, stall productivity
and thus high performance organisation. In sum, both tribalism and nepotism under-
mine efficiency, performance and productivity [1] in SSA firms as well as hinder the
firms’ ability to transform into HPOs.
Additionally, collectivist behaviours that can impede the extensive use of HPW
practices such as performance management systems could hinder the development
of HPOs. Earlier studies suggest that managers from collectivist societies are often
reluctant to provide critical feedback to subordinates after performance assessment
exercise as well as use the outcome of the evaluation process to lay-off employees
[13], particularly, those classified as underperformers. Such practice could drive the
retention of redundant workers who will spoil things for the companies and hinder
progression into HPO status.
Interestingly, the absence of these key institutions can also facilitate or impede the
development of HPOs in sub-Saharan Africa. According to Rottig [24], institutional
voids, the lack or underdevelopment of certain institutions, is one of the key charac-
teristics of emerging markets, specifically, the SSA region. In most SSA countries,
certain institutions such as judicial institutions and business intermediaries are either
absent or underdeveloped [58]. Obviously, the absence of these institutions often
results in market failures in SSA [59]. For example, businesses may not be able to
make important decisions when necessary due to the lack of relevant information
brought about by the absence of key business intermediaries. Moreover, inefficient
judicial systems may be incapable of enforcing contracts in a reliable way. Hence, the
absence of intermediary institutions such as audit committees, aggregators, distribu-
tors makes it more costly for SSA firms to acquire inputs such as technology, finance
and talent [58]. Overall, this might underpin the poor performance of firms operating
in SSA and hinder their potentials for HPOs [1]. This is usually the case because an
institutional void exposes organisations to risks and uncertainties that constitute into
higher cost of doing business [24]. It is, however, important to note that firms that
can deploy organisational resources to respond creatively will develop the relevant
advantage required to transform into high-performance organisation [59].
In view of the above discussion, it is increasingly important to build a strong
platform for the development of high-performance work organisations in SSA in
particular and Africa in general. According to Adams et al. [31], the concept of
building effective institutions has been a key component of development in SSA, but
the strategies required to build these institutions have eluded the region. In sum, there
is a great upheaval sweeping the SSA region and the sort of institutional frameworks
in the region is liable to be dumped, paving way for the emergence of a new human
resource management style. In the next section, the authors provide insights into how
SSA firms can collaborate with governments in the region to drive HPOs through
HPWPs.
5 Harnessing HPWPs in Sub-Saharan Africa to Facilitate

