Journal of Business Diversity · Journal of Business Diversity (JBD) Domain Statement The Journal...

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Journal of Business Diversity North American Business Press Atlanta – Seattle – South Florida - Toronto

Transcript of Journal of Business Diversity · Journal of Business Diversity (JBD) Domain Statement The Journal...

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Journal of Business Diversity

North American Business Press

Atlanta – Seattle – South Florida - Toronto

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Journal of Business Diversity

Editor Dr. Howard Miller

Editor-In-Chief

Dr. David Smith

NABP EDITORIAL ADVISORY BOARD

Dr. Nusrate Aziz - MULTIMEDIA UNIVERSITY, MALAYSIA Dr. Andy Bertsch - MINOT STATE UNIVERSITY Dr. Jacob Bikker - UTRECHT UNIVERSITY, NETHERLANDS Dr. Bill Bommer - CALIFORNIA STATE UNIVERSITY, FRESNO Dr. Michael Bond - UNIVERSITY OF ARIZONA Dr. Charles Butler - COLORADO STATE UNIVERSITY Dr. Jon Carrick - STETSON UNIVERSITY Dr. Min Carter – TROY UNIVERSITY Dr. Mondher Cherif - REIMS, FRANCE Dr. Daniel Condon - DOMINICAN UNIVERSITY, CHICAGO Dr. Bahram Dadgostar - LAKEHEAD UNIVERSITY, CANADA Dr. Deborah Erdos-Knapp - KENT STATE UNIVERSITY Dr. Bruce Forster - UNIVERSITY OF NEBRASKA, KEARNEY Dr. Nancy Furlow - MARYMOUNT UNIVERSITY Dr. Mark Gershon - TEMPLE UNIVERSITY Dr. Philippe Gregoire - UNIVERSITY OF LAVAL, CANADA Dr. Donald Grunewald - IONA COLLEGE Dr. Samanthala Hettihewa - UNIVERSITY OF BALLARAT, AUSTRALIA Dr. Russell Kashian - UNIVERSITY OF WISCONSIN, WHITEWATER Dr. Jeffrey Kennedy - PALM BEACH ATLANTIC UNIVERSITY Dr. Dean Koutramanis - UNIVERSITY OF TAMPA Dr. Malek Lashgari - UNIVERSITY OF HARTFORD Dr. Priscilla Liang - CALIFORNIA STATE UNIVERSITY, CHANNEL ISLANDS Dr. Tony Matias - MATIAS AND ASSOCIATES Dr. Patti Meglich - UNIVERSITY OF NEBRASKA, OMAHA Dr. Robert Metts - UNIVERSITY OF NEVADA, RENO Dr. Adil Mouhammed - UNIVERSITY OF ILLINOIS, SPRINGFIELD Dr. Shiva Nadavulakere – SAGINAW VALLEY STATE UNIVERSITY Dr. Roy Pearson - COLLEGE OF WILLIAM AND MARY Dr. Veena Prabhu - CALIFORNIA STATE UNIVERSITY, LOS ANGELES Dr. Sergiy Rakhmayil - RYERSON UNIVERSITY, CANADA Dr. Fabrizio Rossi - UNIVERSITY OF CASSINO, ITALY Dr. Robert Scherer – UNIVERSITY OF DALLAS Dr. Ira Sohn - MONTCLAIR STATE UNIVERSITY Dr. Reginal Sheppard - UNIVERSITY OF NEW BRUNSWICK, CANADA Dr. Carlos Spaht - LOUISIANA STATE UNIVERSITY, SHREVEPORT Dr. Ken Thorpe - EMORY UNIVERSITY Dr. Robert Tian – SHANTOU UNIVERSITY, CHINA Dr. Calin Valsan - BISHOP'S UNIVERSITY, CANADA Dr. Anne Walsh - LA SALLE UNIVERSITY Dr. Thomas Verney - SHIPPENSBURG STATE UNIVERSITY Dr. Christopher Wright - UNIVERSITY OF ADELAIDE, AUSTRALIA

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Volume – 14(1) ISSN 2158-3889 Authors have granted copyright consent to allow that copies of their article may be made for personal or internal use. This does not extend to other kinds of copying, such as copying for general distribution, for advertising or promotional purposes, for creating new collective works, or for resale. Any consent for republication, other than noted, must be granted through the publisher:

North American Business Press, Inc.

Atlanta - Seattle – South Florida - Toronto

©Journal of Business Diversity 2014 For submission, subscription or copyright information, contact the editor at: [email protected] or [email protected] Subscription Price: US$ 305 per year Our journals are indexed by UMI-Proquest-ABI Inform, EBSCOHost, GoogleScholar, and listed with Cabell's Directory of Periodicals, Ulrich's Listing of Periodicals, Bowkers Publishing Resources, the Library of Congress, the National Library of Canada, and Australia's Department of Education Science and Training. Furthermore, our journals have been used to support the Academically Qualified (AQ) faculty classification by all recognized business school accrediting bodies.

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This Issue

The Seven Deadly Sins of Church Accounting ......................................................................9 Daphne Rixon, Judy Rois, Alex Faseruk This study identifies seven common mistakes that continually manifest themselves in the usage, or perhaps it would be better to say misusage, of accounting data within ecclesiastical settings. As a point of departure, this study employs the typology of the seven deadly sins that has long been a part of church tradition. The discussion discusses a generic use of sins from the paradigm of management literature which has enumerated sins within a variety of situations. The paper examines, through heuristics modeling, various problems encountered by churches which largely ignore various techniques employed in modern accounting policies and procedures. The Influence of Supervisor Race, Gender, Age, and Cohort on Millennials’ Job Satisfaction ......................................................................................................................18 Wendy A. Campione It is the basic premise of this study that Millennial employees are affected by the interplay of various social identities and in turn affect their organizations through their perceptions of these identities. Utilizing a sample of 1000 Millennials from the NLSY dataset 2007, this study investigates the effects of supervisor demographics of race, gender, age, and cohort and any relational differences in these within the supervisor-subordinate dyad on employee job satisfaction. It is found that supervisor’s demographics and the relational differences in these significantly affect Millennials’ job satisfaction. The implication of these findings is that organizations must gain insight into Millennial perceptions and their effects. International Intellectual Property disputes: The Impact of National Culture on Preferences for Dispute Resolution Method...................................................................35 Carole Cangioni, Sandra Spataro This study explores the influence of national culture on preferences among dispute resolution methods used in business conflicts. We hypothesized how Hofstede’s (1988, 2001) primary cultural dimensions, as well as cultural distance (Kogut and Singh, 1988), would likely influence disputants to prefer either litigation or negotiation for conflict resolution. We analyzed resolution method choices among cross-cultural disputants in intellectual property infringement cases and found that those from collectivistic cultures generally prefer negotiation to resolve disputes and cultural distance predisposed disputants toward litigation. Implications for theory and management are discussed. Diversity and Firm Performance: An Analysis of Different Workforce Level and Ethnic Groups.......................................................................................................48 B. Paul Choi, Jin-Gil Jeong, Youngho Lee Using unique data for a thirteen-year period, this article examines the impact of diversity on firm performance based on six different levels of workforce for three different ethnic groups. The results of this research show that diversity strategy is successful at the two ethnic groups, i.e., Blacks and Hispanics. However, we cannot find the same result for the Asian group. In addition, the conclusion becomes less conclusive when the workforce demographics are broken into a different level of management.

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The Top Four Percent: An Exploratory Study of Women Leading Fortune 1000 Firms................................................................................................................59 Marge Karsten, Wendy Brooke, Marvee L. Marr This study of women who lead the 1000 most profitable organizations in the United States began in October 2012. At that time, four percent, or 40, of these Chief Executive Officers (CEOs) were women; 96% were men. Since then, several changes have occurred. One CEO no longer holds that position due to a merger, and seven women became heads of their respective organization, bringing the total number of CEO women to 46 at this writing. Diversity Yes, Force No: How Markets Punish Workplace Racism ................................74 Christopher Westley This paper argues that a primary cause of racist outcomes in the workplace is the degree of explicit or implicit protectionism employers receive. When this occurs, employers are protected from market penalties that would otherwise increase the costs associated with workplace discrimination and reduce profits. Examples from U.S. economic history are provided to support the argument that wage differences in competitive markets can be explained by differences in worker productivity and that wage differences between whites and blacks did not significantly diverge until after labor market interventions had the effect of protecting employers from market penalties resulting from such actions. Students’ Perceptions of their Attitudes and Behaviors toward Different Cultures/Ethnicities Before and After a Diversity Training Program .............................80 Marie-Élène Roberge, Evelina Petrov, Wen-Rou Huang Teaching students to engage in appropriate cultural attitudes and behaviors is critical to help them understand, accept, and open-up to different cultures. Diversity training help students to work efficiently in a diverse environment. This paper aims to examine students’ attitudes and behavior toward different cultures/ethnicities before and after the implementation of a diversity training program. An exploratory study was conducted with 38 students from a Midwest university enrolled in a course entitled “Managing Diversity in Organizations”. The survey was administered at the beginning and at the end of the semester. Results are presented and discussed in the paper. The potential theoretical and practical implications of the study are also addressed.

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GUIDELINES FOR SUBMISSION

Journal of Business Diversity (JBD)

Domain Statement

The Journal of Business Diversity (JBD) is dedicated to the advancement and dissemination of knowledge by publishing, through a blind, refereed process, ongoing analysis, study and results that address non-traditional demographic characteristics such as age, gender and ethnicity that influence company policies. JBD is inclusive, & practical, and encourages active interaction between academics, managers, and consultants performing in diverse business settings. The scope encompasses policy analysis and best practices in large and small enterprises, public and private sector service organizations, state and national government, and local and regional societies and economies with special emphasis on linking academic research to future practice. Articles are written by business leaders, policy analysts and active researchers for an audience of specialists, practitioners and students. Articles of regional interest are welcome, especially those dealing with lessons that may be applied in other regions around the world. This would include, but not limited to areas of marketing, management, finance, accounting, management information systems, human resource management, organizational theory and behavior, operations management, economics, or any of these disciplines in an international context. Submission Format

Articles should be submitted following the American Psychological Association format. Articles should not be more than 30 double-spaced, typed pages in length including all figures, graphs, references, and appendices. Submit two hard copies of manuscript along with a disk typed in MS-Word (preferably).

Make main sections and subsections easily identifiable by inserting appropriate headings and sub-headings. Type all first-level headings flush with the left margin, bold and capitalized. Second-level headings are also typed flush with the left margin but should only be bold. Third-level headings, if any, should also be flush with the left margin and italicized.

Include a title page with manuscript which includes the full names, affiliations, address, phone, fax, and e-mail addresses of all authors and identifies one person as the Primary Contact. Put the submission date on the bottom of the title page. On a separate sheet, include the title and an abstract of 100 words or less. Do not include authors’ names on this sheet. A final page, “About the authors,” should include a brief biographical sketch of 100 words or less on each author. Include current place of employment and degrees held.

References must be written in APA style. It is the responsibility of the author(s) to ensure that the paper is thoroughly and accurately reviewed for spelling, grammar and referencing.

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Review Procedure

Authors will receive an acknowledgement by e-mail including a reference number shortly after receipt of the manuscript. All manuscripts within the general domain of the journal will be sent for at least two reviews, using a double blind format, from members of our Editorial Board or their designated reviewers. In the majority of cases, authors will be notified within 60 days of the result of the review. If reviewers recommend changes, authors will receive a copy of the reviews and a timetable for submitting revisions. Papers and disks will not be returned to authors. Accepted Manuscripts

When a manuscript is accepted for publication, author(s) must provide format-ready copy of the manuscripts including all graphs, charts, and tables. Specific formatting instructions will be provided to accepted authors along with copyright information. Each author will receive two copies of the issue in which his or her article is published without charge. All articles printed by JBD are copyright protected by the Journal. Permission requests for reprints should be addressed to the Editor. Questions and submissions should be addressed to:

North American Business Press 301 Clematis Street #3000

West Palm Beach, Florida 33401 [email protected]

866-624-2458

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The Seven Deadly Sins of Church Accounting

Daphne Rixon Saint Mary’s University

Judy Rois

University of Toronto Anglican Foundation of Canada

Alex Faseruk

Memorial University

This study identifies seven common mistakes that continually manifest themselves in the usage, or perhaps it would be better to say misusage, of accounting data within ecclesiastical settings. As a point of departure, this study employs the typology of the seven deadly sins that has long been a part of church tradition. The discussion discusses a generic use of sins from the paradigm of management literature which has enumerated sins within a variety of situations. The paper examines, through heuristics modeling, various problems encountered by churches which largely ignore various techniques employed in modern accounting policies and procedures. INTRODUCTION

When done properly accounting is an important information-generating science that measures and portrays the financial health of various organizations to aid them in fulfilling the basic management functions of planning, organizing and control. In the enterprise, one should be able to complete pro forma statements at the beginning of the year to not only have a recipe to generate cash flows but also to have regular and ongoing updates to financial statements at various intervals to effectively manage the affairs as they unfold. The practicing manager must carefully monitor revenues and expenses, as well as constantly know cash balances, to ensure short-term viability. At the end of the accounting cycle, the audit must then be readily completed within a reasonable time frame to provide the required assurance to stakeholders. Capital planning is necessary for the long-term viability of the enterprise and in order to not be overly consumed by fire-fighting in the short-run while potentially ignoring long-run considerations.

Despite having been in existence for almost 2,000 years, many churches at various levels, (such as the congregational, parochial, diocesan, provincial, national or communion levels) do not appear to have adequately embraced modern accounting procedures or the tenets of strategic management that arise through understanding various accounting statements. The focal point of this study is to examine the problem of the church’s accounting procedures by labeling them as the seven deadly sins of church accounting. These seven deadly sins of accounting highlight the implications of these ‘sins’ on the financial viability of local churches, namely congregations and parishes. This paper draws upon

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previously completed research in church accounting, including the recent studies by Rixon and Faseruk (2010 and 2012), as well as heuristics derived from these studies which represent more than 30 years of various accounting functions within the church.

This paper is comprised of four sections. The first section has served as an introduction to the paper. The second section outlines the origin of the term seven deadly sins from both theological and management perspectives, while the third section presents the seven deadly sins of church accounting as compiled from previous studies. The fourth section concludes the paper and provides prospects for future research. THE SEVEN DEADLY SINS

In the theology of the church, the seven deadly sins, also known as the capital vices or the cardinal sins, is a typology of the objectionable vices that have been used since early church times to educate and instruct members of the church about humankind’s tendency to sin. As early as the second century, the Didache produced a sevenfold list that was amended by the theologian Cassian at the end of the fourth century. In the sixth century, Pope Gregory the Great provided the final list that is used by the Roman Catholic Church. These sins were: 1. Pride is an excessive belief in one’s abilities. 2. Envy is the wanting of what others have, be it status, abilities or possessions. 3. Gluttony in the desire to eat or consume more than is required. 4. Lust is a powerful craving for such desires as sex, power and money. 5. Anger is the loss of rational self-control and the desire to harm others. 6. Greed is the desire for material wealth or gain. 7. Sloth is laziness and avoidance of work.

The Roman Catholic Church divides sins into two categories: venial, in which guilt is relatively minor, and the more severe mortal sins. Theologically, a mortal or deadly sin is believed to destroy the life of grace and charity within a person and thus creates the threat of eternal damnation. Mortal sins do not belong to an additional category of sin, although they are often seen as original or capital sins. The etymology of capital is from the Latin caput meaning head as they are on the head of other sins. A deadly sin can be venial or mortal depending on the situation, but they are capital as they engender other sins or other vices. Often sins do not come as a single offense, but are often paired together as some of these sins are very similar: envy, gluttony, lust and greed are all about desire. There is also an embedded lack of concern for others in envy and anger.

When Pope Gregory defined the seven deadly sins, as those which ought to be avoided, he also provided a counter-balancing set of virtues that people should espouse and adopt. These are:

1. Faith is a belief in the right things. 2. Hope is taking a positive future view that good will prevail. 3. Charity is a concern for, and active helping of, others. 4. Fortitude is never giving up. 5. Justice is being fair and equitable with others. 6. Prudence is care of and moderation with money. 7. Temperance is moderation of needed things and abstinence from things which are not needed.

While the original delineation of the seven deadly sins was theological in nature, several authors have adapted this paradigm of the seven deadly sins into the management literature by providing various typologies based largely on subjective, qualitative analysis. They consider them deadly sins as the authors figure that these situations could have dire consequences for the organization. Consider two of the more interesting ones, which are the Seven Deadly Sins of Audit Committees by ParenteBeard (2012) and The seven deadly sins of strategy implementation by Corby and Corrbui (2013).

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In an effort to alert companies to the common pitfalls encountered by audit committees, ParenteBeard released its version of the seven deadly sins of audit committees during the firm’s third annual Audit Committee Forum (2012) as: 1. Haste Committee members, who are groomed to be problem-solvers, pride

themselves on being quick to decipher the puzzle and make a decision. Speed, however, does not trump the value of a well-thought-out decision.

2. Rigidity Committee members often deem problems to be binary decisions, they must accept or reject.

3. Naiveté Committee members’ decisions often can be highly influenced by how a decision is framed. 4. Hubris Committee members are often experienced professionals, and that experience breeds confidence. 5. Stubbornness People tend to stick to their first preference or opinion, leading some decision-makers to seek out only supporting information that confirms their original premise. 6. Assumptions This is the tendency to assume that the first stated monetary value is accurate, even if it is not. 7. Complacency This is the tendency for members to rely on their memory to make decisions rather than conducting proper research for alternatives.

In examining complex organizations for the viewpoint of strategic implementation, Corby and Corrbui (2013) commented on the seven deadly sins of strategy implementation as: 1. The strategy is not worth implementing. 2. People are not clear how the strategy will be implemented. 3. Customers and staff do not fully understand the strategy. 4. Individual responsibilities for implementing the change are not clear. 5. Chief executives and senior managers step out of the picture once implementation begins. 6. The brick walls are not recognized. 7. Forgetting to “mind the shop.”

CNN Money (2013) reports that the seven deadly sins of entrepreneurship are: 1. Sloppy accounting 2. Unrealistic pricing 3. Naïve hiring 4. Fear of firing 5. Lack of standards 6. Lack of controls 7. Poor branding

The seven deadly sins have also been resurrected for the management of church-related affairs. Donahue and Russ (2002) in their book The Seven Deadly Sins of Small Group Ministry listed the sins as: 1. Unclear Ministry Objectives 2. Lack of Point Leadership 3. Poor Coaching Structures 4. Neglect of Ongoing Leadership Development 5. Close Group Mindset 6. Narrow Definition of Small Groups 7. Neglect of Assimilation Process

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Accordingly, the idea of the seven deadly sins is well ingrained into theological and management lexicons. This paper extends the paradigm of the seven deadly sins with specific references to the church accounting function within the Anglican Church of Canada using the data contained in the survey conducted by Rixon and Faseruk (2010 & 2012) and augmented by heuristic analyses of the authors who have been involved in various church-related affairs for periods of up to 30 years at the congregational, parochial, diocesan and national levels, including the Anglican Foundation of Canada where the three authors currently serve as in executive positions.

THE SEVEN DEADLY SINS OF CHURCH ACCOUNTING

In order to put the seven deadly sins of church accounting into perspective, this study first reviews the previous research that has been undertaken in church accounting. The preponderance of previous research in accounting for religious organizations has focused on three main themes. First, research has explored the inadequacies of accounting practices, poor internal control and lack of expertise in financial management in churches (Leather and Sanders, 1972; Ellis, 1974; Keister, 1974; Rowe and Giroux, 1986; Zietlow, 1988; Edwards, 1990). The second major area of research documented good accounting practices in contrast to poor practices (Cunningham and Reemsnyder, 1983; Faircloth, 1988; Harper and Harper, 1988; Aramacost and Schneider, 1989; Stock, 1995; Hardy and Ballis, 2005; Jacobs, 2005). The third main area examined the differences between spiritual/non-spiritual and secular/non-secular as dichotomous aspects in the study of church accounting systems (Boyce 1984: Arndt and McCabe, 1986; Laughlin, 1988 and 1990: Booth, 1993; Irvine, 2005).

It is worthy of note that poor accounting practices and weak internal control are perhaps less relevant in the current environment than they used to be due to the availability of moderately priced software systems and knowledgeable church treasurers. That is not to say that these concerns have completely abated, but the preponderance and persistence of these problems have diminished over time. Software systems help to facilitate the adoption and implementation of appropriate accounting practices that also enhance internal control systems. Furthermore, the increasing trend for many churches to appoint treasurers who are either professional accountants or have a strong business background helps to ensure the accounting practices and internal controls are appropriate. The combined impact of accounting software and knowledgeable treasurers has significantly reduced the need to continue to focus on comparisons of good and poor accounting practices and internal controls. However, treasurers may also be responsible for hoarding information, treating the assets of the church as their own and having a sense of entitlement given that many times they are in a volunteer position. Moreover, not all sectors of the church have a professionally qualified accountant as their treasurer and some areas of the church have underinvested in systems given either the expense or a lack of qualified personnel to administer the system. As previously outlined, there is already an extensive literature examining the topics of poor accounting practices and weak internal controls. The one remaining area to be addressed is the potential for a sacred-secular tension within religious organizations and how this tension impacts accounting and other management practices.

When examining church accounting practices, the distinction between secular and sacred activities is an ongoing area of debate. Accounting is considered to be a secular-support activity in religious organizations (Booth, 1993; Abdul-Rahman and Goddard, 1998; Laughlin, 1988 and 1990). However, unlike Laughlin’s (1988 and 1990) findings from his studies of the Church of England, Abdul-Rahman and Goddard (1998) found that the distinction between secular and non-secular activities was not as clear. Similarly, Irvine’s (2005) study, which was based on Booth’s (1993) framework, also found little evidence of a conflict between accounting and the sacred activities of the church. Many of the earlier studies have concentrated on accounting and how it might contribute to the sacred-secular divide, but have not addressed the broader management issues, such as strategic planning which often emanates from the financial results.

The seminal work of Booth (1993) provides a framework which lays the foundation for enhanced understanding of the factors that influence church accounting, but his framework has not been extended to

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examine other secular management practices in religious organizations. Booth’s (1993) framework is based on the hypothesis that church accounting is influenced by religious beliefs, membership and occupational groups and organizational resources. Other studies (Abdul-Rahman and Goddard, 1998 and Irvine, 2005) have also examined the level of compatibility between accounting and religious beliefs. However, these studies did not explore the church’s utilization of strategic planning which relies extensively on accounting information as a major component.

Booth (1993) contends that religious beliefs are key elements in understanding accounting as a situated practice in churches. According to Booth (1993), the arguments have stressed the general tendency for religious beliefs to result in resistance to the use of secular management practices, such as accounting in churches. While Booth argues that religious beliefs tend to lead to resistance rather than support for accounting, he also acknowledges that the relationship between sacred and secular practices are complex, dynamic and reciprocal. He concludes that resistance is not a given.

In contrast to other studies that concentrated mainly on accounting issue (Booth, 1993; Laughlin 1988 and 1990; Irvine, 2005), Rixon and Faseruk (2010 & 2012) found that the financial information and budget reports motivated some parishes and dioceses to engage in strategic planning. On a national level, the Anglican Church of Canada (ACC) has developed a strategic plan, but there is no provision for the plan to be cascaded down to the diocesan and parochial levels. Instead, the units of the church (parishes, dioceses and national office) have proceeded or are proceeding with their own strategic planning initiatives which may or may not necessarily support the national vision. Not uncommon from Rixon and Faseruk (2010) is for parishes embarking on strategic planning to be led by a consultant through a visioning process. The support at the local levels for strategic planning is evidenced in several dioceses by the appointment of a stewardship officer. This priest often guides parishes through the strategic planning process. Since the role of the stewardship officer is obviously stewardship, this might influence how he or she guides parishes in their strategic planning. For example, it might result in strategic plans that have significant emphasis on stewardship and financial goals rather than on other religious goals. The strategic planning approach adopted by parishes and dioceses reflects the common business practice of engaging external experts to lead the process. However, that is where the similarity ends. Another respondent indicated that reporting on the strategic plan has not been formalized and that goals are not measured.

Sin One: Misuse of Accounting Information

The first deadly sin for church accounting is that the church often forgets that accounting is an information-generating science designed to manage complex organization in both the short-run and the long-run. Accordingly, the church ought to realize the many ways in which accounting statements are used in order to satisfy the various requirements of the church. Rixon and Faseruk (2010 and 2012) note that there is an undue emphasis placed on operating budgets only with little emphasis placed on capital replacement plans. There has been a noticeable paucity of provisions for major repairs/replacements to buildings. Ideally, line items in budgets should be allowed as this procedure would go a long way toward avoiding the usual panic attack when the roof needs repair or a furnace needs to be replaced. Often a minister-in-charge at a particular point must make a special appeal(s) to have the item(s) repaired or replaced. Repeated requested can wear thin on the parish’s/congregation’s desire or ability to undertake the repair, particularly if required maintenance has been skipped. More careful planning through the establishment of contingency reserve accounts and addressing capital budget problems before they become serious can greatly aid in long-term planning and viability for the church.

