Journal of Organisational Transformation and Social Change: Volume: 5 | Issue: 2

Journal of

Organisational Transformation& Social Change

Journal of Organisational Transform

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ISSN 1477-9633

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Organisational Transformation & Social Change Volume 5 Number 2 – 2008

105–107 Editorial Paul Iles

Articles

109–127 Gender wage inequality in the transitional Chinese economy: A critical review of post-reform research

Jie Shen and Xin Deng

129–140 Applying the congruence model of organisational change in explaining the change in the Indian economic policies

Karabi C. Bezboruah

141–157 Job motivation and self-confidence for learning and development as predictors of support for change

Chaiporn Vithessonthi and Markus Schwaninger

159–173 E-mail at work: A cause for concern? The implications of the new communication technologies for health, wellbeing and productivity at work

Howard Taylor, George Fieldman and Yochanan Altman

175–189 Communication and information exchange among SMEs and their localenvironment

Viveca Asproth and Christina Amcoff Nyström

Organisational Transformationand Social Change

Volume 5 Number 2

Organisational Transformation and Social Change (OTASC) is an interna-tional English language, peer reviewed scholarly journal. It is dedicatedto an academically sound approach to enquiry and exploration intochange in organisations and social systems, and it seeks convergence ofthese and related disciplines so as to form a science of social communi-ties. This journal takes the view that situations involving people are nor-mally highly complex, and hence it sees all human/social conditions andprocesses in terms of the complexity paradigm. While OTASC particularlyencourages systemic, operational research and cybernetic approaches, itshould also be seen as a general vehicle to explore theory and practiceabout change deriving from the more traditional academic disciplines.OTASC encompasses the social sciences, including organizational andmanagement science, management systems/operational research andcybernetics, social psychology, sociology, anthropology, political science,psychohistory, as well as economics, law, mathematics and matters relat-ing to the information or knowledge society.

While preference will be given to papers that are well grounded inthe scientific literature, OTASC will also consider more exploratory piecesof work that seek to provide an opening for alternative thought.

All articles will be submitted to two referees, nominated by theEditorial Committee, for peer review.

Editorial Board Yochanan Altman Human Resource Development, UKBela Banathy Systems, Social Evolution, USASoeren Brier Cybernetics and Semiotics, DenmarkZhicheng Chen Strategic Management, OR, ChinaKeith Dowding Politics, UKDaniel Dubois Complexity and Living Systems, BelgiumSebastian Green Strategic Management, IrelandStig Holmberg Systemic Modelling, SwedenHiroyuki Itami Knowledge, Invisible Assets, JapanMike Jackson Systems, UKDevi Jancowicz Human Resource Development, UKGeorge Klir General Systems, USAAlexander Laszlo Knowledge Evolution, MexicoMonica Lee Human Resource Development, UKGerald Midgley Systems, OR, UKNiculae Mihaita Cybernetics, RomaniaJan Owsinski Systems Social Change, PolandJose Perez Rios Systems Thinking and Cybernetics, SpainRajesh K. Pillania Knowledge Management, IILM, IndiaMark Rouncefield Ethnomethodology, UKJuan Salcedo Social Migration, SpainRandall Schuler Human Resource Strategy, USAMarkus Schwaninger Managerial Cybernetics, SwitzerlandJie Shen (International) Human Resources Management

Organisational Transformation and Social Change is published three times per yearby Intellect, PO Box 862, Bristol, BS99 1DE, UK. The current subscription rate-sare £33 (personal) and £210 (institutional). A postage charge of £9 is madefor subscriptions of Europe (outside UK), and £12 for the rest of the world.Subscriptions may also be paid for in Euros, by cheque only and at the discretionof the subscriber for €50 (personal) or €240 (institutional). Subscriptions,enquiries and bookings for advertising should be addressed to: JournalsManager, PO Box 862, Bristol BS99 1DE, UK.

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EditorsMaurice YollesSchool of Business InformationLiverpool John Moores University 98 Mount Pleasant Liverpool L3 5UZ [email protected]

Paul IlesRunning Stream Professor HRDLeeds Business SchoolLeeds Metropolitan UniversityHeadingley CampusLeedsLS6 3QS, [email protected]

Assistant Editor Ann [email protected]

Editorial AdministratorNicky HovellFaculty of Business and LawLiverpool John Moores University98 Mount PleasantLiverpool L3 [email protected]

© 2008 Intellect Ltd. Authorisationto photocopy items for internal orpersonal use or the internal or personaluse of specific clients is granted byIntellect Ltd for libraries and otherusers registered with the CopyrightLicensing Agency (CLA) in the UK orthe Copyright Clearance Center (CCC)Transactional Reporting Service in theUSA provided that the base fee is paiddirectly to the relevant organisation.

Articles appearing in this journal areabstracted and indexed in CambridgeScientific Abstracts, InternationalBibliography of the Social Sciences(ISBSS), and Journal of EconomicLiterature (EconLit).

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ISSN 1477-9633

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Journal of Organisational Transformation and Social Change Volume 5 Number 2© 2008 Intellect Ltd

Editorial. English language. doi: 10.1386/jots.5.2.105/2

EditorialPaul Iles Co-Editor, JOTASC

This edition of JOTASC has five papers, three of which are about change inemerging, transitional or developing economies whilst two concern infor-mation and communication technologies in Western countries. Three areliterature reviews whilst two are based on empirical studies, one usingqualitative and one quantitative methodologies.

There has been much written recently on the shift in economic powerfrom West to East, and the emergence of the BRIC bloc of big, rich, indus-trialising countries (Brazil, Russia, India, China). This edition of the journalis timely in that there are two articles on this bloc of countries.

Shen and Deng’s article on gender wage inequality in the transitionalChinese economy explores through a thorough literature review one impactof China’s economic reform, which has brought significant changes to itsincome distribution system. This article critically and systematically reviewsa growing but scattered literature on gender wage inequality in post-reform China. It concludes that, due to appropriate rewards of humancapital characteristics, marketisation has given rise to a gender wage dif-ferential which is similar to or smaller than the differential in most indus-trialised and developing nations. Moreover, the gender wage gap is smallerin urban industries than in rural ones. Gender wage discrimination thataccounts for unexplained components is generally smaller than that of theearnings differential. Increased market competition does not seem to havereduced gender wage inequality. However, the current literature is incon-clusive, as it examines the gender wage inequality of only a tiny fraction ofthe country’s vast population and geography before China’s acceleratedreform programme in the late 1990s. Large-scale empirical researchwhich explores the effects of such reform on gender wage inequality istherefore urgently needed. The article is particularly interesting in that itbrings together research by economists and sociologists, often employingquite different methodologies. It has implications also for politics and HRMin terms of its significance for HRM policies in organisations, especiallyaround diversity and equality, as well as government policy in this area. Itshould also inspire research into other growing inequalties and disparitiesin China, such as the growing gap between urban and rural, East andWest, and rich and poor, as well as the growing ethnic and regionalinequalities currently receiving much media interest.

India is often spoken as a rival to China for Asian economic leadershipand influence. Karabi Bezboruah’s article on applying the congruence

105OTASC 5 (2) 105–107 © Intellect Ltd 2008

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model of organisational change in explaining changes in economic policieslooks at recent developments in India, faced with a dynamic and globalisedexternal economic environment and a deteriorating internal economicenvironment. The Indian government also began reform of its economicpolicies, overhauling India’s economic system by making it more marketoriented. This article applies the well-known Nadler–Tushman’s CongruenceModel of organisational change to the changes in the Indian economicsystem and attempts to examine the model’s validity in large-scale organi-sational settings. The findings show that although the change process isconsistent with the model’s features, the model does not recommend anyaction strategies to handle resistances. Resistance being a significant partof any change process, inclusion of strategies to manage resistance wouldenhance the applicability of the congruence model.

However, with the focus on the BRIC group, there is a danger of neglect-ing the economic transformation that is rapidly occurring in other countries,such as the countries of South-East Asia. Another article by Vithessonthiand Schwaninger looks at Thailand, and also at the resistance issues men-tioned but unexplored in the Indian article. It examines job motivation andself-confidence for learning and development as predictors of support forchange amongst school-teachers in Thailand. Studies on change manage-ment have often attempted to determine the factors that influence employeeresistance to change. The focus of this study is to test whether job motivationand self-confidence for learning and development influence employeesupport for downsizing. Data were gathered from a sample of 86 teachers atone private school in Bangkok, Thailand. The analysis was carried out usingmultinomial ordered probit regression. The results suggest that the level ofjob motivation is negatively associated with the level of support for change,and that the level of self-confidence for learning and development is notassociated with the level of support for change. This is an interesting findingwhich needs replication in other sectors and countries. The relationship ofother variables such as commitment or engagement to resistance to changewould also be worth exploring.

The final two articles take us back to the West and the central issue ofcommunication and change. E-mail at work: a cause for concern? The impli-cations of the new communication technologies for health, wellbeing andproductivity at work by Taylor, Fieldman and Altman takes us back specifi-cally to the United Kingdom and the rapid and decisive impact electroniccommunication has had on our lives in general and the work place in par-ticular, notably e-mail as the preferred communication medium (thoughthere is also a rapid growth of web 2.0 technologies and social networkingsites such as Facebook, Myspace, Bebo, Youtube and Second Life andLinkedin which may challenge the dominance of e-mail, and seem already tohave done so amongst younger age groups). A literature review examinesthe available evidence on their potential negative effects, given that the ben-efits of e-mail communication for individuals and organisations are moreoften noted in the literature. It is argued that the particular characteristics of

106 Paul Iles


electronic mail and communication may have an adverse impact upon well-being, stress and productivity. E-mail may act as a stress conduit, but is alsoin itself a potential stressor, and may also impair productivity due to its com-munication characteristics, affecting key operational aspects such as decisionmaking and team cohesion. It may escalate disputes, facilitate harassmentand encourage litigation. The article presents a framework identifyingantecedents and potential personal and organisational outcomes, and con-cludes with an outline agenda for further research as a first step in develop-ing strategies to overcome e-mail’s potential negative consequences.

In the final article by Asproth and Nystrom the results of a Swedishpilot study on the ‘Arena for Sustainable Innovative Development of smalland medium-sized enterprises’ are discussed. The project aimed to createand test a model for collaboration and sustainable development amongsmall- and medium-sized enterprises (SMEs) in local areas. This is an issuefacing many countries, especially those where SMEs are a dominant forcein the economy. The research question in this article is focussed on issuesconcerning use of ICT, information exchange and communication amongthe interested parties. The pilot study was accomplished in a qualitativeand explorative way with semi-structured interviews. As a result of thestudy some questions are identified as needing further investigation.

107Editorial



Article. English language. doi: 10.1386/jots.5.2.109/1

Gender wage inequality in thetransitional Chinese economy: A criticalreview of post-reform researchJie Shen Monash University, Australia

Xin Deng University of South Australia

AbstractChina’s economic reform has brought significant changes to its income distribu-tion system. This article critically and systematically reviews a growing but scat-tered literature on gender wage inequality in post-reform China. It concludes that,due to appropriate rewards of human capital characteristics, market liberationgives rise to a gender wage differential which is similar to or smaller than the dif-ferential in most industrialised and developing nations. Moreover, the genderwage gap is smaller in urban industries than in rural ones. Gender wage discrim-ination that accounts for unexplained components is generally smaller than thatof the earnings differential. Increased market competition does not seem to reducegender wage inequality. However, the current literature is inconclusive, as itexamines the gender wage inequality of only a tiny fraction of the country’s vastpopulation and geography before China’s accelerated reform in the late 1990s.Large-scale empirical research, exploring effects of such reform on gender wageinequality is therefore urgently needed.

1. IntroductionThe post-reform research on gender wage inequality in China is criticallyand systematically reviewed in this article. Earnings inequality is mainly aChinese post-reform phenomenon. China has a long tradition of Confucianismthat discriminated against women. Such a tradition diminished during theplanned economy (1949–1978) when China was committed to genderequality, particularly in the labour market. Prior to the reform, femalework participation in urban areas reached more than 90 per cent. Such alevel was matched by only a few developing countries (Croll 1995). TheChinese central government adopted a system of national wage scales,which was based on the principle of socialist egalitarianism and cradle-to-grave ‘welfarism’ (Loscoco and Bose 1998; Warner 1995). The socialistegalitarian ideology suppressed human capital characteristics and inducedequal pay between males and females (Liu, Meng and Zhang, 2000;Meng and Miller, 1995). Although wage discrepancies in rural areas still

109

Keywordsgender wage inequalitygender wage gapgender wage differentialgender wage

discriminationgender wage differenceChina

OTASC 5 (2) 109–127 © Intellect Ltd 2008

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existed, between 20 and 40 per cent in some instances, and opportunitiesto work away from the farm were limited by policy (Chan, Madsen andUnger, 1992; Rozelle et al. 2002), overall gender wage differentials, rela-tive to other countries, were small (Croll, 1995; Rozelle et al. 2002). Thiswas particularly so in urban areas. However, the downside was that egali-tarianism in the labour market curtailed economic efficiency (Knight andSong 2003).

Economic reform has replaced the Maoist ideal of socialist egalitarian-ism with Deng Xiaoping’s policy of ‘a few getting rich first’. Since the mid-1980s, firms have been given autonomy to determine within governmentguidelines their own remuneration systems. Such guidelines have gradu-ally loosened and evolved into a request for abiding by only minimumwages since the early 1990s (Shen 2007). Although the deep-rooted egali-tarianism amongst the Chinese still plays a role in the wages system, someenterprises tend to use group pay when they allocate bonuses so that every-body in the group receives the same amount (Mitsuhashi et al. 2000), egal-itarianism has become more and more unacceptable to employers andemployees alike. Decentralisation and marketisation of wage system allowmanagers to link remuneration to firm’s profitability and individual labourproductivity, and consequently provide room for discrimination (Hughesand Maurer-Fazio 2002; Knight and Song 2003; Ng 2004). Althoughfirms have stronger incentive to improve profitability, more intensive com-petition force them to pay greater attention to cost reduction, paying theiremployees a wage that is lower than the market value has been utilised as away to cut down cost. It is not surprising that employees with less humancapital are more likely to be underpaid. As a result, alongside rising unem-ployment and inadequate social welfare, there has been widening incomedisparity in both urban and rural areas, between regions, and between pop-ulation groups (Shen 2007). In the last two decades, China has moved fromone of the most equal countries to one of the most unequal ones in terms ofincome distribution. This is evidenced by the change of Gini coefficient – ithas risen from 0.3 in 1981 to 0.45 in 2002 (Kuroda 2006). Someresearcher reported Gini coefficient as high as 0.495 in 2007 (XinhuaNews Agency 2007). China’s income inequality has now surpassed that ofall developed countries, and may soon reach that of high-inequality coun-tries like Brazil, Mexico and Chile if current trends continue. It is particu-larly alarming as income disparity in other transition countries has notwidened as quickly as that in China. The United Nation’s 2005 ChinaReport notes that more than 90 per cent of Chinese people believed thatincome inequality was too great and about 80 per cent wanted theirnational government to solve the imbalance (The UN 2005). As Shen(2007: 25) argued, ‘the ever-widening earnings gap between the rich andpoor, in stark contrast to the official ideology of China’s Communist Party,is a major source of discontent for many ordinary Chinese’.

Wage discrimination against females has emerged as a major phenom-enon of income inequality (Hughes and Maurer-Fazio 2002; NBSC 2005;

110 Jie Shen and Xin Deng

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MOLSS 2005; Rozelle et al. 2002; World Bank 2002). China has a largefemale population, which reached 630 million at the end of 2004, andfemale employment accounts for nearly 45% of total employment (NBSC2005; MOLSS 2005). Gender wage inequality in China is an importanttopic for empirical research in order to determine the effect of reform ofthe largest transitional economy on the largest female workforce in theworld.

China’s experience may have significant implications for other transi-tional economies. Similar to China, many transition economies in EastEurope experienced widening wage gap, rising unemployment and declinedfemale labour force participation rates. Contrary to China where femaleemployees are paying higher price compared with their male counterpartyfor such change, female employees fared relatively well in these countries.The decline in male labour force participation in the early years of transi-tion is reported to exceed that of female labour force participation, andthere has been a consistent increase in female relative wages across EasternEurope, despite a substantial decline in female relative wages in Russia andUkraine (Brainerd 2000).

Not surprisingly, there is a growing literature which examines genderearnings inequality in China since the middle 1990s. This increase is alsolargely due to the fact that the phenomenon of gender earnings inequalitycontradicts the principle underlined in Mao’s famous slogan ‘Women holdup half the sky’ (funu neng ding banbian tian), and in the Chinese constitu-tion that guarantees women equal rights with men in all aspects of lifeand equal pay for equal work.

However, there is a lack of research that summarises and assesses thefindings of existing scattered studies which would clarify whether pastresearch has scientifically and satisfactorily explained this new phenome-non. Many questions are worth seeking answers to: How large is theearning gap between men and women in China? What are the majorsources of gender wage inequality? Is western literature equally powerfulwhen applied to the Chinese context? Has past research on China’s genderwage inequality advanced knowledge? What are the major limitations ofthe existing literature?

To answer these questions, this article reviews post-reform research ongender wage inequality in China, aiming to develop a better understand-ing of its size and sources, the effects of economic reform, and to exploreavenues for further research. The databases searched represent virtuallyall areas of academic study, economics and peer-reviewed business andscholarly publications in English and Chinese. The period chosen was1990–2007, as this represents the time when the early 1990s economicrestructuring in China began to make itself felt, and research on the topicflowed as a result. The search terms are the same as the key words of thisarticle. The search term ‘wage difference China’ returns with more than5,000 articles alone from Google Scholar alone, there were nearly 2000articles found in JSTOR with the same term. Other databases that returned

111Gender wage inequality in the transitional Chinese economy: A critical review . . .

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with more than 50 articles are Blackwell Synergy (248) and Kluwer (89).The titles and abstracts, where available, were screened to identify thepotentially relevant publications. Two reviewers independently identifiedthe publications and extracted the findings of the studies cited. Differenceswere resolved through discussions, and 25 articles were selected for thisliterature review. These articles were published between 1995 and 2007,with eleven papers published between 1995 and 1999 and ten paperspublished between 2000 and 2004. This indicates continuing interest inthis area since the mid-1990s. Majority of the research uses Oaxacadecomposition method to test the existence of gender discrimination. Asshown in the sections below, these papers have covered a wide range ofareas and utilised data sources including nation-wide household surveyand surveys covering several cities, a group of firm and households.

To meet our objectives, the remaining article is structured as follows:Firstly, it reviews western concepts explaining gender earnings inequality,including earnings differential and gender discrimination, and the under-lying sources. Secondly, it assesses by themes past studies on these issuesin China, including gender earnings inequality in both urban and ruralindustry, across ownership sectors and across regions. Subsequently, itrevisits the research questions set for this article, discusses limitations ofpast studies and further research directions, and draws some conclusions.

2. Concepts of gender wage inequalityThe earnings inequality based on gender has been a common socialproblem in many developing and industrialised countries (Blau and Kahn1994; Brainerd 2000; Katz and Autor 1999). This is particularly so intransitional economies, such as Russia and Ukraine (Brainerd 2000).Western economists separate the gender wage differential from wage dis-crimination in order to explore sources of gender earnings imparity(Arrow 1972; Becker 1957; Oaxaca and Ransom 1994; Neumark 1988).

Economists, such as Oaxaca and Ransom (1994) and Neumark (1988),argued that gender wage differentials are resulted from attempts to rewardhuman capital endowments. Since employees may be different in thisregard, they should be rewarded accordingly. If there is a perceived produc-tivity differential between men and women and if their capital characteris-tics are appropriately rewarded, their wages may differ. As Blau and Kahn(1992, 1997) argued, gender wage difference is influenced by howobserved and unobserved skills of men and women are rewarded in themarket. Competitiveness in the market is largely based on efficiency thatrequires an appropriate reward. Under conditions of perfect competition,with perfect information, and no transaction costs, gender wage disparityshould exist only where there are differences in productivity betweengenders (Hare 1999). Skill-biased technical change is often regarded as themain culprit of wage differential (Bound and Johnson 1992; Katz andAutor 1999; Juhn, Murphy and Pierce 1993). Skill-biased technical changeis not gender-specific – but it can be largely associated with gender.