HPOs
The important role of HPWPs and highly skilled employees in facilitating the devel-
opment of HPOs occupies a centre stage in the high-performance organisation lit-
erature [6, 60]. Drawing on the literature by Ashton and Sung [16], we suggest that
SSA firms (in collaboration with governments) can deploy HPWPs for the devel-
opment of HPO status. We note that HPWPs enhance employees’ human capital as
well as encourage positive employee attitude [6]. HPO is then developed through
firm innovation and increased productivity moderated by employee human capital
and positive attitude/commitment [15].
The HPWPs framework combines key management practices for developing
employees’ abilities and work-related competencies [61]. The main difference
between traditional control-based HRM and HPWPs is the emphasis on firm employ-
ees as the main source of organisational value [6]. Taking an AMO perspective of
HPWPs which is pertinent to the mutual gain perspective of HPWPs—practices that
reinforce firm performance through their positive effects on employee human capital,
well-being and attitude—SSA firms can deploy skills enhancing practices such as
comprehensive recruitment, rigorous selection and extensive training to acquire and
develop employees’ human capital. AMO model argues that for firms to reinforce
positive employee attitude and drive performance they need to work on employees’
abilities, motivation and opportunities by deploying a set of HPWPs effectively [62].
Prior research has shown that skills enhancing HR practices are strongly related to
human capital development [60, 63]. We note that skills development is particu-
larly important in the emerging context of Africa where there is a reported shortage
of highly skilled employees which SSA firms need to create sustained competitive
advantage [34].
Furthermore, to strengthen skills development efforts SSA firms will need to
motivate and create opportunities for trained employees to perform well. We note
that simply developing the human capital of employees alone cannot and will not
facilitate the development of HPWOs. To drive organisation performance and thus
HPO status, SSA firms should implement motivation-enhancing HR practices to
enhance employee motivation. Typical strategies include competitive compensation,
employee involvement, career development, incentives, promotion and job security
to elicit workplace behaviour, commitment and performance among employees [6,
60]. Specifically, employees who perceive firm action towards them as beneficial
may feel obligated to reciprocate such gesture by working hard to add value to
the organisation [60]. Existing studies by Gould-Williams [15] and Sun et al. [61]
found significant links between implementing motivation-enhancing HR practices
and desirable employees’ outcomes such as job satisfaction, organisation citizenship
behaviour, employee commitment and performance.
Extensive training and motivation without adequate opportunities for employees
to make use of their skills as well as demonstrate commitment may not add value to the
firm and thus cannot enhance firm HPO status. To enhance HPO status, opportunity-
enhancing HR practices should be designed and deployed to propel employees to
exercise their commitment as well as deploy skills to achieve organisational goals
[60]. More specifically, employees’ capabilities and knowledge must be put into full
use by the firm to impact on performance [34] and drive HPO status. This argument
is consistent with the works of Gong et al. [64] and Huselid [63] who found that
deploying systems of HR practices to enhance employee human capital, motivation
and opportunities is associated with positive organisational outcomes such as greater
commitment, lower turnover, higher productivity, better service performance and
financial performance. Thus, employers are more likely to generate more positive
employee attitude and organisational success when the AMO elements underpin their
human resource management structure [65] in SSA.
SSA governments can also facilitate skills development on both demand and
supply sides to support the development of HPOs [16]. On the demand side, the
government needs to encourage the adoption of high-performance work practices
such as workplace training and skills development programmes in both public and
private organisations [16]. This can be achieved by strengthening existing policies
and schemes (such as industrial training fund in Nigeria) that support workplace
learning and quality training in firms. A significant number of existing national
policies and schemes in some SSA countries such as Nigeria and Zambia do not have
the capacity to facilitate workplace learning and skills development in these countries
due to poor implementation plan. To address this trend, policies and schemes that
support workplace learning and skills development should be developed in SSA
countries where such policies and programmes are currently not in operation [34].
Government in the various SSA countries should not only develop these policies and
schemes but must also develop policies to ensure the delivery of quality training. In
other words, the government should be more involved both in the design and in the
implementation of these workplace learning programmes.
On the supply side, SSA governments should work on their labour market institu-
tions to enhance the flow of skills appropriate for the facilitation of high-performance
organisations [16]. This can be achieved directly by introducing the transmission of
such skills through college/university curriculum [16] as well as providing more
funding for the development of higher education in this region [34]. In a recent
study, Yeung [57] found that through government support and increased spending
on higher education, Singapore has been able to develop the relevant talent required
to drive economic growth. The extant literature suggests that a large part of what
universities and colleges in SSA teach is mostly theory-based which is why some
graduates in this part of the world lack certain soft and technical competencies [66].
6 Discussion
This chapter sought to identify the institutional factors that facilitate or impede the
development of high-performance work organisations in sub-Saharan Africa and to
suggest how organisations operating in the region in partnership with government
can facilitate the development of HPWOs by leveraging on HPWPs. In so doing, we
advance the literature that explains the factors that hinder the development of effective
organisations and how these organisations can develop the capabilities required to
become high-performance organisations. The chapter demonstrated multiple accom-
plishments in enhancing our understanding of the subject area. As the chapter has
demonstrated, only a handful of studies have explored factors that facilitate or impede
organisational effectiveness.
Going forward, the present chapter suggests that institutional forces facilitate
but also impede the development of high-performance work organisations in SSA
countries. In line with the extant literature by Ogbonnaya et al. [6], by imple-
menting mutual HPWPs, SSA firms can develop the skills and employee attitude
required to enhance performance and transform into HPO. Overall, in implement-
ing the mutual HPWP perspective, SSA firms can address institutional resistance
(i.e. employee/union resistance) to the use of organisational practices with negative
employee outcomes when used wrongly, support workforce localisation programmes
through massive skills development, address the challenges associated with nepotism
and gain legitimacy required to transform into HPO.
An interesting development is that a consensus is being built on the factors that
facilitate as well as impede the development of high-performance work organisations
in Africa. Undoubtedly, management research on institutions and HPOs has benefited
from increased focus on Eastern Europe, Central Europe and Asia, with norms,
rules and contexts different from that of the Western developed economies [1]. By
extension, management research will benefit from our extension of institutional and
HPOs research to the frontiers of Africa, where the context, norms and rules are
quite different from those in Asia, Central Europe and Eastern Europe as well as the
West. Of course, the HPWPs perspective which emphasises the creation of sustained
competitive advantage through active employee participation in workplace decisions
and the utilisation of their knowledge, skills, abilities and other characteristics in ways
beneficial to the organisation where they work can be expanded in Africa. Essentially,
an understanding of how firms operating in SSA can leverage on HPWPs to create
HPWOs will greatly enrich the development of HPWP perspective and enhance its
global status.
7 Practical Implication of the Study
This chapter has some practical implications for managers operating within the
emerging markets of SSA. First, the discussions in this chapter provide huge and
nuanced insights into managers on what and how institutional factors facilitate and
also impede the creation of high-performance work organisations in SSA. We argue
that such awareness will enable managers to think proactively on how to develop
the relevant capabilities and resources required in addressing the constraints linked
with this institutional environment. Second, practising managers within the SSA
region can also acquire knowledge about how to facilitate the development of high-
performance work organisation in partnership with governments in Africa without
encountering much resistance from employees and union representatives. Earlier
studies suggest that the implementation of HPWPs (i.e. those with adverse effect on
employee well-being) may sometimes be frustrated by union activities in societies
where they are recognised by law [13]. Moreover, some managers in a collectivist
environment like SSA may also be reluctant to apply HPWPs with negative outcomes
for employees’ well-being. Finally, the chapter offers a lot of insights into SSA gov-
ernments on how legislations impact on the development of high-performance organ-
isations and how they can partner with the private sector to develop the workforce
relevant for creating HPWOs. Admittedly, organisations that can leverage on high-
performance work practices in ways that enable them to overcome the challenges
associated with the complex and unpredictable institutional environment in SSA are
more likely to achieve HPO status.
8 Limitations and Directions for Future Research
This chapter has a few limitations which can be addressed by future research. The first
limitation is that we have focused on theory expansion without providing any empir-
ical evidence to support our claims. We suggest that future empirical work should
test the arguments presented in this study. The second limitation is that the authors
tend to focus on institutional and HPWPs theories in understanding the factors that
facilitate as well as impede the development of HPOs in SSA and how organisations
in the region can adopt HPWPs to advance their HPO status. We assert that both
theories are only a starting point and not exhaustive; thus, future research should
explore other theories to stimulate scholarly discourse on developing management
theories relevant to SSA organisations. Finally, we only studied the sub-Saharan
Africa region in Africa. We suggest that similar studies should be conducted in the
other regional block in order to develop a more holistic theory for Africa. There is
a growing consensus that the institutional environment of the emerging markets of
Africa appears to be a very fertile ground to test and expand the existing institutional
theories as well as develop new ones [67].
9 Conclusion
This chapter has enhanced our understanding of institutional factors that facilitate
but also impede the development of high-performance organisations in SSA. The
chapter shed light on how organisations in SSA can leverage on HPWPs to improve
their HPOs status. A bulk of the literature on institutions is from the developed West-
ern contexts. More recently, a number of studies have emerged from the emerging
contexts of Asia and Eastern and Central Europe. Admittedly, only a handful of
the institutional literature is from the emerging context of Africa where there are
distinct norms and rules. However, this chapter provides very strong and nuanced
evidence that regulatory, normative and sociocultural institutional factors impede but
also facilitate the creation of HPOs in SSA.
The crucial lesson that emerged from the chapter is that organisations operating
within the SSA region can adopt high-performance work practices to improve their
HPO status. HPO status is moderated by strong human capital base and positive
employee attitude. For successful implementation of HPWP, SSA firms must embrace
the AMO human resource structure to avoid any form of resistance to the adoption
of HPWPs in a highly collectivist context like the SSA. The government can also
support this move by facilitating the adoption of HPWPs both directly and indirectly
for the overall development of the relevant workforce needed for the creation of
HPWOs.
References
1. Zoogah, D. B., Peng, M. W., & Woldu, H. (2015). Institutions, resources and organizational
effectiveness in Africa. The Academy of Management Perspectives, 29, 7–31.
2. George, G., Corbishley, C., Khayesi, J. N. O., Haas, M. R., & Tihanyi, L. (2016). From the
editors: Bringing Africa in: Promising directions for management research. Academy of Man-
agement Journal, 59, 377–393.
3. de Waal, A. A., Goedegebuure, R., & Mulimbika, T. (2014). Creating high performance gov-
ernmental organizations in Zambia. African Journal of Business and Economic Research, 9,
57–86.
4. Aiginger, K. (2009). Strengthening the resilience of an economy. Intereconomics, 44, 309–316.
5. Peng, M. W. (2014). Global business (3rd ed.). Cincinnati: Cengage Learning.
6. Ogbonnaya, C., Daniels, K., Connolly, S., van Veldhoven, J. P. M., & Nielsen, K. (2016).
Employees, managers and high-performance work practices. In N. M. Ashkanasy, R. J. Bernett,
& M. J. Martinko (Eds.), Understanding the high-performance workplace: The line between
motivation and abuse. New York: Routledge.
7. Kashefi, M. (2011). High-performance work organizations and rewards in manufacturing and
services economies. International Sociology, 26, 547–570.
8. Godard, J. (2001). High performance and the transformation of work? The implications of
alternative work practices for the experience and outcomes of work. Industrial and Labor
Reviews, 54, 776–805.
9. O’Reilly, C. A., & Pfeffer, J. (2000). Hidden value. How great companies achieve extraordinary
results with ordinary people. Boston: Harvard Business School Press.
10. Miller, D., & Le Breton-Miller, I. (2005). Managing for the long run. Lessons in competitive
advantage from great family businesses. Boston: Harvard Business School Press.
11. de Waal, A. A. (2001). Power of performance management. How leading companies create
sustained value. New York: Wiley.
12. de Waal, A. A. (2006). The characteristics of a high performance organisation (online). Avail-
able at: SSRN: https://ssrn.com/abstract=931873 or http://dx.doi.org/10.2139/ssrn.931873.
Accessed May 31, 2017.
13. Lawler, J., Chen, S., Wu, P.-C., Bae, J., & Bai, B. (2008). High performance work system prac-
tices in foreign subsidiaries of American multinationals: A multi-country study. Unpublished
paper, 1–12.
14. Whitener, E. (2001). Do high commitment human resource practices affect employee commit-
ment? A cross-level analysis using hierarchical linear modelling. Journal of Management, 27,
515–535.
15. Gould-Williams, J. (2003). The importance of HR practices and workplace trust in achieving
superior performance: A study of public-sector organizations. The International Journal of
Human Resource Management, 14, 28–54.
16. Ashton, D. N., & Sung, J. (2002). Supporting workplace learning for high performance work-
ing. International Labour Organization.
17. Dunning, J. H., & Lundan, S. M. (2008). Institutions and the OLI paradigm of the multinational
enterprise. Asia Pacific Journal of Management, 25, 573–593.
18. Ingram, P., & Silverman, B. (2002). Introduction in the new institutionalism in strategic man-
agement. In P. Ingram & B. Silverman (Eds.), The new institutionalism in strategic management.
Amsterdam: Elsevier.
19. North, D. C. (1990). Institutions, institutional change, and economic performance. New York:
Cambridge University Press.
20. Scott, W. R. (1995). Institutions and organizations. Thousand Oaks, CA: Sage.
21. Kostova, T. (1999). Transnational transfer of strategic organizational practices: A contextual
perspective. Academy of Management Review, 24, 308–324.
22. Westney, D. E. (1993). Institutionalization theory and the multinational corporation. In S.
Ghoshal & D. E. Westney (Eds.), Organization theory and the multinational corporation. New
York, NY: St. Martin’s Press.
23. Scott, R. W., & Meyer, J. W. (1983). Organizational environments: Ritual and rationality.
Beverly Hills, CA: Sage.
24. Rottig, D. (2016). Institutions and emerging markets: Effects and implications for multinational
corporations. International Journal of Emerging Markets, 11, 2–17.
25. Scott, W. R. (2014). Institutions and organizations: Ideas, interests and identities (4th ed.).
Thousand Oaks, CA: Sage.
26. Urban, B., & Hwindingwi, R. (2016). The influence of institutional factors on MNC’s triple
bottom-line reporting: A focus on African emerging markets (AEMs). International Journal
of Emerging Markets, 11, 497–513.
27. Puffer, S. M., McCarthy, D. J., & Jaeger, A. M. (2016). Institution building and institutional
voids: Can Poland’s experience inform Russia and Brazil? International Journal of Emerging
Markets, 11, 18–41.
28. Rousseau, D. M., & Fried, Y. (2001). Location, location, location: Contextualizing organiza-
tional research. Journal of Organizational Behavior, 22, 1–13.
29. Johns, G. (2006). The essential impact of context on organizational behavior. Academy of
Management Review, 31, 386–408.
30. Beugré, C. D., & Offodile, O. F. (2001). Managing for organizational effectiveness in sub-
Saharan Africa: A culture-fit model. International Journal of Human Resource Management,
12, 535–550.
31. Adams, K., Debrah, Y. A., Williams, K., & Mmieh, F. (2015). Why on earth should foreign
banks invest in Africa’s financial services sector? Evidence from financial multinationals in
Ghana. Thunderbird International Business Review, 57, 445–462.
32. Ovadge, F., & Ankomah, A. (2004). Human resource management in Nigeria. In P. S. Bud-
hwar & Y. A. Debrah (Eds.), Human resource management in developing countries. London:
Routledge.
33. Jin, Y., Hopkins, M. M., & Wittmer, J. L. S. (2010). Linking human capital to competitive
advantages: Flexibility in a manufacturing firm’s supply chain. Human Resource Management,
49, 939–963.
34. Debrah, Y. A., Oseghale, R. O., & Adams, K. (2018). Human capital development, innovation
and international competitiveness in sub-Saharan Africa. In I. Adeleye & M. Esposito (Eds.),
Africa’s competitiveness in the global economy. London: Palgrave Macmillan.
35. Rivera-Santos, M., Holt, D., Littlewood, D., & Kolk, A. (2015). Social entrepreneurship in
sub-Saharan Africa. Academy of Management Perspectives, 29, 1–49.
36. Hyden, G. (2006). African politics in comparative perspective. Cambridge, UK: Cambridge
University Press.
37. Sidani, Y. M., & Thornberry, J. (2013). Nepotism in the Arab world: An institutional theory
perspective. Business Ethics Quarterly, 23, 69–96.
38. Bamett, T., & Kellermanns, E. W. (2006). Are we family and are we treated as family? Nonfam-
ily employees’ perceptions of justice in the family firm. Entrepreneurship Theory and Practice,
30, 837–854.
39. Oppong, N. Y., & Gold, J. (2016). Developing local managers in the Ghanaian mining industry:
An indigenous talent model. Journal of Management Development, 35(3), 341–359.
40. Mangaliso, M. P. (2001). Building competitive advantage from Ubuntu: Management lessons
from South Africa. Academy of Management Executive, 15, 23–33.
41. Mensah, F., & Oppong, N. (2016). Improving employee performance at Kakum rural bank
limited, Ghana: Role of motivational packages. International Journal of Management and
Applied Science, 2, 68–75.
42. Aryeetey, E., & Killick, J. (2000). Aid debt and growth in the Ghanaian economy—Macroe-
conomic and sectoral developments since 1970. In E. Aryeetey, J. Harrigan, & M. Nissanke
(Eds.), Economic reforms in Ghana: The miracle and the mirage. Oxford, England: Woeli.
43. Mbaku, J. M. (2004). Institutions and development in Africa. Trenton, NJ: Africa World Press
Inc.
44. Sidani, Y. M., & Al Ariss, A. (2014). Institutional and corporate drivers of global talent man-
agement: Evidence from the Arab Gulf region. Journal of World Business, 49, 215–224.
45. Harry, W. (2007). Employment creation and localization: The crucial human resource issues
for the GCC. The International Journal of Human Resource Management, 18, 132–146.
46. Al Qudsi, S. S. (2006). Unemployment evolution in the GCC economies: Its nature and rela-
tionship to output gaps. Abu Dhabi: Center for Market Research & Information (CLMRI).
47. Oseghale, O. R. (2016). Talent management in multinational companies in the Nigeria oil and
gas industry (Unpublished doctoral thesis).
48. Adisa, T. A., Osabutey, E. L. C., Gbadamosi, G., & Mordi, C. (2017). The challenges of
employee resourcing: The perceptions of managers in Nigeria. Career Development Interna-
tional, 22, 703–723.
49. Nwogwugwu, N., & Sosanya, O. A. (2015). Effects of federal character on appointment into
the civil service system: A study of federal ministry of education. Arabian Journal of Business
and Management Review, 3, 1–12.
50. Zhou, J. Q., & Peng, M. W. (2012). Does bribery help or hurt firm growth around the world?
Asia Pacific Journal of Management, 29, 907–921.
51. Acquaah, M. (2007). Managerial social capital, strategic orientation, and organizational per-
formance in an emerging economy. Strategic Management Journal, 28, 1235–1255.
52. Michalopoulos, S., & Papaioannou, E. (2015). On the ethnic origins of African development:
Chiefs and precolonial political centralization. The Academy of Management Perspectives, 29,
37–71.
53. Chironga, M., Leke, A., Lund, S., & Van Wamelen, A. (2011). Cracking the next growth market:
Africa. Harvard Business Review, 89, 117–122.
54. Collier, P. (2007). The bottom billion: Why the poorest countries are failing and what can be
done about it. Oxford, UK: Oxford University Press.
55. Ugwegbu, D. C. E. (2001). The psychology of management in African organizations. Westport,
CT: Quorum.
56. Dia, M. (1996). Africa’s management in the 1990s and beyond. Washington, DC: World Bank.
57. Yeung, H. W. (2000). Limits to the growth of family-owned business? The case of Chinese
transnational corporations from Hong Kong. Family Business Review, 13, 55–70.
58. Khanna, T., & Palepu, K. (2005, August). Spotting institutional voids in emerging markets
(pp. 1–11) (Background Note 106-014). Harvard Business School.
59. Amankwah-Amoah, J. (2016). An integrative process model of organisational failure. Journal
of Business Research, 69, 3388–3397.
60. Jiang, K., Lepak, D., & Baer, J. (2012). How does human resource management influence
organizational outcomes? A meta-analytic investigation of mediating mechanisms. Academy
of Management Journal, 55, 1264–1294.
61. Sun, L., Aryee, S., & Law, K. (2007). High-performance human resource practices, citizenship
behavior, and organizational performance: A relational perspective. Academy of Management
Journal, 50, 558–577.
62. Ogbonnaya, C., Daniels, K., Van Veldhoven, M., & Tregaskis, O. (2013). Using HPWP to drive
towards growth: The impact of occupational health and safety leadership. In G. Saridakis & C.
Cooper (Eds.), How HR can drive growth. Cheltenham: Edward Elgar Publishing.
63. Huselid, M. A. (1995). The impact of human resource management practices on turnover, pro-
ductivity, and corporate financial performance. Academy of Management Journal, 38, 635–672.
64. Gong, Y., Law, K., Chang, S., & Xin, K. (2009). Human resources management and firm per-
formance: The differential role of managerial affective and continuance commitment. Journal
of Applied Psychology, 94, 263–275.
65. Applebaum, E., Bailey, T., Berg, P., & Kalleberg, A. L. (2000). Manufacturing advantage: Why
high performance work systems pay off . London: Cornell University Press.
66. Farrell, D., & Grant, A. (2005). China’s looming talent shortage. The McKinsey Quarterly, 4,
71–79.
67. Zoogah, D. B. (2008). African business research: A review of studies published in the Journal
of African Business and a framework for enhancing future studies. Journal of African Business,
9, 219–255.
Human Resources Management
in a Small- and Medium-Sized Enterprise
Adriana Faria and Carolina Feliciana Machado
Abstract Small-sized enterprises generate most of the jobs in Portugal; however,