Sin Two: Limited Acceptance of Financial Statements and Problems with Controls

In the interviews conducted by Rixon and Faseruk (2011 & 2012) several treasurers indicated that financial statements were not important to them as they focused only on actual versus budget operational reports, thereby ignoring critical information that was contained within the statements. However, the priest and the treasurer should be more aware of the importance of the totality of the financial statement information and its intended functions including controls. Often congregations demonstrated lack of internal controls within the parish, such as only one signature required on a check with the result that

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incumbent minister and treasurers have embezzled money or engaged in illegal activities, including check-whitening or even more simply the pocketing of cash. The church often uses volunteer treasurers who can be unqualified bookkeepers/accountants (aunt, uncle, or someone who has done the books for recent memory or in church parlance forever). In many congregations there are little checks or balances on expenses, with few invoices to support expense claims and little/no accountability for petty cash, rector’s discretionary accounts and spending on items not approved in budgets. The treasurers, who are not professional accountants and not bound by an appropriate standard of conduct, often become lax in the functions that they will do. For example, treasurers can: treat money as if it is their own and refuse to write checks or pay invoices for expenses over which they disagree. They can (in the words of one priest) “become bullies” and withhold information with the priest or the congregation; let deposits build up for several weeks with delayed crediting of cash and checks to accounts; dissuade congregants from electronic giving as it will reduce their control; operate in the belief that as the church is a Christian organization the usual controls that are made in a for-profit organization are not required in a not-for-profit, charitable organization. Ancillary problems occur when staff turns over (even ineffectual volunteers) as there is a loss of organizational memory since records have been poorly kept. These problems are often exacerbated as there is habitually a lack of investment in IS and IT for the generation and storage of financial information as money had not been spent on professional services. These factors then contribute to large lump sum expenditures required to rectify the problem, which is seen as emergency in nature, whereas the expenditures should have been ongoing over time as prophylactic amounts. The rector, the treasurer and the parish council can be highly reluctant to discuss these circumstances as it would be tantamount to admitting to lack of understanding of financial statements, inadequate controls, poor selection of a treasurer and avoiding expenditures. These sins are often seen as admitting guilt or incompetence once a problem(s) is (are) uncovered. Sin Three: Lack of Understanding of Financial Information

The church needs to use a more user-friendly approach to explain the nature of financial statements to parishioners. Financial statements are often presented at annual general meetings of the parish by the treasurer. Often there are very few questions asked as many people are intimidated by the complexity of the statements, do not understand the notes to the statements, and focus on minutia/trivial amounts as opposed to more important issues. Most congregants are content with being told whether or not the parish is under, over or at budget, and then being presented with a plan to address these issues, if a problem exists. At a minimum, financial statements could also include a narrative budget and use charts and graphs in order to make points more succinctly, as well as pro forma statements to see where the parish might be heading. Often pro forma statements are seen by the congregation only when it plans to undertake a capital campaign and the congregants are asked to make a long-run financial commitment under the guise of stewardship. Rectors are notorious at this point for delivering the Three T-Homily (Time, Talent and Treasure) wherein people in the congregation are asked to share their time with the church along with their talents (non-monetary, such as sweat equity) and their treasure (monetary gifts). Sin Four: Donor Fatigue when Giving is not tied to Relevant Financial Information

As described in Sin Three congregants are often only given pro forma statements at the beginning of a financial campaign which could lead to donor fatigue as they knew that the request for additional giving was forthcoming. As opposed to constantly asking for money, Rixon and Faseruk (2012) identified situations where priests who would simply provide a one-page report that showed the difference between actual giving on a month-over-month or year-over-year comparative basis. In the end, they did not have to say much, rather when the members of the congregation saw the numbers they gave more money. A simple variance analysis as opposed to a pro forma could lead to increased giving. Sin Five: Lack of Ownership for Financial resources and Uneven Distribution of Cash Flow

In following from Sin Four, Rixon and Faseruk (2012) found that strong financial positions could be due to a frequent focus on stewardship/giving and that many people need to buy into the financial

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reporting and planning. Church accounting and reporting should have a parish-wide interest and not be the responsibility of just the treasurer and the priest. In addition, frequent updates will keep the parishioners more aware of the financial situation. Rixon and Faseruk (2012) noted that frequent updates could lead to donations being more evenly disbursed over the 12 months of the year rather than at Christmas (fourth quarter) and Easter (late first quarter or early second quarter). During the summer months the need for cash is particularly acute owing to holidays and other reasons for non-attendance. Moreover, there is little tying the donation that has been made to specific projects or milestones in parish ministry through a parish newsletter or email list. Often, the sole concern is issue tax receipts to facilitate filing of tax returns, but the funding of specific projects within the life of the church could potentially lead to greater giving that is more evenly distributed over the year. Moreover, congregations have a greater propensity to fund capital projects and emergency relief, as opposed to operating expenses. Similarly members of the congregation often do not feel that it is necessary to provide additional donations to the church for provision of a sacrament (e.g. being married or baptizing a child) as that is what a church is supposed to do, despite the fact that many clergy often perceive themselves as being overworked and underpaid. By not providing an additional donation many priests have often interpreted it as a lack of trust in their performance of the sacraments. Conversely, it is also difficult to raise a priest’s salary beyond inflationary adjustments as often congregations feel that they cannot afford the additional expenditure. Sin Six: Being Shrouded in the Past

The church often ignores the fair/market value of its existing land and properties or other assets such as artwork or sacred vessels, sometimes gold and encrusted jewels.. However, the historical or book value often does not reflect the true value of the property or assets (either understated or overstated). Looking at the market values might be a consideration for a potential sale of church assets, amalgamating parishes and relocation of parishes. For example, many congregations are located in downtown city cores where property values have escalated, but many congregants over the years have relocated to suburban churches. The dwindling congregations and enhanced property values might make relocation a definite possibility. However, there can be mitigating factors as many people have preference for a building and are adverse to relocation. The opposite situation has taken place in many rural areas wherein the population has migrated and the value of the land and property has declined precipitously and yet the remaining congregants want to be serviced in this area. Often these circumstances may be accompanied by off balance sheet/off income statement amounts that do not truly reflect the value in the community, such as the use of non-stipendiary deacons and priests or retired clergy. In this case the financial statements can undervalue the donated nature of the services performed, and yet assets can be overstated as their market value would be significantly below historic value. Being asset rich and cash poor can be a major problem for congregations. The Principal of Wycliffe College in Toronto refers to churches as saddling the church with the “albatross of deferred maintenance” (Sumner, 2014), while real estate agents look upon these same properties as occupying valuable real estate. Consider, for example, churches in midtown Manhattan on Fifth Avenue or at least in midtown Manhattan in the United States. In Canada much the same could be said for downtown Toronto, Vancouver or Calgary where land costs are very high. Moreover, with some older churches there are graveyards or crypts which are attached to churches and can thereby occupy land with a very high value as well. Sin Seven: Robbing Peter to Pay Paul

The linking of revenue and expenses to the actual size of the congregation and using this information for future planning are essential; otherwise the congregation will experience losses and underfunding. Declining congregations often dip into capital or divest assets to pay operating expenses. Many congregations are adverse to cutting expenses particularly if they are associated with salaries, especially for assistant/associate priests or curates as many congregants find comfort in more than one priest per parish. They do not wish to see salaries cut and are willing to incur deficits even when a congregation is no longer economically viable. It should be noted that under the canons of the ACC, the first financial responsibility of the parish is to meet the salary and sustenance of the priest(s). One of the respondents

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said that they conducted an extensive survey to compile demographic information which has proven to be useful for future planning purposes. For example, if the population is declining the revenue and the expenses should be adjusted accordingly to mirror those conditions. This phenomenon can go beyond a congregation. Dioceses will charge assessments to congregations and record this as an accounts receivable and hence an asset of the diocesan balance sheet and will continue to record assessments in arrears as assets without regard to the collectability of those receivables or conduct standard lending practices such as the aging of receivables or classification as a productive vs. non productive loan. From a behavioral perspective within the church, it is very difficult to write off assessments in arrears, as this would admit failure. CONCLUSIONS

This paper set out to explore the seven deadly sins of church accounting through an examination of recently completed research and through the authors’ heuristics from a wide array of local and national units within the Anglican Church of Canada. This paper adds to the literature on church accounting by identifying current challenges and missed opportunities which have a negative impact on the financial viability of many churches. A further contribution to the literature is the linking of prior literature on the seven deadly sins from theological and management perspectives to include accounting.

This study has laid the groundwork for several future strands of research. Since this study was based primarily on heuristics derived from church accounting in conjunction with the recent research findings by Rixon and Faseruk (2010 & 2012), it would be worthwhile to conduct a study based on a significant sample of parishes to test the extent to which the outlined seven deadly sins of church accounting are experienced in the wider church in order to confirm the statement of the hypotheses espoused in this paper. REFERENCES

Abdul-Rahman, A. & Goddard, A. (1998), An Interpretive Inquiry of Accounting Practices of Religious Organisations, Financial Accountability and Management, 14(3), 183-201.

Armacost, R. & Schneider, W. (1989), Financial Management in Church Operations, The CPA Journal, 59 (4), 36 – 41. Arndt, T. & McCabe, J. (1986), Communicating the Financial Aspects of Church Operations, The Ohio

CPA Journal, Spring, 25-29. Booth, P. (1993). Accounting in Churches: A Research Framework and Agenda, Accounting, Auditing

and Accountability, 6 (4), 37-67. Boyce, L. (1984). Accounting for Churches, Journal of Accountancy, February, 96-102. CNN Money. (2013) Seven deadly sins: From sloppy accounting to poor hiring, here are the business-

killing traps that every entrepreneur must avoid. Last accessed October 7, 2013. http://money.cnn.com/galleries/2009/smallbusiness/0906/gallery.seven_deadly_sins.fsb/index.html

Corboy, M. & Corrbui, D. (2013). The seven deadly sins of Strategic implementation. http://www.chinaacc.com/upload/html/2013/06/27/lixingcun19cad4fea3ce4c0f99f23084697ebc02.pdf . Last accessed on October 7, 2013.

Cunningham, G. & Reemsynder, D. (1983). Church Accounting: The Other Side of Stewardship. Management Accounting, August, 58-62.

Donahue, B. & Robinson, R. The seven deadly sins of small group ministry. Zondervan; Grand Rapids, 2002.

Edwards, R. (1990), Financial Accountability in Religious Organizations, The National Public Accountant, 35 (6), 16 – 18. Ellis, L. (1974), Internal Control for Churches and Community Organizations, The CPA Journal, May,

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Faircloth, A. (1988). The Importance of Accounting to the Shakers, The Accounting Historians, 15 (2), 99-129.

Hardy, L. & Ballis, H. (2005). Does one size fit all? The sacred and secular divide revised with insights from Niebuhr’s typology of social action. Accounting, Auditing and Accountability, 18 (2), 238-254.

Harper, B. & Harper, P. (1988). Religious Reporting: Is It the Gospel Truth? Management Accounting (US), February, 34-39.

Irvine, H. (2005). Balancing money and mission in a local church budget. Accounting, Auditing and Accountability. 18 (2), 211-237.

Jacobs, K. (2005). The sacred and the secular: examining the role of accounting in the religious context, Accounting, Auditing and Accountability, 18 (2), 189-210.

Keister, O. (1974), Internal Control for Churches, Management Accounting (US), January, 40- 42. Laughlin, R (1988). Accounting in its Social Context: An analysis of the Accounting Systems of the

Church of England, Accounting, Auditing and Accountability, 1 (2), 19-42. Laughlin, R. (1990). A Model of Financial Accountability and the Church of England, Financial

Accountability and Management, 6 (2), 93-115. Leathers, P. & Sanders, H. (1972). Internal control in Churches, The Internal Auditor, May/June, 21-25. ParenteBeard. (2013). Seven Deadly Sins of Audit Committees. Last accessed October 7, 2013.

http://www.parentebeard.com/4238/parentebeard-reveals-seven-deadly-sins-of-audit-committees/Rixon, D. & Faseruk, A. (2010). Not-for-profit Accounting Standards: Should Churches and Private

Enterprise Sing from the Same Hymnbook? North American Accounting Society Conference, Chicago, March 24-26.

Rixon, D. & Faseruk, A. (2012). Secular Tools and Sacred Goals, A Case Study of How Anglican Priests Are Embracing Management Accounting and Strategic Planning. Journal of Business Diversity, 12 (1), 19-32.

Rowe, T. & Giroux G. (1986). Diocesan Financial Disclosure: A Quality Assessment, Journal of Accounting and Public Policy, (Spring), 57-74.

Stock, S. (1995), Church Reporting Made Easy, Management Accounting, 76 (9), 56-59. Sumner, G. (2014) “The Future of the Anglican Church,” Public Lecture at Queen’s College, St. John’s,

Newfoundland and Labrador, March 3, 2014. Zietlow, J. (1988). Capital and Operating Budgeting practices in Pure Nonprofit Organizations, Financial

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The Influence of Supervisor Race, Gender, Age, and Cohort on Millennials’ Job Satisfaction

Wendy A. Campione

Northern Arizona University

It is the basic premise of this study that Millennial employees are affected by the interplay of various social identities and in turn affect their organizations through their perceptions of these identities. Utilizing a sample of 1000 Millennials from the NLSY dataset 2007, this study investigates the effects of supervisor demographics of race, gender, age, and cohort and any relational differences in these within the supervisor-subordinate dyad on employee job satisfaction. It is found that supervisor’s demographics and the relational differences in these significantly affect Millennials’ job satisfaction. The implication of these findings is that organizations must gain insight into Millennial perceptions and their effects. INTRODUCTION

One of the major challenges facing companies today is the retention of their talented and productive employees. Especially critical is retention of the newest recruits, the Millennials; companies claim to rely on these new employees for development of innovative ideas, loyalty to corporate missions to broaden domestic and global markets, and potential leadership pipeline candidates. Companies offer what are often complex compensation packages and workplace options. Yet despite these offerings, low retention rates of these newest employees translate into low rates of return on these corporate efforts (Miller, 1998).

In his seminal 1978 article “Job Satisfaction as an Economic Variable” Richard Freeman argues that answers to questions about how people feel towards their jobs are not meaningless (as many economists of the time argued), but rather convey useful information about economic life that should not be ignored. In this early study, job satisfaction is shown to be a major determinant of labor market mobility in part because it reflects aspects of the workplace not captured by standard economic variables (Freeman, 1978).

In exit interviews, young former employees often cite their disillusionment in the company culture and philosophy. This disillusionment is often credited to the immediate supervisor or management team - the most “visible” representative(s) of the company. Part of the retention process then is for companies to understand the dynamic within the supervisor-subordinate dyad relationship in order to ensure a satisfying work environment for employees. The quality of this relationship is critical to the productivity, job satisfaction, and retention of these employees. Utilizing a sample of 1000 Millennial employees from the National Longitudinal Survey of Youth (NLSY97) for the year 2007 (U.S. Bureau of Labor Statistics, 2007), this study investigates the impact of supervisor demographics and relational demographics within the supervisor-subordinate dyad on employee job satisfaction.

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The following questions are addressed in this paper: Do the simple demographic characteristics of the employee’s immediate supervisor, race, gender, and age affect the employee’s assessment of his/her job and therefore job satisfaction? Or does the assessment involve more complex relational demographic comparisons, for example, whether the supervisor’s gender differs from the employee’s gender?

Why might these demographic and relational demographic characteristics impact job satisfaction? Do these visible demographic characteristics act as social identities which allow Millennials to quickly assess their supervisor; perhaps even stereotypically categorize their supervisor; and therefore affect employee job satisfaction? What are the implications of these assessments for the success of supervisors’ policies and the achievement of organizational goals? The Pivotal Role of the Immediate Supervisor to the Employee and the Organization

Missing from many formulations of the traditional business job satisfaction model is the impact of the immediate supervisor. There is an old saying: Employees do not quit their jobs, they quit their bosses! Today’s companies often tend to rely on the reward structure as the main recruitment and retention tool. Such a shortsighted strategy fosters double-digit annual budget increases (Miller, 1998) and fails to stem the flow of young employee turnover.

The importance of the supervisor in the workplace setting is firmly established. Recent studies find that trust in one’s supervisor is significantly and positively related to satisfaction with supervisor and innovative behavior (Tan & Tan, 2000) and that trust has a significant and positive influence on employee job satisfaction (Flaherty & Pappas, 2000). Supervisor support of employees and the quality of the relationship between supervisor and employee influences job satisfaction, job performance, and job evaluations (Janseen & Van Yperen, 2004) as well as results in higher career satisfaction, lower turnover, and higher organizational commitment (Kacmar et al, 2003).

First line supervisors in particular are the managers who establish the immediate work environment and affect productivity. Many studies find the importance of the mentor role of the immediate supervisor to entry-level employees’ career success because such a relationship performs both a career and psychosocial function (Orpen, 1995). Goris et al (2000) state that supervisors would do well to spend time promoting trustful relationships with their employees and making sure they are perceived as having upward influence to solve downward problems (support their employees).

However there is also evidence that even a supportive supervisor may not improve job satisfaction and performance outcomes (Hilton et al, 1995). Theory informs that lacking extensive experience within a particular setting, such as the workplace, individuals may rely on quick assessments of others based upon their visible traits, such as race, gender, or age. If young Millennials are utilizing the visible characteristics of their supervisor as the means to assess their supervisors’ actions and therefore assess their jobs, this could undermine supervisor and organizational policies. Within the supervisor-subordinate dyad relationship, this could mean that these young subordinates are “assessing” their supervisors and therefore their jobs based upon their supervisors’ race, gender, age, and/or cohort. BACKGROUND General Background on Supervisor-Subordinate Relationship

Every individual has an array of social identities, including race, age, gender, and others. These identities affect and are affected by the individual’s perception and experience. Interactions with others are dynamic: our expectations and behavior are continuously shaped by others’ expectations and behavior as the interaction unfolds. These interactions always take place within a given context (Bodenhausen, 2010).

Empirical research in many fields primarily examines the independent effects of demographic characteristics, such as age, gender, and race at the employee level on such work outcomes as job satisfaction (Waldman & Avolio, 1986). Tsui & O’Reilly (1989) question whether this approach adequately captures the full impact of potential demographic effects. Working organizations are

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composed of multiple sets of relationships and therefore it is suggested that more complex relational analyses are required (Chasteen, 2005).

Early on organizational demographers such as Kanter (1977) and Blau (1977) argue that the greater the minority’s representation in an organization, the more likely the majority is to perceive them realistically and to interact with them without focusing on group differences. The smaller the disparity in the groups’ sizes and thus, the greater likelihood of interaction, the less likely members of the preponderant group are to avoid interaction with the minority. However, Blau (1994) later recognizes that the salience of some statuses is so overarching that it overwhelms the structural effect of the relative group size and he acknowledges that sex and race are such statuses.

Organizational demographers now recognize that, net of individual employee traits, the demographic characteristics of a workgroup affect the behavior and attitudes of its members (Reskins et al, 1999). This heterogeneity can in particular affect employee assessments such as job satisfaction. In absence of detailed personal information about others, such as values, experiences, and attitudes, employees are often left with stereotyping – that is individuals are ascribed the characteristics of their racial, gender, or age “group”– whether the result of prejudice or not. Out of these group stereotypes may come preferences or expectations based upon “norms” (what is normally visible in the labor force), again obscuring the individual traits of the supervisor.

Given the significance of the specific relationship between the immediate supervisor and subordinate, relational demography significantly speaks to the dyad and can be linked to both worker satisfaction and to achievement of organizational goals. Relational demography refers to the comparative demographic characteristics of members of dyads or groups within organizations who are in a position to engage in regular interaction (Tsui & O’Reilly, 1989) and can be used to explore the extent to which the comparative demographic characteristics of the supervisor-subordinate dyad influences work outcomes.

Within the organizational demography perspective, the similarity-attraction paradigm contends that again in absence of detailed information about others, individuals tend to like those who are similar to them on visible characteristics such as race, gender, and age. Interacting with similar others enhances one’s self-esteem and fosters a motivation to identify with the group (Riordan & Shore, 1997). An alternative paradigm, the social categorization paradigm, postulates that individuals tend to define others as part of one’s social circle or outside it, and out-group members are less likely to be viewed as honest and trustworthy (Tajfel & Turner, 1986). Both the similarity-attraction theory and self-categorization theory predict that the need for a positive self-identity causes us to have a preference for (Webber & Donahue, 2001), smoother interaction with (Geddes & Konrad, 2003), and consequently more positive evaluation of people who are similar to us.

Research demonstrates that longer term contact between individuals of different races, ages, and genders is critical to gain individual knowledge of personal characteristics. A higher amount of individuated knowledge and closer interpersonal ties between supervisor and employee can be expected to motivate and enable individuated processing and therefore reduce stereotyping and potential conflict and misunderstanding within work groups (Mayer et al, 1995; Somech, 2003). Specific Background on Supervisor-Subordinate Relationship – Race

It is at the workplace where inter-racial group contact is likely to be highest (Brown et al, 2003). In racially diverse settings, individuals from both minority and majority groups often seem to experience forms of identity threat – that is contextually triggered concerns about being negatively judged because of their identity (Steele et al, 2002) – which in turn could potentially undermine intergroup relations.

Empirical findings are mixed. For example, studies find that racial heterogeneity of the workgroup is associated with higher absenteeism and turnover intentions (Pelled et al, 1999; and Wharton et al, 2000). However, these studies fail to account for individual-level correlates of job satisfaction, such as pay. Other studies which examine the impact of job conditions on job satisfaction fail to consider the effect of work group/supervisor demographics. Recent research finds that several factors can shift the outcomes of interracial interactions in more positive (or negative) directions (Tsui et al, 2002). These factors include

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the amount of prior intergroup contact (Blascovich et al, 2001); levels of concern about the interaction (Shelton & Richeson, 2006); and ways of coping with the stress of the situation (Trawalter et al, 2009).

In a meta-analytic review of dyadic interracial interactions, Toosi et al (2012) report on changes over the last 40 years in affect (emotional outcomes), explicit attitudes, non-verbal behavior, and performance resulting from interracial interactions. They find that explicit attitudes towards people of other races and non-verbal behavior improved. They also find that when the interracial interaction is structured (such as with work tasks), performance outcomes between same-race and interracial dyads are more comparable than when the interaction is free-formed. This may be due to a decrease in self-presentational concerns which result from a more structured interaction (Avery et al, 2009; Pettigrew & Tropp, 2006).

Toosi et al (2012) further conclude that only longer term contact leads to more positive outcomes in all domains (affect, non-verbal behavior, attitudes, and performance). Longer term contact may allow an individual to “individuate” the other person and thus rely less on preference for their “own” race or group stereotypes to guide emotional responses (Fiske & Neuberg, 1990). Specific Background on Supervisor-Subordinate Relationship - Gender

Although much has been written on the differences in communication styles between women and men, the focus here is on perceptions that lead to attitudes and behavior and thus affect individual and organizational work outcomes. The literature provides two competing models. Based upon socialization theory, the Gender –Difference Model contends that men and women have distinct values and priorities (Dodd-McCue & Wright, 1996). Different gender orientations subsequently affect the manner in which males and females learn to behave and carry out their jobs in the workplace (Aven et al, 1993). Differences of this nature have been attributed to the fact that males and females, from the time they are young, learn to speak and carry out conversations in different social contexts that are same-sex oriented (Tannen, 1994).

Supportive research reveals a double standard in the evaluation of men and women such that women must perform better to be considered equally competent (Biernat & Kobrynowicz, 1997); derived from the perception of greater competence and greater expertise, men possess more power than women do particularly legitimate power (Carli, 1999); and men, more than women, associate managerial ability with the gender “male” (Heilman, 2001) and are viewed as more likely to possess potential leadership and management skills than women (Schein, 2001).

In contrast the proponents of the Gender-Sameness Model argue that men and women are more alike than different and what is more significant is the diversity of personality traits and situational variables that affect employee and organizational outcomes. Employees possess a certain potential to negotiate their own roles in the workplace and in general people modify their behavior dependent upon their assessment of how the other person is likely to behave in the situation; how they themselves are expected to behave; and their own relative power in the interaction.