OTSC_5-2-02-Shen 5/31/08 10:16 AM 2

Liberalisation of economies enables an appropriate reward of humancapital characteristics, and hence gives rise to potential gender wage dif-ferentials. The experience from developed countries indicates that genderwage differentials tend to be smaller in countries with centralised collec-tive bargaining that emphasise egalitarian wage policies in general, e.g.Sweden, Norway and Australia, but larger in countries that have decen-tralised, market-oriented wage determination with enterprise-level bar-gaining, e.g. United States and Canada (Gunderson 1994; Blau and Kahn1995). Former centrally planned economies tend to have the smallestgender wage gaps (Meng 1996).

Gender wage discrimination is not driven by productivity differencesbut is sex-based (Arrow 1972; Becker 1957). Economists define discrimi-nation as willingness to pay, either directly or in the form of a reducedincome, to be associated with some people instead of others (Becker 1957:14). Gender wage discrimination arises from personal tastes of individuals,including employers, employees and consumers, and often the industry’sown preference for particular types of workers (Arrow 1972; Becker1957; Blau and Kahn 1992, 1997; Hare 1999). In the literature, it iscommonplace that gender wage discrimination is unexplained by observ-able differences in human capital (Millimet and Wang 2006). Statisticaldiscrimination occurs when the employer is unable to measure accuratelythe productivity of each individual worker and pays each worker accord-ing to the perceived average productivity of all workers of that type (Hare1999). Such wage structures are likely to undervalue, or not reward at all,some skills of women and thus result in discrimination. The social conse-quence of such discriminated wage structures is that women are discour-aged from participating in employment and investing in education andskill enhancement, and that the valuable human capital of women areunderdeveloped and underutilised in the society.

Gender wage differentials and wage discrimination are often reflectedin industry or occupational segregation. Rozelle et al. (2002) argued thatthe explained wage gap is also attributable to men and women’s accessibil-ity to a certain industry, a certain type of firm, or job. For example, thereare differing shifts in the occupational and industrial distribution ofemployment between men and women. While men comprise a largershare of employment in heavy industry, the expected shift in the industrialstructure away from heavy industry should favour women relative to men.Men and women may exhibit different productivity over different occupa-tions. This is particularly relevant to China, where rural migrants are notallowed to fill many occupations in the urban areas due to the hukeo(household registration) system. As Meng (1998a) pointed out, such occu-pational segregation is the most important source of gender wage disparityamong Chinese migrants. Meng (1998a) also argues that occupationalsegregation can be attributable to both wage differentials and wage dis-crimination. Although occupational segregation resulting from differencesin human capital characteristics is an example of wage differentials caused


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by the low possibility of one gender group finding jobs in a specific sector,employers’ prejudice against one gender group over the other is anexample of gender wage discrimination.

However, many scholars are optimistic about the role of market forceson reducing gender discrimination, suggesting that, in the long run,gender wage discrimination is not sustainable under perfect market com-petition, as firms that do not discriminate against females are able toachieve higher productivity and efficiency than those that do (Arrow1973; Becker 1957; Liu et al. 2000). Becker (1957) argued that marketforces may result in less gender wage discrimination if it becomes toocostly for employers to compete with those who do not discriminateagainst females. Some authors find that wage discrimination is less likelyin more market-oriented enterprises and suggest that market liberalisationwill improve women’s economic position (Meng 1998b; Liu et al. 2000).According to these authors, it can be argued, therefore, that in the long-run, equality of wages can contribute to economic efficiency.

The methods of Oaxaca (Oaxaca 1973; Oaxaca and Ransom 1994),Blinder (1973) and Neumark’s (1998) are well-known as Oaxaca-Blinderdecomposition for analysing the composition of the gender wage differ-ence. According to these researchers, the total gender wage gap consists ofthe gender wage differential – attributable to gender differences in observ-able productive characteristics (explained component) – and the residualgap – attributable to differences in the male and female returns to theseproductive characteristics. This residual is an unexplained componentattributable to discrimination, but could also be due to differences inunobserved productive characteristics. Nevertheless, critics of Oaxaca-Blinder decomposition are concerned with the neglect of the remainder ofthe distribution (Jenkins 1994; Millimet and Wang 2006).

If western concepts are equally applicable to the Chinese context,China’s transition from a centrally controlled economy to a marketisedeconomy is most likely to exert two competing gender effects on wages. Onone hand, liberalisation of the market fosters efficiency and productivity,which requires appropriate reward of human capital, and, consequently,widens the gender wage gap, but on the other hand, increasing marketcompetition might function as a catalytic agent of gender equality, thusreducing the incidence of gender wage inequality. Nevertheless, it is impor-tant to clarify how the largest economic transition has actually affectedgender wage inequality.

3. Gender wage inequality in China: the review findingsChina had separated rural and urban labour markets for over half acentury. Although since the late 1980s the restrictions on rural–urbanmigration have been gradually eased, rural migrants have not been enti-tled to the same employment and social welfare as have urbanites. For thisreason, in this article we look at gender wage inequality in the urbanindustry and the rural industry separately. The last decade has also seen


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an increase in income disparity between different enterprise ownershiptypes. In 1994, the average wage of workers in foreign-invested enterprises(FIEs) was 31% higher than that of workers employed in state-ownedenterprises (SOEs) (China Statistical Yearbook 1995). Since 1990, theincome of employees in SOEs have increased faster than those in othersectors. The average wage in SOEs exceeded that of all other sectors for thefirst time in 2003 (Shen 2007). Hence, we also look at gender wageinequality across enterprise ownership types. Moreover, there are largeincome disparities between regions as well. Economic development hasgenerally been more rapid in coastal provinces than inland. According tothe state statistics, in 2003 the average incomes of urban dwellers were14,867 and 6,530 CHY in Shanghai and Ningxia respectively, making adifference of 8,337 CHY, which increased by 1,031 CHY over 2002. Inrural areas, farmers in Shanghai had the highest average income (6,654CHY), which was 4.25 times higher (an increase of 0.07 times comparedto 2002) than the income of farmers who lived in Guizhou. Generally, theregional income gaps among rural dwellers are larger than those of urbandwellers. Hence, it would be interesting to find out if regional income dis-parity has an impact on gender wage inequality.

4. Gender wage inequality in the urban industry4.1. Size of gender wage inequalityScholars did not become concerned with China’s gender earningsinequality until the middle 1990s. Azizur Rahman Khan was one of theinternational scholars who first noticed this issue. Referring to theChinese official statistics, he reported that overall during the late 1980s,Chinese women’s earnings were about 80 per cent of men’s and about50 per cent of men’s in privately owned enterprises (POEs) in the urbanarea (Khan 1996). Analysing the official data presented in labour year-books, Maurer-Fazio, Rawski and Zhang (1999) revealed that the genderearnings gap widened nationally in urban industry between 1988 and1994; the unadjusted gender earnings gap reached between 34–54 percent. Xu, Tang and Wang (2006) reported that the overall gender earn-ings gap in two urbanised towns in Zhejiang Province reached 32%between 1999 and 2000.

In contrast to the findings of the above-mentioned studies, otherstudies have reported a small gender wage gap. Hughes and Maurer-Fazio(2002) and Gustaffson and Li (2000) argued that the urban female–maleearnings ratio was about 80 per cent between 1988 and 1995. Thegender wage gap in urban China rose from 15.5 per cent in 1988 to 17.55in 1995, but its average level was smaller compared to many other coun-tries. According to Gustaffson and Li (2000), gender wage gap is smalleramong the youngest employees and those with better educational qualifi-cations. Similarly, according to Maurer-Fazio and Hughes (2002), theoverall gender wage gap was 14 per cent in 1991. Using the data of theChinese Household Income Project (CHIP), Bishop, Luo and Wang (2005)


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revealed that the gender earnings gap increased slightly from 19 per centin 1988 to 20 per cent in 1994. The gender wage gap was reported asabout 10 per cent in the study of Shu and Bian (2003), which is smallerthan reported in other studies. Shu and Bian (2003) also disagreed on theincrease in the gender wage gap; instead, they argued that the gap wasstable from 1988 to 1995. Liu et al. (2000) concluded in their study thatthere was increasing competition but no perfect competition, between1988 and 1994, in the markets of the Chinese transitional economy. Theeffect of marketisation on increasing wage differentials overwhelms anydiscrimination reduction effect of competition.

4.2. Sources of gender wage inequalityScholars examined the components of the gender earnings gap in orderto explore the various contributing factors and the change in pattern. Intheir study, Bishop et al. (2005) found that the ratio of the gap betweenunexplained and total earnings was high. However, while the genderwage gap increased slightly, the relative share of gender wage discrimina-tion declined from 71 per cent to 61 per cent during the study period.Similarly, Liu et al. (2000) argued that, as wage differentials were mainlythe result of appropriate awards of human capital characteristics and sec-toral differences in wage policies, the relative share of discriminationdeclined considerably between 1988 and 1994. Shu and Bian (2003)found that gender earnings inequality resulted mainly from women’sunchanged disadvantaged status in education, employment, political lifeand promotion over the study period. Shu and Bian argued that theincreasing marketisation reduces the share of gender wage discrimina-tion only in the most marketised cities. Gustafsson and Li (2000) arguedthat the share of wage discrimination in the total wage gap increasedfrom 1988 to 1995.

Millimet and Wang (2006) conducted a distributional analysis basedon the notion of stochastic dominance and found that, between 1988 and1994, large gender earnings gaps existed at the distributional level interms of annual earnings and hourly wages. Gender discriminationexplained one-third of the disparity in the lower end, but it was not evidentat all in the upper end of the distribution. Gender discrimination andfemale underpayment worsened in the lower region of the distribution, butimproved in the upper end. Rising in gender earnings inequality was mostsevere for the youngest females. However, the authors’ conclusion, thatfemale underpayment was a source of discrimination, does not seem to beable to explain the real source of gender wage discrimination. Millimetand Wang (2006) were supported by Hughes and Maurer-Fazio (2002)and Xu et al. (2006) who argued that gender wage gaps decrease amongthose with a relatively high educational attainment. Hughes and Maurer-Fazio (2002) argued that married women experience larger total genderwage gaps than single ones and a larger proportion in the area of wagediscrimination.


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5. Gender wage inequality in the rural industry5.1. Size of gender wage inequalityGender wage inequality in China’s rural industry was first reported inMeng and Miller (1995); its finding was further discussed in Meng(1998a), in which, on an average, women earned 20 per cent less thanmen in the 49 sample township and village enterprises (TVEs) in 1985. Ina 1989 study of 249 farm households in Guangdong Province, Hare(1999) found a substantial gender wage gap in the rural industry reflectedin the fact that women earned 37.8 per cent less than men. Analysingdata collected from 230 villages across eight provinces, Rozelle et al.(2003) reported that, while the average wage of males rose by 2 per cent,those of females fell by 9 per cent, and the gender wage gap increased from29 per cent to 45.7 per cent during the study period 1988 to 1995. Donget al. (2004) looked at gender wage inequality in the private rural industryin three counties in Shandong and Jiangsu provinces in 1999 and 2000,and argued that men’s annual and hourly wages were 32.9 per cent and34.7 per cent higher in the respective provinces than women’s, indicatingthat privatisation had increased gender inequality.

5.2. Sources of gender wage inequalityIn their study, Dong et al. (2004) revealed a large amount of gender wagediscrimination, accounting for between 82.22 per cent and 93.65 per centof total gender wage gaps in the post-privation period. This percentage washigher than in the pre-privatisation era. The wage gap attributable to pro-ductive characteristics rose by a very small margin. Meng (1998b) sug-gested about 16 per cent as the gender wage discrimination coefficient atthe aggregate level in the rural industry. Based on this figure, the authorargued that gender wage discrimination in China’s rural industry wasmuch more serious than in the urban sector for industrial and developingeconomies (like the United States, Canada, the United Kingdom, Australia,Malaysia and Taiwan). This was because a traditional female discrimina-tion culture was deep-seated in rural China. Supporting Meng (1998b),Xu et al. (2006) argued that gender wage inequality in rural areas waslargely a result of discriminatory practices, for example institutional con-straints on migration and differentiated gender roles in society and family.Meng (1998a) found significant differences between the market and non-market groups in the structure of wages, and concluded that increasingmarket liberalisation reduced the contribution of wage discrimination intotal wage gaps. However, Rozelle et al. (2003) disagreed with Meng(1998a) by arguing that rising competition did not affect gender wagegaps during their study period. In Hare’s (1999) study, the structure ofwages did not vary with the sex of the individual. However, households, forexample land holding and household size and composition, contributed tothe observed gender wage differentials through their influence in the for-mation of the individual’s reservation wages. The supply side of the labourmarket played a critical role in contributing to the wage gap in the rural


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industry. Women were more likely to become wage employed when thehousehold’s demand for agricultural labour input was low. Nevertheless,there seems to be consensus that the relative share of wage discriminationdecreases in the rural industry over time (Dong et al. 2004; Meng 1998a;Rozelle et al. 2003).

There is not much literature, except for Meng (1998a) and Xu et al.(2006), devoted to the gender wage differential and discrimination of ruralmigrants. Meng (1998a) argued that there was a significant gender wagegap (34%) among migrants during the study period and it was mainly dueto occupational segregation, for example the unequal treatment of maleand female attributes in occupational assignment. The share of genderwage differentials and discrimination accounted for 27 per cent and73 per cent respectively of the total wage gap. However, while discrimina-tion in occupational attainment was a very serious problem for migrants,intra-occupational gender wage discrimination was lower for them thanfor workers in the rural industry. Xu et al. (2006) reported that the genderearnings gap was much less among migrants than among local residents,and was biggest, before 2000, among those working as agriculturallabourers in rural areas.

6. Gender wage inequality across enterprise ownership typesA number of studies on China’s gender wage gap have confirmed theeffects of enterprise ownership. Maurer-Fazio et al. (1999) attributed alarge part of the gender wage gap to the crowding of women into low-rewarding industries. Relatively, the gender wage gap in collectively ownedenterprises (COEs) was smaller, between 1988 and 1994, than in otherownership types of enterprise. The study of Hughes and Maurer-Fazio(2002) shows there were significant wage differences and the gender wagegap was smaller in SOEs than in joint-ventures (JVs). Hughes and Maurer-Fazio (2002) argued that the industrial effect was much stronger on thegender wage gap than that of occupation. Specifically, the wage gapsbetween married women and their single counterparts were much higherin JVs than in SOEs and COEs. Liu et al. (2000) revealed that therewas substantial widening of gender wage differentials across ownershipsectors in Shanghai and Jinan cities, and that gender wage differentialsand discrimination increased in the middle 1990s from the state to thecollective/private sector. In a similar vein, in their study, Xu et al. (2006)found that the gender earning differentiation is least among the self-employed and largest in POEs.

Two studies are exceptions, since they propose findings different fromthose mentioned above. Rozelle et al. (2003) argued that there was no sys-tematic association between the level of wage discrimination and thedegree of market orientation by industry, ownership or job type. Gustafssonand Li (2000) noticed that the size of earnings was highly dependent ongeographic location and the ownership type of the enterprise. However,they did not specify whether gender earning gaps were also associated


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with these two factors, or produce conclusive findings on the relativeimpact of gender earnings differentials and discrimination.

7. Gender wage inequity across regionsOnly a few studies examine the effect of location on gender wage inequalityand their findings are very diverse. Using data from 1988 to 1992 for anational urban household survey of 24,372–30,894 working individuals,Ng (2004) divided China into three regions: eastern, central and western.The authors found that, up until the 1990s, the western region (the leastdeveloped) had the largest gender earnings gap and the eastern region (themost developed) had the highest female–male earnings ratio (0.83–0.86)during the whole study period. The female–male earning ratio increased forall regions, indicating gender wage differences reduced over the period.Prior to 1991, gender wage discrimination in the eastern and centralregions was not obvious. Relatively, the urban gender earnings differen-tial was lower than in rural areas. Analysing data from a 1988 nationalincome survey of 9,009 urban households, Xie and Hannum (1996) foundthat the effects of gender on returns to education and work experience wereregionally static. Supporting Xie and Hannum (1996), the research ofBishop, Luo and Wang (2005) did not reveal any regional variations ingender wage gaps that actually increased between 1988 and 1994.

8. DiscussionsIn this section, we revisit research questions set for this review study, anddiscuss the limitations of past studies. Research Question 1 asked whetherChinese women are financially disadvantaged in the wages they earn. Paststudies all agreed that economic reform, which has liberalised markets andenterprise management, had resulted in widespread gender wage inequal-ity replacing socialist egalitarianism in both urban and rural industries.Yet, past studies did not reach consensus on the size of gender wageinequality, which reportedly ranged from 10 per cent to 54 per cent inurban industries and from 20 per cent to 45.7 per cent in the rural sector,and on whether gender wage inequality increased over time. Amongmigrants, the size of the gender earnings gap was about 34 per cent in theearly 1990s, which falls within the reported wide range (Meng 1998a).

Following the majority, including Bishop et al. (2005), Dong et al.(2004); Hare (1999), Gustaffson and Li (2000), Hughes and Maurer-Fazio(2002), Meng (1998a,b), Rozelle et al. (2003), Knight and Song (2003)and Shu and Bian (2003), and referring to international literature, forexample Blau and Kahn (1992, 1994), Brainerd (2000) and Ogloblin(1999), we are inclined to draw three conclusions with regard to the sizeof gender wage inequality. First, the overall gender wage gap in China issmaller than or similar to that of other industrialised and developingnations. This indicates, to a certain extent, that Maoist gender equalityideology has been maintained in the transition from a command economyto a market economy. Second, the overall gender wage gap was stable in


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the first two decades of economic reform. Third, the gender wage gap inthe urban industry is smaller than in its rural counterpart.

Research Question 2 dealt with the major sources of gender wageinequality. Past studies are much divided in estimating relative sizes of thegender wage differential and discrimination. While the reported sizes ofgender wage discrimination in the total earnings gap range from zero (inthe upper end of the distribution) to 71 per cent in the urban industry,those in the rural industry vary from 16 per cent to 94 per cent (includingamong migrants). Past studies found that education, work experience andmarital status are the universally accepted factors mostly associated withthe gender wage differential. The gender wage gap decreases with anincrease in a worker’s level of education and duration of employment.Women generally lag behind men in their average number of years ofschooling (China Educational Commission, 1996) and often have a dis-ruption in their careers due to child-bearing. In contrast to their unmar-ried counterparts, married women’s intermittent labour force participationis an important cause of gender wage gaps. There are variations in genderwage gaps across ownership types, where they decrease from the self-employed, to the state, to the collective, to FIE/JVs and to private enter-prise. Also, all studies, except that of Gustaffson and Li (2000), arguedthat the relative share of gender earnings discrimination had decreasedsince China’s economic reform. Moreover, it is widely agreed that genderwage discrimination is more serious in rural rather than urban indus-tries, due to a deep-seated discriminatory culture that exists in ruralareas.