their informal way of working in what concerns human resources leads to an inef-
ficient use of resources, both financial and human, that are invaluable values within
this type of business. This work aimed to analyze how human resources management
is developed in a small Portuguese family company, having as background the the-
oretical assumptions in the field of human resources management in SMEs, as well
as to identify the factors that contribute to the implementation of the practices of
human resources management in the organization. For this, empirical evidence of an
exploratory case study is presented, carried out in a small family business, being the
data collected through a semi-structured interview with the founder and CEO of the
organization. Results show that the implementation of human resources management
is determined by the relationship of the organization with larger client companies,
with the most implemented practices being recruitment, selection, rewards, and train-
ing. However, there are major resource constraints to formalize and develop the most
critical human resources management practices.
1 Introduction
This chapter aims to carry out an empirical study about human resources manage-
ment (HRM) in small- and medium-sized enterprises (SME) and contribute to a
better understanding of the factors that may limit or influence HRM in this type of
organization.
The organization under study is a small family business, made up of fourteen
employees and which sells products for the industry as a whole, as well as equipment,
tools, and accessories for the automotive industry.
The study was supported by an exploratory qualitative research in which the
information gathering technique was the semi-structured interview to the founder
and administrator of the company, followed by the content analysis. The starting
A. Faria · C. F. Machado (B)

School of Economics and Management, University of Minho, Braga, Portugal
e-mail: carolina@eeg.uminho.pt

220 A. Faria and C. F. Machado
point understood as the driver of the study was “What are the determining factors
to the implementation of human resources management practices in a small fam-
ily business?” At the same time, the main objectives were to explore how human
resource management is adopted in the small family business; what are the type of
human resources management practices implemented; and, finally, to understanding
the reason why these practices are implemented. Therefore, the variables in study
were the determining factors of the implementation of human resources management
(independent variable) and the implemented human resources management practices
(dependent variable).
The work is divided into four sections, the first focuses the review of the literature
of the existing theories about the management of human resources developed in
small and medium enterprises. The second deals with the methodological options
that characterize the study, the third one describes the case study and presents the
analysis and discussion of the results and, finally, the final considerations of the work
are presented.
2 HRM in SME
The “Instituto de Apoio às Pequenas e Médias Empresas e à Inovação” (IAPMEI)

classifies companies according to the number of workers, while the European Com-
munity defines micro-, small-, and medium-sized enterprises according to their work-
force, their volume of businesses, or their total annual balance sheet. So, a middle
company is one that has fewer than 250 employees, a volume of businesses less or
equal than 50 million euros, and a balance sheet totaling less than or equal to 43 mil-
lion euros of total balance. A small company has less than 50 employees, an annual
volume of businesses, and the annual total balance not exceeding 10 million euros,
while micro-enterprises employ less than 10 people and whose annual turnover or
annual total balance does not exceed 2 million euros (Comissão Europeia, 2008,
referred to by [1]).
Small- and medium-sized enterprises accounted for 99.9% of the Portuguese
business framework and 55.4% of jobs, having a crucial role in the Portuguese
economy (INE, 2010, referred to by [1]). This type of enterprises is characterized by
a simple organizational structure, and limited financial and human resources, being,
however, very close to the market, to the customer and with a great flexibility and
adaptation to the change [1].
In Portugal, many organizations of this type are family enterprises. In what
concerns this type of organization, it doesn’t exist a specific definition of the concept
of a family business. However, the main definitions refer that these organizations, in
addition to seeking profit from the business, have family members at the manage-
ment, interested in continuing the owner family values, as well as want to continue
to strengthen the family patrimony. At the same time, a non-family business is
managed by professionals who have as their primary and fundamental objective
the profit and, through it, the organization survival (Ussman, 2004, referred to by
Human Resources Management in a Small- and Medium-Sized Enterprise 221
[2]). According to the literature, an enterprise can be called as familiar if it includes

combinations like family ownership and family management; or family ownership
without family management; or family management without family ownership
(Chua, Chrisman and Sharma, 1999, referred by [1]).
Another characteristic of family enterprises is that these organizations have a life
cycle that can pass through three family generations where in the first generation,
owner is the founder who exercises a centralized power in the organization and whose
main objective is the growth of the business. The second generation is constituted
by the founder’ sons, being the main aims the rejuvenating and re-adaptation to
the market. The third generation portrays a relationship between cousins, where
the presence of the founder’s sons and grandchildren may even exist, in which the
authority is based on capital and competencies, being the objective its re-adaptation
to the market.
At the same time, each family enterprises life’s cycle crosses a set of four phases,
namely the foundation, growth, maturity, and the decline, after which it may occur
the re-launch of the business, which is characterized by the entry of the following
family generation in the organization. This way, phase one, foundation, is charac-
terized by the existence of an owner who is the founder of the organization, being
his values and beliefs transferred to the collaborators, giving rise to the creation of
the organizational culture, at the same time that the main objectives of the business
are to grow up and find a place in the market. Phase two refers to the growth and
portrays the expansion of the organization in several areas, the creation of structures
and organizational processes. Phase three is maturity, where the business is recog-
nized in the market for the work done over the years, requiring, the size business, a
strategy redefinition, considering that at this stage, organizations face structural and
communication difficulties at the management that need to be anticipated in order
to minimize the consequences. It is at this stage that the plan of succession must
be prepared. The last phase is the decline where the conflict arises between several
successors, in the struggle for power and the continuity of the business (Ussman,
2004, referred to by [3]).
Regarding the processes of management, these companies can be divided into
two groups: those that are independent and operate in small businesses with infor-
mal procedures and those that belong to large organizations with a mature culture,
more formal procedures and more formalized management practices (Cassel, Nadin,
Gray and Clegg, 2002 referred by [1]). Studies show that the processes of devel-
opment of human resources management systems in these companies are mostly
informal. At the same time, most of these organizations do not have a department
of human resources management, nor give to this area the necessary independence
and attention because in many cases, human resources management is carried out
by the organization’s owner/manager. Apart from this, the limited budgeting and
material resources as well as the lack of legitimacy as an employer contribute to the
difficulty of formalizing the management of human resources. Taking into account
the market composition, formed by small- and medium-sized businesses as well
as businesses managed by families without an human resources department, busi-
ness characteristics also difficult the development of human resources management