Thus with more interpersonal interaction and realistic expectations, considered in conjunction with many other factors, differences which may be attributed to gender will be small (Smythe & Meyer, 1994). These and other critics of the Gender-Difference Model argue that the model perpetuates inaccurate, stereotypical conceptions of sex differences. Barker & Zifcak (1999) recommend that companies value and reward a more thorough understanding of employees as individuals if they are to survive in a diverse business world. Specific Background on Supervisor-Subordinate Relationship – Age, Cohort

Research spanning the last decades reveals that a person’s age forms one of the principal bases for stereotypical categorizations (Fiske & Neuberg, 1990). Older workers on the one hand, may be seen as a representation of experience, proven-qualities, and vital corporate knowledge (Shultz & Adams, 2007); on the other hand, they may be seen as less productive, non-innovative, and embedded in the status quo (Van der Heijden, 2002). Younger workers may be seen as just the opposite; on the one hand unproven, inexperienced, and lacking in corporate history (Briscoe & Hall, 2006); on the other hand, productive, risk-taking innovators who will break with the past (Sullivan, 1999).

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Substantial evidence demonstrates the importance of age in workplace processes and outcomes (Ostroff et al, 2004). Age dissimilarity, as in supervisor-subordinate dyads, has been most frequently studied within job performance and performance evaluation processes. Here research results are somewhat mixed. For example, in a meta-analytic investigation of age bias in both field and laboratory settings, Gordon & Arvey (2004) find that supervisors’ age may interact with employees’ age to affect supervisory ratings of employees. However, utilizing relational demography, Tsui & O’Reilly (1989) and Liden et al (1996) did not find support for a non-directional age difference effect (simply the number of years difference in age) on supervisor performance ratings of subordinates.

Other researchers argue that the similarity-attraction hypothesis and the testing for non-directional age difference effects may not go far enough to explain relational demography effects on work outcomes. Directional age differences occur where subordinates, who have to report to a young(er) supervisor, experience status incongruence, a negative response; possibly due to a perceived violation of career timetable or a lack of trust in the young(er) supervisor (Perry et al, 1999; Tsui et al, 2002). Neither Perry et al (1999) nor Van der Heijden et al (2010) find support for directional age difference effects on work outcomes.

More importantly Van der Heijden et al (2010) did find, even after controlling for age-related supervisory practices on performance evaluations, the quality of the relationship between the supervisor and the subordinate to be the most significant moderator of any negative performance ratings due to age difference stereotyping. If members of the dyad have only stereotypical information to rely on, then they will resort to a quick assessment of each other on these superficial aspects. However, research early on informs that relational demography can affect and change stereotypes and therefore perceptions of work outcomes and attitudes through interpersonal attraction in attitudes, values, and experiences, through quality of communication, and through the frequency of interactions (Byrne, et al, 1986).

Having both supervisor age and subordinate age allows for examination of inter-generational dyad relationships as well. Recently much has been written on the differences in communication, expectations, and technology use of the different generations that make up organizations and the current workforce. Inter-generation communication is a major focus of corporate retention strategy.

A generation is a cohort that shares birth years and related significant life events. Generational researchers suggest that one’s life experiences, various historical, political, and social events, shape people in their world views, beliefs, expectations, attitudes, and values (Glass, 2007). These differing attitudes and values are thought to produce generation-specific work and work environment attitudes, values, work styles, communication preferences, and motivators (Smola & Sutton, 2002; Arsenault, 2004). A lack of understanding of these differences, especially within the supervisor-subordinate dyad, contributes to conflict within working relationships, lowers productivity, and increases turnover (Ballone, 2007).

Currently four generations work concurrently in our workforce: the Builders, also known as the “Silent Generation” (born prior to 1946); the Boomers, better known as the baby-boomers (born 1946-1964); the Busters, also known as Gen X (born 1965-1979); and the youngest, the Millennials, also known as Gen Y, (born 1980-1993). In relative comparisons, Veterans are characterized as conservative, overly cautious, and loyal to authority figures and their organization (Hu et al, 2004). Baby boomers are characterized as workaholics who value work performance, promotions, and titles; who ‘live to work’ and are loyal to their organization; and who desire purpose and meaning in work (Apostolids & Polifroni, 2006).

Gen X workers are characterized as self-directed, lifelong learners who favor work environments that value talent, creativity, and expertise; who change jobs if unhappy; who prefer to work in teams that encourage individual contribution; and who are comfortable with technology (Kupperschmidt, 2000). Gen Y workers, Millennials, prefer collaborative work environments and tend to need direction in their job; strive to balance work and home; will use job portability and lateral career moves to achieve this balance; and are lifelong learners who are comfortable with technology.

Use of these group characteristics within the supervisor-subordinate dyad sometimes eclipses recognition that each individual differs in personal experience and personality traits. Thus legitimate

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generational differences are sometimes used within the dyad as quick guides to categorize individuals into a particular group and ascribe group characteristics to the individual; hence stereotyping. MODELS DEVELOPED AND TESTED Traditional Business Model of Employee Job Satisfaction: Model 1

The traditional business model (Model 1) of job satisfaction postulates the compensation package paid to the employee and job and work environment characteristics as primary correlates of employee job satisfaction. These are often referred to as the extrinsic factors which affect job satisfaction– in this case those provided by the employer to the employee. In this study, the impact of the compensation package is represented by the independent variables hourly base pay, provision of medical insurance, and availability of sick leave days. Job and work characteristics are represented by the variables availability of flex time, union membership, working extreme hours, employer establishment size, regular shift, and co-worker support. The inclusion of these variables is drawn from the literature and the availability in the dataset. Further discussion of these variables and their expected impact on Millennials’ job satisfaction is included in the variable construction section.

Although it will be argued here that the extrinsic factors of the job may not provide all that employees need to succeed and be satisfied with their job, they must be taken into account in models of job satisfaction. However, without a good relationship with their supervisor, these young Millennials will not stay; especially given their need for mentoring and guidance. Without this understanding, trustful relationship, Millennials will probably seek out other employers. Adding Supervisor Demographics and Relational Demographics of the Supervisor-Subordinate Dyad to the Traditional Model: Model 2a and Model 2b

In this study, three demographic characteristics of the employee’s immediate supervisor are available for this inquiry: gender, race, and age of supervisor. These variables can be used to identify employee preferences (if they exist) for a particular race, gender, and age based upon group stereotypes which either reflect prejudice or visible “norms” (that which is most normally seen in the workforce); and by extension and more importantly, supervision by that person and the impact on job satisfaction. The variables themselves in this inquiry are constructed to reflect the “norm” of a U. S. supervisor, that is, male, white, and older.

The data allows further relational demographic investigation (Model 2b). Suppose for example it is not whether a supervisor is male or female that affects employee job satisfaction, but rather whether the supervisor’s gender differs from the employee’s gender. Three additional variables are created to capture this relational distinction: a supervisor “race difference” variable; a supervisor “gender difference” variable; and a supervisor “cohort difference” variable. It may turn out to be as important or more important to measure these relational differences, especially for the immediate supervisor-subordinate relationship. “Same” may be comforting and less threatening; the variables themselves in this inquiry are constructed to represent differences in race, gender, and cohort.

The model presented here represents an effort to incorporate supervisor demographic and relational demographic characteristics into a traditional business job satisfaction model. Three sets of individual-level logistic regression models are estimated. Model 1 Traditional Business Model Job Satisfaction = f (compensation, job characteristics, work environment, (excluding immediate Supervisor characteristics) Model 2a Model 1 + immediate supervisor demographic characteristics Add to Model 1 by: Incorporating Supervisor Race, Supervisor Gender, and Supervisor Age Model 2b Model 1 + relational demographics of the supervisor-subordinate dyad Add to Model 1 by: Incorporating Race Difference, Gender Difference, and Cohort Difference

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DATA

This study utilizes a representative sample of one thousand Millennial employees (not including self-employed) from the National Longitudinal Survey of Youth (NLSY97) for the year 2007. This dataset uniquely: 1) allows for inclusion of all traditional correlates of job satisfaction: compensation and job and work environment characteristics and 2) allows for inclusion of supervisor demographic characteristics (often lacking in any study) and creation of “relational differences variables”: differences in gender, race, and cohort of the individual employee relative to supervisor.

To explore the extent to which the employee’s compensation and job and work environment characteristics and immediate supervisor demographic and relational demographics characteristics affect job satisfaction, multivariate statistical testing is utilized. Descriptive Statistics

Table 1 lists the descriptive statistics for all variables utilized in all Models of this study. On a scale of 1-5, 1=dislike very much, the mean value of job satisfaction is 4.03. The sample is nearly split in terms of gender, with 49% of sample members male. Twenty seven percent of sample members are Hispanic; 84% single marital status, and most are relatively healthy on a scale of 1-5, 1=excellent, with a mean value of 2.16.

TABLE 1

DESCRIPTIVE STATISTICS, MODELS 1, 2a, & 2b Variable Definition Mean Standard Deviation Independent Comp & Benefits Rate of Pay Hourly Wage 17.50 14.690 Medical 1 = Provided 0.72 0.448 Sick 1 = Provided 0.27 0.932 Job & Work Char Flex 1 = Available 0.39 0.448 Union 1 = Union member 0.12 0.323 Extreme50 1 = Works >50 hours 0.33 0.423 Emp Size 1 = Small, up to 49 2.13 0.531 Reg Shift 1 = Works reg shift 0.51 0.892 Co-worker 1 = Receives support 0.81 0.624 Supervisor Sup Gen 1 = Male supervisor 0.59 0.505 Sup Race 1 = White supervisor 0.77 0.419 Sup Age cont Supervisor’s age 41.41 9.515 Difference Gen Diff 1 = Difference in gender 0.52 0.843 Race Diff 1 = Difference in race 0.72 0.724 Cohort Diff 1 = Difference in cohort 0.86 0.986 Controls Own Ethnicity 1 = Hispanic 0.27 0.379 Own Gender 1 = Male 0.49 0.166 Marital St 1 = Single 0.84 0.381 Health 1 = Excellent (scale 1-5) 2.16 0.906 Dependent Job Satisfaction 1 = Dislike very much (scale 1-5) 4.03 1.040

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Looking at the employees’ immediate supervisors, 59% are male; 77% are white; and the mean supervisor age is 41 years. In examining the supervisor-employee/subordinate dyad, 59% of the dyads are of different gender; 72% of different race; and 86% of different cohort/generation.

In terms of compensation, the mean hourly wage is $17.50; 72% have medical insurance provided; and 27% have sick leave days provided. In terms of job and work environment, 39% have a flex time option; 33% work 50 hours or more per week; and 51% work a regular day, evening, or night shift. Twelve per cent of employees are unionized, working on average at a medium-sized establishment, 1=small (0-49 employees), with a mean value of 2.13; and 81% receive some co-worker support. VARIABLE CONSTRUCTION AND HYPOTHESES Dependent

Job satisfaction has long been considered a core indicator of workers’ evaluations of their jobs (Hodson, 2011; Hodson, 2004). Research provides evidence that job satisfaction is consistently and significantly correlated with retention (Coomber & Barriball, 2007); is a determinant of quits and intention to leave the workplace (Bockerman & Ilmakunnas, 2005); influences early retirement; employee long-term absence from work due to illness (Lund & Villadsen, 2005); short-term sickness absence (Munch-Hansen, et al 2009); and productivity (Cooper, et al, 1996).

As a concept, job satisfaction assumes that workers evaluate all aspects of their job situations, consider their alternatives, and through an internal calculus arrive at an overall evaluation of the quality of their jobs. A meta-analysis by Wanous et al (1997) concludes that single-item scales of job satisfaction are acceptable. The dependent variable utilized in this analysis is a global measure in which workers respond to the question: how satisfied are you with your job overall? Response categories include: like very much; like fairly well; think it’s OK; dislike somewhat; and dislike very much. As shown in the descriptive statistics section, the categories are re-ordered to facilitate interpretation of the results.

Data which results from the measurement of qualitative phenomena by the use of questionnaires is often categorical, ordinally-scaled; ordered, but with intervals that may be uneven. Job satisfaction is just such an example – using a verbal rating scale, which consists of a discrete number of verbally described ordered categories. Given the ordinal nature of the dependent variable and the skewed distribution of responses, these measures are analyzed with ordered logistic regression. This technique is an extension of the binary logistic regression and is often referred to as the cumulative logistic regression model. The technique estimates a series of tau thresholds or cut points, giving the cumulative log odds of scoring at or below a given threshold of satisfaction. The number of thresholds is always one less than the number of categories on the dependent variable (since by definition, all responses are in the highest response category or lower).

The slope parameters in ordered logit regression indicate changes in the cumulative distribution of responses at the cut points given unit increases in predictor variables; significance tests are conducted in the usual manner (slope parameter divided by the standard error). The ordered logistic regression model estimates a model chi-square (with df equal to the number of predictor variables in the model) that shows the reduction in the log likelihood compared with a model that contains only the intercept. Explanatory Variables Compensation and Job and Work Environment Characteristics

The traditional business model (Model 1) of job satisfaction postulates the compensation package paid to the employee and job and work environment characteristics as primary correlates of employee job satisfaction.

Hypothesis 1: Employee compensation and job and work environment characteristics directly affect employee job satisfaction Given the use of another variable in this study, “extreme hours”, the variable “rate of base pay” is

used here which excludes any reference to pay for performance or overtime. This base pay measure is a measure of absolute rather than relative wage. It is hypothesized that an increase in absolute wage will

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positively affect job satisfaction (Sell & Cleal, 2011). A binary of “whether medical insurance is provided” to the employee is constructed. In discussions of relative benefit importance this captures what most employees cite as the most sought after benefit; thus positively contributing to job satisfaction (Decker et al, 2009). The binary variable, whether “sick leave time is available” represents another much desired benefit. Its availability should contribute to overall job satisfaction (Keefe & Medjuck, 1997).

Flexibility has been found to be highly ranked among employees (Bond et al, 2004). A binary is created to capture “whether flex time is available” and its availability is hypothesized to positively affect employee job satisfaction. A binary is created to capture “whether a union member or not”. Membership affords professional and social network contacts as well as sources of information and potential grievance recognition and resolution (Bluestone & Rose, 1997). Membership is hypothesized to positively affect employee job satisfaction.

The literature also suggests that a measure of “extreme hours worked” affects job satisfaction and delineates the threshold at 50 or more hours per week. Long working hours can be evidence both for workers having a challenging job and for workers just having too much work (based upon their preferences) (Kristensen, et al 2004; Hewlett & Luce, 2006). A binary “whether worked 50 hours or more” is created. Working extreme hours is hypothesized to negatively affect employee job satisfaction. The continuous variable, number of employees at site establishment, is used to create the variable “employer size” with the delineations of “small”, “medium” and “large” firms using the industry standard. Hodson (2011) finds that employee job satisfaction tends to be lower in larger firms, which are more impersonal and bureaucratic. Larger employers however may also provide more varied pay and promotional opportunities. There is no a priori expectation as to the effect of employer size on employee job satisfaction. The variable “shift” refers to the distinction between regular and irregular schedules, where irregular schedules refers to changing hours and/or changing among day, evening, and night shifts. It has been found that employees will find these “irregular” shift environments less satisfactory (Tausig & Fenwick, 2001). It is here hypothesized that a regular shift environment will positively affect employee job satisfaction.

The last variable “co-worker support” measures whether the employee has “a co-worker to talk to about work issues” (not including supervisors). Employee-perceived co-worker support can motivate employees to persist in meeting requirements of their jobs and can reduce employees’ withdrawal intentions and actual turnover (Iverson, 1999; Price & Mueller, 1986). Co-worker support is hypothesized to positively affect employee job satisfaction. Supervisor

The NLSY data provides a unique opportunity to examine this supervisor-subordinate relationship and its effect on employee job satisfaction. The construction of the supervisor difference variables is based upon the structure of the original supervisor gender, race, and age variables. It is also worth noting that the variables measuring supervisor and supervisor differences’ impact on employee job satisfaction are not generated from direct questions within the NLSY questionnaires but rather the facts of supervisor characteristics and differences are entered directly into the equations as independent variables to discern whether these are significant contributors to job satisfaction. This eliminates any bias of socially acceptable answers that direct questions might elicit and eliminates the possibility that answers are a way for employees to vent against their supervisor.

Three demographic characteristics of the employee’s immediate supervisor are available for this inquiry: gender, race, and age of supervisor (Model 2a). The data allows further relational demographic investigation (Model 2b). Three additional variables are created to capture this relational distinction: a supervisor “race difference” variable; a supervisor “gender difference” variable; and a supervisor “cohort difference” variable.

Hypothesis 2a: Supervisor characteristics of race (white=1), gender (male=1), and age (older) positively and directly affect employee job satisfaction Hypothesis 2b: The difference (difference=1) in race, gender, and cohort between the supervisor and the employee negatively and directly affects employee job satisfaction

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RESULTS

To aid in the interpretation of the results presented here, this study reports both the parameter estimates bk and the exponential parameter estimates (eb

k). The exponential parameter estimate is a measure of the factor change in the odds of the outcome produced by a one unit increase in the value of an independent variable; here that means the increase in the odds of being in the highest job satisfaction group for a one point increase in the explanatory variable. Units implied by raw coefficients of a logistic regression model (log-odds) are not intuitively interpretable (Long, 1997). Also the factor change measure of the effect on odds has the additional benefit of being independent from the settings of the independent variables, unlike predicted probabilities and most marginal effects (Sell and Cleal, 2011). Traditional Business Model of Employee Job Satisfaction: Model 1

The traditional business model posits compensation and job and work environment characteristics as the fundamental factors that determine employee job satisfaction. Since no significant changes occur with respect to the traditional variables with the addition of supervisor variables, results for the traditional business factors are reported in Table 2 with supervisor variables. Compensation: Pay and Benefits; Job and Work Environment Characteristics

Of the compensation variables tested, both “rate of pay” (hourly base wage) and “the availability of sick leave” are moderately significant and positively affect job satisfaction. The “provision of medical insurance” is not significant. Interestingly this insignificant finding may signal that the most expensive benefit provided is not, at this stage of these workers’ young lives, important. “Working more than 50 hours per week” is highly positively significant to job satisfaction. Perhaps the “norm” of 40 hours per week is far less defining for this generation than for previous generations. This is consistent with the insignificance of union coverage for these Millennials.

The variables “regular schedule” and the “use of flex time” are strongly positively associated with job satisfaction. Also highly significant is the variable “employer size” and it appears from these findings that these employees’ early experiences in large companies are negative. The variable “co-worker support” is surprisingly highly negatively significant. This support may instead be expressions of frustration - rather than assistance in resolution. Adding Supervisor Demographics and Relational Demographics of the Supervisor-Subordinate Dyad: Model 2a and Model 2b

Critical to the work environment for Millennials is their relationship with their immediate supervisor; it is a primary source of intrinsic motivation for subordinate employees (Deci et al, 1999). The global chi square statistics indicate that the Model 2a (chi square statistic =95.306; p<.01) and Model 2b (chi square statistic=92.498; p<.01) logit regressions are highly significant.

The first set of analyses (Model 2a) combine the traditional model’s variables, compensation, job and work environment characteristics with the “supervisor gender”, “supervisor race”, and “supervisor age” variables. Previous significance and levels of significance of these traditional model variables is maintained with the addition of the supervisor variables. Of the three demographic supervisor variables, “supervisor race” and “supervisor age” are positively significant, with “supervisor age” highly significant.

Supervisor race (white = 1) is setup to measure the impact of having a white supervisor, the “norm”, on job satisfaction. It is found as hypothesized that a white supervisor positively and significantly affects employee job satisfaction (b=0.308; p<.05). There are several plausible explanations for this. In the general workforce and in this NLSY sample, the majority of managers are white. It may be that a white manager is seen as the “norm”, even for young non-white employees. It may be for some that given their limited general labor market experience, they have never encountered a non-white manager.

If white is the perceived “norm”, then a non-white manager may increase these young employees’ uncertainty. This preference or expectation for a white supervisor could also signal that white is a proxy for perceived managerial experience; non-white managers’ experience often lags behind or may be

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perceived to lag behind their white counterparts. This actual or perceived additional managerial experience could translate into an improvement in communication with subordinates; someone better able to align young workers’ career desires with their career goals.

Even more positively significant as hypothesized is the continuous variable “supervisor age” (b=0.020; p<.01). For these young employees, rather than rebel against age, they prefer an older supervisor. Perhaps this can be explained by the fact that positions of authority in their immediate pasts were teachers and parents and thus a supervisor older than they may be the “norm” in these Millennials’ minds.

TABLE 2 RESULTS FROM ORDERED LOGIT REGRESSIONS: MODEL 2a and MODEL 2b

Traditional with Supervisor 2a Traditional with Differences 2b Variable bk eb

k bk ebk

Rate of Pay 0.010* 1.010 0.010* 1.010 Medical -0.152 0.859 -0.170 0.844 Sick 0.270* 1.310 0.293** 1.340 Flex 0.445*** 1.567 0.440*** 1.553 Union -0.313 1.368 0.309 1.362 Extreme50 0.448*** 1.565 0.441** 1.554 Emp Size -0.227*** 0.797 -0.225*** 0.799 Reg Shift 0.261* 0.770 -0.298** 0.742 Co-worker -0.288*** 0.750 -0.279*** 0.757 Own Ethnicity -0.135 0.874 0.032 1.032 Own Gender -0.133 0.875 -0.141 0.868 Marital St 0.240* 1.271 0.234* 1.264 Health -0.324*** 0.723 -0.326*** 0.722 Sup Gen -0.182 0.834 Sup Race 0.308** 1.361 Sup Age cont 0.020*** 1.020 Gen Diff -0.244* 0.783 Race Diff 0.170 1.185 Cohort Diff 0.393*** 1.481 Global Chi-Square Statistic 95.306*** 92.498***

Note: ebk

is the exponentiated parameter estimate and represents the factor change in the odds of the outcome produced by a one unit increase in the value of the independent variable. *p<.10; **p<.05; ***p<.01.

Interestingly the variable “supervisor gender” (male = 1), contrary to the hypothesis set forth here, is

not found to be significant. There does not appear to be a specific preference or “norm” with respect to the gender of the supervisor for these Millennials. Perhaps this is reflective of the fact that there are more female managers, especially in the private service sector and government sector, than in the past. The expectation for male-only supervisors is far less strong and instead is being replaced by the visibility of both male and female supervisors. Also these young workers are interfacing with lower level immediate supervisors who are more likely to be female in comparison to more seasoned and tenured employees whose immediate supervisor is likely to be higher ranked and less likely to be female.

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Supervisor difference variables (Model 2b) are then substituted for the original supervisor variables and the models are re-run. Both the “gender difference” and “cohort difference” variables are positively significant as hypothesized with the variable “cohort difference” highly significant. Even though there is no overarching “norm” or preference for a male or female supervisor, it appears these Millennials nonetheless prefer to be supervised by the same gender. With respect to the “gender difference” variable, having an immediate supervisor of a different gender significantly and negatively affects employee job satisfaction (b=-0.244; p<.10). This is consistent with the similarity-attraction paradigm and the gender-difference model’s perspective which would predict that young men and women will feel more comfortable working directly under a same-gender supervisor.

Young employees in particular, without a long work history and array of personal experience in the workforce, may seek identification based on gender first. Often in school, students are identified or classified into male or female groupings without any stereotyping or negativity. Friendships are more often gender-based, as are other social associations. This finding is also consistent with the need for role models for these young employees.

Contrary to the hypothesis set forth here, the “race difference” variable is not significant. The attraction of same gender but not same race is intriguing. One explanation is that for this age group in this cohort, gender matters more than race. Perhaps it is a good sign that race as a distinguishing “difference” is less important and this is reflected in our young workers. It could also show that, coupled with the previous finding, these young employees exhibit a preference for a white immediate supervisor rather than someone of the same race.

The “cohort difference” variable is constructed to capture generational differences. Generational difference (having the older cohort supervise) is highly significant and positively affects Millennials’ job satisfaction (b=0.393; p<.01). Contrary to the hypothesized reference to the similarity-attraction paradigm, these young workers prefer to be supervised by an older “different” cohort. This finding takes on additional significance when one considers the efforts and resources companies and consulting firms have expended to address the issues and potential problems of a multi-generational workforce. Some of these resources could perhaps be re-directed to address these young employees’ feelings of status incongruence – the feeling that these “younger” supervisors are not qualified in their eyes to supervise them.