Research Question 3 dealt with whether western literature is equallypowerful when applied to the Chinese context, and research on China’sgender wage inequality has indeed advanced knowledge in this area. Asdiscussed in Blau and Kahn (1992, 1995, 1997), western literature differ-entiates wage differential from discrimination by examining the compo-nents attributable to differences in productive characteristics (explainedfactors) and in rewarding productive characteristics (unexplained factors).Without exception, when analysing China’s gender wage differential anddiscrimination, all past studies used western concepts proven to be equallypowerful when applied to the Chinese context. First, this review studyshows that there is a consensus in the literature that China’s economicreform, which allows market-oriented wage determination system and freeselection of occupations and employees, has increased gender wage differ-entials. This is because marketisation enables human capital, mainly edu-cation and experience, to be appropriately rewarded. Second, marketliberalisation and the relaxation of socialist egalitarian control result ingender wage discrimination in the workplace. However, due to the factthat past studies have been mainly application of the Western concepts tothe Chinese context, they have developed a better understanding of genderwage difference in China, but have contributed little in advancing thetheory. The only exception is the study of Hare (1999), which examined


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land holding and household size as explanatory variables for observedgender wage differentials.

Research Question 4 asked what the major limitations of the existingliterature are. This review study has identified several limitations thatprevent past studies from producing consistent and up to date findings.First, the most common study period of past research is between 1988 and1995, including that of Gustafsson and Li (2000), Hare (1999), Hughesand Maurer-Fazio (2002), Liu, Meng and Zhang (2000), Maurer-Fazio etal. (1999), Meng (1998a,b); Meng (2003), Ng (2004), Shu and Bian(2003) and Xie and Hannum (1996), This period is ten years into reform.Rozelle et al. (2003) argued that gender wage discrimination might haveemerged in the early stage of reform, e.g. 5–10 years, so if the size of wagediscrimination remained stable, the trend in changes could not be detectedin their study periods. In the first few decades, there were a large numberof non-market enterprises (Meng 1998b). As discussed earlier, China’seconomic reform has deepened since 1997 and only since then has it beendeveloping a full market economy, greatly increasing the level of competi-tion. Wage scales and structures before 2000 were very different after thatyear. For example, before 1994 state-sector wages were substantially abovecollective pay scales (Maurer-Fazio et al. 1999). Workers also preferredSOEs to COEs and POEs. This situation has largely changed as many SOEsand COEs have encountered financial difficulties or, since the late 1990s,been privatised. Before the 1990s, there were many restrictions on ruralresidents who worked in urban areas and many of these restrictions havesince been lifted. The change in migration policy has had significanteffects on job attainment, as well as on the gender earnings gap. Using1995 data, Meng (1998a) analysed only the gender wage gap amongearly migrants who had different work and life experiences from that ofnew migrants now. More job opportunities have become available formigrants since 1990. During recent years, China has devoted much effortto developing a harmonious society by dealing with widespread labour dis-putes and other social problems, including income inequality and genderdiscrimination. These recent economic reforms and social developmentcertainly have significant impact on gender wage differentials and discrim-ination, which the existing literature has failed to reflect and address.Also, although data was heavily focused on the period between 1988 and1995, different study periods are used in past studies, which may be acause of their often inconsistent findings.

Second, the data of past studies represents a tiny fraction of China’shuge labour force (Maurer-Fazio et al., 1999) even some of them havewide geographical coverage. China has a vast and diverse economy. Acrossregions, there are significant differences in economic development andwages. The sample bias, for example studies focusing on a selection of fewregions, invariably results in inconsistent and even contradictory results.Xu et al.’s (2006) study area, for example, is a newly urbanised townwhere there is a highly developed rural economy, resulting in relatively


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higher incomes for rural residents compared to urban residents. The find-ings of this study, however, are hardly universal and under-representativein China. Meng (1998a) argued that gender wage discrimination is moreserious in the non-market group than in the market group. This findingcontradicts the well-agreed argument that gender earnings inequality isless serious in a planned economy than in a market economy (Blau andKahn 1995; Gunderson 1994; Meng 1996), and, due to its sample bias, ishardly universal. Therefore, one should be always cautious when usingthe results of the past studies.

Third, there should be a concern for the quality of data used in paststudies. As Maurer-Fazio et al. (1999) pointed out, some studies extracteddata from yearbooks that do not provide information about individualcharacteristics, for example education, experience and age breakdown.Migrants, however, who have become an important labour force in theurban industry, are often excluded from urban surveys. Unavailability ofsome essential personal data makes it impossible to clarify the relativeimportance of wage differentials and wage discrimination in a representa-tive population. FIEs and JVs, an important part of the Chinese economythat employs a large number of employees and has affected considerablyChinese wage system, were often excluded in the analyses. So too was theearnings gap of farmers. Moreover, ‘the reliability of Chinese official statis-tics is often considered problematic’ (Warner 2002: 396).

9. ConclusionsThe ever-widening wage inequality, including gender earnings inequality,is a major source of discontent for many ordinary Chinese people. Thisarticle reviewed the post-reform research on gender wage inequality inorder to examine its size and sources, and applicability of western litera-ture to the Chinese context. It is inferred that economic reform hasresulted in gender wage inequality attributable to both wage differential(explained by appropriate rewards of human capital characteristics, suchas education, experience, marital status) and gender discrimination. Thesize of the gender wage differential is relatively larger than that of genderdiscrimination, but smaller than in most industrialised and developingnations. Gender wage discrimination is much more serious in the urbanindustry than in the rural industry, due to deep-seated discriminatoryculture existing in rural areas. However, it needs to be noted that the find-ings of past studies are inconclusive and inconsistent. This is mainly due tothe current literature drawing a picture of gender wage inequality only ofthe first two decades of reform, and then of a minor fraction of China’svast and diverse population. Past Chinese studies have mainly appliedwestern concepts which are proven very applicable to the Chinese context,but made little theoretical contribution.

One of this study’s objectives is to identify avenues for further researchinto gender wage differentials and discrimination. According to the perfectmarket competition approach, with intensification of market competition


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and development of a harmonious society, gender wage differentials anddiscrimination will gradually decrease. However, Rozelle et al. (2003)argued that rising competition in China did not affect the gender wage gapbetween 1988 and 1995, which is ten years after the beginning of reform.How the recent acceleration of economic reform and the development of aharmonious society have affected gender wage inequality in China is yetunknown, hence, further empirical research is indicated. To develop abetter understanding of these effects, it would be necessary for newresearch to collect more representative data in order to examine changesin both gender wage gaps and the relative shares of wage differentials anddiscrimination nationwide. Further research can be done in at least twoareas: one is to collect and analyse more recent data to cover a widerrange of population so as to provide a more comprehensive and up-to-datepicture of gender wage difference; the other is to conduct in-depthresearch via case study or specific survey on gender wage difference. Thesecond area can be down in many different ways. A representative sampleof population (e.g. university graduates) may be surveyed to identifyfactors that may lead to gender discrimination, and population cohortssuffering greater discrimination. Ideally, the surveyed population can betraced over an extended period so as to identify more complicated issuesthat may evolve over the time, such as job change, promotion and pay rise.

Since the late 1970s, China has been at the elementary stage of devel-oping the full market economy and it will take many years for it to becomea perfectly competitive market. Further liberalisation will continue to giverise to a gender earnings differential. It is, however, predicted that China’scurrent efforts to build a harmonious society will reduce gender wage dis-crimination. We suggest that its efforts should focus on changing policiesof sex-differentiated lay-offs which force female workers to retire earlier,eliminating stronger prejudices against women in the rural industry andimproving their education. Also, relaxation of the hukeo system wouldimprove the current inferior residential status of migrants, especiallyfemale, and thereby reduce industrial and occupational segregation.Empirical studies that evaluate the impact of those policies on both genderwage gap and gender wage discrimination would provide useful informa-tion for policy makers.

The enforcement of Labour Laws against discrimination is also veryimportant. China has prided itself for providing equal opportunity forwomen, and anti-discrimination was not an issue under socialist societyprior to reform. Wide-spread discrimination in labour market after reformleads to the incorporation of the first anti-discrimination provisions in the1994 Labour Law. More specialised provisions, including those found inthe 1995 Law on the Protection of Women’s Rights and Interests, followedsoon thereafter.

However, the law does not seem to have improved women’s employ-ment condition. While China does not publish official statistics on thegender breakdown of wages, we can observe a steady decrease in the share


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of female employees among urban units in recent years. The proportion offemale employees in urban units dropped from 38 per cent in 1994 to36.4 per cent in 2001 (Calculated from China Labour Statistical Yearbook2005). Unfavourable employment conditions against female are likely tobe the driving force of this change. And there are plenty anecdotal evi-dences showing that females are still discriminated in labour market. Forexample, some employers openly stated in their job advertisements thatonly male candidates will be considered, or be given priority. In recentyears, employees have won several high-profile cases of discrimination onthe basis of height, place of origin, hepatitis B status. This has discouragedsimilar discriminative practices. However, gender discrimination has yetattracted enough attention. The lack of enforceable legal definition ofgender discrimination as well as the long history of Confucian culture thatlooks down upon females can be important factors. The gap in genderwage difference is unlikely to close without an enforceable legal frameworkto address gender discrimination. Raising society’s awareness on this issueis also important. However, none of them will be an easy task in an over-supplied labour market like China.

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Contributor detailsJie Shen (Dr) is Associate Professor in International Human Resource Management,Department of Management, Faculty of Business and Economics, MonashUniversity, Melbourne, Australia. He is Adjunct Associate Professor at University ofSouth Australia, Guest Professor at Southwest Jiao Tong University, ShanghaiUniversity and Fujian Normal University. His main research interests areInternational Human Resource Management (IHRM) and HR and industrial rela-tions (IR) in China. Contact: Jie Shen (Dr), Associate Professor in InternationalBusiness, Department of Management, Faculty of Economics and Management,Monash University, Melbourne, 3000, Australia. Tel: 0061-3-99055465, Fax:0061-3-9905 5412.E-mail: [email protected]

Dr. Xin Deng is Lecturer in Economics at University of South Australia. Herresearch is in applied Microeconomics areas, and her previous publications cover awide range of topics including state owned enterprises reform in China, taxationmodelling and cost evaluation of non-market goods. Contact: Xin Deng (Dr),Lecturer, School of Commerce, Division of Business, University of South Australia.Tel: 61-8-83020743, Fax: 61-8-83020992.E-mail: [email protected]


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Applying the congruence model oforganisational change in explaining thechange in the Indian economic policiesKarabi C. Bezboruah University of Texas at Dallas

AbstractFaced with a dynamic and globalised external economic environment and a deterio-rating internal economic environment, the Indian government decided to reform itseconomic policies. The changes meant overhauling India’s economic system bymaking it more market oriented. This article applies Nadler–Tushman’s CongruenceModel of organisational change to the changes in the Indian economic system andattempts to examine the model’s validity in large-scale organisational settings. Thefindings show that although the change process is consistent with the model’s fea-tures, the model does not recommend any action strategies to handle resistances.Resistances being a significant part of any change process, inclusion of strategies tomanage resistances would enhance the applicability of the congruence model.

1. IntroductionThe economic system of a country is the backbone on which the countrydesigns its development. A large-scale transition involving the economy ofa nation of a billion people is not only merely a process but it also meanschanging the identity as well as future of the country. Models for explain-ing organisational changes have been espoused by several scholars overthe years (Weisbrod 1976; Nadler and Tushman 1988; Burke 2002;Bolman and Deal 2003). The purpose of this article is to evaluate the policychange process implemented by the Government of India in the early 1990sby applying the congruence model developed by Nadler and Tushman in1997. This article, by examining the policy reforms in the framework ofthe congruence model, seeks to assess the validity of this model in large-scale economic transitions. The economic reforms of India initiated as aresult of severe economic crisis have, over the years, led to increasedforeign investment, growth in entrepreneurial ability, higher collaborationwith multi-national corporations, and an increased importance of India ininternational economics. Because of these achievements post-reform, thechange process merits scholarly study. Such massive policy changes of anation have not been previously studied in the framework of any organisa-tional change model.

129

Keywordscongruence modelNadler–Tushman’s

modelIndian economic

reformschange managementorganisational change


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In analyzing the applicability of the congruence model, this article con-siders the Indian sub-continent as an organisation. Although there arevast differences between a country and an organisation in terms of factorssuch as population, culture, history and purpose, the differences do notaffect the analysis because the Nadler–Tushman model takes these factorsinto account while analyzing the change process. As per the model, anorganisation’s environment, history and resources are the primary inputsin the change process. Similarly, in India’s economic transition, its history,its economic, political, social and cultural environment and its resourcesare the prime inputs in the transition. Because of this characteristic of theNadler–Tushman model, it is possible to consider the country of India asan organisation and explain the broad economic changes in the frame-work of the model.

According to Nadler and Tushman (1997: 34), congruence is ‘thedegree to which the needs, demands, goals, objectives, and/or structures ofone component are consistent with those of the other’. The greater thecongruence, the higher is the performance of the organisation. This is acomprehensive model that specifies inputs through outputs. According tothis model, the key components of the change leaders include envisioning,energising and enabling. Envisioning means creating and communicatinga vision of a future state with which the people identify and has greaterintrinsic value. Energising and enabling involve empowering the peopleinvolved in the change with the necessary tools and resources.

The changes brought about by the Indian economic reforms were of aninstitutional nature, that is, they were implemented at the national leveland involved a series of deregulation, delicensing and privatisation activities.For the purposes of this article, these changes at the institutional level havebeen interpreted at the operational or the organisational level. Thus, theeconomic reforms implemented in the Indian economy have been taken asreforms or changes in an organisational setting. Such an interpretationwould assist in the applicability of a change model to explain the transitionof India from a closed and protected economy to a more open and entre-preneurial one.

This article is divided into four sections. First, the literatures on organi-sational change management and the Indian economic reforms are brieflyexplored. This review of the literature presents an overview of the theoriesand models espoused by change management scholars and focuses on thechange efforts of the Indian leaders and its effects on the Indian economy.After the review, the congruence model of change is analysed and appliedto the Indian context. This is followed by an analysis of the findings, andsubsequent conclusions.

2. Literature review2.1. Overview of the organisational change managementChange is a permanent feature and an ongoing process in organisationsand institutions. Change can be proactive or reactive, incremental or

130 Karabi C. Bezboruah


discontinuous and through choice or due to an impending organisationalcrisis. Large-scale changes, which involve changing the way a nation hadbeen functioning, require careful planning and implementation. Theimplementation of such large-scale changes requires extensive attentionbecause it affects not only the daily operations and subsequent changes(Meyer and Stensaker 2006) but also changing the mindset of a diverse setof people. After a review of the change literature, Meyer and Stensaker(2006) have developed five categories of recommendations for developingchange capacity. The categories are framing (the reasons and rationale forchange as well as the technique for communicating the change), partici-pation (involving those affected by change), pacing and sequencing (paceand timing of change), routinising (use existing or establish new routinesto handle change) and recruiting expert personnel. In the absence of thesecategories, it would be difficult to develop change capacity.

Gardner (2006), who believes that all change processes are gradual,identifies seven factors that might cause a change in perspective or achange in the way of doing things of an individual or institution. Thesefactors are reason (rational approach), research (collection of relevantdata pertaining to costs and benefits), resonance (fit of the idea with thecurrent situation), redescriptions (reinforcing views), rewards, real worldevents and resistances to change. Changes, according to Gardner (2006:18), can occur ‘when the first six factors operate in consort and resis-tances are relatively weak’.

Argyris and Schon (1974) maintained that people have mental orien-tations with respect to acting in situations. These orientations guidepeople, in the case of organisations, managers, in planning, implementingand reviewing their actions. The scholars state that there is a splitbetween the theories people espouse and their actions. Based on these,Argyris and Schon developed two models – Model I and Model II. Model Ibelieves in unilaterally setting goals and working to achieve them. Here thechange managers unilaterally control and manage the task environment.The consequences are defensive relationships, low freedom of choice,reduced production of valid information and little public testing of ideas.The Model II environment, on the other hand, focuses on internal com-mitment, valid information, and free and informed choice. It includesshared and participatory decision making which leads to minimal defen-sive relationships and high freedom of choice. Argyris (2000) urgeschange managers to move from Model I to Model II environment becauseModel I behaviour focuses on winning and suppressing negative feelings.Based on Argyris’ (2000) arguments, it can be said that the use of Model Itheories by change managers can act against the long-term interests of theorganisation. The Model II environment encourages open communicationand that helps change managers to address some of the mundane aspects.

Thus, the literature on change management views change as a gradualand rational process that includes in-depth research as well as participa-tion by those affected by change. It also means having talented individuals

131Applying the congruence model of organisational change in explaining the . . .


to implement the changes, manage resistances and to communicate thechanges process to others on a regular basis.

3. Necessity of change in Indian economic policies3.1. The Indian economy at the time of reformsUntil the 1990s, India was a stringently controlled and a highly regulatedeconomy. With the economic reforms of the 1990s, the central politicalleadership completely overhauled the Indian economy by initiating a massiveparadigm shift from a state-oriented to a market-oriented economy, therebyembracing globalisation and catapulting India into the world economy.The changes initiated in the wake of severe economic crises were aimed atmacroeconomic stability and international confidence in the Indian economy(Singh 1997). Overall, the major areas covered by the reforms were fiscaldeficit reduction, industrial and trade policy, agricultural policy, infra-structure development, financial development, privatisation and socialsector development. Some of the internal reforms were the abolishment ofindustrial licensing, reduction in the number of industries reserved for thepublic sector, relaxation of the anti-trust legislation to facilitate expansionand diversification, banking reforms and changes in the tax system.External reforms include the devaluation of the Indian currency, increasein the direct foreign investment to 51 per cent, lowering of licensingrequirements for imports, and reductions in tariffs (Nayar 1998).

Changes can be due to either internal or external forces. Internal couldbe in the form of growth pressures whereas external could be the environ-mental pressures that compel an organisation to change. In the case ofIndia, the impending economic crises because of balance of paymentsproblems, and a decrease in foreign exchange reserves pushed the need forreforms in the foreign economic policies. Reforms were brought about inthe national economic policies to deregulate the economy as well as priva-tise some of the loss making public sector industries (Bhalla 1995). Thesepolicy reforms brought about changes in various areas of the economy.

3.2. The results of the change in economic policiesThe implementation of the economic reforms was gradual, and over theyears, changes in several areas were noticed. Most notable was the increasein foreign direct investment, privatisation of some of the loss makingindustries in the public sector, an increase in the presence of multinationalcorporations in India, a significant decline in the poverty rate, and astronger presence of India in the world economy. The gradual implemen-tation of the reforms led to positive economic growth only during the firstfive years post-reforms. The following five years experienced slow eco-nomic growth and was much below the target set by the government. Ananalysis of the performance of the major areas after the changes wereimplemented resulted in the following observations – failure by the gov-ernment to invest in public services; industrial policies favouring a fewinvestor-friendly states resulting in less than uniform development among



the states; high tariff levels among the developing countries; low export ratedue to India being a high-cost producer; and rigid laws relating to employ-ment and retrenchment of labour resulted in high production costs and lowproductivity (Ahluwalia 2002). The effects of the gradual changes weremixed. For example, the primary sector lagged behind the secondary andtertiary sectors, and the non-uniform implementation of the reforms led touneven growth across states. The services sector, especially the informationtechnology enabled services enjoyed the greatest surge due to the deregula-tion. Employment in this sector also increased due to the presence of largenumbers of well-educated and English speaking people. According to Dattand Ravallion (2002), in spite of a strong national rate of growth, this sec-toral and geographic imbalance of growth hampered an equivalent reduc-tion of the poverty rate. However, the cumulative effect of the changes wasvery significant to the Indian economy. This is reflected in India’s increas-ing gross domestic product (GDP). The Indian economy has posted anaverage growth rate of more than 7 per cent in the decade since 1996 andachieved an 8.5 per cent GDP growth in 2006. Exports of merchandise, ser-vices and industry increased 23 per cent, 10.3 per cent and 7.6 per cent,respectively (World Bank 2007).

4. The necessity of a change modelA change model assists in explaining any changes implemented in an organ-isation in a simplified manner. The models try to illustrate the variousfactors or variables that have a strong influence on the changes. Because ofthe complex nature of organisations, a change model needs to be holistic inorder to take into account factors such as organisational structures, culture,leadership processes, individuals, knowledge, as well as capabilities. Theselection of a change model to explain organisational changes is crucialbecause the model would need to adequately represent the changes. In thisarticle, the congruence model is applied to the Indian context in order toexplain the economic changes of the 1990s. The application of the modelwould, in turn, assist in evaluating its validity in large scale changes.