practices (Cabral-Cardoso, 2006, referred to by [1]).
There are some organizational contextual variables (such as company size, strat-
egy, technology, structure, and other organizations’ influence in the internal environ-
ment) and external variables (organizational governance and ownership control, the
influence of the business community, the relationship of small and medium compa-
nies with large clients and trade unions impact) that predict the existence or absence
of human resources management practices in these organizations as well as their
degree of formality [4]. In this sense, the recruitment process is based on an informa-
tion system to attract and retain people that possesses the desired job requirements,
not forgetting that in small and medium enterprises it is more formalized at the
operational level without formalization at the management level. Indeed, in these
organizations top management usually is formed by the founder or his relates, which
contributes to a situation where recruitment occurs from a succession process or fam-
ily interest [4]. The most used recruitment techniques are “pass to word,” employment
agencies, references from other collaborators, announcements in journals, and spon-
taneous candidacies. In turn, the selection intends to choose among the candidates
attracted by the recruiting technics the most qualified and prepared to the job [5].
Reinforcing the literature, in Portuguese small- and medium-sized organizations, the
selection process is done through individual interviews and an experience period in
the organization [4].
As far as attraction and retention of human capital is concerned, it is difficult for
those organizations to compete with larger ones since they do not have a competitive
set of resources and practices that allow them to find and retain the most competent
collaborators.
Reception and integration is a process according to which the organization looks
to transfer to the new collaborator, the organizational foundations, and premises
and develop socialization measures leading him to adopt the adequate attitudes that
will drive the collaborator to the best performance [5]. However, in these types of
organizations this practice is often informal and quite rare because this process occurs
in an ad hoc way.
As happen with the recruitment and selection process, training and development is
a very used practice in small- and medium-sized businesses (and family businesses).
According to the literature, this process is informal, developed on the job and with
a small or any commitment of top management. Regarding the used methods, most
of these companies implement classroom training, supported by computers and self-
taught material [4].
About performance appraisal system, it relates to the strategic objectives oper-
ationalization, allowing the organization to measure the contribution of its collab-
orators in the achievement of the organizational goals, detect gaps and foregoing
possibilities of developing the collaborators competences [5]. In small- and medium-
sized organizations (and family businesses), performance appraisal is minimal and
basic facing many barriers to its development, namely a resources scarcity (Hud-
son, 2001, referred by [4]). The literature highlights that performance appraisal is
affected by the organization’s size, being that these organizations use informal meth-
ods while large organizations develop more formalized practices. The most common
technique used is the collaborators’ appraisal by line or top management, while in top
management performance appraisal managers’ self-assessment is developed. Requir-
ing more financial and material resources, other performance appraisal methods are
poorly applied [4].
Rewards/incentive systems have a significant role in these organizations because,
many times, they influence or limit the organizational capacity to retain collabo-
rators, since the implementation of a compensation management is a highly effec-
tive retention strategy. Rewards can be monetary and non-monetary; however, these
organizations highlight monetary rewards, such as cash prizes, as they contribute to
a simplified incentive system, at the same time that they are understood as the most
effective, reason why they are usually used [4]. Small- and medium-sized enterprises
(as well as family businesses) have, however, a basic, informal, and limited reward
management.
In the following sections, we will present and analyze the human resource man-
agement process implemented in a small family business that sells accessories to
industry and automobiles market.
3 Methodological Options
The present study was driven by a qualitative research, with an exploratory character.
Indeed, more than testing hypotheses it was intended to obtain a deeper knowledge
and familiarity about human resources management practices implemented in a small
company. Thus, the study was supported by a phenomenological paradigm in which
the research method was the case study allowing us to conduct a research within a
real context. The analysis focus was a small family business whose activity is the
commercialization of accessories for the industry in general and for automobiles.
We used an intentional non-random sampling where the unit of analysis selection
was done arbitrarily according to the research convenience. Indeed, and due to the
temporal and financial resources available to carry out the research, it was decided
to develop contacts that were more close and available to collaborate [6].
The research question of the study is “What are the determining factors for the
implementation of human resources management practices in a small family busi-
ness?” About the main objectives, the study looks to explore how human resources
management in the organization is adopted; what kind of human resources man-
agement practices are implemented and, finally, to understand the reason why these
practices are implemented in the context under analysis. Thus, the determinant fac-
tors of the implementation of human resources management practices consist in
our independent variable, while the dependent variable corresponds to the human
resource management practices implemented in the organization.
In order to operationalize the study, a bibliographical review was carried out
in order to acquire and deepen the notions and knowledge of this subject, at the
same time that a semi-structured interview was administered to the founder and
actual CEO of the organization, a critical interlocutor with a good knowledge of the
organization management. A set of guiding questions were developed, allowing to
drive the interview in a fluid and flexible way. The interview was held in person at
the company’s office. Data processing technique was based on a thematic content
analysis obtained from the interview key themes.
4 Case Study: Results Analysis and Discussion
This section aims to present the data of the case study and the analysis and discussion
of the results obtained from the developed interview. By confidential reason, the
names of the organization and the interviewed CEO will not be present.
4.1 About the Organization
The organization under study is a small family business that develops and sells
products for the industry, as an all, as well as automobile products. The main market
segments in which it operates are the automobile, dyeing, stamping, spinning, and
metal-mechanical. Its main goal is to provide quality products and solutions at a
competitive price in order to obtain total customer satisfaction. The organization’s
strategy is to market a wide range of products in the most diverse industrial areas, in
order to achieve quality service and excellence in response to customer needs.
The organization began its activity in 1979 under a joint-stock company, made up
of two partners and an effective employee. The main focus of the organization was
to provide industrial accessories and a “bazaar” aimed at children. Due to the lack
of demand for children’s products, this corporate relationship ended after two years.
After that period, the founder and majority partner created the current organization on
an individual basis. The organization took on a new direction and in 1982 returned to
the market only with a service of industrial products supply. However, as the founder
was a professor in the mechanic field and was unable to reconcile teaching with
the organization’ management he delegated tasks to his wife who has qualifications
in higher education, who became the legal CEO. The micro-organization was then
constituted by a founder, a CEO (his wife), and an employee.
The business developed over the years, leading to the need for growth, increasing
human resources, and expanding the facilities obtaining two physical spaces in two
different places. In 2003, the business expanded to the automotive market having
at the present two distinct business areas, namely products for the industry and
automotive products.
Given this context, it is observed that at this moment and according to Ussman
(2004, referred by [2]), the organization is in its first generation as there exists a
single owner who is the organization’s founder and main manager. It is positioned in
the maturity phase since the company is already recognized by the work carried out
along its route, where the recent business expansion requires the definition of new
strategies and organizational processes more complex and formalized.
I started the business, we grew and the recognition of our work by the clients allowed the
expansion to other areas and the improvement of the processes, but we still have to formalize
processes, ensure the company structure to continue satisfying customers and prepare our
sons to the succession. (Interviewee)
According to the literature, it was possible to understand that in the business

maturity stage, some structural difficulties and the decline of management skills can
arise, reason why it becomes important to professionalize the organization and begin
to prepare the succession. In the case under study, the succession process is currently
being prepared and planned, which is reflected in the specific training of the founder’s
sons and their entry into the organization, in the daily monitoring of the business,
in the participation of the company’s management, and in the relationship with no
familiar employees.
… they want to succeed in the organization, so they need to acquire more professional skills
to deal with the market dynamics and different needs of the customers. And these skills are
only obtained here in everyday life […] this will only succeed in the future if they know the
management and the business and for that, it is necessary to plan and they are already here
to be prepared for the future and to prepare the organization. (Interviewee)
4.2 Characterization of the Organization Human Resources
The organization has fourteen collaborators mostly male. Regarding this characteris-
tic, the interviewee explains that this situation does not happen intentionally. Indeed,
it is due to the fact that the industrial and automobile areas are preferred, mainly, by
the male gender.
The average age is 43 years old, the majority literary qualification is professional
technician, and the labor contract is indefinite time, with all employees effective in
the organization.
Regarding the decision making of the management processes, the founder has full
decision making of the business strategic and financial planning as well as the human
resources planning. The CEO (the founders’ wife) is responsible for the operational
management of human resources and financial management. In the upper ranks, the
daughter of the founder with higher education is responsible for the commercial
department of industrial products and the son, with higher education as well, is
responsible for the automotive products section. The remaining collaborators work in
the logistics department, purchasing, sales, customer service, and consulting services
on solving technical problems and looking for products for specific situations.
4.3 Human Resource Management Practices
In the organization, there is no human resources department. However, there exists

a small formalization of some human resources management processes.
In what concerns the human resources planning, it allows the organizations to
ensure that they have the necessary human resources to reach a particular level of
production and services in the future [5]. In the case under study, management holds
administrative meetings, at the beginning of the year, where the objectives are defined,
as well as the projects with large clients. Then, an analysis of the sales volume, the
budget, among others, is developed, making a balance of the existing and necessary
resources. Once the analysis has been made and the need for resources is verified, a
plan for obtaining them is then prepared.
… meetings are held between the management where annual objectives are established
according to the projects that we will have and, taking into account these objectives and
future needs of the client, a forecast of the necessary human resources is made, as well as
the sales volume, budgets, etc. The business grew and expanded in other areas due to the
process planning over the time where our goals were and always are the customer satisfaction.
(Interviewee)
Human resources forecasting is carried out through a market study of the existing
human capital in the region, with school partnerships and employment center, being
compared the market supply of human capital competencies with the needs of the
business previously defined, in order to align the existing competencies in the market
with the necessary ones in the organization. Finally, a plan where the required compe-
tencies, the available resources, among other requirements are defined, is elaborated.
Before recruiting it is done a homework by myself in which I already know what are the future
projects and client needs and then I research what exists in the market through the help of
schools and the employment center. Then there is an internal document where our objectives
and skills requirements are defined which helps to make a profile of the best collaborator
needed to meet the needs of the job. Then the vacancy is created, and advertised, in the national
newspapers and employment center and applications are expected. At the beginning of the
year I know what I will need, reason why I recruit before. I don’t recruit any one in a hurry
because choosing the wrong person entails cost and time risks and dissatisfied customers.
So I prefer to plan than recruit the wrong people because even with training they will not
provide the customer with the service we want as they do not have the right skills and we
will have to recruit again. This makes us lose time and have unnecessary costs […] but of
course there are sometimes unforeseen things. (Interviewee)
What we observe is that there is some resource planning, at least in the short term.
However, this planning seems more financially formalized and more informal in
terms of human resources. Indeed, studies argue that small businesses do not have a
well-defined business strategy and therefore they cannot make strategic and business-
aligned human resource planning, with financial planning being more formal due to
the business needs (Russo and Martins, 2005, referred to by [7]). However, the
organization aims to plan, in some way, the human resources needed, at least in the
short term, to meet customer needs.
Regarding human resources management practices, the recruitment process is

formalized through advertisements in national newspapers, announcements at the
employment center, and spontaneous applications, and the main skills required are
technical–professional in the field of industry and automotive/mechanics. By its
turn, selection consists in a curricular analysis and individual interviews where the
cognitive, professional, and social skills and abilities of the individuals and their
experience are verified. Due to his knowledge and experience in the industrial and
automotive areas, these processes are a responsibility of the founder, which shows
a centralization of administrative power and an accumulation of functions. This is
in line with what was exposed in Chapter “Corporate Governance Foundations”,
where it is pointed out that usually decision making, in a small- and medium-sized
enterprise, is determined by an individual, often the owner/manager [1].
When it comes the time to recruit, the vacancy is announced at the job center and newspaper
ads and we receive the applications. Sometimes I get 100 applications for a position and I
have to look at the cover letters and curriculums. After this selection individual interviews
with me are done. Almost always it is necessary more than one interview to get to the right
person as our job involves dealing with different clients and with different needs. And often
the client speaks by code and we need to decipher these codes. The customer knows what he
want in general and we have to indicate the best option. So, I need to know the professional
skills of the individual because they need to know the material, but mainly they need to have
the skill and insight to understand the customer’s needs. It is necessary to have competencies
that belong to the individual and other that are acquired with the experiences. Sometimes
I have to turn the interview into simulations of situations to see if there exist or not this
characteristic in the candidate. (Interviewee)
It is observed that, in this case, there exist some recruitment and selection planning
in order to select the candidate who has the best skills to provide the best customer
service and support. Contrary to what is stated, that selection interviews emphasize
adaptation, relegating the qualifications or the register of professional experiences
to a second level (Carrol, Marchington and Taylor, 1999, referred to by [1]); in
this specific case, there is an appreciation of the individuals’ flexibility as well as the
skills they have, since an organization with a set of appropriate internal competencies
will be able to satisfy the client more efficiently. Thus, it is noted that there is a
concern of the management to formalize and plan recruitment and selection for the
organization to have resources to satisfy clients, which shows that this decision to
plan and formalize these practices is determined by the relationships between the
company and its large customers.
It is also worth noting that the use of an open or informal interview, in which the
candidate’s biographical facts, theoretical knowledge, and experiences are analyzed,
leads the founders to evaluate the interviewee in light of their prototype of the “ideal
candidate,” and not considering the position to fill, which makes the predictive power
of the future candidate’s performance weak. This is due to the fact that, in this type
of organization, those responsible for the process are mostly individuals who do
not have appropriate training and therefore have difficulty in distinguish the facts
from the good impressions transmitted by the candidates, where there are no clear
descriptions of the functions that allow to define the most appropriate profile of the
candidates to the exercise of the job and where it is difficult to have sufficient time
to properly prepare and perform the interviews [5].
With regard to job analysis and description, this is represented in the organization
as a basic document where only the jobs, the mandatory minimum requirements, and
a brief description of the activities are defined. This fact demonstrates, as suggested
in the literature, that job descriptions in this type of organization are vague and very
basic. However, from the point of view of the entrepreneur, although this process is
simple and informal, it allows the organization to make an alignment between the
recruitment and selection process and the business objectives.
… there exist a document in which jobs are described. Described the work activities and
mandatory requirements. This is a basic document, but it serves as a guide to drive us
and to know the necessary competencies to the job, which, together with the objectives
annually defined and with data from schools and the employment center serve as guiding
lines of information to recruit the right person to the position so we can fulfill the planned
objectives. It is for recruitment to be the most rigorous in relation to our criteria, as existing
a script one does not escape to the objectives, looking to recruit the best person to serve the
client. (Interviewee)
Training and development process is characterized in the organization by a pro-