But more potentially profound is that the young Millennials, at least in terms of job satisfaction, do not seem concerned about the “differences” of the older generations. Perhaps the older generations represent leaders to these Millennials; younger supervisors may either be less inspiring or more threatening. It might also be the case that younger supervisors, such as those in Gen X, are perceived to be more ambitious, in the height of their own careers, and tasks such as mentoring and guidance, so necessary to Millennials, are not seen as important ways to get ahead. Younger-generation supervisors may be threatened by the up-and-coming Millennials as potential rivals for promotions and special project assignments. In seeking out ways to retain young workers, companies may want to rely less on stereotypes of age and cohort differences and focus on the basics of trust and mutual respect. Demographic Controls

Interestingly neither the employees’ ethnicity nor gender is a significant correlate of their job satisfaction. Perhaps these young Millennials have not yet experienced instances where their gender or ethnicity might impact their assessment of their jobs. For example, any differences, whether real or perceived, in promotion opportunities. CONCLUSION

Both demographic characteristics of the immediate supervisor and relational differences, which represent social identities and differences in social identities, prove to have significant effects on employee (subordinate) job satisfaction. Having a white older supervisor positively affects job satisfaction for this sample of Millennials. A white older supervisor may represent the norm, that is, what

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is expected of a person in authority. This may reduce uncertainty that may be associated with a non-white younger supervisor. These young employees may assume that a white older supervisor may be better qualified or situated within the organization to satisfy their job and career desires and goals.

No norm or preference is revealed with respect to gender. These young employees do not prefer or perhaps even expect a male. This may be indicative of the increasing visibility of female supervisors, especially those managing the entry-level positions of these young workers.

Focusing on the supervisor-subordinate dyad, relationally these young workers prefer same-gender supervisors belonging to an older generation. This is partially consistent with the similarity-attraction paradigm where having a supervisor of the same gender is comfortable, less threatening, and perhaps perceived to be more likely to provide a mentor role model. However, generationally, these young workers prefer to be supervised by an older “dissimilar” cohort. Perhaps since trust in supervisor has proven to be very significant to the quality of the supervisor-subordinate dyad, older cohort supervisors are perceived to be more trustworthy; less likely to be in competition with these young workers; and perceived to be more likely to accept and succeed in the mentor role. IMPLICATIONS

It is strikingly clear that race, gender, age, and cohort play significant roles in the workplace. Young employees in this sample are affected by the interplay of these various social identities and in turn affect their organizations through their perceptions of these identities. For organizations to meet their goals, they must gain insight into these perceptions and how they play out within their organizations. In particular, these young Millennials may not have the tools to deal with a work environment that may be different from what they expect.

The results here indicate that demographic characteristics and relational demographics must be considered with respect to employee job satisfaction. Thus if employees are not individuating their supervisors, that is, getting to know them as individuals, it is likely this lack of knowledge would lead to misunderstanding, misconception, and mistrust.

If young workers prefer or feel most comfortable with a white supervisor, as these findings indicate, then a non-white supervisor’s policies may fail to engage and retain these workers, regardless of the quality of her/his policies or work tasks.

If young workers are more comfortable with a supervisor of the same gender, then these workers may be less productive due to self-presentational issues. Given that Millennials need mentoring and guidance in their jobs, then the opposite gender supervisor may fail, not from lack of reaching out, but due to these workers’ lack of comfort or confidence.

If young workers prefer an older supervisor and are more comfortable with a later-generation supervisor, then the results of the promotion of younger workers (such as Gen X) to supervisory positions may prove less successful for the overall organization, even if they mentor Millennials, if these young Millennials feel threatened by or in competition with these supervisors.

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International Intellectual Property disputes: The Impact of National Culture on Preferences for Dispute Resolution Method

Carole Cangioni

Northern Kentucky University

Sandra Spataro Northern Kentucky University

This study explores the influence of national culture on preferences among dispute resolution methods used in business conflicts. We hypothesized how Hofstede’s (1988, 2001) primary cultural dimensions, as well as cultural distance (Kogut and Singh, 1988), would likely influence disputants to prefer either litigation or negotiation for conflict resolution. We analyzed resolution method choices among cross-cultural disputants in intellectual property infringement cases and found that those from collectivistic cultures generally prefer negotiation to resolve disputes and cultural distance predisposed disputants toward litigation. Implications for theory and management are discussed. INTRODUCTION

Intellectual property rights are an important part of international trade in today’s increasingly global exchange system (Maskus, 1998). Each year violations of intellectual property rights create conflicts and legal disputes between businesses from various national origins. Between 1996 and 2001 alone, more than 40,000 disputes around intellectual property involving foreign and domestic firms were filed and closed in U.S. Federal courts. With the growing number of cross-cultural disputes, it becomes increasingly important to understand how the disputants’ national culture may influence preferences about how best to resolve such disputes.

Although there is debate about whether culture matters in approaches to dispute resolution, previous literature shows variation in conflict resolution strategies across countries and nationalities. For example, culture has been shown to influence methods and strategies used to solve conflicts in international diplomatic relations and in cross-cultural management. Further, recent research identifies the need for more cultural approaches to commercial disputes (Meyer et al., 2004; Slate, 2004) and framing of conflicts (Kozan, 1997).

Two methods of dispute resolution anchor opposite poles of conflict resolution strategy: negotiation and litigation. These methods differ in risk, uncertainty, cost, and time involved; thus choice of method is highly consequential to both parties. To the extent that method of choice is based on underlying values about human interaction, disputants from the same culture share the same values and are more likely to choose the same dispute resolution method. By the same token, then, disputants from different cultures may be more prone to select differing resolution methods and thereby exacerbate the conflict.

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The prospect of anticipating which dispute resolution method one party is more likely to prefer opens the door to better managing the process of conflict resolution and could serve to help the parties reach a more productive resolution. The questions of which dispute resolution method one party will prefer and whether that preference is based on their national culture thus become highly important. This paper empirically examines the various dimensions of national culture (Hofstede, 1988, 2001) and the distance between disputing parties’ cultures as factors influencing the choice of resolution methods in intellectual property violation cases.

THEORETICAL DEVELOPMENT Types of dispute resolution

The characteristics of dispute resolution methods are usually classified in terms of cost, time spent and level of control over the process and the outcome. These characteristics of the two poles of dispute resolution methods are summarized in table 1.

TABLE 1

CHARACTERISTICS OF DISPUTE RESOLUTION METHODS

Negotiation Arbitration Litigation

Disputants control of the outcome Higher d Lower a Lower a

Disputants control over the process Higher d Higher ab Lower a

Cost involved Lower d Higher ac Higher c

Time involved Lower d Higher ac Higher c

a Neil (2005) b Fellas (2004) c Posin (2004) d Lewicki et al. (1997)

Litigation is considered the most stressful and time-consuming of the dispute resolution strategies, as

it is burdened with the costs and flaws of legal institutions, including potential judge fallibility (Posin, 2004). Parties to litigation have less control over the dispute process as well as less predictable outcomes (Neil, 2005). Furthermore, since lawsuits may become public over the course of the litigation, there is an added liability in intellectual property disputes whereby other unexpected plaintiffs may enter the case, resulting in higher potential losses for defendants. Finally, litigation limits the ability of the parties to save face (Posin, 2004), especially as the case becomes public.

In contrast, negotiation is considered the least expensive and time consuming. Both parties to a negotiation have control over the process and can decide the amount of time and money they involve in the negotiation process. In addition, both parties participate in developing outcomes and potentially seeking integrative or win-win resolutions. The potential for value creation, compromise and mutual concessions make negotiation the less aggressive and the most participative of the dispute resolution methods. Thus litigation and negotiation differ significantly in both participation from the disputants and in the potential impact on the relationship between the parties. We turn next to discuss how these differences in methods may be valued differently across cultures.

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Culture and dispute resolution methods Culture, as defined by Hofstede and Bond (1988) is “the collective programming of the mind that

distinguishes the members of one category of people from those of another”. Interestingly, culture still divides opinions, particularly in the negotiation literature. Three different perspectives are expressed regarding culture’s influence on dispute resolution: the skeptics, who think that culture is epiphenomenal (Zartman, 1993) and is solely a phenomenon appearing after another phenomenon; the proponents, for whom culture does matter (Hofstede, 1980, 2001; Hall, 1976; Fisher, 1980); and the contingency adopters who argue that the effect of culture is contextual in nature (Elgström, 1999).

Existing research on cross-cultural disputes has focused primarily on diplomatic rather than commercial conflicts and differences in resolution processes between countries. Despite existing calls for culturally-based understanding of approaches to commercial disputes (Meyer et al., 2004; Slate, 2004), the majority of existing research focuses on the business negotiation process (Lewicki et Al, 1997; Graham, 1983, 1984, 1993; Adler, Graham & Schwartz, 1987; Adler, Brahm & Graham, 1992). Recently, Posin (2004) addressed cross-cultural issues in mediating international business disputes and Fellas (2004) discussed how various methods can facilitate international business dispute resolution. However, the influence of culture on the choice of dispute resolution method has been left unexplored.

Earlier work from Graham (1983, 1984, 1993), Adler, Graham & Schwartz (1987), and Adler, Brahm & Graham (1992) used a buyer/seller negotiation simulation to show that similar negotiation outcomes can be attained by business negotiators from various countries as long as they negotiate with people of their own country; whereas, inter-cultural negotiations typically lead to lower outcomes or performance (Lewicki et Al., 1997). These studies argue that different ways to resolve a dispute may result in the same outcome, but that the disputant is better off selecting the dispute resolution strategy that best fits his or her culture.

Hofstede and Bond (1988) identified five primary dimensions of national culture. In the following sections, we discuss each dimension’s expected influence on a party’s choice of a dispute resolution method.

Power distance

Power distance is defined as the extent to which power inequalities are accepted by the members of a particular society, organization, or family (Hosftede, 1980, 2001; Hofstede & Bond, 1988). Greater power distance involves the acceptance by the majority of a culture that the power in their society is concentrated at the top. Thus, people in high power distance cultures consult more often with their managers or supervisors and wait for decisions before acting and therefore have a higher tolerance for slower processes.

Consequently, individuals from high power distance cultures are conditioned to accept the decisions of authority figures, including a judge or arbitrator in a litigation setting, more easily than those from low power distance cultures. Additionally, for high power distance cultures, managers establish formal rules that subordinates are supposed to follow (Hofstede, 2001) which reinforces the propensity to choose litigation because of its formality and enforceability.

In contrast, individuals from low power distance cultures are less willing to accept authority. Mulder (1977) posits that when the power distance from the subordinate to the more powerful person is small, the subordinate will have a strong propensity to try and reduce the distance. Thus, persons from low power distance cultures will want to redistribute power in a way that improves the legitimacy of their own power position. Negotiation gives parties the opportunity to redistribute some of the power to themselves. Further, low power distance cultures commonly have decentralized decision structures and lower concentration of authority (Hofstede, 1980, 2001), increasing individuals’ sense of agency. Thus,

Hypothesis 1: In cultures with higher levels of power distance, disputants are more likely to choose litigation as the dispute resolution strategy, while those from low distance cultures are more likely to choose negotiation.

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Individualism/collectivism Individualism/collectivism refers to the degree of gregariousness of individuals in the society

(Hofstede, 2001) and the degree to which a person is distant from, or close to, the collectivity (Newman and Nollen, 1996). Organizations in collectivistic societies are built around groups with a strong emphasis being placed on teamwork and group achievement rather than autonomy and personal responsibility. In a collectivistic culture, organizations tend to encourage collective decision making and consider direct appraisal of individual performance a threat to team harmony. From a theoretical perspective, the influence of individualism/collectivism on choice of dispute resolution method is not clear. One could formulate theoretical arguments to support both individualism and collectivism influencing disputants toward negotiation. We therefore offer competing hypotheses below.

Building relationships is central to collectivistic cultures: for instance, in China, signing an agreement is only the beginning of a relationship (Phatak & Habib, 1996). Since negotiation is less competitive than litigation in nature and potentially more harmonious, it lends itself to the prioritization of relationships. Furthermore, people from the collectivistic cultures typically are more sensitive to the potential of losing “face” since this tends to not only affect their position in their in-group but also taint the entire in-group. The public nature of confrontation and exposure of misdeeds in litigation is therefore less fitting to the collectivistic orientation. Therefore,

Hypothesis 2a: In cultures with higher levels of collectivism, disputants are more likely to choose negotiation as the dispute resolution strategy.

In individualistic cultures people desire independence and responsibility for themselves. Among

individualists, individual performance is frequently evaluated and rewarded. Likewise, individual initiative and challenges that encourage competition are emphasized in individualistic cultures. This emphasis is consistent with negotiation, which provides a venue for individual agency and enables more immediate reward for success. Together, time pressure, acceptance of individual responsibility and individual rewards encourage the use negotiation to resolve disputes. Thus,

Hypothesis 2b: In cultures with higher levels of individualism, disputants are more likely to choose negotiation as the dispute resolution strategy.

Masculinity/femininity

Masculinity/femininity refers to the relative importance of personal achievement over relationship building and the accomplishment of group goals (Hofstede, 2001). Organizations in masculine societies tend to emphasize merit-based personal rewards, material success, and assertiveness (Newman and Nollen, 1996). As a result, individuals from masculine cultures are typically independent, ambitious, aggressive, and assertive and as such, are more likely to make individual decisions in order to gain recognition. Furthermore, they will seek achievement, self-realization through independent decision making and prefer larger and faster rewards. Hofstede (2001) suggests that fighting and display of force are more typical in masculine cultures when dealing with international conflicts. In contrast, an organization in a feminine society is more likely to emphasize harmony and quality of life issues (Newman and Nollen, 1996). According to Hofstede (2001), in low masculinity cultures, career ambitions are secondary with the primary focus on humanizing the work through teams, joint problem solving, compromise, and negotiation. Since litigation facilitates assertiveness and demonstration of power, we posit that,

Hypothesis 3: In cultures with higher levels of masculinity, disputants are more likely to choose litigation as the dispute resolution strategy, those from more feminine cultures are more likely to choose negotiation.

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Short-term/long-term orientation Long term-short term orientation, also known as Confuciansm, refers to an orientation towards the

future with perseverance, prudence, and savings. Short-term oriented cultures refer to a past and present orientation with a respect for traditions, social context, and face saving (Hofstede, 2001). Prior studies suggest that short-term/long-term orientation influences the strategic decisions made in international partnership (Beldona et al., 1998). Thus, this dimension is expected to impact the choice of dispute resolution strategy.

Short-term orientation refers to the focus on immediate versus future results. Individuals in short-term oriented countries tend to focus on quick fixes and short term profits rather than long-term solutions and strategies requiring perseverance, such as market share growth (Newman and Nollen, 1996). Interestingly, the social norms associated with short term orientated cultures emphasize an expectation for immediate gratification of needs, and teach “short-term virtues.” They, therefore, focus on social consumption, bottom line performance, and nebulous problem solving. A disputant from a short-term oriented culture values fast results and engaging in unstructured problem solving; thus, they will attempt to avoid structured and time-consuming dispute resolution methods.

In contrast, long-term oriented cultures are willing to make the investments needed to build relationships and as such, adhere to long-term virtues like frugality and commitment, deferred gratification of needs, as well as a propensity for structured problem solving. If the disputant is from such a culture, he or she is expected to be willing to accept a delay in dispute resolution in exchange for a structured method of dispute resolution. Thus,

Hypothesis 4: In cultures with higher levels of short-term orientation, disputants are more likely to choose negotiation as the dispute resolution strategy, and those from long-term oriented cultures will more likely choose litigation.

Uncertainty avoidance

Uncertainty avoidance involves the extent to which people in a particular culture feel comfortable in uncertain and unstructured situations (Hofstede & Bond, 1988). Those from a culture with a high level of uncertainty avoidance prefer rules and well-defined processes as ways to reduce uncertainty (Hofstede, 2001). Further, high uncertainty avoidance individuals prefer to reduce personal risk and use group decision making as a way to do so (Hofstede, 2001).

The preferences above suggest a propensity for litigation. However, Hofstede (2001) also shows that citizens from uncertainty avoiding cultures are negative toward the legal system and think of the law as being usually against them. The World Value Survey gives support to the fact that a need for more legislation does not imply trust in the legal system; it found ‘confidence with the legal system’ to be negatively correlated with uncertainty avoidance.

In addition, Gibson and Caldeira (1996) studied European countries on perceptions of legal value. Two of the dimensions that were later found correlated with uncertainty avoidance were legal alienation, which is the perception that law is often against me, and the feeling that it is ok to break the law when it is perceived as unfair. (Hofstede, 2001). Thus, two social norms are in opposition for the choice of dispute resolution strategy: the need for a structured strategy and the negative perception of the legal system as unjust or corrupt. We therefore propose competing hypotheses here again:

Hypothesis 5a: In cultures with higher levels of uncertainty avoidance, disputants are more likely to choose litigation as the dispute resolution strategy. Hypothesis 5b: In cultures with lower levels of uncertainty avoidance, disputants are more likely to choose litigation as the dispute resolution strategy.

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Cultural distance Cultural distance is a composite of countries’ differences relative to Hofstede’s cultural dimensions

and has been shown to influence decision making (Brouthers & Brouthers, 2001; Kogut & Singh, 1988; Mezias et al., 2002). Kogut and Singh (1988) first introduced cultural distance to predict the foreign market entry mode choice; however, some results appeared to be paradoxical. The paradox was explained by Brouthers & Brouthers (2001) as follows: high cultural distance leads to the choice of a cooperative entry mode like joint venture. When investment risk in the target market interacts with cultural distance, the choice changes toward internalized entry mode like wholly owned subsidiaries. We therefore hypothesize that the gap between cultures will increase the willingness of the disputants to opt for a more cooperative dispute resolution strategy:

Hypothesis 6: In disputes involving parties with high cultural distance, disputants are more likely to choose negotiation as the method of dispute resolution.

Our hypotheses are summarized in Figure 1.

METHOD

Data Our archival data was procured from the Federal Court Cases Integrated Database. This dataset of

U.S. Federal cases was compiled by the Inter-University Consortium for Political and Social Research, by way of the Federal Judicial Center. Official records from federal district courts were recorded by court clerks after cases closed (Administrative Office of the U.S. Courts, 1985). Our sample comes from the 40,000 intellectual property dispute resolutions cases that were closed between the years of 1996 and 2001. Of the 40,000 intellectual property dispute cases 874 cases were included in the study based on systematic random sampling (Trochim, 2001). Included firms were coded based on home country

Figure 1: Summary of Hypothesized Influence of Culture on Choice of Dispute Resolution

Low Power Distance

Individualism

Collectivism

Feminine

Short-term orientation

High Power Distance

Masculine

Long term orientation

Negotiation

High Uncertainty Avoidance

Low Uncertainty Avoidance

Litigation

Dashed lines represent competing hypotheses.

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(country of the headquarters), found through the Lexis-Nexus Academic Universe business search engine. Additional or confirmatory information was retrieved from Hoovers and Google business search engines. The coding of individual firms resulted in 650 dyadic cases. All of these cases used either negotiation or litigation as their method of conflict resolution. Cases involving American firms as both plaintiffs and defendants were eliminated from the sample for lack of cultural distance. After this elimination, the sample size came down to a total of 252 plaintiff-defendant dyads representing divergent cultures (Trochim, 2001). Finally, we eliminated repeat cases from existing dyads to reduce the possibility of auto-correlation. The final sample was comprised of 186 cases, 50% negotiation and 50% litigation.

Variables Dependent variable

The dependent variable in the study is CONFLICT RESOLUTION STRATEGY, either litigation or negotiation. The dependent variable is dichotomized (1 equals negotiation; 0 equals litigation) and run in logistic regression models. Independent variables

In order to predict the conflict resolution strategy choice we use Hofstede’s five national culture dimensions: MASCULINITY, INDIVIDUALISM, POWER DISTANCE, UNCERTAINTY AVOIDANCE, and CONFUCIANISM (Hofstede 2001, 1980) and assigned his ratings, by country, for the values of each dimension for each country. Due to the dyadic nature of the cases, we analyze each of the dimensions for plaintiffs and defendants separately and together as well as the cultural distance between plaintiffs and defendants for each of the dimensions with the exception of CONFUCIANISM, for which cultural distance is not sufficiently represented in the sample. CULTURAL DISTANCE was calculated according to Kogut and Singh’s (1988) index modified to allow comparisons between countries other than the United States. The original Kogut and Singh index compares cultural dimensions of each country with the ones of the US. As we intend to compare any country with another country, the model used in this study is: 4

CD = Σ {(Iip – I id)2/Vi}/4 (1)

i=1

Where CD is the cultural distance between country of the plaintiff and the one of the defendant; Iip and Iid indicate the score of Hofstede’s dimension i for the country of the plaintiff and the country of the defendant, respectively. (Iip – I id)

2/Vi is the squared difference between the country of the plaintiff and the one of the defendant for each dimension divided by the variance Vi for the respective dimension. In this model, we use the four dimensions originally found by Hofstede: uncertainty avoidance, individualism, masculinity, and power distance. Control variables

Due to the nature of the dataset (and sample) used for this study, certain control variables normally utilized in international business research, such as firm size and overseas experience (e.g., Brouthers, O’Donnell & Hadjimarcou, 2005), could not be operationalized in this study. However, we did control for type of intellectual property violation. In the sample, three types of intellectual property violations are represented: copyright, patent, and trademark. Each of them was dichotomized as dummy variables; only PATENT and COPYRIGHT are used in the models to avoid the dummy variable trap.

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RESULTS Three independent variables violate the normality assumption: cultural distance between plaintiff and

defendant’s Power Distance, cultural distance between plaintiff and defendant’s Individualism, and plaintiff’s Power Distance. The outliers spotted in the dataset are part of the country specific cultural indices, thus we chose not to remove them and decided instead to transform the corresponding variables according to the recommendations of Tabachnik and Fidell (2001). Severe positive skewness for plaintiff’s power distance was corrected using inverse transformation and substantial positive skewness for the two cultural distance measures was corrected using logarithmic transformation. The three transformed variables are used in the subsequent analysis. The assumption of homogeneity of variance is not violated, as the plot of the studentized deleted residual against the unstandardized predicted value resulted in two parallel lines (Tabachnick & Fidell, 2001).

Tables 2 and 3 report the variable means, standard deviations, and correlation coefficients between the dependent, independent, and control variables. In addition, the maximum Variance Inflation Factor (VIF) value found in the models is 5.391, which is smaller than the maximum limit of 10 specified by Kleinbaum et al. (1998). Thus, multicollinearity is not an issue in this study.

Table 4 presents the results of the logistic regression analyses, which tested the likelihood of choosing negotiation as a dispute resolution strategy.

Six different models were run with choice of resolution strategy as the dependent variable (negotiation = 1). Model A controls for the likelihood of choosing negotiation according to the type of intellectual property violation. The – 2 log likelihood in this model has no statistical significance (�patent=-.023; �copyright= -.067, both n.s.) and thus fails to show any influence of the type of intellectual property violation on the choice of dispute resolution strategy.

The next column, Model B, shows both plaintiff and defendant cultural dimensions as predictors of choice of dispute resolution strategy. The model is significant (-2 log likelihood = 223.12; p<.01). In this model, both plaintiff and defendant individualism are negatively related to the likelihood of choosing negotiation as a dispute resolution strategy (�individualism = -0.03; p<.10 and � = -0.04 p<.05, respectively). The Nagelkerke R² shows that the model is explaining 22.7 percent of the likelihood to choose negotiation and 72 percent correctly classified exceeds the proportional chance criterion of 50 percent. Thus, the likelihood of choosing negotiation decreases as individualism increases; said differently the likelihood of choosing negotiation increases as collectivism increases. This result provides support for Hypothesis 2a. Hypothesis 2b is not supported. All other dimensions of culture were not significant in Model B (�power distance=8.63 for plaintiffs and -.04 for defendants; �masculinity=.01 for plaintiffs and -.00 for defendants; �uncertainty avoidance=-.01 for plaintiffs and .02 for defendants; �confucianism = .01 for plaintiffs and .00 for defendants; all n.s.). Thus, we did not find support for hypotheses 1 or 3 – 5. Only individualism/collectivism had direct influence over choice of resolution method.