5. The congruence model and its applicability to the Indian economyNadler and Tushman’s change model is an open systems model based onthe proposition that the effectiveness of an organisation is determined bythe congruence between the various elements of the organisation. Accordingto the open systems theory, the organisation is dependent on its environ-ment. The outputs from the transformation of the system-received inputsare again exchanged for new inputs (Hendrickson 1992). There are fourbasic components in the transformation process of an organisation – taskor the specific work activities; individuals or the knowledge, skills, needsand expectations; formal organisational arrangements which includesthe structures, processes and methods; and informal organisation thatinvolves implicit, unstated values, beliefs and behaviours (Palmer, Dunford



and Akin 2006). The inputs towards the transformation process include theexternal environment, internal resources and the organisation’s history.Based on these inputs, the organisation’s leaders formulate the strategy forinitiating changes. The outputs are the performance of the various sectorsof the organisation after the changes are implemented.

The economic policy reforms initiated by the Indian government were agradual process involving a period of about 6 years from 1991 to 1997.These changes can be categorised as a first-order, incremental change thatinvolves maintaining and developing the continuity of the organisation asopposed to second-order, discontinuous change involving radical transfor-mation in the nature of the organisation. Nadler and Tushman (1995)added another dimension to this distinction between the incremental anddiscontinuous change by incorporating the concepts of anticipatory or reac-tive of changes to the external environment (Palmer, Dunford and Akin2006). In the case of changes in the Indian policies, the changes were pri-marily reactive in nature. The impending economic crisis faced by India wasdue to the Gulf War between Iraq and the United States in the early 1990sthat led to a short-term rise in the prices of oil. The collapse of the SovietUnion, India’s largest trading partner in 1991 was another cause of India’seconomic crisis (Nagaraj 1997). Similarly, there were demands from inter-national lenders such as the international monetary fund (IMF) to deregu-late and liberalise India’s economy in order to avoid a debt crisis andmaintain economic stability (Basu 1993). In addition, weak economic poli-cies by earlier governments whereby expenditures exceeded revenue leadingto high fiscal deficits and heavy borrowing by the government were alsoresponsible for the economic crisis (Nayar 1998). The economic reformsbrought about by the government were, thus, a reaction of these pressures tobring about change in the national policies. Moreover, these incrementalchanges in the policies were adaptive to the pressures of India’s deterioratingeconomic situation as well as the dictates of international lenders.

The congruence model outlines eight steps while analyzing organisa-tional problems. Table 1 lists the eight steps and then analyses them in thecontext of the changes.


Step 1 Identification of symptoms of problem existenceStep 2 Specification of the key elements of the organisation – environment,

resources and strategyStep 3 Identification of outputs – the desired and the actualStep 4 Classification of the problems, that is, the gap between the desired and

the actual outputsStep 5 Describe the organisational components by collecting data on the

four componentsStep 6 Evaluation of the congruence between the various componentsStep 7 Identify the key factors requiring attention by linking the congruence

analysis to the problem identifiedStep 8 Identification of action steps that might remove or reduce the problem

Table 1. Eight steps of Nadler–Tushman’s congruence model.


5.1. Application of the congruence model to the Indian economic change processIn the context of the changes brought about by the economic reforms inIndia, the eight steps would be as follows. The symptoms that suggestedthat there existed a problem in the Indian economy are a balance of pay-ments problem, high fiscal deficits and high inflation. The inputs for thetransition are the policies that were formulated to bail the country out ofsevere economic crisis. These policies were in response to external pressuresas well as internal efforts at stabilising the economy. The intended outputsof the change efforts were to improve India’s economic stand in the inter-national arena as well as to make India a more deregulated and globalisedeconomy. The problems or the gaps between the intended and actualoutputs are deficiencies in the policies implemented by the previous govern-ments. Being a democracy, the new policies related to changes in the eco-nomic system need to be dictated by consensus. In addition, the governmentinitiating the changes was a minority government which was subject tocoalition politics as well as the demands of the opposition parties.

The next sections would discuss in detail steps 5 through 8, that is, theorganisational components, the congruence between them, and identifyactionable steps.

5.2. The organisational components in the change processFollowing is a brief description of the four important organisational com-ponents involved in the change process.

Task – the task or the specific work activities in the change processinvolved formulating economic policies that would initiate and sustain thechanges.

Informal organisation – this includes the implicit, unstated values, beliefsand behaviours of the organisation. India being a socialist democraticrepublic, its policies, ideals and values were dictated by social concerns,namely, those which benefited the whole society. However, with globalisa-tion and reforms in countries such as China as well as radical changes inerstwhile communist nations and the break-up of the Soviet Union, Indiahad to change its socialist values for a market-oriented, capitalist approach.

Formal organisational arrangements – the policies that were imple-mented were recommended by a high-powered committee comprising ofthe Tax Reform Committee, the Committee on the Financial System andthe Insurance Reform Committee. Other key groups such as politicalparties, organised labour groups, and the public – the middle class inparticular – were also included in order to build consensus on the changes(Nayar 1998).

Individual – this level consists of the knowledge, skills, needs and expec-tations of the organisations undergoing the change. The change effortsinitiated by the Indian government became more definite with theappointment of Dr. Manmohan Singh, a renowned scholar in economicsand a proponent of open markets as India’s Finance Minister. Dr. Singh



had the necessary knowledge, skills and experience in liberal economicpolicies, and was instrumental in framing the changes that led to replac-ing of the previous economic policies with policies characterised bymedium levels of protection and regulation.

In the next section, the fit between these four organisational compo-nents is studied.

5.3. Assessing congruence or consistency between theorganisational componentsThere needs to be consistency between the four components involved in thechange process, namely, task, informal organisation, formal organisationalarrangements, and the individual in order for the change to be effective. Asdiscussed earlier, the specific task to bring about change involved framingnew market oriented and investor friendly policies that were very differentfrom the policies implemented by previous governments. In fact, the social-ist values that guided the country’s policies since independence from Britishrule were somewhat given up in order to avoid a huge public debt and animpending economic crisis. Moreover, the new policies were framed aftermuch discussions and deliberations with key stakeholder groups such aspolitical organisations, organised labour groups, committees set up for dif-ferent areas, interest groups, industrialists, as well as the general public.The change would not have been effective if it had not been for the appoint-ment of a skilled Finance Minister whose knowledge in the field of deregu-lation, delimitation and open market systems assisted in the framing ofpolicies that propelled India into the forefront among the developingnations. Thus, the four components are consistent with each other and thisexplains why the changes initiated by the Indian government were effectivein boosting the country’s economic health.

In the event of inconsistencies between the components, Nadler andTushman (1988) suggested an identification of the key factors needingattention and identifying actionable steps that would reduce or remove theproblem as mentioned in steps seven and eight of the congruence model. Inthis analysis, the four components were consistent with the change and theneed for identifying key factors and solutions do not arise. The changes inthe Indian economic system is also consistent with the stage-based theorydeveloped by Rogers (1983) to explain how new ideas or initiatives are dis-seminated and adopted by the society. The five stages identified by Rogers inthe diffusion process of a new initiative are knowledge, persuasion, decision,implementation and confirmation. Roger’s argument was that disseminationof ideas is high when the perceived superiority of the initiative is high com-pared with the existing practice as well as when the initiative’s perceivedcompatibility with the existing social system is high. In the Indian context,the new economic policies were successfully implemented because the per-ceived success rate of the new policies in stabilising the economy was veryhigh. Also, economic changes in the communist countries and China alsochanged the mindset of the Indian people regarding market oriented policies.



6. Findings and conclusionsThe application of the Congruence model to the Indian economic policychanges implemented in the early 1990s shows that the changes werewell planned in terms of a gradual and piecemeal implementation thatreplaced high levels of economic protection and regulation by mediumprotection and regulation. This strategy of gradual implementation wasfollowed because the change leaders had to build consensus among thekey stakeholders and groups as the policies were implemented. These poli-cies were also designed to gradually transform India from a highly insu-lated economy to one that is more integrated with the world economy. Thecautious and gradual approach was undertaken by the change leaders inorder to avoid repeating the failed economic reform efforts of previousIndian governments. Earlier attempts at reforming the economic policieswere unilateral approaches that did not include consensus building orresearch. As a result, those reforms failed.

The model explains that the change efforts were consistent with thefinal output or goal of the government. The eight-step analysis found thatthe context of the organisation that defined the strategy to be used fits wellwith the four important components involved in the change process.Because of this consistency, the output or the goal – to achieve economicstability and improve India’s economic standing in the world economy – ofthe change leaders was achieved. Moreover, because the change processwas gradual, there was adequate room for feedback among the variousstages of change. This ensured adaptation and modification of the policiesbased on the prevailing political and economic conditions. The findingsalso suggested that the information on the change process was available toall stakeholders and these stakeholders were involved in the decision-making process. Thus, this model applies well to the changes in the Indianeconomy as the change managers planned well in implementing thechanges. The congruence between the different organisational compo-nents reduced the need for examining the changes based on steps 7 and 8of the model. This is because in step 7, those organisational componentsare identified that have some problems and do not fit with the other com-ponents. The problems can pose a hindrance in the achievement of thechange outcome. In step 8, actions are taken to remove or reduce thisproblem and bring about coherency between the components. Because ofthe congruency between the various components such as task, formalorganisation, informal organisation and the individual in the Indian eco-nomic policy changes, the need for steps 7 and 8 do not arise.

The congruence model, however, does not mention any resistances tochange. Resistances are deeply embedded in change efforts and could be inthe form of both active and passive resistances. The resistances that croppedup in the Indian economic reforms in the form of opposition from otherpolitical parties to implement new policies were also managed by the ableleadership of the change leader and the bureaucrats assisting in the tran-sition. In addition, the economic situation during that period necessitated



such a change in policies and as such, the reforms were contextual to acertain extent as well. Although Gardner (2006), as mentioned earlier,stated that change is possible when resistances are relatively weak to otherfactors, changes were implemented and effective to a large extent despitestrong resistances from various quarters. Public sector managers resistedbecause they did not want to give up the old management techniques,control and power. Similarly, organised labour groups resisted changes infear of losing employment but they were taken into confidence during thechange process thereby minimising opposing pressures. Since 2006,however, the Indian government has stalled the privatisation of publicsector industries because of the resistances from within the ruling politicalparty and their communist allies.

By applying the Congruence model of change to the Indian economicreforms, this article examined the economic change process in the frame-work of the model as well as evaluated the model’s applicability. The find-ings showed that as per the model, the various elements involved in thechange process in the Indian change scenario were consistent with eachother. The main drawback of the model is that it did not recommend anyaction strategies to manage resistances to change. This becomes starkerwith the stalling of the privatisation efforts in recent years due to politicalpressures, which have created a barrier for the country’s effort to imple-ment market-oriented practices. These are resistances that can be miti-gated through proper discussions and negotiation. Moreover, welfarepolicies for employees displaced or losing employment would also help inreducing the resistances.

On the other hand, the congruence model when applied to the complexchange process of a nation’s policies is useful in that it shows the need forfit between the elements as well as flexibility to deal with changing condi-tions in a globalised environment. This model can serve as a template forfuture economic transitions of nations and can provide change agentswith a framework for formulating and implementing the change plan. It canalso be used to evaluate any large-scale changes post-implementation as theorganisational components and the continuous feedback can be used tomeasure the effectiveness of the change process. Thus, this model can beused in the beginning as well as after the changes have been implementedand can guide change managers to better manage the transition phase andthereafter. Needless to say that in order to maintain sustainable success ina fast-changing world, change managers should possess capabilities toface any competition or threat proactively or reactively by framing policies,that fits any situation.

7. Research implicationsThe analysis of the Indian economic reforms suggests that the componentsinvolved in the transformation process were consistent with each other asper the congruence model. However, this model might not be able toexplain all aspects of such a large-scale change that involves the economy



and future of a whole nation. This is because the model leaves out animportant aspect of any transformation, that is, resistance from thoseaffected by the change. On the other hand, the model provides a holisticview as it encompasses the various elements of the organisation.

Diagnostic models of change management assist in explaining how thechange process works out. Congruence model is one such explicit modelthat tries to link the causal relationship of any change. Yet, the questionarises regarding the necessity or usefulness of models to explain organisa-tional change. According to Burke (2002), as cited in Palmer, Dunford andAkin (2006: 108–109), organisational change models help in reducingcomplex situations into more manageable categories and also identify theactivities that needs the most attention. The models also bring out the inter-connectedness of the elements and processes which highlights the sequenceof events that were involved in the change process. Although applicationof these models to nations and economic transformations is not common,these models can be useful to analyse changes in the national context. Suchapplication can provide insight to the change processes from the planningstage so that the complex processes are categorised into more manageableunits. Further, this can also help in extending and modifying the model byevaluating its applicability in all aspects of large-scale transitions.

This article provides a gateway for future research on economic transi-tions of nations by applying change management tools and models. Futurestudies would assist in proving a change model’s applicability and validityas well as evaluate its usefulness and shortcomings in different organisa-tional environments. This could assist in modifying and refining thechange models in order to enhance their characteristics.

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Argyris, C. and Schön, D. (1974), Theory in Practice: Increasing ProfessionalEffectiveness, San Francisco: Jossey-Bass.

Basu, K. (1993), ‘Structural Reform in India, 1991–93: Experience and Agenda’,Economic and Political Weekly, 28: 48, pp. 2599–2605.

Bhalla, A.S. (1995), ‘Recent Economic Reforms in China and India’, Asian Survey,35: 6, pp. 555–572.

Burke, W.W. (2002), Organization Change: Theory and Practice, Thousand Oaks:Sage.

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Datt, G. and Ravallion, M. (2002), ‘Is India’s Economic Growth Leaving the PoorBehind?’, Journal of Economic Perspectives, 16: 3, pp. 89–108.

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Suggested citationBezboruah, K. (2008), ‘Applying the congruence model of organisational change in

explaining the change in the Indian economic policies’, Journal of OrganisationalTransformation and Social Change 5: 2, pp. 129–140, doi: 10.1386/jots.5.2.129/1

Contributor detailsKarabi C. Bezboruah is a doctoral candidate in the Public Affairs programme at theSchool of Economic, Political and Policy Sciences, University of Texas at Dallas. Shealso teaches courses in Public Administration such as bureaucracy and nonprofitorganisations at the University of Texas at Dallas. Her interests include organisa-tional change and behaviour, corporate philanthropy, nonprofit management andemotional intelligence. Contact: Karabi C. Bezboruah, EPPS – Public Affairs, MailStation WT 17, University of Texas at Dallas, 2601 N. Floyd Rd., Richardson, TX75080, USA.E-mail: [email protected]





Job motivation and self-confidence forlearning and development as predictorsof support for changeChaiporn Vithessonthi Mahasarakham University

Markus Schwaninger University of St. Gallen

AbstractFor the most part, studies on change management have attempted to determinethe factors that influence employee resistance to change. The focus of the presentstudy is to test whether job motivation and self-confidence for learning and devel-opment influence employee support for downsizing. Data were gathered from asample of 86 teachers at one private school in Bangkok, Thailand. The analysiswas carried out using multinomial ordered probit regression. The results suggestthat the level of job motivation is negatively associated with the level of supportfor change, and that the level of self-confidence for learning and development is notassociated with the level of support for change. These results are counterintuitive,and they refute our initial hypotheses.

1. IntroductionGreater competition, rapid technological and social changes in an emerg-ing market economy have made efficiency improvement a crucial manage-rial challenge for firms to remain competitive in the marketplace. However,authors on organisational change have pointed out that managerialchoices may be influenced by pressures from employees and institutionalinertia (e.g., Barnett and Carroll 1995). Firms with poor performance tendto be shrinking; downsizing is then either a consequence of poor perfor-mance or one of to the options for improving performance. According toresource-based and dynamic capabilities views, it is essential for a firm toactively manage internal resources in order to sustain competitive advan-tages over time (Teece, Pisano and Shuen 1997). A key issue with respectto the management of firm performance is the use of downsizing. In a narrowview, downsizing has been defined as the planned reduction in a firm’spersonnel intended to improve the efficiency and effectiveness of a firm(Alien et al. 1995; Cascio 1993; Freeman and Cameron 1993; Wayhan andWerner 2000); in a broader perspective, downsizing has been defined as areduction in the use of a firm’s resources to improve its performance

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Keywordschange managementdownsizingjob motivationlearningsupport for change


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(DeWitt 1998). DeWitt (1998) argues ideas that downsizing is a restruc-turing process, entailing three resource reduction choices: retrenchment,downscaling and down scoping. In this article, we refer to all the threekinds of downsizing.

It has been argued that the main benefits of downsizing are efficiencyimprovement and increased profitability. A firm that better manages itshuman resources so that firm-specific capabilities are created is morelikely to stay competitive in the marketplace (Wright, Dunford and Snell2001). Nevertheless, downsizing can be viewed as a breach of the psycho-logical contract between a firm and its employees, leading to a reductionin trust in management (Mishra and Spreitzer 1998). Empirical researchhas found mixed results concerning the effect of downsizings on efficiencyand profitability (Cascio 1993; McKinley, Sanchez and Schick 1995). Oneplausible explanation for this may be the influences of employees inthe aftermath of downsizings. That is, a firm’s downsizing success iscontingent upon the attitude of employees towards change initiatives.In change management literature, employee resistance to change has beencited as the main factor derailing change initiatives (Regar et al. 1994;Kotter 1995).

Although downsizing destroys the existing social networks in a firm, italso creates a new social network that may provide new opportunitiesfor employees who have survived (Shah 2000). Accurate knowledge ofemployee reaction to change is clearly essential to the selection and imple-mentation of strategies by the firms, and employees are key firm assets,making downsizing strategies crucial. This raises important questions.What factors influence the extent to which employees support organisa-tional change? The purpose of this study is to enhance our understandingof employee reaction to downsizing initiatives in the context of an emerg-ing market economy where economic growth has rapidly changed thecompetition landscape for local firms.

This study addresses a question that is crucial for firms pursing strate-gic change. It focuses on the key factors that can explain observed differ-ences in the level of support for change among the employees that facedownsizing. Given that firms usually attempt to initiate a wide range ofstrategic actions, including downsizing, after firm performance has begunto deteriorate, it is particularly surprising that few studies (e.g., Judson1991; Kotter 1995) have attempted to explain the differences in the levelof support for change that has been observed among employees. Pastresearch has placed considerable emphasis on various factors that canminimise employee resistance to change. Consequently, this article triesto link observed differences in the levels of support for change amongemployees to several factors in addition to change management models.Several researchers (Dent and Goldberg 1999; Mabin, Forgeson and Green2001) have begun to place substantial emphasis on various factorsthat can influence employee reactions to change that occur in differentcontexts. In broad terms, employee reaction to change has been tied to a

142 Chaiporn Vithessonthi and Markus Schwaninger


wide range of factors, from prevailing change process conditions to specificemployee perceptions.

Given that importance of these factors, it is not surprising that Kotter(1995) suggests that managers should attempt to investigate and under-stand the factors that lie behind observed differences in the levels of resis-tance to change and support for change in order to have successful changeinitiatives. In this article, we therefore attempt to address this importanttopic in the context of downsizing in an emerging market economy thathas been largely neglected by past studies. We focus exclusively on asample of employees that can be clearly regarded as being in a downsizingsituation in Thailand. We then attempt to examine and explain the differ-ences among these employees in their support for change in spite of thefirm’s downsizing that might affect their job.