gram of reception and integration, during a week, to the new collaborators, where
they know the facilities, its operation, having a turnover by all the functions. Another
modality is an initial training of 6 months which corresponds to apprenticeship in
the workplace and which covers all employees with top management supervision.
Another type corresponds to the updating or acquisition of new skills required by
the new technologies/products. In this case, training is characterized by two modal-
ities: theoretical, in the classroom and the practice, in the work place. To this end,
there is collaboration with large client enterprises in which they have specialized
trainers in the field, managing training in the family organization, transferring the
material and industrial/automotive accessories for demonstration and learning. An
assessment of knowledge/skills is carried out at the beginning and after the training,
in order to evaluate the progress of the trainee. However, there is no plan for career
management or employee development, but there is a scope for promotion of salary
and salary increases.
According to the founder’s speech, the main objective of these training courses
is for employees to acquire specific skills, necessary for the existing functions and
the service provided, and for employees to develop transversal skills to improve
problem-solving abilities so that the organization can satisfy the customer with the
highest quality.
The idea is for them to be insightful and understand the customer’s desire, to be mentally one
step ahead of the customer. This is necessary because we have a diversity of clients that goes
from the individual to the big companies that require internal abilities to meet the diversity
of needs and ability to solve problems that arise. Contingencies that arise and you can only
achieve these skills with training and daily learning. That is why training is important and
comprehensive to all […] and, technology changes and we have to evolve, and the employees
too, otherwise we are left behind, because industry and automobile accessories are updated
and you have to know how to use them to be able to explain and support the client. The
fact that we have many large customers requires us to have the resources to serve them or
we do not satisfy them and they go to the competition and a way to compete is to have the
maximum resources within our limit and that allows to captivate and satisfy customers that
have been in existence for 30 years. (Interviewee)
It is concluded this way that the implemented training practice is oriented to train
employees to reach the expectations of external stakeholders. It is also worth men-
tioning the fact that this family organization has collaboration with client companies
to implement internal training, which enables to obtain financial support capable
to sustain this practice. Once again, it is observed that in formalizing the train-
ing practice, the organization aims to better serve the client, which is corroborated
by empirical studies according to which the relationships of small- and medium-
sized enterprises with large clients are determinant for the implementation of human
resources management practices. Factor that is recognized by the CEO:
We have large customers with specific needs and to satisfy them, there is a need for planning,
however small it may be, as when we anticipate our needs we can have a better management
and better serve the client and we need to have techniques and internal procedures that
improve our work to retain the client. With a bad recruitment, we do not have the right
person, which carries risks to the business, and we can lose the client. And, also, not having
trained and updated employees in the job makes us stagnate and we will not be able to
serve the client. This is why we pay attention and special care to these procedures; the client
requires it. (Interviewee)
It should be noted that in fact the demands of large clients seem to be decisive
for the formalization of recruitment, selection, and training practices in this type
of organizations. Indeed, recruiting candidates with more adjusted competencies to
organizational objectives and investing in training cause improvements in goods or
services quality, which in turn leads to greater customer satisfaction, and greater
customer satisfaction results in increased loyalty, which translates into increased
revenues and margins and, consequently, an increase in profits (Kaplan and Norton
2000, referred to by [7]). However, it is noted that this training will have a learning
rather than development character because, as there is no job analysis and description
system implemented, there is no effective alignment between the skills required by
the job and those obtained by training.
About performance appraisal, this consists of an annual meeting between the
founder and the employee, being characterized by an informal conversation where
the employee’s performance and difficulties are discussed. The employee’s informal
self-assessment is also discussed, not covering the top management evaluation. So,
we can conclude that this practice is not formalized and that it has an ad hoc use, which
according to Kotey and Slade and Kotey and Sheridan (2005, referred to by [8]), this
informality stems from the close proximity between management and workers. It
is easier in these companies to observe the subordinates performance and proceed
immediately to possible changes, as verified by the discourse of the interviewee:
I’m in the company every day near my collaborators, as well as my sons. And we rectify or
draw the employee’s attention regarding their performance or learning. And they do not feel
bad because our communication is open, flexible. It is to alert to error and rectify and never
to punish them. So, we do not do a very rigid performance appraisal, it is just a record of the
employee progress to guide us or see if improvements are needed. (Interviewee)
As performance management is one of the procedures that most human resources

management practices have interconnected, it becomes necessary to formalize the
organization performance appraisal through the implementation of appraisal prac-
tices, such as: the competencies’ management associated with performance manage-
ment where exist an identification of organizational generating skills or functional
competencies and its description anchored to observable behaviors that can be evalu-
ated and recorded on a token; peer or 360 degree assessment; or regular performance
feedback. In this way, by defining the performance requirements, it will be possible
to measure the employee contribution and analyze his performance strengths and
weaknesses in order to effectively rectify the failures and effectively detect skills
failures.
As regards remuneration management, this consists of a basic salary which takes
into account the employee’s seniority, the holiday and Christmas allowance, a food
allowance, and a health insurance associated with the employee. Regarding careers
management, it doesn’t exist any employees’ career development planning; however,
it is possible to occur punctually job promotions.
There is nothing written about this, no progress planning is done because the company is
small and with a small hierarchical structure and then there is no need. But, it happens and
it is possible to grow when we have a collaborator that stands out in a specific area. In these
situations the employee shows a high performance and pleasure for an area and so he leaves
the job and moves to another position and the salary rises. (Interviewee)
Reward management, despite being a practice implemented in the organization,

is used informally, with no rigorous attribution criteria, which is in accordance with
the empirical studies that report that these organizations have a great use of monetary
rewards, based in simple and informal rewards systems [4]. What is observed is that
the organization has a formative process to endow the employees with skills, however,
does not emphasize the employees’ development and progress. Indeed, this process
is one of the main problems faced by small- and medium-sized enterprises, since they
are unable to meet the growth needs of their workers and, consequently, retention.
However, as in the case under study, non-monetary rewards may be a way of retaining
the best employees in the organization, as is the example of professional recognition
of employee performance, which, in the interviewee’s discourse, concludes that it
is a highly valued practice by employees and that contributes to the motivation and
good organizational climate.
Seasonally we offer a monetary prize to all employees and by the end of the year we still
offer the accessories that we distribute. And, there is a word of acknowledgment about the
employee performance because it is very important to see the good performance and give
a word of recognition. There exist a very communicative relationship and we both rectify
the immediate performance as we value it. I know that all employees have to be rewarded
and it is not only the customer who should be rewarded for his loyalty to the company. The
employees too. And this is a way of reward because we existed at 30 years and the employees
are still here. (Interviewee)
In what concerns management formalization, this is defined as “the formaliza-

tion of administrative processes to deal with more complex circumstances due to
the increase or diversification of the activity” (Ussman, 2004, cited by [3]: 39). Fol-
lowing this, professionalization implies creating formal mechanisms of coordination
and control, recruiting competent individuals, duly selected for the position, hav-
ing a formal structure of decision making/delegation of responsibilities and creating
plans and budgets. In view of all of the above, it can be seen that the small fam-
ily organization in study, although carry out some planning, and recruit and select
competent individuals for the job, does not have formalized and standardized control
and coordination mechanisms. Nor is there a formal evaluation of the success of
the implemented human resources management practices, which may result in a low
probability of continued application of the practices. In addition, although there is
the professionalization of successors (their sons), there is no delegation of responsi-
bilities and strategic decision making. The founder is the sole responsible for these
processes. Another fact is that the organization neglects job analysis and description
as well as performance evaluation formalization in which both have an implication
in critical processes of human resources management.
All of this reinforces the fact that many of these organizations have a high level of
health both from a financial and organizational point of view. However, they could
be better positioned in what concerns competitiveness, apart from the informality
of their management process that makes it impossible to solve problems; makes the
optimization of resources unfeasible; and maintains an environment of uncertainty,
when present days demand processes that guarantee businesses sustainability (Kaplan
and Norton 2000, referred to by [7]).
5 Final Considerations
This section summarizes the main conclusions of the study, their contributions, and
limitations.
Given all that have been exposed in the previous sections, we can conclude that
this type of organization is really affected by the market characteristics, its size, and
the lack of financial and human resources, which makes it impossible or difficult to
formalize human resource management practices. Moreover, like other small- and
medium-sized enterprises, it does not carry out a formal evaluation of the practices
it implements, which makes it impossible to analyze the benefits derived from them.
In this case, top management favors recruitment, selection, and training because
these processes enable the organization to answer and satisfy more efficiently its
clients’ needs. In addition, collaboration with large clients also provides better
resources and training conditions, which contributes to formalize and implement this
practice in the organization. Thus, it is perceived that large clients are a determin-
ing factor for this organization to formalize and implement some human resources
management practices.
It was also verified that the founder and current CEO has an entrepreneurial men-
tality more focused on the individual and not only in business. This contributes to
a management decision making focused on the recruitment of the individual com-
petences and not only in the adaptation, and value the employees’ professional per-
formance recognition as a non-monetary reward, among others. Thus, it is up to the
entrepreneurs to realize that it is possible to adopt a proactive position in manage-
ment, anticipating events, rather than develop just a reactive management. Of course,
the business of this kind of organizations requires that managers do a reactive man-
agement. However, it is necessary to invest in proactive actions where there is a
planning of all organizational resources, not just financial resources.
It is important to highlight that the present study makes it possible to understand
the reality of the analyzed organization, not being possible to draw conclusions
regarding other small–medium enterprises.
References
1. Melo, P. (2015). A Gestão de Recursos Humanos nas Pequenas e Médias Empresas em Portugal:
Definição de um Modelo de Atuação (Tese de doutoramento em Ciências empresariais). Escola
de Economia e Gestão, Universidade do Minho, Braga.
2. Cunha, P. (2011). Gestão de Recursos Humanos em Empresas Familiares: O impacto gera-
cional na definição das políticas de Recursos Humanos (Dissertação de Mestrado em Gestão
de Recursos Humanos). Escola de Economia e Gestão, Universidade do Minho, Braga.
3. Paulo, D. (2009). Empresas familiares em Portugal: sucessão competente (Dissertação de
Mestrado em Ciências Empresariais). Escola Superior de Economia e Gestão, Universidade
Técnica de lisboa, Lisboa.
4. Melo, P. R. N., & Machado, C. F. (2013). Human resource management in small and medium
enterprises in Portugal: Rhetoric or reality? International Journal of Entrepreneurship and Small
Business, 20(1), 117–134.
5. Gomes, J. F., Cunha, M. P., Rego, A., Cunha, R. C., Cabral-Cardoso, C., & Marques, C. A.
(2008). Manual de gestão de pessoas e do capital humano (1st ed.). Lisboa: Edições Silabo.
6. Yin, K. (2001). Estudo de Caso: planeamento e métodos (2nd ed.). Porto Alegre: Bookman
Editora.
7. Azeitão, J., & Roberto, J. (2010). Planeamento estratégico e a gestão estratégica nas PME.
Revista TOC, 120, 57–68.
8. Felizardo, A. (2014). Práticas de gestão de recursos humanos nas PME: um estudo de multi-caso
no concelho de Alcácer do Sal (Dissertação de Mestrado em ciências empresariais). Instituto
Politécnico de Setúbal, Setúbal.
Index
A Benefits, 3, 6, 8, 63, 64, 81, 83, 88, 91, 92, 94,