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Mean S.D. 1 2 3 4 5 6 71. Litigation 0.50 0.5012. Negotiation 0.50 0.501 1.000 **

3. Copyrights 0.12 0.330 -0.016 0.0164. Patent 0.65 0.480 0.000 0.000 -0.507 **

5. Trademark 0.23 0.423 0.013 -0.013 -0.206 ** -0.739 **

6. Plaintiff power distance 0.02 0.004 0.237 ** -0.237 ** 0.024 -0.006 -0.0127. Plaintiff individualism 75.96 20.787 0.132 -0.132 0.109 0.018 -0.106 0.482 **

8. Plaintiff masculinity 61.66 16.200 -0.083 0.083 0.042 -0.050 0.023 -0.141 0.0649. Plaintiff uncertainty avoidance 54.97 16.016 -0.100 0.100 -0.037 0.024 0.002 -0.535 ** -0.676 **

10. Plaintiff confucianism 29.88 22.984 -0.200 ** 0.200 ** 0.013 -0.027 0.020 -0.469 ** -0.449 **

11. Defendant power distance 43.22 10.916 -0.062 0.062 -0.001 0.060 -0.067 -0.125 0.01012. Defendant individualism 73.39 22.090 0.306 ** -0.306 ** 0.013 -0.241 ** 0.263 ** 0.172 * -0.165 *

13. Defendant masculinity 61.52 18.653 -0.050 0.050 -0.099 0.125 -0.065 -0.090 -0.153 *

14. Defendant uncertainty avoidance 59.30 19.754 -0.262 ** 0.262 ** -0.095 0.242 ** -0.208 -0.165 * 0.11415. Defendant confucianism 33.36 25.263 -0.164 * 0.164 * 0.037 0.139 -0.188 -0.210 ** -0.144 *

**. Correlation significant at the 0.01 level (2 tailed)*. Correlation significant at the 0.05 level (2 tailed)ª. Correlation significant at the 0.10 level (2 tailed)N= 186 Maximum VIF= 5.391

8 9 10 11 12 13 148. Plaintiff masculinity9. Plaintiff uncertainty avoidance 0.177 *

10. Plaintiff confucianism 0.343 ** 0.249 **

11. Defendant power distance 0.026 0.049 0.11312. Defendant individualism -0.034 0.005 -0.117 0.437 **

13. Defendant masculinity -0.131 0.152 * 0.015 0.161 * -0.04114. Defendant uncertainty avoidance -0.025 -0.006 0.102 0.603 ** -0.763 ** 0.343 **

15. Defendant confucianism -0.033 0.161 * 0.155 * 0.420 ** -0.564 ** 0.366 ** 0.383 **

Table 2. Pearson correlations coefficients for cultural dimensions of plaintiff and defendant

Table 2. Pearson correlations coefficients for cultural dimensions of plaintiff and defendant

Mean S.D. 1 2 3 4 5 6 7 8 91. Litigation 0.50 0.502. Negotiation 0.50 0.50 -1.000 **

3. Copyrights 0.12 0.33 -0.016 0.0164. Patent 0.65 0.48 0.000 0.000 -0.507 **

5. Trademark 0.23 0.42 0.013 -0.013 -0.206 ** -0.739 **

6. Power distance -0.88 0.78 -0.229 ** 0.229 ** -0.134 0.125 -0.0367. Individualism -0.33 0.94 -0.321 ** 0.321 ** -0.046 0.123 -0.104 0.440 **

8. Masculinity 2.08 3.00 -0.166 * 0.166 * -0.074 0.146 * -0.108 0.026 0.258 **

9. Uncertainty avoidance 1.27 1.39 -0.179 * 0.179 * -0.030 0.136 -0.131 0.600 ** 0.529 ** 0.07010. Cultural distance 1.37 1.22 -0.299 ** 0.299 ** -0.060 0.190 ** -0.169 * 0.486 ** 0.688 ** 0.679 ** 0.595 **

**. Correlation significant at the 0.01 level (2 tailed)*. Correlation significant at the 0.05 level (2 tailed)ª. Correlation is significant at the 0.10 level (2 tailed)N= 186 Maximum VIF= 1.811

Table 3 Pearson bivariate correlations coefficients for distance in cultural dimensions

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Hypothesis 6 posited that high cultural distance will influence parties toward a choice of negotiation

over litigation. Model C shows cultural distance as a predictor of chosen strategy and provides support for hypothesis 6. Aggregated cultural distance positively related to the likelihood of choosing negotiation (B = 0.54, p<.01). The model is significant with a -2 Log likelihood of 240.03 (p<.01), which shows better goodness of fit than any other models in the study. The Nagelkerke R² of .12 shows less explanation in the variance but the percent correctly predicted of 66.9 gives a better prediction than chance and supports our sixth hypothesis.

DISCUSSION

This study explored the extent to which culture may influence the choice of dispute resolution method used in legal cases involving parties from different cultures as shown in model 2. Previous research has shown that culture and cultural distance may influence strategic choices; this study attempts to make that influence more concrete by showing that cultural dimensions and cultural distance have a direct influence on the choice of dispute resolution method. Our empirical results tell somewhat of a different story, however. We found support for our second hypothesis regarding Collectivism influencing choice toward

B Exp (B) Wald      B Exp (B) Wald             B Exp(B) Wald

Constant 0.04 1.04 0.04 5.35 * 210.95 3.07 ‐0.68 * 0.51 5.28

Control Variables

Patent ‐0.02 0.98 0.02 0.21 1.24 1.11 0.12 1.13 0.43

Copyright ‐0.07 0.94 0.07 ‐0.04 ‐0.97 0.02 ‐0.27 0.97 0.01

Covariates

Plaintiff

Power Distance ‐8.63 0.00 0.05

Individualism ‐0.03a

0.97 3.73

Masculinity 0.01 1.01 1.00

Uncertainy Avoidance ‐0.01 0.99 0.49

Confucianism 0.01 1.01 0.28

Defendant

Power Distance ‐0.04 0.96 2.38

Individualism ‐0.04 * 0.97 3.91

Masculinity 0.00 1.00 0.00

Uncertainy Avoidance 0.02 1.02 1.05

Confucianism 0.00 1.00 0.12

Cultural Distance 0.54 ** 1.72 16.20

df 2 12 3

‐2 log likelihood 257.78 223.12 ** 240.03 **

Likelihood ratio 20.67 34.73 17.83

Percent correct 26.60 72.00 66.90

Nagerlkerke R2

0.00 0.23 0.12

Sommer's D 0.02 0.45 0.37

N  186 186 186

**p<.01; *p<.05; ap<.10

B=logistic regression parameter estimate; Exp(B) = odds ratio

Model A                      

Control

Model B                    

Cultural Dimensions

Model C                          

Cultural Distance

Table 4.

Logistic regression for predictors of Dispute Resolution Method

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negotiation (H2b), but we did not find any other direct effects of cultural dimensions on choice of dispute resolution strategy.

We found support for the role of cultural distance in influencing choices of resolution method (H6). Greater cultural distance across cultural dimensions between two disputing parties increased the likelihood they would choose negotiation as their method of dispute resolution, rather than litigation.

It would be interesting to explore other methods of dispute resolution and the role culture plays in selecting them. Interestingly, in our randomly selected sample of 252 international cases of intellectual property violations there were no cases of arbitration as a dispute resolution method. This was true despite the presence of US based disputants in the sample and prior arguments (e.g., Neil, 2005) that arbitration is a popular dispute resolution strategy in the U.S. Consequently, it is necessary to seek for more information on this subject, including research on disputes other than those on intellectual property violations.

Limitations and implications for future research.

One limitation of the current study concerns the construct of organizational culture, which differs from national culture (Hofstede, 1980; Mezias, 2002). In this study, organizational culture is not addressed, even though we tried to overcome this issue by coding the case in terms of the country of the company’s headquarters. Also, the discretion given to the local managers can influence the degree to which the national and organizational culture of the headquarters may influence the choice of dispute resolution method used. Thus, we suggest that future research examines the influence of organizational culture, in addition to national culture. Also, we used country of company headquarters to code parties’ cultural values, which was not always the value system most proximate to disputant. Future exploration of dissemination of home country values to foreign subsidiaries may also aid in advancing this line of inquiry.

In addition, psychic distance is not addressed in this study. Language is one of the factors included in psychic distance, and researchers may be able to determine if this construct should be considered as a moderator along with structural differences (Stottinger and Schlegelmich, 1998; O’Grady and Lane, 1996). Other structural considerations, such as the political relations between countries and the environment within nations, might provide insight to better understand the relationship between culture and business dispute resolution.

Finally, we did not directly assess the mechanism behind the choice of resolution method and rather inferred it. Future survey research of disputing firms may provide an opportunity for a richer understanding in this regard. The benefits of such a survey in addition to measuring the mechanism are threefold: first, we can avoid common method variance by cross-checking the cultural dimensions of the decision-makers in the cases; second, we can assess whether or not the attributes of the dispute resolution types are valued or perceived the same way across cultures; third, we can explore the perceptions and strategic intention of the defendant in intellectual property violation as well as the perception and strategic intentions of the plaintiffs in the choice of a resolution strategy. The exploration of these possible extensions will provide insightful information on the real goals of the organizations involved in a dispute. In reality, it is possible that the choice of dispute resolution method might be a means to an end, not the final goal per se. The stream of research on the influence of culture on strategic decision making could benefit from this contribution as it provides a behavioral response via individuals’ expectations. Conclusion

Strategic decision makers, negotiators, and parties implicated in business disputes will likely find insight with the knowledge of the expectations of the other party. The time and costs involved in various dispute resolution methods may be more easily appreciated and planned accordingly when taking both parties’ culture into account. Further research on the influence of culture on more aspects of legal disputes might help researchers and practitioners to better understand the interactions between business entities from foreign countries and better assess the possible risks in a multicultural business environment.

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Diversity and Firm Performance: An Analysis of Different Workforce Level and Ethnic Groups

B. Paul Choi

Howard University

Jin-Gil Jeong Howard University

Youngho Lee

Howard University

Using unique data for a thirteen-year period, this article examines the impact of diversity on firm performance based on six different levels of workforce for three different ethnic groups. The results of this research show that diversity strategy is successful at the two ethnic groups, i.e., Blacks and Hispanics. However, we cannot find the same result for the Asian group. In addition, the conclusion becomes less conclusive when the workforce demographics are broken into a different level of management. INTRODUCTION AND LITERATURE REVIEW

Theory from social psychology and organizational behavior research suggests that diversity can result in either positive or negative consequences, depending on the task at hand. In general, two theories explain the impact of diversity on firm performance. One group of research, based on cultural identity theory, argues that members of a common cultural identity are better to share cultural phenomena, such as worldviews, norms, values, and common heritage through a common language and rules among the same cultural group (Alderfer and Smith, 1982, Cox, 1993, and Ely and Thomas, 2001). This group of research supports the positive impact of diversity on firm performance.

The second group of theory is based on status and power. This group of people argues that status and power differentials in work groups explain why majority and minority employee behave in different ways at work (Nkomo, 1992 and Ragins, 1997). Individuals see and evaluate the power of other people on the basis of ethnicity so that diverse group behaves different ways than less diverse group (Alderfer, 1987 and Ridgeway, 1991). A negative relationship between firm performance and diversity is expected from this theory.

Many empirical studies attempt to support the positive link between diversity and firm performance. Firms may have a marketing advantage using a diverse sales force (Edelman et al., 2001, Martin, 2005, and Pandey et al., 2005). Human skills and the knowledge of individual employees are some of the advantages that firms adopting diversity possess (Hunt and Morgan, 1995). Some other studies report that firms, with better decision making by culturally diverse groups and increased problem-solving

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capabilities, may achieve comparative advantage over other peer groups (Cox and Blake, 1991 and McLeod et al., 1996).

More studies focus on sales forces on the study of diversity and firm performance e.g., Lattimer, 1998, Gilbert et al., 1999, Richard and Johnson, 2001, and Pandey et al., 2005.

However, there has been lack of diversity studies on the different levels of management and their impact on financial performance among different ethnic groups. Thus, the goal of this paper is to provide an empirical study which attempts to examine the impact of the Company workforce demographics on its financial performance by different ethnic groups. More specifically, this paper explores the different levels of workforce from three ethnic groups to examine the positive value of diversity.

We obtain six different levels of workforce¸ which includes total minorities, total male minorities, total female minorities, minority managers, minority professionals, and minority sales forces. Three ethnic groups, i.e., Black, Hispanic and Asian, are further identified and tested. This study uses the linear regression model to analyze the Company’s changes in demography in relation to financial performance. With this unique data for thirteen-year period, we are able to identify the impact of diversity at a different management level on the firm performance at different ethnic groups. DATA AND METHODOLIGY

This paper uses one of the unique data sets that were provided by the Company. The Company has a tract of different demographic variables over a thirteen-year period. The demographic variables include total minorities, male minorities, female minorities, minority managers, minority professionals, and minority sales workers. To control the effects of other firm characteristics on the firm performance¸ we have three firm-specific variables in the testing model, i.e., firm size, leverage and investment activities. Also included are a GDP component that accounts for the state of the general U.S. economy and a U.S. population that generally impacts on the demand of the financial products (Cole et al., 2011). With the addition of the GDP and the population component, the linear regression takes into account the degree of influence that the state of the U.S. economy has on the Company’s financial performance. The regression model is represented by the following:

(1)

where t indicates the year. The testing model is performed for the three different ethnic groups, i.e., Black, Hispanic, and Asian group. As a measure of Performance, we use Tobin’s q which is defined as the ratio of the market value of a firm to total assets (Wernerfelt and Montgomery, 1988 and Lang et al., 1989, Chung and Pruitt, 1999, and Anderson and Reeb, 2003). Tobin’s q has been used to capture many aspects of diverse corporate phenomena, including diversification decisions and cross-sectional differences (Jose et al., 1986 and Malkiel et al., 1979).

Minority is the key variable to test the diversity theory. This variable takes six different demographic forms for each ethnic group. The positive relationship between Minority and the dependent variable confirms the notion that adopting diversity policies offer positive economic benefits for the Company.

To reflect the business cyclical economic fluctuation, two cyclical variables are included in the testing model. Firstly, the model controls for the national GDP level. It is expected to be positively related to performance if the GDP growth boosts demand for the products of the Company. It is also expected that this variable captures the riskiness of the firm at different points in the business cycle (see Bassett and Brady, 2002). Secondly, the U.S. population is included. The demand of the products of the Company and its profitability can be affected by the number of consumers as well. These two variables are expressed in logarithm form so that we do not want to give too much explanatory power on these variables in the regression model since other variables are expressed in ratios.

0 1 2 3 4 5

6 t t t t t t

t t

Performance Minority GDP Population Asset Leverage

Investment

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We also control for firm characteristics which may have effects on the Company’s risk and profitability. Total assets are used to identify the effect of the size of the firm since financial condition is influenced by, among other factors, total assets of the firm (Demsetz and Villalonga, 2001). This variable is also expressed in logarithm form for the same reason.

Next, we control for risk-taking behavior of the Company since risk is closely related to the decision of the level of capital holding. Leverage is used to identify the capital adequacy of the sample firm. Leverage is included as a risk measure, and is defined as total assets to total owners’ equity. As this ratio decreases, firms’ ability to cover unexpected future events is increased. So, an increase in this ratio is associated with higher risk and increased level of financial distress. Colquitt and Hoyt (1997) argue that higher levels of leverage are considered lower values for the firm in the market, which would affect the dependent variable.

Lastly, the model controls for the investment activities. Since investment is one of the core business activities of the Company, it is essential to the Company’s overall financial performance. The Company’s asset portfolio and its ability and willingness to invest could affect the performance of the firm (Choi and Weiss, 2005). It is expected to have a positive relationship between this variable and firm performance if the market reflects increased investment as enhancing firm value. Otherwise, we expect a negative relationship if the market views the aggressive investment activities as a risky factor. EMPIRICAL RESULTS

The empirical analyses are based on the thirteen-year undisclosed data provided by the Company for the years 1993 through 2005. We compare the movement of total minorities over the sample period. The Company has hired an increasing number of minorities during the sample period. The proportion of total minorities was 12.83 percent in 1993, and then it was increased to 21.56 percent in 2003. Figure 1 highlights that there has been upward trend in minority hiring over the past years. Especially, there was a big jump in minority hiring, mostly caused by hiring the Black and Hispanic sales workers, and Hispanic managers, in year 2000, followed by a small decrease in hiring minority in 2001. The graph on the minority male employment shows that there is a large increase in hiring Hispanic male in year 2000, then the number of Hispanic male workers is higher than that of Black after 2002. The picture of the female minority hiring shows the same trend as the total minority hiring. Different levels of management, i.e., mangers, professionals, and sales workers, show the same trends. There is a declined trend of Black managers and Hispanic mangers in years 2004 and 2005. The graph of professionals shows that the number of Asian professionals is higher than that of Hispanic professional for the sample period, contrary to the employment trend of managers and sales workers.

To test the relationship between firm performance and diversity relevant to different levels of management, we utilize a regression analysis. Table 1 presents summary statistics for the variables used for the regression model. Table 1 indicates that mean of Tobin’s q of the sample company is 0.3947. Mean of total Black is 0.0835, mean of total Hispanic is 0.0559, and mean of total Asian is 0.039. The mean of leverage is 5.2822, which indicates fairly stable management by the sample company.

Tables 2a and 2b report the regression results for the six different models for the Black. Since there is no evidence for heteroscedasticity and multicollinearity problems, a standard linear regression model is used. The results show that there is a statistically positive relationship between firm performance and total Black in Model 1. Furthermore, the coefficient on total female Black is positive and significant as shown in Table 2a. Thus, the outcomes present a strong argument of diversity strategy for the business case. Hiring more minorities represented by Black ethnic group enhances firm performance.

Next, those total Black variables are further classified by the different level of management types, i.e., managers, professionals and sales workers. When minority demographics are broken down into more specific components, a positive and strong relationship between Black managers and firm performance is found, while hiring more Black professionals does not improve the firm performance as appeared in Table 2b. This suggests that, when the aggregate variables are broken down into the micro level categories, we find a mixed result. It seems to show weak support for the diversity in the workplace at the micro level.

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The Black sales workers have a positive influence on the firm’s performance, but it is not statistically significant. Thus, the results suggest that there has been a mixed impact of diversity strategy when the management functions are further broken down.

GDP variable shows that there is a statistically positive relationship between the firm performance and level of GDP in all six testing models. The coefficients on this variable indicate that more purchasing power can enhance the performance of the Company. However, in all testing models in Tables 2a and 2b, the coefficients on Population show a negative relationship with firm performance. Total assets are negatively related to the dependent variable, and they are significant in 4 testing models. Increased leverage is positively related to firm performance, but it is only significant in Model 3, while Model 4 shows a negative relationship. Thus, we cannot obtain a consistent conclusion. Investment activities are negatively related to the firm performance. So, the results indicate that increases in investment activities draw some suspicious concerns on the riskiness of the Company in the market.

Models in Tables 3a and 3b show the relationship between Hispanic variables and firm performance. The positive and statistically significant relationship is found in the Model 1 only. That is, the total Hispanic variable is only related to the performance, while other variables do not show the significant relationship with the firm performance. Testing results for the economic variables and firm specific variables show mostly the same results as in the Black group.

Tables 4a and 4b indicate the result for the Asian group. Compared to the previous two ethnic groups, no positive and significant relationship between the minority and firm performance is found. On the contrary, the Asian male variable shows that increasing Asian male impacts negatively on the performance of the Company. As in the Black and Hispanic testing models, similar results for the economic variables and firm-specific variables are found in the Asian group. CONCLUSIONS

This study seeks to discover the importance of changes in demography influencing on firm performance over time by different ethnic groups. Various level of diversity was analyzed to explore the impact of diversity on the firm performance. Total minorities, minority male, minority female, managers, professionals, and sales workers are included in the testing models for the Black, Hispanic and Asian group. A regression analysis demonstrates whether the level of workforce at different ethnic groups impacts on firm performance positively or negatively, while testing two prevailing theories.

The testing results show a different impact of workforce level on the performance. Generally, the regressions show that total minorities do, in fact, have a positive influence on the Company’s performance for the Black and Hispanic group. The results confirm the argument that firms with more diverse leadership teams may have a broader range of managerial perspective and skills, which lead to a positive influence on firm performance (Roberson and Park, 2007). This finding is consistent with the notion that diverse firms may enhance strategic problem-solving and decision-making capabilities.

However, we cannot find the same result for the Asian group. Contrary to the findings in Black and Hispanic models, Total Asian Male is negatively related to the performance of the Company in the Asian ethnic group.

Further, the conclusion becomes less conclusive when the workforce demographics are broken into a different level of management. We only see the positive correlation between Black managers and the Company’s financial performance. In most cases, testing results show weak support for the importance of workforce diversity at the micro level.

So, overall we can see the collective power on the diversity strategy, but it is not yet successful at the micro level. We also find that the positive impact is not consistent at the different ethnic groups. It should be noted that this study is based on one sample firm for the period of thirteen years. So, future study with additional data could confirm the general results of this study.

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FIGURE 1 EMPLOYMENT CHANGES BY ETHNIC GROUPS: 1993~2005

0.02 

0.04 

0.06 

0.08 

0.10 

0.12 

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Total BlackTotal HispanicTotal Asian

0.01 

0.01 

0.02 

0.02 

0.03 

0.03 

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Total Black MaleTotal Hispanic MaleTotal Asian Male

‐0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Total Black FemaleTotal Hispanic FemaleTotal Asian Female

0.01 

0.02 

0.03 

0.04 

0.05 

0.06 1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Black ManagerHispanic ManagerAsian Manager

‐0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Black ProfessionalsHispanic ProfessionalsAsian Professionals

‐0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Black Sales Workers

Hispanic Sales Workers

Asian Sales Workers

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TABLE 1 SUMMARY STATISTICS

Mean Stan. Dev. Min Max Tobin's q 0.3947 0.1014 0.2313 0.5269 Diversity Variables Total Black 0.0835 0.0121 0.0666 0.0961Total Black Male 0.0235 0.0020 0.0205 0.0272Total Black Female 0.0600 0.0106 0.0461 0.0717Total Black Managers 0.0351 0.0091 0.0238 0.0535Total Black Professionals 0.0535 0.0111 0.0355 0.0697Total Black Sales Workers 0.0498 0.0117 0.0330 0.0687 Total Hispanic 0.0559 0.0166 0.0342 0.0769Total Hispanic Male 0.0183 0.0057 0.0115 0.0254Total Hispanic Female 0.0375 0.0110 0.0227 0.0516Total Hispanic Managers 0.0266 0.0102 0.0160 0.0416Total Hispanic Professionals 0.0353 0.0113 0.0181 0.0485Total Hispanic Sales Workers 0.0351 0.0168 0.0172 0.0586 Total Asian 0.0390 0.0069 0.0271 0.0485Total Asian Male 0.0144 0.0029 0.0096 0.0190Total Asian Female 0.0246 0.0041 0.0175 0.0295Total Asian Managers 0.0217 0.0054 0.0124 0.0286Total Asian Professionals 0.0416 0.0136 0.0238 0.0649Total Asian Sales Workers 0.0157 0.0048 0.0087 0.0234 Macro Variables US GDP1 $10,635.51 $1,637.67 $8,332.40 $13,377.20 US Population2 285.574 9.053 271.180 298.109 Company Profile Variables Total Asset3 $23,691.80 $3,403.64 $18,691.00 $28,329.00 Leverage 5.2822 0.3339 4.6604 5.9426Investment 0.0592 0.0255 0.0338 0.09331GDP in billions of chained 2005 dollars. Source: US Dept. of Commerce, Bureau of Economic Analysis. 2Population in millions. Source: US Census Bureau.3Total Assets in millions of dollars.

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TABLE 2A MINORITY = BLACK, MODELS 1~3

DEPENDENT VARIABLE = TOBIN’S Q

Model 1 Model 2 Model 3 Independent Variable Coeff. Std. Err. Coeff. Std. Err. Coeff. Std. Err.

Intercept 501.016 93.282 ** 359.558 140.85 * 510.218 79.948 ***

Total Black 5.4128 2.0982 *

Total Black Male -1.5915 30.733

Total Black Female 6.0420 1.8915 **

GDP 6.7663 1.2360 ** 5.4149 2.1521 * 7.0877 1.0918 ***

Population -35.475 6.5511 ** -26.193 9.9008 * -36.336 5.6569 ***

Assets -0.5818 0.2077 * -0.4952 0.5216 -0.6673 0.1842 **

Leverage 0.1576 0.0796 0.0781 0.1316 0.1665 0.0686 *

Investment -4.0170 1.3816 * -1.4977 2.5488 -3.9472 1.1372 **

Adjusted R2 0.9290 0.7718 0.9481 *** significant at 1% level, ** significant at 5% level, and * significant at 10% level.

TABLE 2B MINORITY = BLACK, MODELS 4~6

DEPENDENT VARIABLE = TOBIN’S Q

Model 4 Model 5 Model 6Independent Variable Coeff. Std. Err. Coeff. Std. Err. Coeff. Std. Err.

Intercept 804.086 41.1983 *** 268.94 86.2180 * 387.341 130.332 *

Black Manager 22.8755 1.8826 ***

Black Professional -15.702 6.3042 *

Black Sales Workers 2.1690 2.9504 GDP 12.1517 0.6248 *** 5.2307 1.1401 ** 5.3093 1.8380 *

Population -59.046 3.0358 *** -21.150 5.9826 ** -27.529 9.2292 *

Assets -0.7700 0.0569 *** -0.5515 0.2108 * -0.4559 0.3374

Leverage -0.1543 0.0266 ** 0.1158 0.0767 0.1421 0.1492

Investment -1.5506 0.2562 *** -1.6686 1.0368 -2.5691 2.1365

Adjusted R2 0.9955 0.9256 0.8065 *** significant at 1% level, ** significant at 5% level, and * significant at 10% level.