Research suggests that employees develop beliefs about the extent towhich they are motivated to achieve their tasks and assignments (Herzberg1968). Empirical evidence suggests that job motivation is related to avariety of work-related attitudes and outcomes (Deery et al. 1995). Twoimportant issues requiring further attention are the relationship betweenjob motivation and support for change on the one hand and the factorsinfluencing the development of job motivation on the other. Likewise,research suggests that self-efficacy for development and learning influ-ences one’s performance (Maurer 2001). As such, it is of great interest tounderstand the effects of self-confidence for learning and development onbehaviours of employees.

In this study, we propose that job motivation and self-confidencefor learning and development play an important role on an employee’ssupport for change. Under circumstances in which a firm’s strategicchoice such as downsizing might significantly affect employees in the firm,employees’ perceptions are more likely to influence their level of supportfor the firm’s decision. Thus, an important research issue deals with thenature of employees’ perceptions during the downsizing process and howto enhance the positive effects of such perceptions while reducing the neg-ative effects of such perceptions. This study attempts to fill a gap in currentresearch on downsizing and change management by empirically examin-ing the role of employees’ job motivation and self-confidence for learningand development in predicting employees’ support for change in thecontext of a downsizing endeavour pursued by a large private school inThailand. In general, the work pattern in Thailand differs from that foundin North America in that it is shaped by different values. For instance, incontrast to the United States with their universalism- and individualism-oriented culture, Thailand’s culture is stamped with enthusiasm for par-ticularism and communitarianism (Cf. Hofstede, 1992: 54). Thus, thesehave implications on how Thai employees view the world and the peoplearound them. In particular, they will more likely react differently to changesin the organisation than the Americans. For example, as in many Asiancountries, avoiding confrontation is the norm in Thailand (Cf. Hofstede

143Job motivation and self-confidence for learning and development as predictors . . .


1992: 123f.): Traditionally, Thais seem to find it difficult to accept a directnegative response or answer. Hence, Thais tend to make excuses ratherthan offer a direct negative answer. Consequently, in our survey we havenot used any scales including ‘no’ answers.

2. Literature review and hypotheses2.1. Job motivationJob motivation has emerged as one of the most important factors influenc-ing a variety of work-related variables (Jalajas and Bommer, 1999; Stumpfand Hartman, 1984). Many studies in the field of change managementsuggest that job motivation is positively related to organisational commit-ment (e.g., Deery et al. 1995; Morrow 1983), work performance (Jalajasand Bommer 1999), commitment (Jalajas and Bommer 1999; Morrow1983). In addition, Brockner, Grover, Reed and DeWitt (1992) find thatperceived job enrichment has a positive and significant effect on workeffort. Research on the effect of job motivation on employee absenteeismsuggests that the two variables are negatively correlated (Blau 1986;Deery et al. 1995).

Recent research in the field of change management has raised interestin the extent to which employees can be motivated to perform their jobsand in the way of how firms can motivate employees (e.g., Herzberg 1968;Kanfer 1990; Vroom, 1964). When employees have high job motivation,they are likely to show better adaptive responses to any change in theorganisation. Broadly speaking, managers, acting on behalf of the firm,might make decisions that affect the job motivation of employees (Korsgaard,Sapienza and Schweiger 2002), which in turn affects their attitudes andbehaviours toward the decisions. If we apply the same basic rationale tohow job motivation would affect absenteeism, organisational commitmentand work effort, it is plausible that job motivation will be able to influenceemployees’ support for organisational change pursued by a firm. Now, con-sider an organisation change from which only benefits to a firm and itsemployees will result. All employees must support the change in order forany of them to derive the benefits. Thus, there is an incentive for employeesto try to support the firm’s implementation of the change in an effort toreap private benefits. In such a situation, employees are likely to be moti-vated to support the change. However, employees with higher levels of jobmotivation are likely to provide higher levels of support for change.

Studies of job motivation support the notion that motivation is definedin relation to need strength (e.g., McClelland and Boyatzis 1984; Herzberg1968). McClelland and Boyatzis (1984) argue that humans are motivatedby need for power, achievement and affiliation. Scholars distinguish twotypes of motivation: intrinsic motivation refers to the relationship betweenemployees and their job itself (Hui and Lee 2000), and is derived fromwithin the individuals or from the activity related to the job itself (Sansoneand Harackiewicz 2000); and extrinsic motivation applies to the relation-ship between individuals and externally administered rewards such as pay



(Komaki, 1982). Hackman and Oldham, (1976) suggest that key character-istics that induce intrinsic motivation include task variety, task significance,task identity, and task feedback. Guerrero and Barraud-Didier (2004)suggest that job motivation can result in the high involvement in thecompany that will increase effectiveness and productivity. However, agecan account for the degree of job motivation. In this respect, Kanfer andAckerman (2004) argue that the attractiveness of higher levels of effort isa negative function of age, because the perceived utility of effort is expectedto decline with age.

Empirically, Stumpf and Hartman (1984) find that work motivationhas improved perceived work performance, and has lowered the intentionto quit. Recently, Halbesleben and Bowler (2007) find that work motiva-tion (e.g., achieving striving motivation, status striving motivation andcommunion striving motivation) mediates the relationship between emo-tional exhaustion and job performance in the sample of professional fire-fighters. It is logical to argue that the more job motivation a person has,the greater his/her effort to adapt to organisational change, and thegreater her support for change. Employees are likely to ascertain that theirjob motivation and work effort are aligned; the alignment process mighthave some implications for their decision. For example, if employees havelow job motivation, it should be relatively more difficult to increase theirsupport for change and build trust between managers and employees inthe context of downsizing. On the other hand, employees with high jobmotivation are more likely to be adaptive to and support downsizing, otherthings being equal. In sum, we hypothesise that:

H1: Higher levels of job motivation are positively associated with support forchange.

2.2. Self-confidence for learning and developmentHuman resource management research has long included ideas that relateemployees’ self-confidence in their ability to learning and development on theone hand to work performance on the other. Research into self-confidencefor learning and development suggests that humans have different beliefsabout the factors responsible for what happens to them. Individuals withan internal locus of control consider what happens to them as determinedby factors under their control; on the other hand, individuals with anexternal locus of control consider what happens to them as determined byfactor outside their control (Elangovan and Xie, 1999). Self-confidence forlearning and development continues to receive increasing research inter-est, possibly due to its importance for employees’ work performance. It ishowever an under-researched topic, particularly when it comes to the rolethat self-confidence for learning and development plays in employees’reaction to organisational change.

In the literature, self-confidence is also known as self-efficacy (Maurer2001). There has been a growing awareness in the organisational psychology



literature that self-efficacy is a key determinant of individuals’ intentionand choice to pursue an activity (e.g., Bandura 1977). For instance,empirical research examining the roles of entrepreneurial self-efficacysuggests that there is a positive relationship between entrepreneurial self-efficacy and entrepreneurial intentions (Zhao, Seibert, and Hills 2005).Self-efficacy has been defined as beliefs or perceptions that one possessesthe ability to complete a certain task (Foley, Kidder, and Powell 2002). Inaddition, Bandura (1997) suggests the notion that self-efficacy has threelevels: (1) task specific self-efficacy; (2) domain self-efficacy; and (3) generalself-efficacy. This categorisation however is not helpful in the context ofour article which aims to explain differences in the level of support fororganisational change.

In the literature we have found a distinction, which relates closer to theintention of our study: self-efficacy for development and learning and self-efficacy for performance (e.g., Maurer 2001). According to Maurer (2001),self-efficacy for development and learning refers to one’s (self-)confidencein developing skills and learning new things, whereas self-efficacy for per-formance refers to one’s confidence in performing a task for which onealready possesses the skills required to perform it. We shall concentrate onthe learning of new skills or advanced levels of currently possessed skills,which is crucial for competence development. One can argue that self-confidence is conceptualised as a more global variable, whereas self-efficacyis usually conceptualised as a more local variable, implying that it is a dif-ferent construct. In this respect, we do not argue for the equivalence of thetwo constructs, per se, rather we suggest that when we have focused onone facet of self-confidence, that is, self-confidence for learning and devel-opment, the differences between self-confidence for learning and develop-ment and self-efficacy for development and learning to become smaller.That is, self-confidence has now been conceptualised at a more local level.

Whether employees exploit potential career development is likely todepend initially on the degree to which employees believe that they possessthe ability to develop skills and knowledge required to perform new tasks.Therefore, employees’ self-confidence for learning and development maybe an important determinant of work performance in a new work settingwhere a new set of skills and knowledge might be needed. In the context oforganisational change where employees are likely to have perceptions ofjob uncertainty, employees’ self-confidence for learning and developmentmay influence employees’ reaction to change.

We hypothesise that employees with high levels of self-confidence forlearning and development tend to feel more comfortable with organisa-tional change than those with low levels of self-confidence for learningand development. Because employees’ self-confidence for learning anddevelopment is likely to influence the degree to which employees actuallylearn and develop, low levels of self-confidence for learning and develop-ment may cause employees to be afraid of potential failures to perform in anew work environment, because of their limited capability to learn new



knowledge and/or develop new skills. Therefore, it is unlikely that they willsupport the change. On the other hand, employees with high levels of self-confidence for learning and development tend to consider learning newskills resulting from organisational change as achievable. In this view,they may see the change as an opportunity to improve their careerprospects rather than a threat, leading them to support the change. Basedon this argumentation we present the following hypothesis.

H2: An employee’s self-confidence for learning and development will be positively(negatively) related to support for change.

3. Methodology3.1 Data collection and sampleThe setting for this study was a private school in Thailand employing 108full-time teachers at the time of the survey in 2004. Declining numbers ofenrolled (both new and current) students over past few years (e.g., fromapproximately 200 new students per year in 1990 to around 100 newstudents per year in 2004) had caused the management team to makemultiple efforts to improve the school’s efficiency and profitability. However,the numbers of enrolled students still continued to decline each year, pres-surising the management team to engage in workforce reductions. Thedownsizing programme was initially aimed to lay off approximately tenteachers by the start of the next academic year (i.e., 2005–2006) so as toimprove the student/teacher ratio and cash flows. Teachers were informedabout the downsizing decision in August 2004. At the time of the survey(during the first two weeks of September 2004), teachers did not know thefull details of the downsizing programme (e.g., the involuntary nature ofthe workforce reductions programme).

A multiple-item survey in Thai was administered during workinghours to a random sample of 100 employees at the school. The originalquestionnaire written in English was translated into the Thai languageby one of the authors. In order to determine the clarity and the readabilityof the original questionnaire written in the Thai language, three otherThais had reviewed and revised the questionnaire. Then, a professionalThai–English translator back-translated the questionnaire into the Englishand the authors examined each item for translation error. The inspectiondid not find any instances where an item’s meaning had significantlychanged because of the translation. Survey instructions stressed that itwas a survey about the planned downsizing of the school and the partici-pation in this survey was voluntary and confidential. Ninety-one question-naires were returned, presenting a response rate of 91 per cent. Of these,three questionnaires were excluded from the analysis because of thoserespondents who did not complete the main part of the questionnaires.The final sample comprised 88 cases.

According to the Office of the Primary Education Committee, Ministryof Education (Thai Ministry of Education, 2006), the number of primary



and secondary public school teachers in Bangkok for the academic year2006–2007 was 12,682 teachers, 77 per cent of which held a bachelor’sdegree or an equivalent. Nonetheless, there was no information on the dis-tribution of the teachers by gender and tenure. The structure of thesample was representative of both the population of the 108 teachers atthis school and the population of school teachers in Bangkok andThailand, at least with regard to the distribution of the school teachers byeducational background. Eighty per cent of the sample had a bachelor’sdegree or an equivalent, mean age � 44.1 years, mean position tenure �

14.8 years, mean organisational tenure � 17.8 years. In comparison withother schools in Bangkok on the basis of the number of teachers, thesample school can be considered as a large school.

Listwise deletion of missing values of the remaining sample reduced thesample size to 86 respondents (for further data analysis with two controlvariables: education and gender). It should be noted that the data used inthis article were part of a larger survey that included 22 variables mea-sured by 66 questionnaire items. It was a trade-off between the number ofvariables studied and the comprehensiveness of variable measurement inthe above-mentioned survey; thus, only three items were used to measureeach variable to increase the response rate. The focus of this article is onjob motivation and self-confidence for learning and development becauseboth variables seem to be closely related in terms of conceptual construct,and thus should be discussed together in this article. Other variables understudy (e.g., perceived change in status, commitment, perceived organisa-tional support, power, pride as a consequence of change, etc.) will be dis-cussed in more details in our other papers. An overview of the surveyitems is given in the Appendix.

3.2 MeasuresUnlike other studies that treated the ordinal data as the matrix data andemployed a factor analysis, this study examined whether the indicators foreach variable were internally consistent, that is whether it was possible toreduce the number of indicators, with the following procedures, for theuse of the multinomial ordered probit model.1 We averaged across theoriginal indicators to form an average indicator, plotted the average indi-cator along with the original indicators in a graph, and examined thepattern of directions of the indicators. Using this procedure, it could beobserved whether the indicators for each variable followed the samepattern of directions or not. In addition to applying the graphical analyses,we also examined the Spearman correlation coefficient.

Support for change was measured using a three-item scale. Becausethere is no consensus on a definition of support for change, three newlydeveloped items were used to measure the degree of behaviours that wereconceived of representing employees’ support for change. The three itemswere similar in spirit to those used by Bovey and Hede (2001). These itemswere measured using a five-point scale ranging from 1 (strongly disagree)

1 Factor analysis hasnot been chosenbecause interval datawere not assumed.The use of ordinaldata in factor analysismay substantiallyalter the underlyingmetric scaling(Kim and Mueller,1978). In addition,a three-point scale islikely to result in thedeparture from thenormal distributionassumption.



to 5 (strongly agree). Following the procedure, the measure of support forchange included two items (Cronbach’s alpha � 0.70).

Job motivation was measured using a three-item measure adoptedfrom those used by Hui and Lee (2000). Respondents were asked to indi-cate the degree to which they agreed with these items using a five-pointscale ranging from 1 (strongly disagree) to 5 (strongly agree). All three itemswere transformed to be used for the measure of job motivation (Cronbach’salpha � 0.81).

Self-confidence for learning and development was measured using athree-item measure. One item was adopted from a study by Maurer et al.(2003) reflecting employees’ perceptions of their capability to learn newknowledge and develop new skills. Respondents indicated the degree towhich they agreed with these items using a five-point scale ranging from1 (strongly disagree) to 5 (strongly agree). Following the procedure, themeasure of self-confidence for learning and development included all threeitems (Cronbach’s alpha � 0.83).

To control differences in education across teachers in the sample, theeducation variable, a categorical variable, was used to represent educationand coded as follows: ‘0 (a degree below a bachelor level)’; ‘1 (a degreeequivalent to a bachelor level)’; and ‘2 (a degree equivalent to a masterlevel)’. To control differences in gender, the gender variable was includedand coded as follows: ‘0 (male)’ and ‘1 (female)’.

3.3 Multinomial ordered probit modelBecause of the ordinal nature of the dependent variables, we thereforeemployed the multinomial ordered probit regression models to test thehypothesised relationships. In comparison with the ordinary regressionmodel, the multinomial ordered probit model would be more appropriate asan analytical tool for estimation in this study because (1) the existence of aranking of levels of a variable is taken into account, (2) it assumes that the dif-ferences between any two adjacent levels of a variable need not be the sameand are unknown, and (3) it does not assume the independence of irrelevantalternative property (Alvarez and Nagler, 1998). The maximum likelihoodfunction using the command PLUM (Polytomous Universal Model procedure)with a probit link function, in the SPSS package version 13 (see Borooah,2002), was used to estimate parameters. It is noteworthy that the smallsample size and number of parameters estimated can impose a potential esti-mation problem for the full model. This will be discussed in the next section.

4. ResultsBecause the sample size was relatively small and might cause the estima-tion problem for the multinomial ordered probit regressions, measurementscales for dependent variables and independent variables were recorded(i.e., the original scales ‘1’ and ‘2’ were recoded as ‘1’; the original scales‘3’ was recoded as ‘2’; and the original scales ‘4’ and ‘5’ were recoded as‘3’) to alleviate the estimation problem before the multinomial ordered



probit regression was computed. Table 1 presents the results of the descrip-tive statistics, Spearman correlation coefficients and scale reliabilities(Cronbach’s alpha) of the study variables. Respondents reported a meansupport for change of 2.16 (SD � 0.81), indicating support for change tobe relative prevalent in the school. Support for change was related to allvariables under study (with the exception of the education and gender vari-ables) and showed the positive correlation with job motivation (r � 0.26,p � 0.05) and the positive correlation with self-confidence for careering-relevant learning and competence development (r � 0.21, p � 0.05).

The results of the multinomial ordered probit models are presented inTable 2. Model 1 (Table 2) is a baseline model containing control variables.It shows that education and gender have statistically significant coeffi-cients suggesting that teachers with higher education and female teachersare likely to have lower levels of support for change when the organisa-tions announce downsizing. Models 2 and 3 individually add the variableof interest to test the hypotheses. Model 4 is a full model that includes allthe variables of the study to check for robustness of the results.

Model 2 provides results that test Hypothesis 1, which proposes thatjob motivation would be positively associated with support for change. InModel 2, the coefficients for job motivation are however negative and sta-tistically significant. These results provide no support for Hypothesis 1,suggesting that teachers with high levels of job motivation are less likely tosupport the change. Model 3 provides results that test Hypothesis 2, whichproposes that self-confidence would be positively related to support forchange. In Model 3, self-confidence for learning and development are neg-atively and partially predictive of support for change, suggesting thathigher levels of self-confidence for learning and development increase thelikelihood of having lower levels of support for change. Thus, Hypothesis 2receives no support.

The results of Models 2 and 3 are contradictory to those of the resultsof Spearman correlations. That is, on the basis of the correlation coefficients,support for change was positively and significantly correlated with job


Mean S.D. 1 2 3 4 5

1. Support for change 2.16 0.81 .702. Job motivation 2.66 0.63 .26* .813. Self-confidence for learning 2.50 0.66 .21* .38** .83

and development4. Education 0.94 0.44 .12 .05 .15 -5. Gender 0.74 0.44 .11 .06 �.09 �.19 -

Notes: N � 86. Correlations typed in bold are significant at the 0.01 level or the 0.05 level(2-tailed).*p � .05, **p � .01. Scale reliabilities (Cronbach’s alpha) are shown along the diagonal.

Table 1: Descriptive statistics and Spearman correlation coefficients for the study variables.


motivation and self-confidence for learning and development. However, thecorrelation coefficients of 0.26 and 0.21 can be considered to be of statis-tical significance but of less economical significance. On the other hand,the results of Models 2 and 3 suggest that job motivation and self-confidencefor change are negatively predictive of support for change. It can be seenthat the results of Models 2 and 3 were only partially and statistically sig-nificant; that is, the coefficients for job motivation were significant at the0.05 level and the 0.10 level. Hence, one can argue that the relationshipbetween job motivation and support for change is not statistically signifi-cant at the traditional level of 0.05. Similarly, the relationship betweensupport for change and self-confidence for learning and development wasnot significant at the traditional level.

Finally, examination of Model 4 suggests that the results are mixed.With all variables entered into the model, all but coefficients for controlvariables that were statistically significant in the earlier model become sig-nificant in the full model, suggesting that taken together, job motivationand self-confidence for learning and development are not predictive ofsupport for change. A plausible explanation for these results is that thesmall sample size led to an estimation problem for the full model with thelarge number of parameters being estimated. In this case, the relativelyclear results of Models 1, 2 and 3 overrule the results of Model 4.