Ability-Motivation-Opportunities (AMO), 199, 102, 104, 129, 141, 158–162, 164,
200, 211, 212, 215 166–168, 174–177, 187, 202, 231
Ability to command, 119 Big data analytics, 183, 186, 190, 193
Active ageing, 136, 139, 140, 142, 151 Black box, 15, 16, 25
Adhocracy culture, 62, 65 Blockchain, 183, 192
Administration, 1, 10, 77, 78, 83, 105, 106, Blockchain-based cryptocurrency, 192
168, 169 Board effectiveness, 1, 17, 18
Adoption of HRM practices, 146 Board independence, 1, 12
Age, 8, 9, 24, 31, 44, 84, 85, 94, 99, 135–140, Board of directors, 5–10, 14, 20, 22, 24
144, 148, 193, 225 Board processes, 18, 19, 21
Ageing workers, 137, 138 Boards governance, 1, 7, 19, 21
Age management, 136–140, 142, 151, 152 Branding, 78, 85, 88, 100–102, 106
Agency theory, 1–4, 6, 7, 14, 18, 22–25 Business, 1–4, 6–8, 13, 21, 25, 29–33, 36, 37,
Age of digitalization, 30 39, 41, 44–48, 54, 59, 62, 69, 76, 83, 84,
Analytical skills, 193 86, 100, 106, 107, 111, 113, 114, 125,
Artificial intelligence, 183, 185–187, 189, 193 158–162, 164, 165, 167–170, 174, 176,
Authority, 51, 60, 63, 66, 112, 115, 119–130, 177, 183, 184, 186, 187, 199, 201–206,
132, 133, 209, 221 209, 210, 219–226, 228, 229, 231, 232
Authority - acquired, 119, 121, 123, 124 Business characteristics, 222
Authority - exercised, 121, 128 Business competition, 12, 209, 229
Authority - lost, 121, 129, 130 Business context, 161, 170, 175
Authority - recovered, 121, 130 Business ecosystem, 193
Business opportunities, 160, 175, 199
B
Barriers, 159–162, 165, 166, 169–172, C
174–177, 200, 222 Capabilities for SCRM, 161, 162, 165, 166,
Barriers to SCRM, 159, 161, 166, 168–172, 169–172, 174, 175
174, 176 Capability, 162, 163, 168, 170, 171, 174, 176,
Basic-building blocks, 157 202
Behavioural approach, 14–16, 19–21 Capability development, 170, 175
Behavioural repertoires, 53, 54 Capability of learning, 163
Behavioural science movement, 77 Capability of managerial support, 163
Beneficial outcomes of SCRM, 159, 167, 169, Caregiving, 141, 146, 150–152
171–173 Caregiving activity, 142, 151, 152

and Industrial Engineering, https://doi.org/10.1007/978-3-030-13229-3
234 Index
Caregiving organization, 151 Cultural forces, 206, 209

Causal knowledge, 37 Cultural models, 9, 61, 62
Centralized power, 221 Cultural perspectives, 53
Challenges, 49, 54, 62, 94, 121, 128, 132, 135, Culture, 1, 4, 7, 8, 24, 38, 45–47, 49–69, 78,
136, 139, 142, 150, 152, 158, 174, 175, 83, 87, 94, 97, 99, 101, 116, 117, 160,
177, 183–187, 190, 191–194, 199, 200, 161, 163, 166, 169–172, 175, 183, 201
208, 209, 213, 214 Culture exploration, 65
Change management, 159, 162, 163, 166–172, Culture of management, 49
174, 176 Customer environment, 175
Changes, 6, 7, 9, 24, 29, 30, 34, 38, 45, 47,
55–58, 60–62, 65, 66, 76, 85, 86, 96, 99, D
106, 113, 133, 136, 139, 152, 157–160, Data-rich, 193
162–164, 167–172, 174–176, 189, 193, Decision making, 15, 16, 19, 20, 82, 99, 103,
201, 220, 228, 229 106, 111, 131, 150, 225, 231
Changing, 29, 45, 47, 55, 57, 62, 78, 118, 138, Decision problems, 187, 194
161–163, 175, 183, 193 Declarative knowledge, 36
Changing attitudes, 137, 138 Decline, 58, 221, 225
Characteristics, 14, 16, 21, 25, 32, 33, 35, 46, Demand-side KM perspectives, 43
50, 52, 111, 113, 143, 159, 160–162, Demographic ageing, 135
168, 176, 177, 192, 201, 210, 213, 221, Demographic approach, 14, 16, 25
227, 231 Designs, 41, 50, 66, 67, 77, 88, 91, 119, 120,
Clan culture, 62, 65 137, 138, 140, 152, 177, 184, 190, 191,
Classical oriented KM perspectives, 42 202, 212
Classification of organizational cultures, 51 Desirable, 67, 111, 202, 212
Clientelism rule, 209 Development, 8, 21, 22, 24, 38, 42, 46, 62, 63,
Collectivism, 55, 207 75–78, 80, 83, 84, 86–88, 90, 93, 96,
Collectivist environment, 214 100, 101, 106, 108, 112, 113, 117, 125,
Colors, 50 126, 128, 132, 133, 135–138, 140, 141,
Command capacity, 111 146–150, 152, 160, 162, 167–172, 175,
Common HRM activities, 78, 107 176, 183–185, 190, 193, 194, 199–202,
Communication, 35, 46, 47, 56, 57, 62, 67, 68, 204, 206–215, 221, 222, 228–230
90, 95, 99, 103, 105, 106, 113, 119, 126, Different emergent technologies, 186
132, 133, 150, 158, 159, 163, 188, 221, Dimensions of age management, 137
229 Diversity, 19, 20, 54, 60, 78, 94–100, 106, 122,
Communication at the workplace, 103 136, 139, 140, 200, 228
Community framework, 12 Diversity challenges, 54, 96
Competence of management, 163 Driving force, 158
Compliance, 4, 19, 20, 78, 105–107, 129 Dynamic, 33, 54, 57, 62, 66, 77, 81, 163, 184,
Computer power, 183, 186 188, 192, 200
Conditional knowledge, 37
Contribution of Forbes, 16 E
Contribution of Milliken, 16 Effective, 18, 22, 30, 40, 45, 46, 50, 51, 53, 65,
Control, 2, 4, 14, 16, 17, 19–25, 46, 56, 60–63, 86, 88, 91, 99, 101–103, 108, 112, 124,
65–67, 76, 104, 119, 160, 167–172, 127, 138, 139, 150, 160–164, 170, 174,
174, 175, 188–191, 211, 222, 231 176, 183, 186, 188, 200, 205–207, 210,
Coordination mechanisms, 231 213, 223–225, 229
Corporate governance, 1–9, 12, 14, 19–22, 24, Effectiveness of organizations, 1, 29, 51,
25 60–63, 65, 75, 77, 200, 202, 204, 205,
Corporate memory, 42 213
Corruption, 127, 129, 203, 208, 209 Effective performance management, 89, 207
Create value, 29, 37, 45, 161, 176 Emergent technologies, 183, 185, 194
Cultural blocks, 5, 51 Employee relations, 78, 85, 103, 106
Cultural context, 51, 62 Employees, 3, 8, 23, 32, 45, 46, 50, 56, 58, 59,
Cultural exploration, 64 62, 67, 69, 76–79, 82–95, 97–108,
Index 235
111–114, 117, 119, 122, 124, 125, 131, Growth, 40, 59, 62, 63, 127, 135, 184, 190,
132, 137–140, 150, 151, 161, 163, 164, 199, 201, 203, 212, 221, 224, 230
166–168, 175, 200–208, 210–215, 219,
220, 224, 225, 228–230, 232 H
Enablers of knowledge management, 29, Harnessing HPWPs, 211
43–45, 47 Hierarchy culture, 62, 65
Engagement, 66, 78, 83, 85, 88, 92, 97, Hierarchy of knowledge, 33, 35
100–102, 104, 106–108, 158, 161, 163, High demand, 193
164, 166, 205 Highly connected organizations, 193
Entrepreneur, 30, 228, 232 High-performance, 185, 199–204, 206, 207,
Ergonomics, 137, 138, 141, 150, 152 210–215
Essentials of knowledge, 29, 30 High-performance organizations, 199–204,
Eurofound, 136, 138, 139, 143 206, 207, 210–215
Exit, 137 High Performance Work Organizations
Explicit knowledge, 35, 36, 39, 45, 46 (HPWOs), 199, 200, 211, 213–215
Extensive human training, 111, 117 History of knowledge management, 39
External, 10, 12, 13, 19, 20, 22, 38, 61–63, HPWO status, 199
65–68, 84, 85, 87, 107, 151, 162, 170, HR forecasting, 84, 226
201, 222, 229 HRM activities, 76–80, 84, 86, 91, 92, 100,
External executives directors, 12, 13 101, 105, 106, 108
HRM function, 76–78, 86, 88, 90, 92, 94, 97,
F 100–102, 105, 107, 108, 112
Factors of production, 30, 31 HRM in SME, 219, 220
Familiar employees, 225 HRM practices, 108, 138, 142, 143, 146–150,
Family generations, 221 152, 211, 212, 220, 222, 223, 226, 227,
Family members, 207, 210, 220 229–231
Fast-changing needs of customers, 201 HR planning, 78, 83, 84, 86, 106, 108, 226
Fast-paced, 193 HR practices adopted, 150
Female participation, 9, 98 Human capital, 111, 112, 136, 202, 206, 208,
Femininity, 55 209, 211, 212, 215, 222, 226
Firm’s strategies, 163 Human Resources (HR), 46, 62, 67, 75–78,
Flexibility, 61, 62, 65–67, 99, 118, 150, 159, 83–88, 97, 100–102, 104–108, 137,
162, 163, 176, 189, 220, 227 143, 148–152, 187, 205, 211, 212,
Flexible working practices, 137, 152 219–221, 224–227, 231
Forces of culture, 51 Human resources director, 111, 112, 114, 116,
Foreign participation, 12 117
Formal, 38, 62, 64, 66, 87, 90, 92, 97, 99, 101, Human value, 113–115, 117, 128, 132, 133
103, 106, 119, 122, 123, 141, 142, 147, Hybridization, 183, 184, 190, 194
148, 152, 202–205, 226, 231
Formal caregivers, 141–143, 145, 146, 147, I
150–152 Impact, 17, 18, 51, 56, 57, 64, 69, 83–88, 92,
Formalized management practices, 221 99–102, 104, 122, 126, 136, 137, 142,
Formal procedures, 221 146, 150, 151, 159, 167, 183, 191,
Forward-looking, 162 203–206, 209, 212, 214, 222
Foundation, 1, 24, 55, 76, 80, 95, 103, 136, Implement SCRM, 158, 159, 166, 175, 176
160, 176, 207, 221, 222, 227 Implications, 16, 29, 53, 97–100, 122, 159,
175, 176, 213, 231
G Importance of knowledge, 30, 32
Governance, 1, 3, 4, 6, 7, 22, 23, 112 Inclusion, 78, 83, 94–97, 102, 106–108, 141
Great humility, 111 Inclusion challenges, 96
Independence, 12, 13, 221
236 Index
Independence of the directors, 9 Knowledge pyramid, 33, 34