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TABLE 3A MINORITY = HISPANIC, MODELS 1~3 DEPENDENT VARIABLE = TOBIN’S Q

Model 1 Model 2 Model 3

Independent Variable Coeff. Std. Err. Coeff. Std. Err. Coeff. Std. Err.

Intercept 609.430 118.48 ** 782.525 277.018 * 391.068 116.253 *

Total Hispanic 6.0363 2.2524 *

Total Hispanic Male 30.6024 18.792

Total Hispanic Female -7.8344 8.3192 GDP 8.0832 1.4815 ** 9.704 3.0307 ** 7.0201 1.0166 **

Population -42.999 8.2236 ** -54.305 18.662 * -30.142 7.2695 *

Assets -0.6411 0.2077 * -0.7283 0.3080 * -0.6816 0.1520 **

Leverage 0.1872 0.0822 0.2652 0.1496 0.1909 0.0581 *

Investment -5.2170 1.6740 * -8.0399 4.1756 0.0460 2.6016

Adjusted R2 0.9327 0.8788 0.9651 *** significant at 1% level, ** significant at 5% level, and * significant at 10% level.

TABLE 3B

MINORITY = HISPANIC, MODELS 4~6 DEPENDENT VARIABLE = TOBIN’S Q

Model 4 Model 5 Model 6

Independent Variable Coeff. Std. Err. Coeff. Std. Err. Coeff. Std. Err.

Intercept 347.222 164.790 530.253 180.077 * 281.98 155.742 Hispanic Manager -0.6255 4.1178

Hispanic Professional 7.5613 6.3114Hispanic Sales Workers -1.7481 2.1052 GDP 5.2306 2.1966 * 7.4779 2.4036 * 4.5125 2.0756

Population -25.301 11.6258 -37.885 12.6451 * -20.922 10.953

Assets -0.4756 0.3640 -0.7311 0.3683 -0.4036 0.3407

Leverage 0.0775 0.1312 0.1610 0.1285 0.0382 0.1281

Investment -1.4066 2.1757 -2.9870 1.8942 -0.3208 2.2399

Adjusted R2 0.7733 0.8455 0.8143 *** significant at 1% level, ** significant at 5% level, and * significant at 10% level.

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TABLE 4A MINORITY = ASIAN, MODELS 1~3

DEPENDENT VARIABLE = TOBIN’S Q

Model 1 Model 2 Model 3Independent Variable Coeff. Std. Err. Coeff. Std. Err. Coeff. Std. Err.

Intercept 449.63 190.37 * 465.7 61.882 *** 296.58 127.89 Total Asian -17.869 28.512

Total Asian Male -45.014 11.637 **

Total Asian Female 24.744 21.948 GDP 7.0562 3.2757 7.7039 1.0136 *** 4.3236 1.9133

Population -33.371 14.657 -34.789 4.5895 *** -21.083 9.4396

Assets -0.4499 0.3461 -0.7979 0.1709 ** -0.6891 0.3599

Leverage 0.1180 0.1392 0.1959 0.0618 * 0.0877 0.1107

Investment -3.2667 3.1731 -4.0241 0.9727 ** -0.6070 1.7538

Adjusted R2 0.7980 0.9619 0.8396 *** significant at 1% level, ** significant at 5% level, and * significant at 10% level.

TABLE 4A MINORITY = ASIAN, MODELS 4~6

DEPENDENT VARIABLE = TOBIN’S Q

Model 4 Model 5 Model 6 Independent Variable Coeff. Std. Err. Coeff. Std. Err. Coeff. Std. Err.

Intercept 341.39 140.10 * 361.34 137.75 * 399.75 107.08 **

Asian Manager 8.5263 19.716

Asian Professional 0.0267 7.5877

Asian Sales Workers -7.5352 5.1195 GDP 5.5284 1.9682 * 5.3699 2.1726 * 6.0036 1.5791 **

Population -25.028 9.9623 * -26.241 10.139 * -29.229 7.7716 **

Assets -0.8627 0.9620 -0.4762 0.3737 -0.4397 0.2795

Leverage 0.1738 0.2554 0.0782 0.1318 0.0941 0.1009

Investment -0.3393 3.3869 -1.5876 1.9852 -2.2596 1.4562

Adjusted R2 0.7850 0.7716 0.8674 *** significant at 1% level, ** significant at 5% level, and * significant at 10% level.

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The Top Four Percent: An Exploratory Study of Women Leading Fortune 1000 Firms

Marge Karsten

University of Wisconsin-Platteville

Wendy Brooke University of Wisconsin-Platteville

Marvee L. Marr

Ashford University

This study of women who lead the 1000 most profitable organizations in the United States began in October 2012. At that time, four percent, or 40, of these Chief Executive Officers (CEOs) were women; 96% were men. Since then, several changes have occurred. One CEO no longer holds that position due to a merger, and seven women became heads of their respective organization, bringing the total number of CEO women to 46 at this writing. INTRODUCTION

This study of women who lead the 1000 most profitable organizations in the United States began in October 2012. At that time, four percent, or 40, of these Chief Executive Officers (CEOs) were women; 96% were men. Since then, several changes have occurred. One CEO no longer holds that position due to a merger, and seven women became heads of their respective organization, bringing the total number of CEO women to 46 at this writing.

AVERAGE AGE AND RACE/ETHNICITY

The basic demographic profile of women at the helm of the 1000 top U.S. firms resembles that of their male counterparts. The mean age of the women studied was 54.5, and the comparable figure for all Fortune 1000 was 56 (Rise of the young CEO, 2013). The median age of all CEOs of firms in the Standard and Poor’s 500 List was 54 in 2008 (Weber Shandwick, n.d.).

Of note is the presence of relatively young top executives. When Marissa Mayer became CEO of Yahoo! Inc., in July 2012 at age 37, she joined Heather Bresch and Laura Alber as three of the youngest CEOs of Fortune 1000 companies. Bresch and Alber are both under age 45.

In terms of racial/ethnic composition, 99.9% of all CEOs of the Fortune 500 companies are white. n identical percentage of women CEOs of those firms are white. Three Asian Americans, one Latina, and one African American are represented among them (Zweigenhaft & Domhoff, 2012).

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EDUCATIONAL LEVELS, SCHOOLS ATTENDED, AND FIELDS OF STUDY In the late 1980s, women who were corporate directors of Fortune 500 firms had more education than

white male peers. The same was true of the few CEO women who “were more likely to have attended elite colleges and universities and to have earned post-graduate degrees” (Zweigenhoff & Domhoff, 2011). These findings support the notion that “to advance in a world that discriminates, women (and other groups facing such discrimination) have to be better educated and perform better than their white male competition.

This initial research did not fully substantiate such a claim. Several women in the study had graduate degrees; one-third earned more than one.

Overall, educational levels of CEO women were similar to those of their male counterparts. The percent of CEOs earning undergraduate degrees far exceeded the percent of the general U.S. population that did so, however. Of the 40 women studied, undergraduate degrees were confirmed for 39. U.S. census data revealed that in 2011, 30.1% of women 25 and older had obtained at least a bachelor’s degree.

Percentages of women and men with baccalaureate degrees were very similar (CEO Statistics, 2012; Infographic: Female Leaders of the Fortune 500, 2013; Lavelle, 2011).

TABLE 1 EDUCATIONAL LEVELS OF CEOS

Highest Degree Earned  All CEOs S&P 500 

All CEOs Fortune 500 

Women CEOs Fortune 1000 

Undergraduate  97%  96%  At least 97.5%* 

Graduate  25%  60%  51% *Educational level of one CEO woman in this study could not be confirmed.

Over fifty percent of all CEOs of the Fortune 500 and of women CEOs in the Fortune 1000 earned a graduate degree. Though the percent of Juris Doctor degrees among the CEO women was comparable to that found among all 100 top CEOs (19% versus 20%), the percent of women who completed the MBA was much higher than that of all top 100 CEOs who did (71% versus 57%).

FIGURE 1

PERCENTAGE OF 100 TOP CEOS AND WOMEN CEOS OF FORTUNE 100 FIRMS COMPLETING GRADUATE DEGREE(S)

0

10

20

30

40

50

60

70

80

MBA JD Other

Women

Top 100

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Although Ivy League schools are still heavily represented among the alma maters of CEOs of major companies (Smith-Barrows, 2013), a survey conducted by the Wharton School at the University of Pennsylvania indicated that having an Ivy League education is no longer the key to the executive suite. In 1980, 14% of CEOs at Fortune 100 companies earned undergraduate degrees from an Ivy League school, but by 2001, only 10% had done so. Similarly, only 10% of the women in this study obtained undergraduate degrees from one of the Ivies, while 15% received their graduate degrees from them.

Sixty percent of the women CEOs studied had degrees in one of four disciplines, namely Business Administration (20%), Economics (15%), and Engineering and Accounting (both 12.5%). Overall, the top 100 CEOs of the Fortune 500 earned a broader range of degrees, as shown in the following graph.

FIGURE 2

UNDERGRADUATE DEGREES EARNED BY 100 TOP CEOS AND WOMEN CEOS OF FORTUNE 1000 FIRMS

SOCIOECONOMIC CLASS OF FAMILY OF ORIGIN

As part of their research for The New CEOs, Zweigenhaft and Domhoff (2011) determined that about 70% of white chief executive women came from upper middle or upper class families (the top 15% of the class structure). Most CEO women in this study also grew up in families in the professional class. Exceptions included Ursula Burns, Chairman and CEO of Xerox, who was raised by a single mother. Burns was one of three children who shared two absentee fathers. To pay the bills and send her children to Catholic school, Burns’ mother, Olga, ran an at-home daycare center and took in ironing. In Burns’ words, “We were poor, for sure, but we didn’t know it.” (“Ursula Burns,” 2013).

Virginia Rometty, President and CEO of IBM, also was raised by a single mother who saw great potential in all her children. Growing up outside of Chicago, Rommety and her siblings were pushed to aim high. The encouragement proved effective, because her two sisters became senior executives, and her brother also is a CEO (“Virginia Rommety, CEO-designate,” n.d.).

At least three top executive women studied, namely Debra Cafaro, Patricia Kampling, and Constance Lau, were second generation Americans or the first in their family to graduate from college. Cafaro, Chairman and CEO of Ventas, Inc., was both. Her father, an Italian American, was a mail carrier, and her mother, born of Lebanese parents, was a homemaker. Cafaro credits her ambition to her working class upbringing. "We never wanted for anything," Cafaro said, "But there was always so much more for me to

0

10

20

30

40

50

60

Women

Top 100

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aspire to: in terms of education… seeing the world [and]… working hard and achieving things. And so that drive comes from the kind of upbringing that I had" (Cancino, 2011).

Kampling also ascribes her success to her background. “I attribute my personal and professional accomplishments to the strong work ethic instilled by my Irish family. As a second generation American, my parents encouraged me to take advantage of our great education system and to push myself every step of the way. I am truly living the American dream” (“Patricia Kampling,” 2011).

Lau, President and CEO of Hawaiian Electric Industries, Inc., who is of Asian ancestry, was unsure whether or not her father finished the sixth grade. He was part of the domestic staff for Hawaii’s governor and later worked the vaudeville circuit in the United States before becoming one of the first real estate brokers in Hawaii. Lau said:

From the time I was little, Dad encouraged me to go to both law school and business school. He

grew up in a very different Hawaii, before the Civil Rights Act….. He was born in 1904 and Mother in 1906, and there was still a Chinese Exclusion Act or quotas on immigration. He always told me he thought it would be important to become a lawyer so I would know my rights and be able to protect myself and my family and others (Creamer, 2011).

MARITAL STATUS AND CHILDREN

Angela Braly, former chief executive of insurance giant WellPoint Inc., was not among the women

evaluated for this study, as she resigned prior to publication of the 2012 Fortune 1000 list. Based on her experience as a member of that elite list the previous year, her comments on the notion of “having it all” seem relevant. In her words,

The myth is that women and their families don't have to make trade-offs to have an ‘extreme career’; they absolutely do… we all make sacrifices that affect our lives as well as our families and our friends. How you prioritize your life and career is your choice. Once you make a decision, stick to it; don't always second-guess yourself, and don't dwell in feeling ‘guilty’ for making the decision you made (“Words from the top,” 2012).

Research on earlier generations of managerial women indicated that they were less likely than male

executives to be married or have children (Hennig & Jardim, 1977). Thus, this information was of interest as it pertained to the current group of CEO women. Marital and family information was found for 90% of the Fortune 1000 CEO women but was much more difficult to obtain for male CEOs. This seems to perpetuate the stereotypical notion that women forming families with men bear more responsibility for integrating work and life and that doing so is a challenge. The public wants to know the marital status of the women holding top positions in U.S. firms, the number of children they have, if any, and how they manage work and home responsibilities.

Articles about male CEOs, on the other hand, address their work lives almost exclusively. Stories about their upbringing are rare; those that exist are typically written for males who differ from the majority. For example, a few such accounts appear for male, minority CEOs or those who are very young.

Rarely do articles mention a male executive’s marital status or number of children, which suggests that his need to balance or integrate work and family is nonexistent. Until the 1980s, no CEOs of Fortune 500 firms were women, and married male top executives typically relied on their wives to handle family responsibilities, so work and family balance was not an issue. The current dearth of information about the personal lives of male CEOs makes it seem as if not much has changed.

In a recent study evaluating marital status and a manager’s attitude toward risk Roussanov and Savor (2012) stated:

We collect the names, biographical information, and compensation of all CEOs covered by ExecuComp in the 1993-2008 period. We then research their marital and family status using a variety of public sources, such as the Marquis Who's Who in Finance and Industry, the SEC insider

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filings, and various media mentions. The ultimate goal of this effort is to establish whether a particular CEO was married or single during his tenure. Unfortunately, we can obtain the actual marriage dates only for a small minority of CEOs, which means that for the bulk of our sample we have to rely on an indirect approach.

Of the CEOs they considered, Roussanov and Savor found that about 80% were married. According

to the corresponding period’s United States census data, only 70% of the men in the 35-59 age range were married.

As stated previously, marital status data could not be found for 10% of the Fortune 1000 CEO women. Of those for whom such information was obtained, 94% were married. This contrasts sharply with the 62% marriage rate for adult women in the United States (U.S. Department of Commerce, 2011). Thus, the concept of the single career woman giving all to her occupation was not supported.

Departing from the stereotype further, most women were parents as well as top executives. Eighty-six percent of the CEO women for whom information about parental status was available had children, and the average number was two. One of the most discussed mothers in this group was Marissa Mayer, who announced her pregnancy shortly after being named CEO of Yahoo. Her plans to take off just a few weeks and work part time during parental leave unleashed a firestorm of controversy (“Marissa Mayer pregnant,” 2012).

Although she was the first CEO of a major corporation who was obviously pregnant when hired to the highest ranking post, a few other CEO women have small children. Though most of their offspring are now adults, many featured CEOs discussed struggles associated with career advancement while their children were young.

Denise Ramos, CEO and President of ITT, credited her husband's decision to stay home with their children as an important factor in her career advancement, which took the family from one U.S. coast to another. "I don't know if [staying at home] would have been his first choice," she said, but in doing so, "he's given me the flexibility to be a CFO." The pathway from CFO led to her appointment as CEO (Stuart, 2008).

CEO and Chairman of Frontier Communications Corporation, Maggie (Mary Agnes) Wilderotter admits that one must prioritize, and that means career over family sometimes. “A lot of people don’t want to say that, but it’s true,” she said. Relinquishing the childcare tasks to her husband required Wilderotter to accept a parenting style other than what she might have preferred, as this passage illustrates: “Once, while she was at work, she learned that her husband was making repairs on the roof of their home – with their baby son right next to him, nailed in place by his clothing. (The child, Chris Wilderotter, was fine, and is now a firefighter. He jokes that his stint on the roof was the “sacrifice” he had to make for his mother’s career.)…” (Kwoh, 2012).

ATTITUDES TOWARD MANAGING THE WORK LIFE INTERFACE

In prior generations, married male CEOs with children relied on spouses to deal with family concerns.

Current female leaders of Fortune 1000 may not favor total role reversal, but they tend to have strong support, particularly from husbands. This allowed some the flexibility they needed in their rapidly progressing careers. For example, Patricia Woertz, CEO and President of Archer Daniels Midland Company, acknowledged that her former husband's support helped open up her career path ."At one point, we sort of said to each other, 'Gee, somebody's career is going to have to take priority'" (Birger, 2006).

The Fortune 1000 women studied do not believe responsibility for the work-life interface should be theirs alone based solely on gender. Instead, duties and roles within a family should be shared. Ellen Kullman, CEO and Chairman of Dupont, seemed to speak for many female peers when she said that work and family issues are not women’s concerns but human issues. In her words, “We work very hard on these issues, and they might have started 20 years ago as us thinking about them as women’s issues, but they’re not women’s issues; they are people issues. We find as many men want to take time off when they have a child as women do” (Kullman, 2012).

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Fortune 1000 CEO women who are married seem to have chosen mates who support their careers and share family responsibilities. In expecting and receiving a high level of support at home, they resemble men in management a generation ago, who were much more likely than their female peers to be married and have children (Larkin, 1984).

Though comparison data for male Fortune 1000 CEOs are not readily available as explained earlier, the fact that the vast majority are white males is undisputed. Even today, few CEOs are women, and fewer still are women of color.

Historically, male CEOs from the professional and upper classes were overrepresented at the helm of major U.S. corporations. With some notable exceptions, such as Burns and Rommety, the same is true of the women studied here. Whether male or female, the majority of leaders of the most profitable U.S. firms still seem to have had relatively privileged backgrounds.

Besides the fact that most CEO women came from at least upper middle class families, most are part of the post-World War II Baby Boomer generation, born from 1946-1964. Nearly all have earned a baccalaureate degree, and many have graduate degrees. They are also likely to have had children and to be married.

Demographics of Fortune 1000 women leaders that could be obtained have been explored. Now similarities and differences in their industry experience and career paths will be discussed.

RESPONSIBILITIES AND INDUSTRY EXPERIENCE

The overall responsibilities of the women at the top differ. 89562All are CEOs, but 82% hold

additional positions within their firm. Twenty-three were also President of their organizations, and 13 were Directors.

Considering only their current positions, the 40 female CEOS of Fortune 1000 companies represent more than 13 industries. Inclusive of previous positions, the women have experience in more than 18 industries. A large number, about 18 of the 40, currently work in four industries: technology, utilities, food and beverage, and retail. Additionally, one or more of the women work in the following fields: real estate, shipping, entertainment, consumer products, print news, banking and telecommunications.

Six of the 40 women work in the retail industry, and four are in each of the following industries: technology, utilities, and food and beverage. Tamara Lundgren, of Schnitzer Steel, is the only woman who is the CEO of a company in the male dominant steel industry. Gracia Martore, of Gannett Newspaper, is also the only woman CEO of a Fortune 1000 firm to run a newspaper. Only six of the 40 women have worked in three or more industries before achieving their current CEO position. Fifteen have worked in two different industries during their climb to the top. Almost half, 19 of 40, of the women have worked in only one industry during their entire adult career. Only six of the 40 women have worked in more than three industries. CAREER PATHS

The path to success varied greatly among the women. Most stayed in the same industry but moved

from one company to another for advancement. Ten percent, or four women, climbed the corporate ladder from entry level to CEO within one organization. These are Rometty, IBM, Burns, Xerox, Debra Reed, Sempra Energy, and Bresch, Mylan Pharmaceuticals. Rometty, of IBM, began her 30-plus-year career there in 1981 as a systems engineer. She then held a variety of leadership positions until working her way up to Senior Vice President of Sales and Marketing Strategy. Eventually, she became the first female CEO of IBM in 2012 (Virginia, 2013).

Burns, of Xerox, began her career with that firm in 1980 as an engineering intern and was later offered a position as an executive assistant with the organization. Burns spent most of the 1980s in executive assistant roles. During the 1990s she started to build a reputation as an outspoken individual and led teams in Xerox areas such as the office network printing and fax business (Bryant, 2010.) In

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2000, Burns resigned from IBM but was wooed back with the title of Senior Vice President of two IBM business groups. She remained with Xerox and became the first female CEO of the organization in 2009.

Reed, of Sempra Energy, began her career there in 1978 when she was hired as an energy systems engineer for the Sempra subsidiary Southern California Gas (SoCal Gas) Company. In 1988 she became the first female officer. Reed worked her way through the ranks of SoCal Gas and San Diego Gas & electric (SDG&E) succeeding in such positions as Chief Financial Officer and President of SDG&E, eventually being named CEO in 2011 (“Debra Reed,” 2013).

In 1992, Bresch started her career with Mylan Pharmaceuticals typing labels for the quality-assurance program. She was then promoted to the business development office, and by 2002 Bresch was the Director of Government Relations. She then moved on to Spokeswoman, Head of Strategic Development, and Chief Operating Officer before becoming CEO in 2012 (Norton 2013).

All four women ascended to the position of CEO rather rapidly but took various paths. Three, Rometty, Burns, and Reed, all began their careers from 1978 to 1981, making them true front runners as top executive women.

The 40 women CEOs prove that no traditional pathway to career success exists. Three of the 40, whose career progress will be summarized next, have demonstrated that opportunity sometimes means having to change organizations. The career of Indra Nooyi, of Pepsico, has been quite diverse, including positions such as Vice President and Director of Corporate Strategy and Planning at Motorola, Product Manager at Johnson & Johnson, and lead guitar player an all-female rock band in her home country of India (“7 female CEOs,” 2013).

Wilderotter, of Frontier Communication, also advanced to CEO using a multi-industry path. She was Senior Vice President of Business Strategy at Microsoft Corporation, served as Executive Vice President of National Operations for AT&T Wireless Services Inc., and was Senior Vice President of McCaw Cellular Communications all before joining Frontier Communications in 2004 as CEO and President (“Mary Agnes Wilderotter,” 2013).

Ramos, of ITT, was Chief Financial Officer, Senior Vice President and Treasurer of Furniture Brands International Inc. She also spent five years at Yum! Brands, Inc. There she was Senior Vice President and Treasurer and Chief Financial Officer for Kentucky Fried Chicken. Ramos began her career at Atlantic Richfield Company where she held finance positions for 21 years before becoming the CEO of ITT in 2004 (“Denise L. Ramos,” 2013).

As stated previously, the career paths of the Fortune 1000 CEO women and industries in which they have contributed are nearly as varied as the women themselves. Though most have experience in different organizations, 85% accepted positions of increasing responsibility in one or two industries. One-fourth of Fortune 1000 CEO women are employed in the retail and food and beverage industries, which tend to be female dominated. Another fifteen percent have reached the top of traditionally male dominated fields such as the steel and news print industry and utilities and technology.

THE ROLE OF MENTORING IN DEVELOPMENT OF CEO WOMEN

An analysis of careers of this group of high-achieving women would be incomplete without a

discussion of mentoring. Twenty-five, or nearly two-thirds, of the 40 women CEOs of Fortune 1000 firms had mentors and recognized them as such. An additional ten may have had mentoring relationships, but evidence of that has not yet been found.

Although her firm lacks a formal mentoring policy, Rosenfeld, of Mondelez International, formerly Kraft Foods, urges women to serve as mentors (Mannino, 2011). In her view, sponsorship is more crucial than mentoring to aspiring executives. Whereas mentors provide career and psychosocial support, sponsors ensure that specific executives are considered for valuable promotions. No definitive information about Rosenfeld’s mentors, assuming she had them, has yet been found. To promote diversity and inclusion, she seemed more concerned about programs other than formal mentoring. Instead, Rosenfeld focused on casting a wide net when seeking the best person for a certain position, doing succession planning, and having capable women throughout the managerial “pipeline.”

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Meg Whitman, of Hewlett Packard, did not consider a former colleague at Procter & Gamble who later founded AOL to be a mentor (“Meg Whitman,” 2013), but that connection proved helpful. Gayla Delly, of Benchmark Electronics, worked closely with other CEOs during her career but did not consider them mentors.

Only one of the 40, of Hawaiian Electric Industries, Inc., said she did not have a mentor. She attributed her advancement mainly to education (Creamer, 2011). Besides earning an undergraduate degree from Yale, Lau completed a Juris Doctor at the University of California and the MBA at Yale (Creamer, 2011). She is among the nearly one-third of Fortune 1000 CEO women who were born in 1960 or later.