Model 1 Model 2 Model 3 Model 4

Dependent Variable Level 1 Estimate ��2.350** ��2.717** ��2.553** ��2.789**Threshold S.E. 0.682 0.720 0.685 0.725

Level 2 Estimate �1.441* ��1.754* ��1.606* ��1.814**S.E. 0.665 0.700 0.665 0.703

Education Level 0 Estimate ��1.550* ��1.603* ��1.450* ��1.568*S.E. 0.735 0.756 0.735 0.762

Level 1 Estimate ��1.635* ��1.806** ��1.624* �1.790S.E. 0.662 0.691 0.663 0.698

Gender Level 0 Estimate ��0.534† �0.488 �0.613* �0.537S.E. 0.297 0.303 0.304 0.309

Job motivation Level 1 Estimate ��0.818† �0.541S.E. 0.480 0.534

Level 2 Estimate ��0.668* �0.604S.E. 0.336 0.345

Self-confidence for Level 1 Estimate ��0.829† �0.555learning and S.E. 0.455 0.512development Level 2 Estimate �0.307 �0.159

S.E. 0.276 0.286�2 8.771* 15.078* 12.700* 16.335*

Notes: N � 86. Parameters for variables’ highest level are set to zero because they areredundant. Coefficients typed in bold are significant at the 0.01 level, the 0.05 level, or the 0.10 level.†p � .10, *p � .05, **p � .01.

Table 2: Regression results of support for change.


5. Discussion and conclusionBoth hypotheses are therewith provisionally refuted, which is surprising inthe light of the assumptions made at the outset. The aim of this article is torelate an employee’s job motivation and self-confidence for learning anddevelopment to the employee’s support for organisational change. At themost basic levels, the findings in respect of job motivation extend currentresearch on the importance of developing job motivation by linkingemployees’ job motivation to the aim of a firm’s downsizing endeavours:support for change in order to improve the efficiency and profitability ofthe firm. In doing so, we support Stumpf and Hartmann’s (1984) sugges-tion that work motivation is the driver of work performance. Firms investin human resource system with the hope that this investment will trans-late into higher levels of job motivation, more advantageous human capi-tals, and thus better work performance. In the context of downsizing, firmswould expect to receive support for change from employees with highlevels of job motivation. The negative and significant impact of job motiva-tion in Model 2 suggest that this does not indeed occur. Rather than beingsupportive of change in the context of downsizing, we found that job moti-vation had a negative effect on teachers’ support for change. The resultsare inconsistent with other studies (e.g., Narayan et al. 2007). Narayanet al. (2007) find that people who were motivated to learn demonstratedhigher levels of readiness to change in a United States sample of 127driving under influence offenders. The findings suggest that employeeswith high levels of job motivation do in practice provide relatively lowlevels of support for change, at least when they are confronted with down-sizing. One plausible explanation for this effect is that one may be afraid ofbeing seen as providing support for a plan that will result in a potentiallayoff of his/her colleagues and that one may be indeed required to providemoral support to those who will be affected by the downsizing by means ofproviding no support to the downsizing. From these data one might con-clude that the human resource system, which had increased job motiva-tion of the employees, had failed in that it had not been able to generatethe employees’ support for the downsizing.

The findings pertaining to self-confidence for learning and develop-ment suggest that this may not help a firm with its downsizing. That is,employees with self-confidence for learning and development tend toprovide low levels of support for change when a firm introduces downsiz-ing. The results suggest that a somewhat complex process governs therelationship between self-confidence for learning and development and avariety of variables that represent employees’ behaviour. When employeeshave self-confidence for learning and development, this facilitates theiractual learning and development in response to the requirement of newwork demand. This benefits the firm. However, when a firm introducesorganisational change (e.g., downsizing) to improve firm performance,employees with high self-confidence are unlikely to provide support forchange.



The results suggest that it will be easier to realise a downsizingprogramme, if the workforce consists of employees with low levels of self-confidence for learning and development. One may conjecture that thislevel of self-confidence will lead to a more effective change programme,with improvements of the organisation’s efficiency and profit. Even thoughsuch an assumption would require additional empirical evidence, one cancogently assume that employee support – ceteris paribus – leads to downsiz-ing success.

The different characteristics of employees required in different contextsare problematic for firms. On the one hand, one may argue that employeeswith self-confidence for learning and development are strategic assets thatpotentially help a firm sustain competitive advantage over time (Wrightet al. 2001), because these employees are more likely to be capable of sig-nificantly improving work performance and adapting to new job require-ments. On the other hand, based on the findings of this study, employeeswith high self-confidence for learning and development are less likely toprovide support for change; thus, a firm that introduces downsizing is lesslikely to receive employee support for change, reducing the probability ofdownsizing success. Taken together, the results about education and self-confidence for learning and development results suggest that when a firminitiates changes in the organisation, it should expect that employees withhigh education and self-confidence for learning and development tend toprovide low levels of support. One plausible explanation for the results isthat teachers with high education and self-confidence for learning anddevelopment hold beliefs that there are other existing job opportunitiesavailable to them outside the organisation; thus, they might see no incen-tives to support downsizing pursued by the school.

A number of limitations to this study require attention. First, as discussedearlier, the small sample size led to an estimation problem for the full model,thereby making coefficients for explanatory variables in the full modelinsignificant. Second, self-reported data in this study made it difficult to sep-arate method variance from true score variance. It is possible that methodvariance bolstered or weakened the magnitude of relationships between pre-dictors and outcomes. To reduce the possibility of mono-method bias, futurestudies should aim to incorporate other methods than relying on subjects’self-reports. For instance, future research should assess the extent to whichdirect observation of employees can be used to measure the employees’ jobmotivation and support for change. Last but not least, this study is exclu-sively based on cross-sectional data; hence, the causal inferences regardingpredictor/outcome relationships could not be determined. Longitudinaldesigns in future studies would enable true causal inferences.

This said, there is much more work to be done. An obvious extension ofthis line of research would be to compare data from this study with datafrom other downsizing plans and organisational contexts. For example, wewould hypothesise that job motivation would decrease resistance to adownsizing. The logic is that an employee may be morally obliged to not



support the downsizing that will negatively affect his or her colleagues. Assuggested before, future research should look more closely at the dynamicinterplay between job motivation and self-confidence for learning anddevelopment in order to tease out more subtle effects on the developmentof human resource potential. More specifically, job motivation and self-confidence for learning and development not only improve work perfor-mance but also decrease support for change. Are there differences in theeffects of job motivation on support for change in the context of assetexpansion versus downsizing programmes? At the same time, it should beexamined whether the different types of data analysis methods signifi-cantly influence the outcomes of the study. This is particularly importantbecause scholars in management studies tend to adopt the ordinaryregression analysis in their study of dependent variables that are measuredon ordinal scale. McKelvey and Zavoina (1975), for example, suggest thatusing regression models that do not appropriately account for the natureof ordinal data may provide misleading results. Therefore, we might wantto revisit our analysis in order to examine the extent to which employees’job motivation and self-confidence in learning and development are likelyto have negative effects on employees’ attitudes and behaviours in othercontexts. Finally, longer-term implications of job motivation and self-confidence for learning and development should be studied. This should beset alongside further work on the processes that create employees’ jobmotivation and self-confidence for learning and development. This shouldlead to a more comprehensive account of the processes that governemployee reaction to a variety of organisational initiatives.

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Appendix: Questionnaire survey itemsSupport for change

1. I agree with the organization’s decision to make this change.2. This change is acceptable to me.3. I certainly comply with this change.

Job motivation1. I take pride in doing my job as well as I can.2. I try to think of ways of doing my job effectively.3. I feel a sense of personal satisfaction when I do my job well.

Self-confidence for learning and development1. I am very confident at learning and developing new skills relevant to my job.2. I know I am very capable of keeping up with new techniques and knowledge

required for my job.3. I can develop my career-relevant skills.


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Suggested citationVithessonthi, C., & Schwaninger, M. (2008), ‘Job motivation and self-confidence for

learning and development as predictors of support for change’, Journal ofOrganisational Transformation and Social Change 5: 2, pp. 141–157, doi: 10.1386/jots.5.2.141/1

Contributor detailsChaiporn Vithessonthi is a visiting lecturer in the Faculty of Accountancy andManagement at Mahasarakham University. He received his doctorate degree fromthe University of St. Gallen, Switzerland. His research interests include interna-tional management, corporate finance and competitive strategy. Contact: ChaipornVithessonthi, Faculty of Accountancy and Management, Mahasarakham University,Kantarawichai, Mahasarakham 44150, Thailand.E-mail: [email protected]

Markus Schwaninger is a Professor of Management at the University of St. Gallen,Switzerland. His research focuses on issues of general management, namely strat-egy and organisational transformation. Methodologically, his works are orientedtowards innovative approaches to dealing with complexity. Contact: MarkusSchwaninger, Institute of Management, University of St. Gallen, Dufourstrasse40a, CH-9000 St Gallen, Switzerland.E-mail: [email protected]





E-mail at work: A cause for concern? Theimplications of the new communicationtechnologies for health, wellbeing andproductivity at work*Howard Taylor Buckinghamshire New University

George Fieldman Buckinghamshire New University

Yochanan Altman London Metropolitan University

AbstractWith the rapid and decisive impact electronic communication has had on our livesin general, and the work place in particular, notably e-mail as the preferred com-munication medium, this literature review paper examines the available evidenceof its potential negative effects. Even though the benefits of e-mail communicationfor individuals and organisations are well noted, it is argued that the particularcharacteristics of electronic mail and communication may have an adverse impactupon well-being, stress and productivity. E-mail may act as a stress conduit but isalso in itself a potential stressor. It may impair productivity too due to its com-munication characteristics, affecting key operational aspects such a decisionmaking and team cohesion; it may escalate disputes, facilitate harassment andencourage litigation. We present a framework delineating antecedents and poten-tial personal and organisational outcomes and conclude with an outline agendafor further research as a first step in developing strategies to overcome e-mail’spotential negative consequences.

1. IntroductionIn all areas of work and work-related domains, electronic-mail has becomethe primary source of communication in the workplace (APS 2003) with98% of ‘business-to-business’ communication worldwide employing it(Business Communicator 2004). E-mail is also rapidly becoming the pre-ferred medium of personal to organisational communication, evidenced bythe steep rise in personal computers and home-based Internet communi-cation (Levitt and Mahowald 2003; Rosenberg 2003). However, it seemsthat the move to this new era of communication is driven more by theimmediate, practical advantages, and the availability of the technology,rather than a rational assessment of its advantages and disadvantages.The use of e-mail and electronic messaging is the biggest change in the

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Keywordse-mailelectronic

communicationwell beingstressproductivity


* At Thomas Edison’sOntario home, thebirthplace of the telephone, there is asmall plaque depictinginstructions to theusers of the then newmedium: how tospeak, at what voicelevel and intonation,at what distance fromthe receiver, keyphrases, etc. At thetime these made anecessary manual;

OTSC_5-2-05-Altman 5/31/08 10:20 AM Page 159

medium of communication since the introduction of the telephone, whichbecame an integral part of the development of the modern business era ofthe last century. It is likely that communication in the new millenniumwill present new concerns and challenges.

The apparent advantages in using e-mail as the preferred medium ofcommunicating, as well as other forms of electronic messaging (mobilephone texts, Internet chat rooms), have opened up immense opportunitiesfor work-related communication and derived efficiencies. The technologyis easy to use and cost-effective, facilitating networking and access (Gartonand Wellman 1995), as is indeed manifested in it being so readily, rapidlyand universally embraced in a wide range of occupations and services. Forexample, in the legal profession, Horton Flaherty (2001) discloses thatattorneys are now negotiating, advising, exchanging documents andresponding to clients via e-mail. In the medical profession Neville (2004)reported a major impact of e-mail on doctor-patient relations. E-mail com-munication now dominates such diverse areas as after sales service andlocal government – resident contacts (Riquelme 2004). E-mail is evenbeing used in psychotherapy (McDaniel 2003) and counselling (Nakadaand Masayuki 2000) – a traditional domain of face-to-face interaction.

Indeed, The transfer from a manufacturing-based economy to aservice-based economy, and more recently to a knowledge-based economy(OECD, 1996), may have stirred a fundamental and irreversible shift in thenature of workplace communications (Castells 2001). Improved commu-nication technology means, for example, that it is now much easier towork in a location that is physically detached from other workers for longperiods (as well as in multi locations) and still be a formal member of a sin-gular team (Arnold et al., 2005). This change in working practice as aconsequence of advances in technology has added to the discourse onwork-related stress an important new interface: that of work and home life(e.g. Sutherland and Cooper 2000). But are these changes all positive?Now that e-mail use has become so ubiquitous, perhaps it is time to beginto ask questions about the possible disadvantages and perhaps even nega-tive consequences for this form of communication. In line with Hart andCooper (2001) who argue that viewing any work experience as eitherstress-positive or stress-negative is too simplistic, we believe the time hascome to question e-mail, not discounting its considerable advantages, as toits potentiality as a source of stress in the work context, as well as assess itspossible negative effect on related productivity.

The aim of this article therefore is to highlight areas of concern thathave emerged and examine the divergent positions voiced as evidenced inthe extant literature, concerning the impact of computer-mediated com-munication (CMC) in the form of e-mail. We will outline the impact that e-mail is having on people at work, especially in the areas of wellbeing andhealth, on the one hand, and for productivity and efficiency, on the other.

The literature was derived from a comprehensive search of manage-ment psychology databases, for example, Psychinfo (covers 1,900 journals

nowadays, one readsthe notes with a wrysmile: surely everyoneknows what one canand can’t do with atelephone? As we areat the onset of a worlde-mail dominatedepoch, we likewisecould do with someuser instructions,deploymentconventions, and bestpractice. That may beno mean task.

160 Howard Taylor, George Fieldman and Yochanan Altman


in 35 languages), and ABI/Inform/Proquest (articles from business andmanagement journals, trade and industry publications, and UK newspa-pers). Searches were made covering the period 1974 to January 2005,using the following key-word combinations: (1) electronic mail systemsand communication (2) computer-mediated communication and stress (3)electronic communication and health. The papers, books, book chaptersand articles were finally selected based on their abstracts. The searchrevealed a bias in favour of a focus on productivity rather than health inrelation to electronic communication. For example, a search of Psychinfoproduced 104 hits relating to electronic communication and productivityas against 21 hits for electronic communication and stress. Altogether wereview here 73 papers, books, book chapters and articles, which specifi-cally addressed the topic.

2. Workplace stress and communicationWith workplace stress reaching epidemic proportions (Cooper and Clarke2003), and the ever-increasing compensation costs of stress-related work-place injury (Griffin 2004), the study of stress at work has become ofmajor interest to scholars and practitioners alike.

In a review of studies looking at the characteristics of companies with thehighest number of stress-related compensation claims compared with thosewith the lowest number of claims, Moran, Wolff and Green (1995) showedthat the worst organisations had at least ten times as many claims as thebest in each industry. More importantly, they showed that workers’ compen-sation costs and associated occupational stress could be managed throughemployer-driven initiatives. They also claim that, even though some of thecauses were external to the employer, the most important factor was theorganisation itself and its management practices. Communication and socialrelationships may be a major factor in stress at work.

A number of attempts to categorise potential sources of job stress havebeen made. Sutherland and Cooper (2000) for example suggest six cate-gories: the job itself, role, relationships at work, career stress, organisationalclimate, and home and work interface. Most, if not all, categorisations of thepotential sources of stress recognise social relationships and, incorporatedin them, communication at work as important relevant factors (Cooperand Marshall 1978; HSE 2004; Le Blanc, Jonge and Schaufeli 2000;Sutherland and Cooper 2000).

In Johnson and Hall’s (1988) demand-control-support model, socialsupport is assumed to be a critical factor, acting as a buffer to stress.Relationships with superiors, colleagues and subordinates can thus act toreduce job stress: the model emphasises the positive aspects of social rela-tions. One wonders though whether this is a wholly adequate conceptual-isation of the role of social relations. Some doubt was cast on the buffereffects of social support on stress (Cohen and Wills 1985); and the majorchanges we currently evidence in the nature of work and careers raise thisquestion too (Guest and Conway 2002).

161E-mail at work: A cause for concern? The implications of the new communication . . .


3. E-mail as an inbuilt work stressorRomm and Pliskin (1999) present the features of e-mail that may haveparticular implications for stress in a work setting. They are:

• Speed. Messages transmitted by e-mail can reach their destination in avery short time, regardless of whether the message is being sent to theoffice next door or to someone on the other side of the globe.

• Multiple addressability. The capacity to send an e-mail message simulta-neously to a large group of people.

• Recordability. The capacity to store e-mail messages indefinitely, auto-matically. This feature allows a database of messages to develop. Someof the messages may have no significance at the time but may later beused as evidence, in a dispute for example.

• Processing. This allows a message to be altered by a recipient before for-warding it on to other recipients. Information can be added, removedor emphasised.

• Routing. Defined as the capacity of senders to transmit messages togroups of addressees whose names may or may not appear as recipi-ents. This function allows the sender to alter the names of the recipi-ents in a group, resulting in individuals who think they are being sentthe same message as others, actually receiving slightly (but signifi-cantly) different messages. This feature also allows messages to bepassed on to individuals who the original sender had not intended themessage to get to.

3.1. Work overloadA common complaint of e-mail users is its impact on their workload.A large survey by the Australian Psychological Society (APS 2003)found that 80 per cent of workers spent more than 20 per cent oftheir day dealing with e-mails. Most of those surveyed said they dealtwith between twenty and fifty work-related e-mails a day; althoughreceiving one hundred e-mails a day is not uncommon (Horton Flaherty2001). Most (69%) found having to deal with their daily intake of e-mailmildly or moderately stressful; and those who sought psychologicalhelp about workplace stress identified e-mails as part of that stress(APS 2003).

In that context it may be worthwhile to note that Karasek andTheorell’s (1990) influential model puts job strain as a consequence of twofactors: job demand and job decision latitude (control). Thus job strain isconceived not only as a consequence of job demand but also dependentson the degree of control a worker can exercise. Jobs that are high indemand but also high in job decision latitude would not necessarilyproduce strain. This could help in understanding the stress caused byhaving to deal with large numbers of e-mails. The problem may result notonly from the volume of e-mails received but also from the inability tocontrol e-mail traffic as well.



4. The potential of e-mail to disturb social relationships at workE-mail may contribute to workplace stress in a number of different ways.The new technology has exacerbated some problems that already existed,such as work overload (see above). However, some of the unique features ofe-mail also influence communication in a manner that may contribute tostress in new ways. These are listed below.

4.1. Electronic mail communication may make it moredifficult to understand and respond to a messageA survey of 26,000 e-mail users showed that 52 per cent of respondentsstruggled to interpret personal e-mails (Yahoo 2003). The findings identi-fied a new cyber disorder: PPMT (pre and post mail tension) relating toanticipated and sent mail. Schwartz (2003) also identified potential e-mailmisunderstanding as a source of interpersonal difficulties.

In a work setting, inherently stressful communications may inevitablyoccur from time to time (for example, instructions to workers to achievecertain targets or goals). E-mail may seem an attractive means to carryingout such communications. This is because the sender of such communica-tion can eschew or postpone having to deal with any objections, oradverse reactions of the recipient. However, top-down imposition of goalshas been shown to be stress inducing and Quick et al. (1981, 1997)showed that stress could be reduced by the use of goal-setting only when aparticipatory and interactive relationship existed between supervisor andindividual, more so perhaps in a virtual work environment, where littleface-to-face communication is possible.

4.2. Electronic mail communication may encourage aninhospitable working environmentSocial support is a means of enhancing an individual’s capacity to dealwith stress at work by increasing their perception that they are cared forand loved, that they are held in some esteem and valued, and belong to asocial framework (Quick et al. 1997). The ‘isolationist’ property of e-mailcommunications thus involves a potential health risk, since isolation is arisk factor for both mortality and morbidity (Borkovec 2005; House,Landis and Umberson 1988).

The monitoring of work-based e-mail is apparently not uncommon(Hacker et al. 1998). In a case study, Romm and Pliskin (1999) showedhow e-mail could be employed to manage people through surveillance andtight control of movements by requiring them to report regularly on theirwhereabouts and deeds. However, efficiency gains were achieved at a costof increased stress and general discontent. In customer service work envi-ronments it would be easy to monitor performance through surveillanceof e-mail communication. Thus, for instance, in private banking, serviceproviders are required to respond to customers’ communications withintwo hours of receipt of e-mail, their response speed (and response con-tents) being open to scrutiny of their superiors (Altman 2005).