Independent directors, 7, 12–14, 24 Knowledge sharing, 38, 40, 42, 45, 46
Individual knowledge, 35, 36 Knowledge storage, 43–45, 47
Individualism, 55 Knowledge use, 42–45, 47
Indulgence, 56
Industry, 29–31, 38, 47, 76, 81, 168, 183, 184, L
189, 219, 223, 224, 227, 228 Labour, 76, 84, 85, 101, 136, 139, 191, 202,
Ineffective, 51, 65, 69 205, 212
Information, 8, 9, 13–20, 29, 30, 33, 34, 38–40, Labour efficiency, 77
44, 50, 62, 80, 81, 111, 113, 121, 127, Labour officer, 77
158–163, 165, 166, 177, 184, 188, Law, 1, 4–7, 18, 20, 21, 24, 99, 105, 106, 141,
191–193, 210, 219, 222, 228 203, 208, 214
Information technologies, 38, 43, 46, 47, 190 Leader, 9, 45, 62, 122, 123, 128, 132, 133, 199
Initiatives, 12, 17, 60, 62, 76, 77, 92, 102, 106, Leadership, 7, 43, 45, 47, 54, 64, 65, 112, 123,
111, 112, 116, 117, 120, 125, 126, 129, 133, 202
138, 139, 141, 164, 167, 177 Learning, 30, 42, 45, 46, 61, 78, 86–88, 93, 99,
Innovation, 46, 55, 60, 62, 63, 116, 183–185, 101, 106, 113, 117, 120, 121, 128, 137,
206, 211 140, 159, 162–164, 166–172, 174–176,
Innovation trends, 184, 193 187, 189, 193, 201, 205, 207, 212, 228,
Innovative, 60, 116, 158, 201 229
Institutional factors, 199, 200, 204, 205, 207, Learning management, 117, 140, 159, 169,
213–215 171, 174, 176
Institution theory, 202 Legal blocks, 5
Integrative approaches, 137 Lifecycle, 221
Intellectual knowledge, 37 LLSV model, 4, 6
Interactive relationship, 199 Long-term orientation, 55, 56, 201
Internal, 10, 12, 13, 18–20, 22, 23, 32, 51,
61–63, 65–68, 84, 85, 87, 119, 151, M
222, 226–229 Machine learning, 185, 187, 189, 190
Internal executives directors, 12, 13 Manage knowledge processes, 43, 47, 48
Internet of Things, 186, 191 Management, 1–5, 7, 10, 12–14, 17, 18, 22, 24,
Interview, 50, 82, 106, 219, 222–224, 227, 228 25, 29, 30, 32, 38–40, 42, 43, 45–47,
Invisible, 51, 52, 56, 69 49–51, 53, 54, 56, 59, 60, 62, 65, 69,
75–77, 84, 91, 92, 94, 95, 97, 99, 103,
J 112, 114, 117, 124–126, 137–142,
Job analysis and description, 228, 229, 231 149–152, 158, 159, 161–164, 167, 170,
Job design, 77, 137, 138, 152 175, 177, 184, 185, 188, 191, 199–202,
Justice, 115, 120, 123, 127, 130, 138, 141 204, 211–214, 219–232
Management challenges, 53, 142
K Management formalization, 230
Knowing how to adapt, 116 Management of knowledge, 29, 30, 37, 38, 40,
Knowing how to communicate, 116 42–44, 46, 47
Knowledge, 13, 14, 16, 18–21, 25, 29–47, 77, Management practices, 40, 43, 45, 47, 76, 140,
80–82, 87, 111–113, 116, 117, 120, 143, 146, 148, 151, 211, 219, 220, 222,
122, 123, 127, 137, 138, 142, 151, 160, 223, 226, 227, 229–231
161, 163, 164, 166–175, 177, 186–188, Management processes, 46, 84, 102, 112, 201,
190, 193, 200–202, 207, 212–214, 223, 225, 226, 231
224, 227, 228 Management sciences, 77
Knowledge creation, 38, 42–47, 163 Manager, 1–4, 6–8, 22, 24, 32, 36, 37, 47, 49,
Knowledge management, 29, 30, 32, 37–47 51, 56–58, 60, 63, 64, 65, 69, 82, 83, 88,
Knowledge management definitions, 29, 39–42 90–92, 97, 99, 103–108, 111, 112, 116,
Knowledge management strategies, 32, 46 117, 123, 124, 127–133, 135, 137, 142,
Knowledge organization, 31 143, 145–152, 160, 161, 163–166,
Knowledge processes, 29, 40, 42–47
Index 237
174–177, 201, 207, 210, 213, 214, 221, Organizational structure, 41, 43, 45–47, 60, 62,
224, 227, 232 63, 220
Managerial practices, 61, 152 Organizational success, 44, 89, 108
Managerial support, 159, 162, 163, 166–170, Overcoming barriers, 157
172, 174, 176 Overtly visible, 52
Manager’s efforts, 51 Overview, 60, 78, 87, 97, 105, 108
Managers’ perceptions, 142, 143, 145, 149 Owner-managers, 160, 161, 164–166, 175–177
Managing, 1, 8, 19, 50, 51, 53, 56, 89, 90, 103,
151, 161–164, 168, 170, 175, 228 P
Managing the valuable asset, 37 Pastime knowledge, 37
Market culture, 63, 65 People, 10, 14, 35, 52, 54–56, 60–63, 67, 69,
Masculinity, 55 75, 79, 80, 83, 84, 86, 89, 95, 99, 101,
Mature culture, 221 108, 112, 114–116, 118, 120, 121, 125,
Maturity, 121, 128, 175, 184, 221, 224, 225 126, 129–133, 136, 139–142, 150, 152,
Modeling knowledge, 187 160, 199, 201, 206, 209, 210, 220, 222,
Model of board processes, 16, 17 226
Modern HRM function, 76 People function, 108
Multidimensional approaches, 138 People resourcing, 78, 79, 106
Multi-faceted approach, 175 Perceived importance, 143, 148, 150, 151
Multiple cultures, 53 Perceived importance of HRM practices, 143,
Multivariate probit models, 157, 165, 167, 171 148, 150, 151
Performance, 3, 4, 13, 16–18, 21, 24, 46, 57,
N 60, 63, 64, 77, 85, 87–94, 96, 99–102,
National culture, 49, 52–57, 60 104, 106, 108, 122, 124, 130, 136–138,
Nepotism, 129, 205–207, 209, 210, 213 145, 146, 162, 163, 176, 184, 186, 188,
New approaches to enrich OR methods, 183, 190, 201, 202, 205–208, 210–213, 222,
185 227, 229–232
New technologies to apply OR, 183, 185 Performance appraisal, 84, 89, 90, 137, 138,
Non-profit, 31 146–149, 222, 223, 229, 230
Nonprofit organizations, 21, 25, 31 Performance management, 78, 80, 84, 85,
Normative, 124, 125, 199, 203–205, 215 89–93, 102, 104, 106, 108, 205, 210,
Normative institutional factors, 204, 207 230
Personal ethics of the manager, 131
O Person with initiatives, 116
Obedience, 119, 121–123, 125 Policies, 3, 4, 21, 40, 52, 58, 59, 62, 63, 67, 68,
Operational context, 53, 65 84, 85, 92, 101, 103, 105–107, 136,
Operations research, 183, 184 137, 139, 142, 162, 166, 175, 176, 186,
Opportunity-seeking, 162 190, 204–209, 212
Optimization, 40, 138, 184, 187–193, 231 Politics, 66
Organization, 1, 2, 12, 15, 20–23, 25, 29–33, Power, 10, 20, 31, 54, 55, 62, 63, 66, 99, 103,
38–47, 49–51, 53, 54, 56–69, 75, 119, 122, 123, 127, 129, 130, 132,
78–92, 94–98, 99–105, 107, 108, 190–193, 221, 227
111–115, 117, 119–123, 125, 126, 131, Power distance, 54, 55
133, 135–144, 146–152, 163, 183, 184, Power of knowledge, 29, 32
186, 193, 219–232 Practical knowledge, 37
Organizational climates, 57–59, 67, 230 Practices, 6, 9, 21, 22, 36, 37, 41, 45, 46, 52,
Organizational culture, 43, 46, 47, 50, 51, 55, 58, 59, 62, 64, 65, 67, 86, 107, 108,
57–69, 97, 139, 221 112, 113, 115, 119, 121, 122, 124,
Organizational environment, 49, 61, 62, 64 128–130, 132, 137–139, 142, 143,
Organizational governance, 4, 222 146–152, 199, 200, 202, 203, 205, 207,
Organizational learning, 39, 42 209–215, 219, 220, 222, 223, 227–231
Organizational learning opportunities, 46, 128, Pragmatic knowledge, 37
137, 140, 183, 201 Proactive engagement, 159, 162, 166,
168–172, 174, 176
238 Index
Probit models, 165, 167, 171 208, 219, 221, 222, 224, 225, 227, 229,
Procedural knowledge, 36 230
Procedures, 33, 40, 52, 58, 59, 62, 63, 65, 67, Renewable energy resources, 190
82, 83, 85, 89, 92, 103, 105–107, 125, Resource-Based View (RBV) theory, 162, 175,
138, 142, 165, 185, 189, 192, 221, 229, 176
230 Resource management, 75–78, 83–86, 90–92,
Processes, 13, 15–21, 29, 30, 32, 33, 37–47, 94, 102–108, 138, 147, 150–152, 211,
49–51, 57, 58, 60, 63, 67, 68, 69, 82–84, 219, 220
87–90, 95, 99, 102, 105, 107, 111, 114, Resource orchestration, 163
116, 117, 121, 122, 127, 137, 138, 140, Resource-related barriers, 161
162–165, 183, 186–188, 192, 193, 201, Respect, 56, 97, 118–120, 123, 127, 129, 137,
203, 210, 221–223, 225–228, 230, 231 138, 207, 209
Process of management, 29, 30, 39, 40, 46, Responsibilities of the HR director, 78, 111,
112, 201, 225 112
Process oriented, 29, 42 Restraint, 56
Process oriented KM perspectives, 42 Reward management, 78, 92, 106, 223, 230
Products, 3, 18, 29, 32, 34, 57, 62, 64, 67–69, Rewards/incentive system, 77, 92–94, 99, 104,
76, 125, 131, 133, 166, 167, 170, 186, 137, 203, 207, 219, 223, 230
201, 219, 224, 225, 228 Risk-taking, 55, 62, 162, 175
Professional activity, 142, 143, 145, 146, 150, Roles of the HR director, 105, 112
152, 184
Professional ethics of the manager, 130 S
Promotion, 100, 137, 140, 150, 152, 202, Sciences, 69, 77, 184, 186, 187, 189, 193
205–207, 210, 211, 228, 230 Scientific management, 76, 77
Proprietary directors, 12, 13 SCRM-related capabilities, 158, 162, 170, 171,
Publics, 2, 12, 22, 68, 126, 141, 161, 168, 169, 174–176
186, 203, 212 Selection, 13, 77, 80–83, 85, 86, 102, 106, 108,
113, 143, 191, 202, 205, 206, 209, 211,
Q 219, 222, 223, 227–229, 231
Quality of work, 139 Shareholder, 2–8, 10, 12–14, 16, 22, 24, 68,
Quantitative OR methods, 193 130
Quota system, 205, 208, 209 Short term orientation, 55
Skilled employees, 201, 207, 208, 211
R Skills, 16, 18, 19, 21, 25, 51, 53, 60, 64, 65,
Reception and integration, 222, 228 80–88, 90, 92–94, 97, 102, 106, 108,
Recognition, 77, 92, 117, 124, 137–139, 187, 111–114, 120, 122, 140, 161, 166, 170,
189, 225, 230, 232 174, 202, 211–213, 225–230
Recruitment, 46, 50, 76, 77, 79–82, 84–86, 99, Skills development efforts, 211
101, 102, 104, 108, 136–138, 143, 152, Small and medium enterprises, 158, 220, 222
202, 205, 206, 208–211, 219, 222, Small and Medium sized Enterprise (SMEs),
227–229, 231 158–168, 170, 174–177, 219, 220
REDING directive, 12 Small family business, 219, 220, 223, 224
Regulatory, 12, 199, 203–206, 215 Small-talk knowledge, 37
Regulatory institutional factors, 206, 208 Social Customer Relationship Management
Related capabilities, 158, 162, 170, 171, (SCRM), 158–177
174–176 Social economy organizations, 141, 149, 151
Relational knowledge, 37 Social knowledge, 35
Relationship, 1, 3, 7, 8, 12, 13, 18–21, 33, 36, Social technologies, 161
37, 54, 55, 58, 63, 75, 86, 89, 92, 93, 96, Societal norms, 209
97, 102–104, 112, 117, 119, 122, Socio-cultural institutional factors, 199, 206,
124–127, 133, 140, 144, 158, 162, 165, 209, 215
167–170, 172–174, 176, 177, 190, 202, Spencer Stuart Indexes, 8–11
Spiritual knowledge, 37
Index 239
Stakeholders, 3–6, 13, 19–25, 68, 101, 107, Top management, 16, 17, 45, 47, 164, 170,
201, 203, 229 176, 222, 223, 228, 229, 231
Stakeholders’ model, 3, 4 Total quality management, 38
Stakeholders theories, 22 Training, 13, 46, 76–78, 83, 84, 86–88, 90,
Standardized control, 231 92–97, 99, 101, 102, 105, 106, 108,
Stereotypes, 54, 57, 138 116, 121, 124, 137–139, 145–149, 152,
Stewardship, 7, 22 202, 205, 206, 210–212, 219, 222,
Stewardship theory, 4, 22, 23, 25 225–229, 231
Strategic commitment, 163 Training and development process, 228
Strategy, 4, 10, 16, 32, 36, 37, 40, 41, 43, Tribalism, 205–207, 209, 210
45–47, 67, 83, 84, 89, 91, 92, 97, True leadership, 111, 132
100–102, 107, 108, 136, 140, 158, 162, Typologies of organizational cultures, 59
163, 165, 166, 188, 191, 201, 202, 210,
211, 221–224, 226 U
Sub-Saharan Africa (SSA), 199–201, 204–215 Uncertainty avoidance, 55
Success, 29, 34, 40, 43, 45, 46, 49, 55, 63, 88, Unfriendly legislative requirements, 209
89, 100, 101, 104, 111, 122, 129, 164, Union activities in SSA, 207
176, 189, 199, 207, 210, 212, 231 Unwanted knowledge, 37
Successful, 29, 30, 37, 43, 45–47, 51, 60, 80,
83, 88, 92, 101, 126, 127, 139, 140, V
159–162, 164, 175, 177, 202, 203, 215 Valuable asset, 29–31, 47
Supply-side KM perspectives, 42, 43 Virtues of the HR director, 114, 115
Surrounding cultures, 51
Sustainability, 94, 108, 135, 136, 151, 231 W
Sustained competitive advantage, 201, 202, Wall-hangings, 50
207, 208, 211, 213 Weak formal institutions, 208
Synergies, 63, 114, 183, 184, 187, 188, 193, Welfare officers, 76, 77
194 Welfare tradition, 76, 77, 105
Well-thought-out, 175
T Wisdom, 33, 34, 116, 158
Tacit knowledge, 35 Workers, 6, 31, 40, 41, 62, 76, 114, 116, 117,
Task environments, 65 124, 125, 130, 136–142, 146–148, 151,
Taxonomy, 29, 35 152, 202, 208, 210, 220, 229, 230
Taxonomy of knowledge, 32, 35, 36 Work organizations, 199–202, 206
Technical knowledge, 111 Workplace, 59, 76, 94, 96, 97, 102, 103, 105,
Technical training, 112, 116 131, 139, 140, 149, 150, 152, 203,
Technological advances, 38, 199 211–213, 228
Technological innovation, 183, 185