Eleven of the 25 CEO women in the study who acknowledged having mentors said they were men. Nine of those 11 were between 55 and 60 years old and may not have had as much access to female mentors as their younger counterparts. Comments of Woertz, of Archer Daniels Midland, who had only male mentors, are representative of some in her age group. She said,

That's just the way it's been in corporate America…Twenty-five years ago when I took my first position in the oil industry, there were no women on the company's management committee. Today, 12 percent of the members are women. And in the ranks coming up, the numbers get bigger and bigger. So, increasingly, women should look for and expect to find mentors of both sexes, of many different nationalities and ethnic origins, and indeed, in many different places around the world. (Woertz, n.d.)

The three CEOs who mentioned having only female mentors also were between 55 and 60 years of

age, however. Three additional executive women had both male and female mentors, and an additional two may have had both. The gender of mentors of the remaining six CEO women was unclear or unspecified.

The way upwardly mobile women obtain mentors is often of interest. Most women at the helm of Fortune 1000 firms were readily identified as high-potential individuals worthy of mentors. Nooyi of Pepsico was adamant that seeking mentors was unnecessary. She believed mentors would gravitate toward talented people in whom they saw talent worth developing (“Indra Nooyi,” n.d.). This happened to Linda Lang, CEO of Jack-in-the Box. She attracted attention of her predecessor due to her strategic thinking during a crisis involving an E-coli outbreak in the 1990s (Kelly & Counts, 2010).

Those who mentored Fortune 1000 CEO women fulfilled traditional supportive and instrumental roles. They served as role models, good listeners, and sounding boards who taught that patience, dedication, and relationships were vital. Denise Morrison, of Campbell Soup, focused on numbers and results early in her career when her children were young. At that stage, she did not place high priority on cultivating workplace relationships, thinking there was “no time” to do so. She credited a mentor with making her realize that relationship-building was important.

Besides fulfilling typical roles, mentor did more. They believed in their protégés and thus became increasingly comfortable delegating higher level responsibilities to them. Sullivan at Stride Rite mentioned a specific male mentor who believed in her and her abilities. Mooney at KeyCorp regarded her father as an informal mentor who gave her confidence to pursue her dreams. Burns of Xerox felt the same way about her mother, who gave her and two siblings courage, will, and love. Whether or not Burns considered her mother a mentor is unclear, but she was a strong influence. Maternal advice that Burns recalled long after it was given was, “If you’re in a bad place, it’s only temporary and shouldn’t change the core value of what you can bring to the world” (MacLellan, 2009).

Well-known management theorist, author, and Harvard professor, Rosabeth Moss Kanter, recommended Rommety’s mentor and predecessor CEO at IBM, Samuel Palmissano, as “mentor of the century” (deFreston, 2012). His unmatched enthusiasm for and belief in Rommety were evident in these comments after she had been chosen to lead IBM. “She is more than a superb operational executive. With every leadership role, she has strengthened our ability to integrate IBM’s capabilities for our clients….

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She brings to the role of CEO a unique combination of vision, client focus, unrelenting drive, and passion for IBMers and the company’s future.”

In the same context, Palmissano stated that Rommety “deserved” to be CEO and that her selection had “zero to do with progressive social policies.” The fact that her mentor felt the need to say this in 2011 was noteworthy if only because similar statements to endorse a male CEO would have been unlikely.

Mentors of Fortune 1000 CEO women gave “stretch assignments” and practical career advice to help them perfect business skills, achieve goals, further cultivate “people skills,” and navigate unexpected career events. Shelly Lazarus, who mentored Kay Krill of Ann Taylor, gave her protégé seemingly philosophical advice with practical application. She told Krill to figure out what was most important rather than trying to “do it all.” Her advice, which Krill never forgot, was to “jettison people and things that don’t matter [and] focus on what’s meaningful to you” (Goudreau, 2012).

Bresch, of Mylan, and Ramos, of ITT, were among many others who valued the benefits of mentoring. Bresch believed having a mentor gave her the ability to focus with laser-like precision on her goals during the second decade of her career. Ramos said she learned “the value of vision and the importance of authenticity in carrying it out” from her mentors. (“Denise Ramos,” 2008)

At least two executive women saw mentoring as part of their organization’s larger succession planning efforts. Burns, CEO at Xerox, said her predecessor, Anne Mulcahy, played a “huge role” in preparing her to assume the top post by teaching her polish, patience, and perspective and the importance of building “followership” (Xerox, 2013). Likewise, Katz at Neiman Marcus had a mentor who groomed her to succeed him as CEO (Wang, 2013).

Interestingly, Kimberly Harris, of Puget Sound Energy, who had male and female mentors, thought she learned different skills from them. She said her male mentors taught her “what to be,” and female mentors thought her “who[m] to be” (Women, 2010).

GENDER AND CAREER ADVANCEMENT

The authors were interested in considering the perceived impact, if any, of gender on career progress

of CEO women in the study. Several CEOs stated that gender was not a major issue. Woertz sought to dispel the stigmatizing notion that her promotion to CEO was related to gender when she said, “I'm fairly certain that Archer Daniels Midland didn't hire me because I'm a woman. I think my background and my performance mean more" (Kinsman, 2006). While at Google, Mayer, currently CEO of Yahoo, said she never thought of herself as a woman at Google but as a Google “geek” (Hare, 2013).

The belief that gender is a non-issue for high-ranking executive women is consistent with studies from the 1980s showing greater similarity between women and men who chose managerial occupations than between executive women and females in traditionally female-dominant fields such as nursing (Donnell & all, 1980). Though Mayer and Woertz seemed to subscribe to this view, other CEO women believed they had to overcome gender-related obstacles during their careers. For example, Bresch encountered gender bias and thought expectations for women were lower than for men, leading to fewer opportunities for the former. Despite a superb record, Mindy Grossman, of HSN, had to prove herself at Nike due to the male-oriented sports culture. She gained credibility by turning around an apparel unit there (Holmes, 2003).

ADVICE TO FUTURE CEO WOMEN

The backgrounds and perceptions of career aids and hindrances of these CEO women differed

markedly. For that reason, one would expect their advice to the next generation of women aspiring to top leadership positions to vary. Their suggestions were similar in some respects, however. Because they believed that hard work, a sharp focus on goals, and a willingness to take risks had helped them advance, the Fortune 1000 CEO women recommended those behaviors to others, along with being flexible and open to new opportunities and ideas. To that, Kampling, of Alliant Energy, added leading through a positive example and choosing one’s battles (“Patricia Kampling,” 2011). Wilderotter and Mayer also

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advocated working with the smartest people (Manjoo, 2012). Further, Mayer promoted passion about one’s work, referring to it as a great “gender neutralizer” (Taylor, 2012). Ilene Gordon suggested enjoying every position in the moment instead of looking ahead to the next (Leahey, 2012). Deanna Mulligan, of National Guardian Life, thought women who wished to advance in management should worry less than they do (Forbes, 2012).

Wilderotter and Lau advocated profit and loss experience and line or “operations” experience. Lau specifically suggested avoiding staff positions, such as human resource management (Creamer, 2011). Leaving or avoiding staff areas has been standard advice to aspiring executive women for over 35 years (Hennig & Jardim, 1977).

ASSISTANCE AND RECOMMENDED ATTITUDES FOR FUTURE CEO WOMEN

Unlike some first generation managerial women who were dubbed “queen bees,” current CEOs in this

study are grateful to the ground-breaking women who preceded them and understand their obligation to those who follow. CEO women are acting now to increase the percent of high-ranking executive women in the future. For example, Mazzarella of Graybar’s formed a group called “Women Influencing Graybar’s Success” (WINGS), which she hopes will facilitate connections among women that lead to mentoring and additional career opportunities (Kathleen Mazzarella, 2009). Rosenfeld has implemented recommendations of R. Roosevelt Thomas (2005) and others to evaluate managers’ performance partially on the way they achieve diversity goals.

Most Fortune 1000 executives seem to believe the adage that “everyone who makes it has had help along the way.” When being recognized for their own and their firms’ successes, these women deflect praise and give credit to mentors and their employees. For example, one states, “The real story is not Ursula Burns. I just happen to be the person standing up at this point representing Xerox” (Bryant, 2010). Similarly, when receiving an award, Amy Miles of Regal Entertainment said that winning it “is not only a great personal honor, but also a testament to the many successes accomplished by the entire Regal team” (Fuchs, 2013). This self-effacement does not seem to reflect conformity to gender stereotypes but may be evidence of the sincere humility that is a hallmark of great leaders—female and male.

With some exceptions, the Fortune 1000 CEO women generally did not aspire to their current posts at first. Morrison, of Campbell’s Soup, however, said, “I knew at an early age that I wanted to lead a company” (Bussey, 2012). Beth Mooney, of Key Corp., said she wanted to go as far as her ambition would take her (“25 Women,” 2013), and Sara Mathew, of Dun & Bradstreet, wanted to be chief financial officer of a publically traded firm before she was 45 (“Who’s in,” 2011). Mulligan, of Guardian National Life, knew she wanted to make a difference but did not think she would become a CEO when her career began. Harris knew she wanted to become a lawyer at the age of 12 and pursued that career with clients in the utility industry until she joined Puget Sound Energy (Allison, 2011).

CONCLUSION

This exploratory study has examined demographics of CEO women leading Fortune 1000 firms, such

as age, race/ethnicity, educational levels and fields of study, marital status and the presence or absence of children, and socioeconomic status of families of origin. Like their male counterparts, most top executive women are in their 50s and have at least a bachelor’s degree. The vast majority are white. Of those who have earned graduate degrees, more female than male CEOs have an MBA. Most are from the relatively privileged professional or upper class. A few are second generation Americans and first generation college graduates, and a small number came from poor families, though they were not fully aware of their deprived backgrounds.

Though information on marital status of male CEOs is difficult to obtain, available data indicate that most are married. However, an even higher percent of CEO women in the study (94%) are married; few are divorced; and most have adult children. Thus, they have not sacrificed personal relationships for careers, though they indicate that tradeoffs are necessary.

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Work-life interface issues of CEO women are more likely to be covered in the media than those affecting their male peers, reinforcing stereotypes about who should have responsibility for such concerns. Counteracting those notions is the fact that many CEO women have found spouses who are comfortable assuming responsibility for the family and accepting secondary careers to support those of their wives. This is not universally true; a few women in the study are married to CEOs.

Eighty-five percent of CEO Fortune 1000 women built careers in one or two industries; ten percent have stayed in the same firm for their entire working lives. About two-thirds had mentors. Some consider their gender irrelevant to advancement; others dealt with gender-related challenges. Most did not set out to become CEOs, though they were ambitious.

Among the many impressive characteristics of these powerful women are their authenticity, their gratefulness to trailblazing predecessors, and their desire to facilitate career progress of future CEO women. They would most likely agree with Mooney, recently named the most powerful woman in banking, who looks forward to the day when CEO women will be so ordinary that they will be “footnotes, not headlines” (Todd, 2013).

APPENDIX

Fortune 1000 CEO Women October 2012 1- assigned to Karsten; 2 - assigned to Marr; 3 - assigned to Brooke 1 Meg Whitman, HP (#10) 1 Indra K. Nooyi, PepsiCo, Inc. (#41) 1 Carol M. Meyrowitz, The TJX Companies, Inc. (#125) 1 Deanna M. Mulligan, Guardian (#250) 1 Ilene Gordon, Ingredion Incorporated (#390) 1 Mary Agnes (Maggie) Wilderotter, Frontier Communications (#464) 1 Beth E. Mooney, KeyCorp (#499) 1 Laura J. Alber, Williams-Sonoma (#596) 1 Tamara L. Lundgren, Schnitzer Steel Industries (#631) 1 Mindy F. Grossman, HSN (#665) 1 Helen McCluskey, Warnaco Inc. (#791) (no longer CEO – Warnaco acquired in 2013) 1 Kay Krill, ANN Inc. (#864) 1 Patti S. Hart, International Game Technology (#918) 1 Sara Mathew, Dun & Bradstreet Inc. (#996) 2 Virginia Rometty, IBM (#19) 2 Irene B. Rosenfeld, Kraft Foods Inc. (#50) 2 Ursula M. Burns, Xerox Corporation (#127) 2 Debra L. Reed, Sempra Energy (#266) 2 Debra Cafaro, Ventas (#992) 2 Gracia C. Martore, Gannett (#465) 2 Karen W. Katz, The Neiman Marcus Group Inc. (#568) 2 Patricia Kampling, Alliant Energy (#606) 2 Kimberly Harris, Puget Sound Energy (#646) 2 Amy Miles, Regal Entertainment (#758) 2 Sandra Cochran, Cracker Barrel (#804) 2 Linda A. Lang, Jack in the Box Inc. (#870) 2 Judy McReynolds, Arkansas Best Corp. (#944) 3 Patricia A. Woertz, Archer Daniels Midland Company (ADM) (#28) 3 Ellen J. Kullman, DuPont (#72) 3 Sheri S. McCoy, Avon Products Inc. (#234)

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3 Denise M. Morrison, Campbell Soup (#334) 3 Kathleen M. Mazzarella, Graybar Electric (#451) 3 Marissa Mayer, Yahoo (#483) 3 Gretchen McClain, Xylem, (#586) 3 Cindy B. Taylor, Oil States International Inc. (#628) 3 Constance H. Lau, Hawaiian Electric Industries Inc. (#659) 3 Diane M. Sullivan, Brown Shoe Company (#772) 3 Gayla Delly, Benchmark Electronics (#853) 3 Denise Ramos, ITT (#889) 3 Heather Bresch, Mylan (#396)

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Diversity Yes, Force No: How Markets Punish Workplace Racism

Christopher Westley Jacksonville State University

This paper argues that a primary cause of racist outcomes in the workplace is the degree of explicit or implicit protectionism employers receive. When this occurs, employers are protected from market penalties that would otherwise increase the costs associated with workplace discrimination and reduce profits. Examples from U.S. economic history are provided to support the argument that wage differences in competitive markets can be explained by differences in worker productivity and that wage differences between whites and blacks did not significantly diverge until after labor market interventions had the effect of protecting employers from market penalties resulting from such actions. INTRODUCTION

Workplace discrimination has long been a focus in the economics literature, at least starting with Shaw (1892), which discusses complaints about discrimination by Illinois mineworkers who refused to utilize company stores. More recently, N. Gregory Mankiw, writing in his best-selling Intermediate Macroeconomics textbook, argues that workplace discrepancies between whites and non-whites (measured in unemployment rates) reflect “unequal access to informal job-finding networks and discrimination by employers.” (Mankiw, 2013, p. 193) However, this paper argues that Mankiw’s explanation for discrepancies on racism is insufficient, and that racism is not always a necessary or sufficient condition to explain such discrepancies. Rather, it argues that it is the lack of market forces that hinder employer discrimination for whatever reason (including racism) that cause such outcomes to occur, and that often, its reduction is based on changing the institutional settings that characterize the workplace, which requires reforming institutions that protect labor from market competition both for its labor input and for its market output. This implies that workplace legislation that promotes labor market competition first and foremost can achieve the same workplace outcomes intended by those groups in society that favor increased levels of diversity in the labor force. This paper is organized as follows. The next section presents some of the important recent contributions to the economics literature on workplace racism. Section Three presents the economic explanation for why market forces reduce the tendency for workplace discrimination for any reason (including racism) to persist. The implication is that while less prima facie evidence of discrimination may result, racism itself is not necessarily eradicated by market forces and it may express itself in other, non-market venues. The last section offers some concluding remarks.

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ECONOMIC EXPLANATIONS FOR WORKPLACE RACISM

The economics of racism has generated much intellectual output in the economics literature, with the most prominent of the modern literature produced by Becker (1971), in which Becker argues that workplace disparities can result from discrimination, and when they do, they lower the income of both the party being discriminated against as well as that of the discriminating party. The predilection to favor one race over another is treated, however, as a taste, and analyzed as such within the traditional neoclassical economic framework. In pursuing this taste, the individual acts as though “he were willing to pay something, either directly or in the form of reduced income, to be associated with some persons instead of others.” (Becker, 1971, p. 6) From this perspective, racism is irrational and also difficult to maintain when acted on in a competitive economy. Later research attempts to provide some rational for racism. Phelps (1972), Arrow (1973), and Kübler (1997) present research that considers workplace racism a low-cost method for ascertaining quality in the workplace. Durlauf (2005) applies this analysis to racial profiling, and finds that such discrimination reflects decision-making under ambiguity. Extending this analysis, Goldsmith, Hamilton, & Darity (2006) present research that suggest that the differences in labor market outcome are explained not only by differences between white and nonwhite workers in the labor force, but also between the performance of dark-skinned blacks and lighter-skinned blacks. However, there are other explanations for disparate outcomes in the workplace. Lang, Manove, & Dickens (2005) show that wage differentials are more likely when wages for advertised jobs are posted, in part because the perception that discrimination exists causes nonwhites to apply for lower-advertised wage positions. Bertrand & Mullainathan (2004) present the results of a study that suggests that employers are more likely to respond to applicants with “white-sounding” names, and that disparities develop regardless of occupation, industry, and employer size. Finally, some research argues that racially disparate outcomes in the workplace may have other, more significant explanations than racism. Lundberg & Startz (1998) emphasize the role of human capital and find that community human capital effects dominate in explaining workplace discrepancies, even in the absence of racism. Meanwhile, Calvó-Armengol, & Jackson (2004) emphasize the role of social networks in explaining workplace outcomes.

MARKETS HINDER WORKPLACE RACISM As pervasive and as egregious as racism is, economic theory suggest that it cannot explain in market outcomes in the long run, because racist employers eventually incur market penalties, and that where racism perseveres in the marketplace, we can assume that extra-market intervention allows it. A much more important factor explaining wage differentials is not skin color but skills and, by extension, productivity. An illustration of this outcome can be found in wage differentials between West Indian blacks and American blacks, with the former’s relative success suggesting that wage differences have other causes than melanin content. In the post-bellum American South, labor markets were flooded with relatively unskilled (or at least narrowly-trained) blacks. Since any individual freeman’s contribution to overall aggregate productivity was small (measured in terms of his marginal revenue product), his wages would reflect this fact. However, that does not mean that his wages were lower than those of unskilled whites. This tended not to be the case because wages reflect a worker’s marginal productivity, regardless of whether racist attitudes dominated society.1 Why is this? Assume that an employer in rural, post-bellum America chooses to discriminate and pay an unskilled white worker a higher wage than an unskilled black worker. The employer would be hurt in two ways. First, if the white worker’s wage exceeded his marginal contribution to the productive process, then the employer would be losing money by employing this worker. If the worker contributed $5 a week in revenue to the total productivity, but was paid $7, the employer lost $2 by hiring him. Second, the

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employer was clearly not profit-maximizing and would attract competition from more efficient competitors drawn by the opportunity to produce the same output at a lower cost. In the same way, if the same employer paid a black worker a wage that was less than his marginal contribution to the productive process, the employer would benefit—until his actions attract competition that would then bid away these underpaid workers. None of this analysis suggests that racism cannot harm minorities in the workforce, at least in the short run, but over the long run, decisions to engage in this kind of activity are punished. Indeed, one of the reasons for the migration of blacks to labor forces in the cities, beginning soon after emancipation, was because of the existence of more competitive labor markets there. In such a situation, racist employers would be penalized. Significant wage differentials among unskilled workers do not start showing up until the application of non-market forces on the workplace, initially with the rise of trade unionism but especially with the passage of minimum wage legislation. (See Table 1.) Prior to the first federal minimum wage bill passed on the 1930s, there was virtually no difference between black and white teenage (i.e., unskilled) unemployment, at a time when many assume that racism was more prevalent than today. After the minimum age bill is passed, however, we witness an increase in black teenage unemployment relative to whites, since as employers are now forced to pay a wage that is higher than the value of many workers’ marginal revenue product, they no longer incur a market penalty for allowing racism to dictate their market decisions.

TABLE 1

U.S. UNEMPLOYMENT RATES OF WHITE AND NON-WHITE WORKERS, 1890-2010

YEAR WHITE NON-WHITE DIFFERENCE 1890 4.41 4.07 -0.34 1900 6.47 7.57 1.10 1930 6.59 6.07 -.052 1940 9.50 10.89 1.39 1950 4.9 9.0 4.1 1955 3.9 8.7 4.8 1960 5.0 10.5 5.2 1965 4.1 8.1 4.0 1970 4.5 8.2 3.7 1975 7.8 13.8 6.0 1980 6.3 13.1 6.8 1985 6.2 13.7 7.5 1990 4.7 10.1 5.4 1995 4.9 9.6 4.7 2000 3.5 7.6 4.1 2005 4.4 10.0 5.6 2010 8.7 16.0 7.3

Source: Vedder and Galloway [1993, p. 272]; Economic Report of the President, Appendix B [2012, p. 368]; U.S. Department of Labor (Bureau of Labor Statistics). Data for years 2000, 2005, and 2010 represent Black or African American only. When differences in unemployment rates are plotted along this time period from 1890 to 2010, racial differences are particularly striking. With the y-axis representing differences in unemployment rates between whites (lower rates of unemployment) and non-white (higher rates of unemployment) and the x-axis time period in years, the association over time may be plotted linearly. While racial differences in

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unemployment wax and wane over time, the trend is strongly upward, especially during periods of marked government intervention in labor markets. (See Figure 1.) Thus, beginning in the 1930s as non-market forces begin to permeate the workplace, including the imposition of the first federal minimum wage, wage differentials expanded. Similar outcomes occurred during the Great Society and again during the post-9/11 labor market. Unskilled blacks suffered from this state intervention in labor markets in many ways. Priced out of jobs, they were unable to earn a legal income that they would have earned otherwise. To the extent that they were shut out of the labor force, many were unable to acquire the skills necessary to earn a larger income in the future. Meanwhile, they were more likely to become dependent on government transfer programs. None of this would have happened had the federal government not intervened in voluntary exchanges between labor suppliers and demanders.2 Interestingly, when these blacks reached their twenties, we see unemployment rates plummet, despite the fact that their skin color had not changed. This happened because many eventually learned productivity-enhancing skills. The intervention in labor markets in the form of minimum wage legislation protected racist employers from the market forces that would have otherwise penalized their actions. As Henry Hazlitt (1952) reminds us, the good economist will consider the full effect of such policies.3

FIGURE 1 RACIAL DIFFERENCES IN U.S.UNEMPLOYMENT RATES OF WHITE

AND NON-WHITE, 1890-2010

Source: Vedder and Galloway (1993, p. 272); Economic Report of the President, Appendix B (2012, p. 368); U.S. Department of Labor (Bureau of Labor Statistics)

It follows, of course, that any intervention in labor markets has similar effects. So when the federal government passes laws that penalize employers for firing employees from some legally-protected group, we see increases in unemployment on the part of employees from the legally-protected group, which reflects the increased relative costs of hiring them. This explains why temp agencies are now among the largest employers in the United States today. Temp agencies allow employers to evaluate new employees, and reject them if they are not satisfactory, without legal penalty, because these workers remain under the legal employment of the agency, not the rejecting firm. It also follows that in a modern, global economy, where any uncompetitive policy threatens firm survival, workplace racism is even less

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

1880 1900 1920 1940 1960 1980 2000 2020

Years

Racial Differences in White and Non-White U.S. Unemployment Rate (percent)

Linear (Racial Differences in White and Non-White U.S. Unemployment Rate (percent))

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likely. Wage policies that pay workers less or more than the marginal revenue they bring to their firms are penalized more quickly than they would have even 25 years ago. Indeed, global capitalism makes bureaus such as the Equal Employment Opportunity Commission less unnecessary.

CONCLUDING OBSERVATIONS

While there are many institutional settings that may reward workplace discrimination, the long-run economic data suggests that less regulated workplaces show less evidence of it, because it forces employers acting on such impulses to pay a direct monetary price for it, reducing revenues and market shares. Where we see evidence of workplace racism in a modern market economy is either a short-run phenomenon that has not yet been penalized, or it reflects a portion of the market that receives some protection from competition. This is why, following the research of Reynolds (1984), unionized labor markets (automobiles in the North or steel in the South, for instance), were traditionally dominated by white workers, whereas the non-unionized labor forces not receiving extra-market protection, tended to be more integrated. Increased exposure to market forces does not eradicate racism which, after all, has deep roots in the human experience. However, such exposure can minimize racism’s pernicious effects in the workplace. Any intervention in the market process that increases the cost of labor can have the effect of increasing incidence of racially disparate outcomes to the extent that these interventions protect employers who would otherwise discriminate on the basis of racial biases from the full cost of their decisions. This implies that laws that are enacted to promote diversity in the workplace may actually have the effect of reducing it.

ENDNOTES

1. For an account contemporary to this time period, see Bemis (1893). 2. That many blacks in the 1930s expected increases in workplace racism is explained in Bernstein (2001).