Sutherland and Cooper (1988) showed that inconsiderate behaviour,close supervision, and rigid performance monitoring by supervisors con-tributed significantly to feelings of job pressure. Negative health effects of poorsuperior–subordinate relationships reported in the literature include: hyper-tension (Kahn et al. 1972), coronary heart disease (Haynes and Feinleib1980), diastolic blood pressure (Mathews et al. 1987; Wager, Fieldman andHussey 2003) and a higher risk of psychiatric disorder (Stansfield, Head andMarmot 2000). Concern about the effects of inconsiderate behaviour ledTaylor, Fieldman, and Lahlou (2005) to examine the effect that a single e-mail communication might have on a recipient’s physiological response. Ina controlled experiment they showed that blood pressure was higher when ane-mail recipient was reading a threateningly worded reprimand than whenthey were reading a nonthreateningly worded reprimand.

E-mail may become an instrument for harassment and bullying too;Baruch (2004) brought convincing evidence of widespread e-mail bullyingin one large organisation. E-mail bullying was associated with anxiety andintent to leave, and negatively associated with job satisfaction and perfor-mance. Finally, e-mail communication has been shown to escalate disputes.In a comparative study, Friedman and Currall (2003) demonstrated howthe structural properties of e-mail (textual, electronic and asynchronous)make it more likely that disputes would escalate when people communicateelectronically than when they communicate face-to-face or via the tele-phone. By asynchronous, they mean that the communicators are not co-present, but rather they can read and respond whenever they desire. Theresult is not a conversation but a series of one-directional comments.

5. E-mail’s potential negative impact on productivityPerhaps because of the self-evident productivity advantages of communi-cating via e-mail: speed, immediacy, accessibility and cost, there is littleresearch about its potential drawbacks. The evidence that does exist – forthe period preceding the e-mail revolution – suggests that electronic com-munication has its disadvantages too. A number of studies have shownthat groups that interact via electronic media take longer to completetasks than groups interacting face-to-face (Kiesler et al. 1985; Weisband1992). Straus and McGrath (1994) found some advantages to interactionvia electronic media (as compared to face-to-face interaction) in the gener-ation of ideas and creativity; but maintain that computer-mediated com-munication was particularly inappropriate for a judgement task whereparticipants had to determine disciplinary action.

Other studies showed that computer-mediated interaction reduces par-alinguistic and social context cues and prevents the full exchange of viewsand feedback available in face-to-face interaction (McGuire, Kiesler andSiegel 1987; Sproull and Kiesler 1986). These studies also found that thenumber, length, complexity and novelty of arguments are much reducedin computer-mediated groups compared with face-to-face groups.Computer-mediated discussions tend to consist of simple statements of



position rather than real argumentation. The limitations associated withcomputer-mediated interaction (restricted ability to exchange verbal andparalinguistic information or to provide dynamic feedback and conveysocial context cues) tend to discourage the exchange of arguments. Workon group decision-making has shown that some of the least desirableaspects of group behaviour, such as ‘groupthink’ and group polarisationoccur when argumentation is absent. There would appear to be a strongcase for arguing that important decisions should not be made via e-mail.

Research has also shown that computer-mediation reduces perceivedhierarchy in team communication (Kiesler and Sproull 1992, Straus1996), and may lead to the establishment of alternative hierarchies in elec-tronic environments (Gatzenbrucker 2004). However, electronic communi-cation also reduces the context and milieu of other team members,conveyed through non-verbal and paraverbal nuances, present in face-to-face communication (Argyle et al. 1970; Bordia 1997; Thompson andCoovert 2002). The effect of this may be demonstrated in the area of nego-tiations (Poole, Shannon and DeSanctis 1992). E-mail is increasinglyreplacing face-to-face and telephone communication (Seaberry 2000);however, we know little of how e-mail and face-to-face negotiations differ(Morris et al. 2002) and the evidence is inconclusive. One study (Purdy,Nye and Balakrishnan 1997) found an advantage for e-mail, another studyshowed e-mail to be disadvantageous (Arunachalam and Dilla 1995), andat least two studies found no significant difference between e-mail and face-to-face negotiations (Barsness and Tenbrunsel 1998; Croson 1999).

These mixed findings suggest that e-mail negotiations may differ withcontext, sector and organisation. Morris et al. (2002) claimed that e-mailnegotiations suffered from low levels of rapport. They proposed that a com-bination of personal contact (via telephone) and e-mail interaction mightbe more effective. As a more socially constrained medium of communica-tion (Chaiken and Eagly 1983, Guadagno and Cialdini 2002), e-mail mayrequire more negotiating than the more traditional modes of communica-tion. Early studies comparing computer-mediated communication withface-to-face communication, showed that participants were more likely toviolate social norms of politeness, and preferred to be task focused (Siegalet al. 1996). Participants interacting face-to-face were found to like theirdiscussion partners more than those interacting via computer (Kiesler et al.1985; Weisband and Atwater 1999). Guadagno and Cialdini (2002) alsoshowed gender differences in the effectiveness of messages in differentmodalities. Women in the face-to-face condition reported more agreementwith the message than women in the e-mail condition. There was no signif-icant difference in agreement for men in the face-to-face and e-mail condi-tions. The authors suggest this is because women focus more onrelationship formation and co-operation than do men.

One of the advantages of e-mail communication is that it allows mes-sages to be sent without interrupting the recipient. The ability to contactpeople without interrupting them is a feature of e-mail that may have an



empowering effect for people with a related anxiety. The anxiety may be aconsequence of the communicator having lower status than the recipientor it may be that the communicator is intimidated by the recipient, orsimply that the communicator is more generally anxious about socialcontact. On the other hand, from the early days of experimental psychol-ogy we know that interruptions may be disruptive to people engaged on atask. Furthermore, modern broadband ‘always-on’ technology allows per-sonal computers to check for new e-mail every minute, and the applica-tion can be set to provide an audible alert upon receipt of a new message.These innovations provide opportunities for frequent interruptions, whichmay be detrimental to work productivity.

6. The potential of e-mail to impact on emotionsWithout the additional cues of facial expression, gestures, tone of voice, orhead nods, the feedback that one normally receives when communicatingis lost (Weisband and Atwater 1999). It has been suggested that the use ofemoticons (e.g. happy face, sad face) may aid non-verbal communication.However, Krohn (2004) has shown that an understanding of suchsymbols is not universal, especially among older generations.

According to Nakamura, Buck and Kenny (1990) facial expressionsare key to understanding emotional states, and e-mail is often used tocommunicate factual information without addressing any germane emo-tional issues. However, in circumstances where there is an emotionalelement, it has been suggested that electronic communication may exacer-bate the emotion. For example, Walther (1996) suggests that much per-sonal information can be conveyed by text, and cites examples of e-mailromances, on-line social support communities, and virtual weddings.

The use of electronic communication in developing social support net-works is one of the fastest growing and interesting areas of social change.The recent development of on-line groups providing support in areasranging from on-line dating to ‘whistle blowing’ on organisational practices,demonstrate the potential of the worldwide web for social empowerment.Research on social support (e.g. Tardy 1992; Searle, Bright and Bochner2001) makes a distinction between informational support (solutions to tech-nical problems, practical advice) and emotional support (improving one’ssense of self worth). There is evidence to show that both of these elementsare present in on-line support networks. Davidson, Pennebacker andDickerson (2000) provide examples of the importance of informationalsupport in on-line illness support groups. However, Preece (1999) points outthat people using such on-line support groups are often looking for morethan just factual information. When people are suffering from a problem it isvital to be able to communicate with others who understand the problem.On-line support groups provide people with the opportunity to empathise oridentify with each other (an important component of psychotherapy).

However, in a work setting the lack of cues may lead to an intensifyingof emotions in an entirely different and more negative way. Friedman andCurrall (2003) propose that diminished feedback will result in weakened



interpersonal bonds that in turn may act as a trigger for conflict escalation.According to Kiesler and Sproull (1992), when disagreements occur elec-tronically, social behaviours such as politeness and acknowledgement ofthe other’s perspective decrease and participants engage in deeper conflict.

One of the key features that comprise the stress response is the con-comitant emotional reaction. To understand the impact of e-mail on stressat work, we need to understand how e-mail affects the communication ofemotion. Acceptance theory (Hayes 1987; Hayes, Strosahl and Wilson1999) may provide a useful framework for understanding how emotionsare affected by electronic mail. Psychological acceptance refers to a will-ingness to experience feelings, especially negative feelings such as fear,without having to avoid them or let them determine one’s actions. Bondand Bunce (2003) have shown that acceptance predicts levels of mentalhealth. The lack of conversational communication embedded in e-mailcommunication may hinder the effective processing of negative feelingsand consequently increase stress.

Summary model: e-mail, stress and productivity outcomes.The model shown in Table 1 summarises the relationships proposed in

the literature between particular e-mail characteristics, the changes in thework setting that these characteristics produce, and subsequent poten-tially negative personal and organisational outcomes.

7. What we need to know about e-mail’s impact in the workplaceThe rapid development of electronic technology and its deployment has ledto an understandable lag in the body of research examining its character-istics, usage and impact. We propose a number of areas of particularpromise for further research.

Much of the evidence to date concentrates on e-mail as a communica-tion tool, but we need to know a great deal more. To help organisations informulating policies regarding organisational use of e-mail, further evi-dence is needed to demonstrate how communication practices interact


Negative personal andE-mail characteristics Anticipated impact organisational consequences

Speed and convenience Increased number of messages Work overload, errorsand increased expectation of response speed

Recordability Increased control potential Resentment, reduced autonomyMultiple addressability, Communication manipulation Potential harassment; possible

processing, routing litigationLack of social cues (facial Weakened interpersonal, bonds; More misunderstandings, lower

expression, feedback) lowered commitment decision quality, context; escalation of disputes

Lack of conversational Focus of attention on internal Greater susceptibility to negativecues (turn-taking, colour, (negative) states affect (mood) and negativeclarification, tone) evaluations

Table 1. E-mail characteristics and their negative effects on personal and organisational outcomes.


with the features of e-mail to produce outcomes such as work overloadand lack of control. We need to know what communication compositionswill yield the best communication results in a collegial work environment.At the micro (individual) level, of high relevance are the effects of specificwords, phrases and tonal signifiers such as font, message structure andemphasis (Boje, Oswick and Ford 2004). We need to know, firstly, whetherand how such message characteristics affect the message recipient.Secondly, we need to know how these relate to important organisationaloutcome variables of employee well-being, health and productivity, as wellas mediating variables, such as interpersonal trust.

Morris et al.’s (2002) study of e-mail negotiations is an example of howresearch findings could be used to improve the outcomes of e-mail-basedcommunication. The study examines the process of negotiating deals andinterpersonal disputes via e-mail. Overcoming obstacles such as initialmistrust and interpersonal friction is achieved through a series of, largelyautomatic, verbal and non-verbal behaviours. E-mail inhibits the processof exchanging personal information through which negotiators establishrapport. The results showed that the liabilities of e-mail communicationscould be minimised by a brief, pre-negotiation, personal telephone call.

At the organisational level, we need to discover how organisations withdifferent communication styles, and different levels of trust and reciproc-ity, differ on outcome variables relating to productivity and well-being. It ispossible that records of e-mail messages could be used by organisations todevelop communication policies. Such policies may help organisations tochange and develop into more effective and, dare we say, more humaneworkplaces by changing the corporate and personal communication stylesof their managers and workers.

And while there is some evidence on the communicative effects of e-mail, we know next to nothing on its organising qualities (Weick 1995) ina work context. What are e-mail’s effects on work processes, structures,power distribution, relationships, motivation, commitment, organisationalcitizenship behaviour, to mention but a few. At the meta organisationallevel we may want to find out how organisational clusters (sectors, indus-tries) differ in their ‘e-mail behaviour’ and how, in turn, this shapes dis-tinctive organisational cultures.

As Sutherland and Cooper (2000) point out, interpersonal skills train-ing is usually a key issue in leadership training programs. It may now betime to include e-mail communication skills as a key part of the interper-sonal skills training for all managers and assess its impact on developing aconstructive e-mail culture at the workplace.

Finally, its potential to facilitate industrial democracy may be a liberat-ing quality of electronic communications. Its effect in facilitating politicaldemocracy is well recognised (Smith 2004; Holmes and Grieco 2002).Realising the full potential of electronic communication in the workplacemay add an important course to organisational citizenship. We wouldbenefit from longitudinal studies of e-mail communication policies and ‘bestpractice’ case studies. However, as studies on e-democracy have shown,



there are potential dangers in opening up policy making to the will of themajority – we may not like the direction the majority want to take.

AcknowledgementWe gratefully acknowledge the help of Frank Bournois, Jacques Rojot and twoanonymous reviewers. All the authors contributed equally to this work.

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Contributor detailsYochanan Altman is Research Professor of International HRM and ComparativeManagement at London Metropolitan University and Visiting Professor of InternationalHRM with CIFFOP, University of Paris (Panthéon-Assas). Educated in occupationalpsychology and organisational anthropology he is also a trained psychotherapist.Yochanan is Founding Editor of the Journal of Management, Spirituality and Religion,European Editor of the journal Human Resource Planning and past Editor of Journal ofManagerial Psychology. Yochanan’s research interests are in international humanresource management, careers, gender, change management, creativity and organisa-tional spirituality. Contact: 262 Shakespeare Tower, Barbican, London EC2Y 8DR, UK.E-mail: [email protected]

Dr. George Fieldman is Principal Lecturer in Psychology at Buckinghamshire NewUniversity. He obtained his BSc and PhD degrees from King’s College London. Hisresearch interests are in Health and Evolutionary Psychology. He has variousentries on BBC News online regarding his own research and invited commentaryupon the research of others. He is a qualified Cognitive Behavioural Psychotherapistin practice in London. Contact: Buckinghamshire New University is HighWycombe, HP11 2JZ, UK.E-mail: [email protected]

Howard Taylor’s PhD research is titled ‘The effects of communication style on taskperformance and well being’. Howard is a Senior Lecturer in Psychology atBuckinghamshire New University. He has presented papers relating to the negativeeffects of certain communication styles and is involved in ongoing researchinto effective communications, especially electronic communication. Contact:Buckinghamshire New University, High Wycombe, HP11 2JZ, UK.E-mail: [email protected]





Communication and informationexchange among SMEs and their localenvironmentViveca Asproth Mid Sweden University

Christina Amcoff Nyström Mid Sweden University

AbstractIn this article the results from a Swedish pilot study in the project ‘Arena for Sus-tainable Innovative Development of small and medium-sized enterprises’ is pre-sented. The project in a whole aims to create and test a model for collaboration andsustainable development among small- and medium-sized enterprises (SMEs) inlocal areas. The research question in this article is delimited to issues concerninguse of ICT, information exchange and communication among the interestedparties. The pilot study was accomplished in a qualitative and explorative waywith semi-structured interviews. As a result of the study some questions are iden-tified as urgent to further investigate.

1. IntroductionCollaboration between different kinds of organisations such as companies isresulting in a range of important outcomes for the collaborating parts.Collaboration not only transfers existing knowledge among organisations butalso facilitates the creation of new knowledge and produce synergistic solu-tions. Organisations can also achieve a more central and influential positionin relation to other organisations through the collaboration (Hardy et al.2003). To achieve the positive effects with collaboration, communication andinformation exchange between the organisations must be efficient. Much oftoday’s communication and information exchange between organisations areoften sporadic and isolated. Virtual teams can bridge the inter-organisationalboundaries and provide a considerable competitive advantage (Lipnack andStamps 1997; Townsend et al. 1998). The term Virtual team can be used forteams that are separated in time and/or in space and teams bridging organi-sational boarders (Watson-Manheim, Chudoba and Crowston 2002).

According to Zakaria, Amelinckx and Wilemon (2004), the humanchallenges of virtual teams are:

• Creating effective team leadership• Managing conflict and global virtual teams dynamics

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KeywordscommunicationSMEcollaborationinformation exchangeICT


OTSC_5-2-06-Nystrom 5/31/08 10:21 AM Page 175

• Developing trust and relationships• Understanding cross-cultural differences• Developing intercultural communication competence

Handy (1995), Maznevski and Choduba (2000) and Crossman and Lee-Kelley (2004), among others, claim that ‘trust needs touch’ at least inthe initial stage. Crossman and Lee-Kelley (2004) conclude that low com-mitment from the individual leads to low trust and that team effectivenessis inhibited, yet organisational efficacy in dispersed teams requires highmutual commitment and high trust. They also conclude that trust takestime to develop.

Holmqvist (2003) and Rashman and Hartley (2002), recommendorganisational learning as a tool to, in the first place, not only develop anintercultural communication competence but also as a complement tolearn more about each other.

The use of organisational learning within an organisation can, whenused in an appropriate way, be successful. The question is how to transferthe concept to inter-organisations. There might be competitiveness andconflicting interest that put hindrance in the way (Asproth 2006).

To increase the possibilities for fruitful collaboration between Swedishsmall- and medium-sized enterprises (SMEs) in geographically delimitedlocations in a peripheral region, a research project has been initiated.Swedish SMEs represents a mix of very small enterprises and there are fewexamples of research projects focusing on this kind of enterprises and theproblems they are facing. Swedish SMEs in this context might well repre-sent SMEs in general. The overall research project (in Swedish the ‘Arenaproject’) is in an initial phase and a pilot study has been carried through.The connection between the ‘Arena project’, the pilot study and this partpresentation is presented in figure 1 below.

The background and interested parties are presented in the nextsection.

1.1. The projectThis section presents the project ‘Arena for Sustainable InnovativeDevelopment of Small and Medium-sized Enterprises’ which the results inthis article are a part of. These results are also a base for further researchin the area.

The research project ‘Arena for Sustainable Innovative Development ofSmall and Medium-sized Enterprises’ is a co-operation between Mid SwedenUniversity, the county administrative board, and the local authority of thecity of Östersund. The project aims to create and test a model for collabo-ration and sustainable development among small and medium sized com-panies in local areas. In the project, two industrial areas, Odenskog andLugnvik, are taking part. A third constellation of companies working withvehicles, vehicle technical centre (VTC) is also incorporated in the project.VTC is a co-operation of interested parties with their background in either

176 Viveca Asproth and Christina Amcoff Nyström


military vehicle education or civil enterprises with connection to vehicles.The area of Odenskog is characterised by increasing heterogeneity amongthe enterprises and trading. The interested group, representing most of theenterprises in the area, wishes to remove the label as a ‘traditional indus-trial estate’ in favour of trading and visiting customers. This is to someextent in conflict with the existing city planning due to limited permis-sions to establish new kinds of trades. The first enterprises in the other dis-trict – Lugnvik – moved from Odenskog in the 1970s, and were earliercharacterised as enterprises demanding large spaces such as hauliers,scrap yards for old cars, and localities for building materials. The districttoday has problems with respect to lack of uniform displaying and prob-lems for customers to find in the area. The interested group in the arearuns a project with the aim to clean up the area and produce uniform dis-plays and enterprise signs. Many of the enterprises in the three studiedclusters are in some kind of an organisational transformation phase,trying to increase their competitiveness.

According to the Statistics, Sweden, a small enterprise is an enterprisewith 10–49 employees. The European commission defines small andmiddle sized enterprises as companies with a range of 10–250 employees.In the studied areas almost every enterprise falls under the definition ofthe Statistics Sweden and certainly within the European commission.There are also quite a few companies that have less than ten employees,the so-called micro companies.

177Communication and information exchange among SMEs and their . . .

Figure 1: The connection between the aim of the different parts – the overallresearch project – ARENA – the Pilot project and the part study.