Buku Management Science PDF

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Buku Management Science PDF

Hochgeladen von

Copyright:

Verfügbare Formate

Management and Industrial Engineering

ISSN 2365-0532 ISSN 2365-0540 (electronic)

Library of Congress Control Number: 2019931511

© Springer Nature Switzerland AG 2019

Braga, Portugal Carolina Machado

Corporate Governance Foundations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Human Resources Management in a Small- and Medium-Sized

About the Editors

Carolina Machado received her Ph.D. in management sciences (organizational

J. Paulo Davim received his Ph.D. in mechanical engineering in 1997, M.Sc. in

special emphasis in machining and tribology. He has also interest in management,

José Alvarelhão Escola Superior de Saúde, Universidade de Aveiro, Aveiro,

Carolina Feliciana Machado School of Economics and Management, University

Nuria Bajo Davó, Víctor Manuel Martín Martínez

N. Bajo Davó (B)

1.1 Corporate Governance—History and Concept

Table 1 A comparison of theoretical perspectives on organizational governance

1.2 Culture, Law and Corporate Governance

Table 2 Cultural and legal blocks of corporate governance

Carrasco: 154 and 159 [19].

2 The Board of Directors

Considering the company as a whole, we could see the Board of Directors as an

2.1 Analysis of the Board of Directors

Table 3 Composition information

3 Board Independence and Corporate Governance

Table 5 Typology of board directors

4 The Demographic and the Behavioral Approach

Demographic approach Control

Fig. 3 Functions performed by the board. Source Own elaboration

Fig. 4 Board member role’s behavioral approach. Source Own elaboration

b. Social psychology, having as a main interest the criteria of effectiveness.

4.2 Modern Efforts to Open the Black Box

4.2.1 The Contribution of Forbes and Milliken

Toward a model of board processes In order to develop their model of boards as

ing, compensation and replacement of senior management, as well as the approval

Firm-specific knowledge refers to detailed information about the firm and an

Table 6 Effects of board demography on board processes

4.2.2 Conflicting and Ambiguous Results

Table 7 Research streams on boards and corporate governance

Board contribution is expected to enable cooperation and to gather knowledge to

(3) Routinization of decision-making. “Board of Directors operates from the

In summary, the behavioral approach of boards and corporate governance will

4.2.3 The Influence of Micro- and Macro-Level Variables

5 Corporate Governance in Special Situations—The Case

Table 8 Differences between Agency Theory and Stewardship Theory

Corporate governance understood as the system by which companies are directed

Abstract This chapter presents basic information about knowledge management.

© Springer Nature Switzerland AG 2019 29

ment issue. Besides, successful management of knowledge processes occurs in case

2.1 Importance of Knowledge

Knowledge as a valuable asset of organizations…

Fig. 1 Factors of production

2.2 Definition and Taxonomy of Knowledge

There is a common perspective about the importance of knowledge among pro-

2.2.1 What Is Knowledge?

A general definition of knowledge is stated in the literature as justified true belief.

According to this definition in order to regard something as knowledge, it should

Another definition of knowledge is made by Davenport and Prusak [3]. In their

In this definition, knowledge is defined as a dynamic concept which includes many

Fig. 2 Knowledge pyramid

Categorized: We know the units of analysis or key components of the data

When it comes to Knowledge, the term can be described as “information with

Fig. 3 Hierarchy of knowledge