Also, consider a cartoon by Rogers (1934) that appeared in the black Chicago newspaper, the Chicago Defender, during Franklin D. Roosevelt’s first term. In the first panel, a man says to his wife, “Dear, the Old Factory is Now a Member of the ‘NRA’ which means better wages and better hours!” In the second panel, men crowd a factory before work, reading a sign that says “UNDER THE ‘NRA’ THIS FACTORY SHALL ADVANCE WAGES AND MINIMIZE HOURS OF ALL EMPLOYEES. HENCEFORTH WE SHALL EMPLOY WHITE HELP ONLY”. The more recent plea by Asian business leaders to repeal the city of Seattle’s $15 minimum wage law (Ethnic Community Coalition, 2014) was motivated partly out of a similar recognition of likely racially discriminatory outcomes of that legislation.

3. Hazlitt writes (p. 3), “In addition to these endless pleadings of self-interest, there is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.” REFERENCES Arrow, K.J. (1973). The theory of discrimination. In O. Ashenfelter & A. Rees (Eds.)

Discrimination in Labor Markets (pp. 3-33). Princeton, NJ: Princeton University Press. Becker, Gary S. (1971). The Economics of Discrimination. Chicago: The University of Chicago Press. Bemis, E.W. (1893). The discontent of the farmer. Journal of Political Economy, 1, 193-213. Bernstein, D.E. (2001). Only One Place of Redress: African Americans, Labor Regulations, and the Courts From Reconstruction to the New Deal. Durham, North Carolina: Duke University Press. Bertrand, M, & Mullainathan, S. (2004). Are Emily and Greg more employable than Lakisha

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and Jamal? A Field Experiment on Labor Market Discrimination. American Economic Review, 94, 991-1013. Calvó-Armengol, A., & Jackson, M.O. (2004). The effects of social networks on employment and inequality. American Economic Review, 94, 426-454. Durlauf, S. N. (2005). racial profiling as a public policy question: efficiency, equity, and ambiguity. American Economic Review, 95, 132-136. Ethnic Community Coalition. (2014). Ethnic business community says ‘no’ to $15 minimum wage hike proposal. Northwest Asian weekly. Retrieved from http://www.nwasianweekly.com/2014/04/commentary-ethnic-business-community-says- 15-minimum-wage-hike-proposal/#more-22821. Goldsmith, A.H., Hamilton, D., & Darity (Jr.), W. (2006). Shades of discrimination: skin tone and wages. American Economic Review, 96, 242-245. Hazlitt, H. (1952). Economics in One Lesson. New York: Pocket Books. Kübler, D. (1997). Auctioning off labor contracts: legal restrictions. International Review of International Economics, 17, 64-74. Lang, K., Manove, M., & Dickens, W.T. (2005). Racial discrimination in labor markets with posted wage offers. American Economic Review, 95,1327-1340. Lundberg, S., & Startz, R. (1998). On the persistence of racial inequality. Journal of Labor Economics, 16, 292-323. Mankiw, N.G. (2013). Macroeconomics (8th edition). New York: Worth Publishers. Phelps, E.S. (1972). The statistical theory of racism and sexism. American Economic Review, 62, 659-651. Reynolds, M.O. (1984). Power and privilege: labor unions in America. New York: Universe Books. Rogers, L. (1934). How the south interprets the new deal. Chicago Defender. January 27. Vedder, R.K. and Galloway, L.E. (1993). Out of Work: Unemployment and Government in Twentieth-Century America. New York: Holmes & Meier.

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Students’ Perceptions of their Attitudes and Behaviors toward Different Cultures/Ethnicities Before and After a Diversity Training Program

Marie-Élène Roberge

Northeastern Illinois University

Evelina Petrov Northeastern Illinois University

Wen-Rou Huang

Feng Chia University

Teaching students to engage in appropriate cultural attitudes and behaviors is critical to help them understand, accept, and open-up to different cultures. Diversity training help students to work efficiently in a diverse environment. This paper aims to examine students’ attitudes and behavior toward different cultures/ethnicities before and after the implementation of a diversity training program. An exploratory study was conducted with 38 students from a Midwest university enrolled in a course entitled “Managing Diversity in Organizations”. The survey was administered at the beginning and at the end of the semester. Results are presented and discussed in the paper. The potential theoretical and practical implications of the study are also addressed. INTRODUCTION

To address the increasing demand for managing workplace diversity successfully, students from business and management majors must be aware of individual and group differences and learn to embrace those differences. Students must be equipped to appreciate diversity and to face effectively its challenges. Diversity is defined as any characteristics based on which people may differ. Some characteristics are visible such as age, race, ethnicity, gender, and physical attributes, whereas other characteristics are invisible attributes, such as work experience, income, geographic location, marital status, educational background, parental status, socioeconomic status, and religious beliefs and affiliations. As people spend more time in the workplace, it is important to establish positive interpersonal relationships with all individuals to create a harmonious workflow that leads to further positive intercultural behavior and relationships in the workplace. In order to prepare students for the reality of the workplace, it is important to offer them the opportunity to engage in positive attitudes and behaviors toward diversity. Positive attitudes and behaviors are defined as welcoming and inclusive attitudes and behaviors that build healthy relationship among different others. Since students are representing future generations, it is crucial for them to be capable of accepting others’ differences and be able to positively interact with people of different perspectives and backgrounds. When students have a positive attitudes and behaviors toward

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different others, they are more likely to understand and adapt to the goals and expectations of diverse organizations. By having the opportunity to engage in a diversity training program, it helps students to learn to adopt the positive attitudes and behavior toward diversity and its challenges. By being exposed to different others’ identities, students learn to relate to their own identities, and others’ ethnicity or cultural background and become able to develop and enhance skills in communicating and accepting differences among fellow individuals. As students are entering the workforce, cooperation and adapting to diversity is crucial for the success of the business and their development in the business sphere. Understanding cultural differences and being able to use appropriate behaviors when dealing with situations of diversity is beneficial in the longevity of individual and organizational success.

This paper aims to examine students’ individual perceptions of their attitudes and behaviors toward cultural diversity at the beginning and at the end of an academic course about managing diversity in organizations. The eventual contribution of this study is to pay a close attention to the positive effects of a diversity training program on possible change in students’ attitudes and behaviors toward different others and their identities.

LITERATURE REVIEW The Importance of Implementing Effective Diversity Training Programs

One of the greatest challenges in the educational system is to how to make course curriculum more relevant to the needs of a diverse workforce. As our society moves toward a more multicultural environment, it becomes necessary to address cultural diversity and other diversity issues (i.e., gender, age, sexual orientation, physical and mental health and abilities) in order to help students to become more adapted and positively responsive to a diverse society. Some researchers suggest that biases, prejudices, and stereotypes are deeply rooted in a person’s psyche and are difficult to change (Sue 1991). The question addressed in this paper is whether it is possible to change people’s attitudes and behaviors toward different others’ cultural identities through the implementation of diversity training programs?

Research suggests that diversity training programs aim to influence participants to increase their positive – or decrease their negative – intergroup attitudes and behaviors, so less prejudice and discrimination is displayed toward others perceived as different from their group of affiliation(s) (Pendry, Driscoll, & Field 2010). Diversity training programs are expected to help to create environments in which all people have the opportunity to advance and succeed in a fair and equal way (Naff & Kellough, 2003). Research suggests that effective diversity training programs can improve cross-cultural communication and interpersonal relationships among coworkers, as well as organizational development (Plummer 1998). Effective diversity training programs mobilize the energy of all participants in ways that are collaborative and nonviolent. Through effective diversity training programs, individuals may develop adapted skills, attitudes and behavioral changes that improve group dynamics and team functioning (Plummer 1998). Such training is directed toward increasing awareness of personal biases and destructive attitudes, and changing them for adopting appropriate cultural attitudes and behaviors that will promote a positive diversity work climate (Plummer 1998).

Studies have shown that positive interracial interactions result in essential components of students’ democratic dispositions, which refer to personal attributes such as caring for the others, speaking truth to abuse of power, and respecting cultural differences (Ahmad 2003), including higher levels of cultural awareness and higher levels of pluralistic orientations. Recognizing racial inequality is critical to the awareness of racial issues with the appreciation of cultural similarities and differences (Spanierman, Neville, Liao, Hammer, & Wang, 2008). Increased engagement in curricular diversity experiences is linked to enhance openness to, and appreciation of cultural diversity (Spanierman et al., 2008). Greater diversity engagement is associated with a global cultural awareness and understanding of related issues that can often interfere with performance. Findings also indicate that other extra-curricular activities (such as workshops or cultural programs) increase students’ understanding of cultural similarities and differences (Fouad, 2006; Spanierman et al., 2008).

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Encouraging student to engage themselves in appropriate cultural attitudes and behaviors is critical to help them understand, accept, and open-up to different cultures. Implementing diversity training programs provide students with the ability to work efficiently in a diverse environment. Students’ individual perceptions of themselves and their cultural attitudes and behaviors before the implementation of a diversity training program is important to be examined in the literature in order to verify if positive attitudes and behavioral changes are possible following the implementation of a diversity training program. Based on this, we propose the following hypothesis:

H1: The completion of an effective diversity training program will positively influence attitudinal and behavioral change toward different others’ cultural identities.

METHOD Participants

The participants of this study were students from a multicultural university in the Midwest region of the United States. All students, part of the sample, were enrolled in a 16 weeks course entitled “Managing Diversity in Organizations”. In total, 38 students participated in the study in which 66% were females. Their ages ranged from 21 and up: 58% were between 21-25 years old, 38% were between 26 -30 years old, and 7% were over 31 years old. They were born all over the world: 50% were born in the USA, 13% were born in Latin America, 16% were born in Europe, 13% were born in the Middle East and India, and 3% were born in Africa, the Caribbean, and Australia. In terms of their marital status, 74% of our participants were single, 21% were married, and 5% were divorced. Their levels of education were also recorded: 87% have been in college for more than 2 years, and 13% already have obtained bachelor a degree. Design

The study was exploratory. A survey was administered at the beginning and at the end of the semester. The course entitled “Managing Diversity in Organizations” and addresses the issues, knowledge, theories, and applications related to managing diversity in organizations. This course is experiential based and its purpose is to develop awareness and knowledge about individual and group differences and to learn how to create a work environment in which diverse people work harmoniously together. It closely examines several diversity indicators (i.e. culture, gender, age, sexual orientation, religious beliefs, physical and mental dis/abilities). Its aims students to gain knowledge and analytical skills that will equip them with the necessary tools to deal appropriately with a diverse workforce. This course helps students to learn how to appreciate diversity, to embrace thinking from different perspectives, and to be capable of applying theoretical concepts to resolve conflicts related to managing diversity in organizations.

A Critical Incident during the Diversity Training Program: The Cultural Kiosk Activity

During the fifth week of the semester, a cultural kiosk activity was conducted with the students. A cultural kiosk activity provides to students the opportunity to engage themselves in experiential learning. Experiential learning is defined as the process of making meaningful connections from direct experience, by engaging individuals into specific actions and reflecting on those activities (Illeris, K., 2007; Kayes, Kayes, & Kolb, 2005; Kolb, 1975). More specifically, the kiosk activity consists of asking groups of students to organize a kiosk that displays information related to cultural or diversity issues (Roberge & Amoroso, 2010). Prior to the kiosk activity, each team must conduct research on a theme related to diversity, and create a kiosk that displays pictures, knowledge and information, or concrete examples. For example, when the theme of the kiosk activity is multiculturalism, students are encouraged to bring symbolic objects, clothing, food, art, and music from different cultures to provide more concrete examples of the uniqueness of each culture. In other words, a kiosk activity resembles a mini-conference organized by students during class time. A kiosk could be focusing on Cuban, Chinese, Indian, or Arabic culture, but it could also address religious diversity such as Hinduism, Buddhism, Judaism, or Catholicism etc. These are just a few ideas. A kiosk can present anything about cultural diversity or any

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other indicators of diversity, such as sexual orientation, as well as diverse personality in teams or health and disabilities at work and in society. During the activity, students are encouraged to visit other students’ kiosks to learn and understand each other’s identity and learning experience. Throughout the activity, students have the opportunity to share their knowledge with others about what they have learned from conducting their search on a specific diversity-related theme.

Sometimes students may identify themselves to the culture of interest. The kiosk becomes an opportunity for them to disclose to and share with others their identities, their cultural or religious heritages and teach other students about their differences. Self-disclosure is therefore a critical part of the learning process at an individual and group level.

Thus, the kiosk activity is an experiential project-based learning that encourages students to engage themselves into intercultural communication and therefore to learn from one another’s identity. By being exposed to different backgrounds (ethnical, cultural, religious, lifestyle) students may change their perceptions, level of tolerance and attitude toward others’ cultural identities. We believe that the kiosk activity may even deactivate stereotyping and reduce prejudices by being informative and by occurring in a psychological safe environment influencing people sense of psychological closeness from others. Measures

The administered survey asked students how diverse they perceive to be, their level of comfort working with their diverse coworkers, their likelihood of being friends with a person from a different culture/ethnicity, and their likelihood of dating a person from a different culture/ethnicity. Also, the survey asked them to determine the likelihood for them to experience a conflict when working with a person from a different culture, and the likelihood for them to try a new ethnic restaurant. Finally, students were also asked to identify their attitudes (i.e., their sense of psychological closeness) toward the following cultures/ethnicities: Arabic, African, Asian, American, European, Indian, Hispanic, and Native American.

RESULTS

The results to the question referring to how diverse students perceived to be: 37% reported to

perceive been very diverse, 44% somewhat diverse, 16% are neutral, and 3% stated that they are not really diverse at the current time (see Figure 1). After completing the course, the results show that 51% reported to perceive been very diverse, 36% somewhat diverse, and 13% are neutral.

The students were asked to indicate how comfortable they feel when working with diverse coworkers: 71% stated that they are very comfortable, 21% are somewhat comfortable, 5% are neutral, and only 3% stated that they are not really comfortable working with diverse coworkers (see Figure 2). After completing the course, the results show that 72% stated that they are very comfortable, 23% are somewhat comfortable, and 5% are neutral when working with diverse coworkers.

Students were asked to indicate how likely they are to be friend with a person from a different culture/ethnicity: 74% of the students indicated that they are very likely to be friends with a person from a different culture/ethnicity, 24% are somewhat likely to be friends, and only 2% are neutral (see Figure 3). After completing the course, 82% of the students indicated that they are very likely to be friends with a person from a different culture/ethnicity, 13% are somewhat likely to be friends, 3% are neutral and 3% are not really likely to be friends.

The students were asked to indicate how likely they would be to date a person from a different culture/ethnicity than their own: 37% stated that they would be very likely to date a person from a different culture, 39% are somewhat likely, 8% are neutral, 13% stated that they are not really likely to date a person from a different culture/ethnicity, and 3% stated that they are not likely at all to date someone different from themselves (see Figure 4). After completing the course, 36% stated that they would be very likely to date a person from a different culture, 23% are somewhat likely, 21% are neutral, 15% stated that they are not really likely to date a person from a different culture/ethnicity, and 5% stated that they are not likely at all to date someone different from themselves

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FIGURE 1

DIFFERENCE BETWEEN STUDENTS' PERCEPTIONS OF THEIR DIVERSITY LEVEL BEFORE AND AFTER A DIVERSITY TRAINING PROGRAM

FIGURE 2

DIFFERENCE BETWEEN STUDENTS’ PERCEPTIONS OF THEIR LEVEL OF COMFORT WHEN WORKING WITH DIVERSE COWORKERS BEFORE AND AFTER A DIVERSITY

TRAINING PROGRAM

Current Diversity Level

3%0%

51%

0% 0%

37%

16%

45%36%

13%

0%

10%

20%

30%

40%

50%

60%

very

diverse

somewhat

diverse

neutral not really

diverse

not diverse

at all

pre

post

Comfortable working with diverse coworkers

71%

21%

5% 3% 0%

72%

23%

5%0% 0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

very

comfortable

somewhat

comfortable

neutral not really

comfortable

not

comfortable at

all

pre

post

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FIGURE 3 DIFFERENCES BETWEEN STUDENTS’ PERCEPTION OF THEIR LIKELIHOOD OF BEING

FRIENDS WITH A PERSON FROM A DIFFERENT CULTURE/ETHNICITY BEFORE AND AFTER A DIVERSITY TRAINING PROGRAM

FIGURE 4 DIFFERENCES BETWEEN STUDENTS’ PERCEPTION OF THEIR LIKELIHOOD OF

DATING SOMEONE FROM A DIFFERENT CULTURE/ETHNICITY BEFORE AND AFTER A DIVERSITY TRAINING PROGRAM

Be friends with a person of different culture/ethnicity

74%

24%

0% 0%

82%

0%3%

13%

3% 3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

very likely somewhat

likely

neutral not really

likely

not likely

at all

pre

post

Date someone from a different culture/ethnicity

37%39%

8%

13%

3%

36%

23%21%

15%

5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

very likely somewhat

likely

neutral not really

likely

not likely

at all

pre

post

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Students were asked to indicate how likely they would experience conflicts when working with a person from a different culture/ethnicity: 3% stated that they are very likely to experience conflicts when working with individuals from a different culture, 10% reported being somewhat likely to experience conflicts, 32% are neutral, 45% stated that they are not really likely to experience conflicts when working with a person from a different culture/ethnicity, and 10% stated that they are not likely at all to experience conflicts with anybody that is different from themselves (see Figure5). After completing the course, 3% stated that they are very likely to experience conflicts when working with individuals from a different culture, 13% reported being somewhat likely to experience conflicts, 33% are neutral, 26% stated that they are not really likely to experience conflicts when working with a person from a different culture/ethnicity, and 26% stated that they are not likely at all to experience conflicts with anybody that is different from themselves.

FIGURE 5 DIFFERENCES BETWEEN STUDENTS’ PERCEPTION OF THEIR LIKELIHOOD OF

EXPERIENCING CONFLICT WHEN WORKING WITH A PERSON FROM A DIFFERENT CULTURE/ETHNICITY BEFORE AND AFTER A DTP

Students were asked to indicate how likely they would be trying a new ethnic restaurant: 55% stated that they are very likely to try a new ethnic restaurant, 21% are somewhat likely, 13% are neutral, 8% stated that they are not really likely to try a new ethnic restaurant, and only 3% stated that they are not likely at all to try a new ethnic restaurant (see Table 6). After completing the course, 64% stated that they are very likely to try a new ethnic restaurant, 28% are somewhat likely, 5% are neutral, and only 3% stated that they are not really likely to try a new ethnic restaurant.

The students were asked to indicate their level of perception of their psychological closeness to different cultures. The results are represented below in Table 1.

Conflict when working with person of different

culture/ethnicity

3%

11%

32%

45%

11%

3%

13%

33%

26% 26%

0%

10%

20%

30%

40%

50%

very likely somewhat

likely

neutral not really

likely

not likely

at all

pre

post

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FIGURE 6 DIFFERENCES IN STUDENTS’ PERCEPTION THEIR LIKELIHOOD OF TRYING A NEW

ETHNIC RESTAURANT BEFORE AND AFTER A DTP

TABLE 1 DIFFERENCES IN STUDENTS’ PERCEPTION OF THEIR FEELINGS OF

PSYCHOLOGICALLY CLOSENESS TO DIFFERENT CULTURES BEFORE AND AFTER DTP “I feel closely to…” Strongly

Agree

Pre Post

Agree

Pre Post

Neutral

Pre Post

Disagree

Pre Post

Strongly Disagree

Pre Post

Arabic

5% 8%

8% 18%

26% 33%

42% 28%

19% 13%

Asian 16% 15% 13% 21% 24% 33% 34% 18% 13% 13%

African 10% 13% 21% 26% 24% 41% 32% 13% 13% 8%

American 37% 46% 40% 38% 18% 10% 5% 5% 0% 0%

European 26% 28% 21% 28% 32% 28% 18% 13% 3% 3%

Indian 3% 3% 16% 31% 24% 33% 31% 23% 26% 10%

Hispanic 37% 33% 16% 33% 21% 15% 21% 5% 5% 13%

Native American 3% 3% 5% 18% 34% 44% 37% 23% 21% 13%

Try ethnic restaurant

55%

21%

13%8%

3%

64%

28%

5% 3% 0%0%

10%

20%

30%

40%

50%

60%

70%

very likely somewhat

likely

neutral not really

likely

not likely

at all

pre

post

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DISCUSSION

The results found have shown that the completion of the diversity training program has improved their perception of themselves of being diverse and open to diversity. It has also opened the door to possible changes in attitudes and behavior. For example, participants reported a positive change as to becoming friend with people from a different culture/ethnicity. However, the results also suggest that students have predetermined attitudes toward people from different cultural/ethnic backgrounds even though most of them consider themselves to be open to diversity. Even though the data has shown that most students feel that they are diverse and open to diversity to a certain extent, there is room for attitudinal and behavioral changes toward embracing diversity even after the completion of a diversity training program.

For example, according to the data, 13% of the students expect to have conflict when working with a diverse individual once they participated in the diversity training program, while 32% were neutral to whether they will experience conflict when working in a diverse setting. This is quite a meaningful percentage that suggests that there are needs for helping students to work on being educated and able to embrace diversity rather than anticipating conflicts. Having a better understanding of different cultures and ethnic identities may lead to better acceptance and cooperation with different others. The world is becoming more globalized and, in the future, becoming comfortable and feeling closer to different cultural/ethnic backgrounds will be the key to a successful career.

On the other hand, some results are pretty optimistic, according to the data, 98% of the students surveyed are likely to be friends with an individual from a different culture or ethnicity, 76% are willing to date a person of a different culture or ethnicity, and 76% are willing to try an ethnic restaurant. These results seem very promising in terms of cultural integration.

Finally, the data also show that even though students from that class are very diverse and perceive themselves being very diverse, they have different attitudes and sense of psychological closeness toward different cultures/ethnicities. Looking at the psychological level of closeness for each cultural group, we conclude that most of the students felt that they feel close to American culture to some extent but they do not necessary psychologically feel close to certain cultural/ethnic groups such as Arabic, Asian, African, Indian, Hispanic and Native American. Despite, such obvious in-group biases toward the American culture, data after the diversity training shows an increased in feeling closer toward those cultural groups. The Limitations of the Study

This study is explanatory and relies only on answers provided by students on a survey that was administered prior to, and after the implementation of a diversity training program. Also, while our sample is diverse, it is very small as it is composed of only 38 individuals. Moreover, we surveyed students and not actual workers from an organization. Our samples of participants are younger and therefore do not show a representative sample of the working population. Also, the study was conducted in a very diverse university which may have affected the results. Different results could have been found if the data would have been collected in a homogenous university. Theoretical Implications and Future Research

Based on the preliminary data, it is important to pursue this research stream to demonstrate the effects of the diversity training program on students’ perceptions of their attitudes and behavior toward different cultural identities. We are interested in observing the differences in levels of psychological closeness toward people from different cultural/ethnic groups that students are experiencing upon the completion of a diversity training program. We hope that by collecting more data from our students we will be able to show the positive effects of diversity training on students feeling of psychologically closeness toward people from different cultural/ethnic backgrounds and their behavior as a reflection of such a change.

Furthermore, it would be interesting to conduct a study verifying the effects of a diversity training program in an organizational setting. It would also be interesting to examine whether the diversity training

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program may help employees to develop intercultural competences, adapted cultural behavior, and shared cultural identities which may ultimately help them to effectively manage a diverse workforce. Practical Implications

According to the literature, effective diversity training programs help to develop a stronger sense of ethnic or cultural identity, and to develop more positive attitudes and behaviors toward peers from different ethnic or cultural groups (Phinney, 1993; Phinney & Chavira, 1992; Phinney, Ferguson, & Tate, 1997). Research suggests that experiential learning enhance students’ sense of ethnic and cultural identity and their openness to people from diverse cultural backgrounds (Teranishi, 2007). We hope that by being exposed to a diversity training program, students will learn to display positive intercultural attitudes and manifest positive behaviors that go beyond the classroom setting. Developing and maintaining positive intercultural relationships within the workplace and the global community is the positive change we hope to achieve (Gudykunst, 2005).

CONCLUSION

It is important to note that diversity awareness is an issue all over the world, but especially in the United States. By educating students about cultural differences via the implementation of diversity training programs, negative conflicts may be avoided and positive confrontations may arise leading to innovation and creativity. Diversity training programs benefit students in terms of providing a real-life diversity interaction opportunity which may help them to acquire appropriate and integrative diversity attitudes and behavior. We hope that by implementing a diversity training program that provides frequent interactions with individuals from different cultural backgrounds, participants will improve their feelings of psychological closeness toward different cultural/ethnic groups.

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