The overall aim with the ‘Arena project’ (see figure 1) is to create andtest a model for collaboration and sustainable development among smalland medium sized companies in local areas.

Questions to be answered in the ‘Arena project’ are:

• What kind of problems and requirements can be found in small enter-prises with respect to information exchange and communication withothers?

• Which information is needed to promote active engagement among theinterested parties?

• How does the knowledge creation and exchange work between theactors?

An initial pilot study, aiming to investigate the necessary conditions forcollaboration between small enterprises, supporting systems run by thelocal authorities and higher education, in order to reach sustainable devel-opment of the trade and industry was carried through. The aim of thisarticle is to present the results from this initial pilot study limited to thequestions concerning communication and information exchange amongthe interested parties.

2. MethodThis section presents the used Method in the pilot study.

The method used in the pilot study was qualitative and explorative. Thestudy was carried through with help of analysis of background informationsuch as brochures, annual reports and homepages. Opinions and experi-ences concerning collaboration were collected by semi-structured inter-views. Fifteen representatives for the trade and industry representing thethree company clusters, representatives for the local authorities and sevenrepresentatives for the University have been interviewed. The participantsfrom the three company clusters have been selected mainly based on theirrepresentation of not only either enterprises belonging to service sector, pro-duction or trading but also the fact that they represent different enterprisessizes. Representatives from the local authorities and the University have beenselected with respect to their experiences with collaboration with SMEs. Aninterview guide was constructed. The guide was divided into questionsabout collaboration between companies, co-operation with the universityand support from the local authorities and questions about communicationand information exchange. The part of the guide containing questions con-cerning co-operation with the university was used for the university inter-views as well as the part of the guide containing questions about supportfrom the local authorities was used for the local authority interviews.

3. Ongoing research – ICT and small enterprisesThis section presents relevant literature and ongoing research in the areaof ICT1 and small enterprises (SMEs). The focus when identifying the

1 The concept ICT isan abbreviation forInformation andCommunicationsTechnology. Thedifference from theconcept IT is that the focus ofcommunication hasbeen highlighted inthe first conceptwhereas it wasimplicit in the latterdefinition.



articles/papers have been on ICT, SMEs, Networks, organisational change,collaboration, virtual teams and trust.

3.1. Networks and their importance for SMEsSeveral researchers conclude that there are great advantages for enter-prises to cooperate in clusters (Enright 1995; Maillat et al. 1995; Pioreand Sabel 1984; Porter 2001). Accordingly, Carbonara (2005: 213), dis-cusses the advantages of cooperating in cluster:

Clusters base their competive advantages on two distinctive aspects: theinter-networking processes and the speed and easy circulation of informa-tion and knowledge. Hence, a cluster can be seen as an extended enterprisewhere the different actors (the cluster firms) are usually specialised in singlemanufacturing phases that require intense coordination, flexible relation-ships and apporpriate supportintg tools to manage the networking activities.

World Wide Web (WWW) offers great opportunities for SMEs to extendtheir customer base into the global marketplace (Tetteh and Burn 2001).However, there is a need to adopt a different approach to strategic plan-ning and management which can enable an extensive infrastructurenetwork based on shared resources with other firms. Accordingly, SMEscould save costs if they share resources with others and carefully analyseand plan for e-businesses. Internet technology offers general advantagesfor businesses to collaborate (Power and Singh 2007).

Organisations using Intranets to support the internal communicationcan reach great advantages with the use of this technology because itsupports communication, collaboration and knowledge sharing (e.g. Bankand Nyström 2005; Nyström 2006b). Well-functioning external commu-nication demands well-functioning internal communication. The Intranetcan be extended in order to allow special groups – e.g. customers andsuppliers – to share a delimited part of the Intranet. The Intranet is extendedwith an Extranet with the main aim to support external communicationwith specific stakeholders (Nyström 2006b; Telleen 1999).

3.2. Use of technology demands organisational change in SMEsSMEs as well as any type of organisation could be analysed from differentpoints. One way to get a comprehensive view would be to study organisationsas the fusion or synergism of four spheres – Competence or human skills,Management, Organisation and Technology (Holmberg 2001) (see Figure 2).

Holmberg (2001) argues that the interdependence of the spheres hasbeen ignored or even omitted in development and maintenance processesof organisations. The focus is normally only on one sphere at a time.

The adoption of technology in organisations differs. According toSMEs, recent data on the diffusion and adoption of ICTs show that the ICTpenetration is still quite low among SMEs (Eurostat 2002; IDC 2000;OECD 1998; Carbonara 2005).



It is well known that Internet-based technologies and other ICTs offergreat opportunities and advantages for organisations as a foundation forcollaboration – both within the organisations as well as between organisa-tions. Hence, Power and Singh (2007) among others, conclude that theapplication of Internet-based technologies provides significant potentialopportunities for the integration of business processes between firms(Power and Singh 2007 referring to Cagliano, Caniato and Spina 2003and Segev, Patankar and Zhao 2003). Benefits based on this integrationcould, for example be reducing costs for searching for and accessing infor-mation (Berthon et al. 2003; Krumwiede, Swain and Stocks 2003), butlimiting factors could also be the increase of information processing andcoordination costs because of the reducing of transaction costs (Kulkarniand Heriot 1999).

Organisations implementing Internet technology in order to createmore integrated supply chain will probably be confronted with the need forstructural change (e.g. Power and Singh 2007; Reid and Catterall 2005).This change could mean a need to develop new processes (e.g. Jayaram,Vickery and Droge 2000; Mitev 1996) or involve new structures, roles andcompetencies for the management of such process (Malhotra 2000; Power2004). This is in line with the Synergy-4 Model by Holmberg (2001).If new technologies are implemented to support inter-organisational col-laboration, an analysis concerning the structure of the organisation, theprocesses and the management as well as the competence in the organisa-tion and necessary measures should be carried out (the other spheres inthe Synergy-4 model).

According to Rabinovich, the Internet and the Web may have had themost profound impact on business integration and collaboration of allinformation technologies (Rabinovich, Bailey and Carter 2003). Sandersdefines e-business technologies as the Internet, Web, and web-basedapplications (Sanders 2007). Findings show that the use of e-business-technologies has a positive impact on intra-organisational collaboration


Figure 2: Synergy-4, adapted from Holmberg (2001).


(collaboration between organisations) as well as inter-organisational col-laboration (collaboration between two or more departments in an organi-sation). Furthermore, the existence of inter-organisational collaborationhas also a positive impact on intra-organisational collaboration (ibid). Useof e-business technologies, inter- and intra-organisational collaborationhas a positive influence on organisational performance (ibid). However,Sanders points out the fact that collaboration is not synonymous with e-business technology use which wrongly has been presumed by a lot ofcompanies. Collaboration, according to Sanders (2007: 12) is:

a result of human interaction which can only be supported by IT, one ofwhich are e-business technologies, but not replaced.

Companies should therefore consider investing in e-business technologiesin order to promote internal collaboration.

IT can be aggregated into several categories. Barki, Rivard and Talbot(1993) have divided IT into six categories as follows: transaction process-ing systems, decision support systems, inter-organisational systems, com-munication systems, storage and retrieval systems and collaborative worksystems. Another categorisation is provided by Kendall (1997); productionoriented information technologies and coordination oriented informationtechnologies. Some of these ITs might have more impact on collaborationand integration than others which future research should consider(Sanders 2007).

3.3. SMEs and collaboration with the environment –conditions and obstaclesVescovi (2000) has identified ‘six natural troubles’ related to SMEs inintroducing e-communication. It should be noticed that these ‘troubles’not necessarily appear at the same time. The ‘troubles’ are:

(1) Unclear communication strategy(2) New communication paradigms(3) Non-integrated marketing communications(4) Company involvement in the Internet challenge;(5) People for Internet communication and(6) Organisational change.

The first ‘trouble’ – unclear communication strategy – could be related toa waiting attitude to the use of the own Web site where absence of purposeand strategy are common. According to Vescovi (2000), referring toSchlosser and Kanfer (2000) and Vescovi (1998), several researcherspointed out a prevalent attitude of undervaluing the updating and vitalis-ing problems of the web site. The absence of strategies could also be relatedto development of Intranet as a common problem (Bank and Nyström2005; Nyström 2006a).



To solve ‘trouble’ number two – new communication paradigms –diffusion and access to computers and computer competence is needed.The attendance ‘on the Net’ demands also quick responses because of thechanged expectations (Vescovi 2000). Bank and Nyström did also noticethe problem with poor access to the Intranet caused by limited number ofcomputers among assistant nurses which caused uninformed employees(Bank and Nyström 2005).

The presence on the net – trouble number three – demands coordinatedmarketing strategies so the Web site shows a uniform view of the companyaccording to contact information and so on.

The fourth ‘trouble’ – company involvement in the internet challenge –addresses issues as patience and carefully planning. The result from mar-keting activities through the Web site does not come immediately. Requestfor a strong cultural change, long time needed for the results, and theinvestment in continuous updating processes creates quick enthusiasmsand fast disappointments (Vescovi 2000) – ‘trouble’ number five – peoplefor internet communication.

The focus when developing Web sites has been too much on technicalsolutions. Vescovi (2000) argues that marketing competencies must enterthe stage in order to market the companies better.

The last ‘trouble’ – Organisational change – demands that the entireorganisation has competence to use the technology. This is in line withthe idea of Synergy-4 by Holmberg (2001) who argues that change inthe technology demands an overhaul of competence, management andorganisation.

SMEs could increase their level of competence and power of attraction inseveral ways. One way is to use ICT in different ways – when collaboratingand so on. Another way is to adopt the idea of Knowledge Management ina systematic way. Wong and Aspinwall (2005) have in a study, systemati-cally determined the Critical Success Factors for Knowledge Managementimplementation in the SME sector. Their study offers information to SMEswhich, according to the authors, are still lagging far behind when it comesto Knowledge Management practices.

3.4. Trust as a prerequisite for collaborationZaheer, McEvily and Perrone (1988) say – referring to Arrow (1974),Granovetter (1985) and Macauley (1963) – that several theoretical traditionshave recognised the importance of trust in economic exchange.

To obtain new business opportunities a range of new forms of inter-organisational collaborations are formed. The important role of trust incooperative relationships have for some while been paid attention to asexpressed by Smith, Carroll and Ashford (1995, page 15):

The study of trust and its impact on cooperative relationships at all levelsmay be particularly fruitful area of future research.



The formation of cross-cultural trust includes a reciprocal element andfalls under two behavioural categories. The first is credibility where onepart believes that the other part has capabilities, competence, expertiseand resources to contribute to a successful outcome. The second categoryis benevolence, i.e. beliefs about the emotional aspects of the other part’sbehaviour (Johnson and Cullen, 2002).

As mention earlier it is important that group members trust each otherand that they work in a shared context with shared goals. Additionally,commitment to these goals and the identification with the collective areimportant aspects that foster cooperative instead of competitive behaviour(Coleman 1999; Zand 1997). Handy (1995), Maznevski and Choduba(2000), and Crossman and Lee-Kelley (2004), among others, claim that‘trust needs touch’ at least in the initial stage. Crossman and Lee-Kelley(2004) conclude that low commitment from the individual leads to lowtrust and that team effectiveness is inhibited, yet organisational efficacy indispersed teams requires high mutual commitment and high trust. Theyalso conclude that trust takes time to develop.

4. Results of the pilot studyThis section presents the results from the pilot study, limited to issues con-cerning ICT use, collaboration in terms of learning, information exchange,communication and knowledge sharing.

4.1. The use of websites and intranetMost of the enterprises websites were mainly used for publishing.Collaboration and more advanced use modes were only found among enter-prises belonging to a group of companies. Several web sites were designedas one-way communication – pushing of information. Some of the intervie-wees also mentioned the risk with publishing to trivial information on theIntranet though more important issues disappeared (information overload).Several interviewees mention the increased importance of updated andinformative websites with respect to new markets in Asia. In general, theinformation retrieval from different websites was increasing and the possi-bility to subscribe for newsletters were used more than before.

4.2. CommunicationPersonal meetings, cellular phones and e-mail were mentioned as veryimportant when the interviewees were communicating with externalparties. Communication through e-mail should be preceded by a personalmeeting if the contact would remain and long-term collaboration will beestablished. Personal meeting must be effective with a clearly outspokenpurpose, and end with a plain contract. The contract must also containquestions left to the next meeting, and meetings must be documented.Contact with customers was experienced as more and more importantand the number of personal contacts increased. Some of the interviewees



experienced use of e-mail to be problematic with respect to informationoverload (spam). Some interviewees used their secretary function as a filterwhereas others did not experience information overload as any problem.The amounts of undesired information were experienced to increase.Someone among the interviewees explained the problem with too muchinformation as a matter of prioritisation: ‘the customers are most impor-tant, then come the suppliers and last the authorities’. Some sellers in anenterprise, who worked in the field, had desired more contact and commu-nication with their other fellow workers. The enterprises had solved thisdesire with phone meetings every month which worked well. The enterprisesin VTC communicated primarily by public information meetings and sec-ondarily by arena meetings/discussion groups. Thirdly, the website wasused for information exchange.

4.3. Information exchangeEveryone thought information exchange to be difficult. There is a lot ofnoise. Some enterprises are sending information to their employees in thepay envelope whereas others use weekly meetings. In the work with infor-mation exchange, it is important to think about the purpose, costs andestimated benefit related to the information. Updating information wasamong several interviewees experienced as difficult and a problem. Someenterprises, who worked with projects, used a common database con-nected to a project management system. This was believed to be a condi-tion to ensure that everyone had proper information.

4.4. Technology matured enterprisesSome of the enterprises in the study used more advanced technology thanothers and were also using the technology in a more advanced mode. Thesefirms felt it is natural to use online chat functions with web cameras as asimilar communication channel as videoconferences (but simpler andcheaper). These firms demanded more functions to support online commu-nication. The Intranet in one of these enterprises was totally integratedwith the enterprise system in the enterprise. Some other interviewees alsomention web meetings where computer and phone are used together. Thesecommunication modes presuppose that the parties know each other beforeand personal meetings have already been carried out. ‘There is no problemwith new technology but the maturing should be high’ as someone said.One of the interviewed enterprises has an operator solution in the form of‘round robin’ where everyone in the enterprise is connected and the firstunoccupied telephone line (cellular phone) works as an operator.

4.5. Electronically discussion boards and bulletin board systemsMost of the interviewees had not heard about systems like bulletin boardsystems (BBSs) or computer based conference systems. None among theinterviewees were using such systems. Someone mentioned the problem to



adapt new technology. ICTs are supposed to be effective, but what is effec-tivity? Quality is not especially effective and vice versa. It is difficult tomeasure effectiveness in ICTs.

5. The results related to ongoing researchThis section relates the results from the pilot study in section 4 with theliterature and ongoing research presented in section 3.

Some of the factors identified by Wong and Aspinwall (2005) that areimportant for SMEs in their work with adopting Knowledge Managementare also present in the results from the study of SMEs presented in thisarticle. The factors are application of technological tools such as collabo-rative tools, knowledge bases, etc, utilisation of the intranet or internetand ease of use of the technology.

Several of the enterprises in the study pointed out the same ‘troubles’as Vescovi (2000): unclear communication strategy – or lack of, companyinvolvement in the internet challenge – poor matured websites and nostrategy for how to use the internet in a strategic manner, organisationalchange and the increased importance of updated websites.

Adoption and diffusion of technology should also be considered togetherwith changes in the organisation, updating of competence and proceduresas well as an overhaul of the management of the enterprises (Holmberg,2001).

Collaboration can be viewed in stages – from simple information exchangeto true collaboration (Sanders, 2007; Sabath and Fonatanela, 2002). Sanderssuggests that future research should consider the relationship between spe-cific types of IT and their linkage to specific collaboration needs.

The interviewees could see advantages of cooperating in cluster/net-works (Carbonara, 2005) but problems with contacts and communicationwere also mentioned. These problems or hindrances could be related to thedemand for trust and development of relationships formulated/explainedby Zakaria, Amelinckx and Wilemon (2004).

Several interviewees explained the need to meet in person before estab-lishing contact through e-mail or other electronic communication media.This is also explained by Handy (1995), Maznevski and Chouduba (2000)and Crossman and Lee-Kelley (2004) – ‘trust needs touch’ at least in theinitial stage.

Several of the problems occurring in the participating enterprises canalso be found in larger enterprises. Anyhow, we believe that these prob-lems are more critical in SMEs with respect to the fact that several func-tions in SMEs might be handled by one or few persons whereas thesefunctions in larger enterprises probably are handled by an organisationalunit or division. SMEs are more vulnerable.

6. Concluding remarksSeveral questions were identified in the study. Some of these questions con-cerned issues about knowledge management, adoption of ICTs, maturing



in use of ICTs related to communication modes, and importance ofcommunication strategies.

There is a gap between enterprises concerning maturing related to theuse of ICT. Technology matured enterprises use the technology in a naturalway and the technology is in some sense experienced as transparent – theusers are focused on the aim with the communication, not the ingoingunits of the technology such as web cameras, microphones, communicationprograms, chat functions, and so on.

• How can this natural use of technology be transferred to low-technologymatured enterprises?

Enterprises in the clusters were anxious about the continuity of thecollaboration through projects – as all kinds of projects financed by exter-nal money – tend to break down when the projects have to survive ontheir own.

• How can the continuity and viability in such projects be guaranteed sothey will survive on their own?

Interviewees pointed out the necessity of trust among collaboration parts.Communication among the participants demands personal meetings beforemore advanced communication modes can be used – ‘Trust needs touch’.

• How can communication be facilitated and simplified?

Further research should focus on the questions above and issues concerningthe transformation of organisations/enterprises from one state to another inorder to guarantee viability. A model supporting collaboration among SMEswith respect to their special problems should therefore be developed.

AcknowledgementsThis article is part of the project ‘Arena for Sustainable Innovative Development ofSmall and Medium-sized Enterprises’. The authors thank the project leaders andthe interviewees in the participating constellation of SMEs.

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Suggested citationAsproth, V., & Nyström, C. (2008), ‘Communication and information exchange

among SMEs and their local environment’, Journal of Organisational Transformationand Social Change 5: 2, pp. 175–189, doi: 10.1386/jots.5.2.175/1

Contributor detailsViveca Asproth is a Professor in Informatics at Mid Sweden University in Öster-sund, Sweden. She has published papers on visualisation, spatial systems, decisionsupport, anticipation and fuzzy systems. In her current research, she is focusing oninter-organisational issues. Contact: Department of Information Technology andMedia, Mid Sweden University, Akademigatan 1, S-831 25 Östersund, Sweden.E-mail: [email protected]

Christina Amcoff Nyström is a PhD/Senior lecturer in Informatics at Mid SwedenUniversity in Östersund, Sweden. Her current research and interests concernsIntranets and their impact on organisations. Example of sub-questions: power,empowerment, influence, philosophy of technology and strategies related toIntranets and organisations. Contact: Department of Information Technology andMedia, Mid Sweden University, Akademigatan 1, S-831 25 Östersund, Sweden.E-mail: [email protected]



Journal of

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Organisational Transformation & Social Change Volume 5 Number 2 – 2008

105–107 Editorial Paul Iles

Articles

109–127 Gender wage inequality in the transitional Chinese economy: A critical review of post-reform research

Jie Shen and Xin Deng

129–140 Applying the congruence model of organisational change in explaining the change in the Indian economic policies

Karabi C. Bezboruah

141–157 Job motivation and self-confidence for learning and development as predictors of support for change

Chaiporn Vithessonthi and Markus Schwaninger

159–173 E-mail at work: A cause for concern? The implications of the new communication technologies for health, wellbeing and productivity at work

Howard Taylor, George Fieldman and Yochanan Altman

175–189 Communication and information exchange among SMEs and their localenvironment

Viveca Asproth and Christina Amcoff Nyström

Journal of Organisational Transformation and Social Change: Volume: 5 | Issue: 2

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