ISSN 1940-9524

International Journal of Accounting Information Science and Leadership

Published and Sponsored by: Intellectbase International Consortium

Editor-in-Chief

Dr. David King, Tennessee State University, USA

Dr. David King holds a Ph.D. in Computer Information Systems and over 14 years experience in Accounting Information Systems, a Masters in E-business and Bachelors in Management Information Systems. He is also a Certified Cisco Systems Instructor, Microsoft Certified Professional, Certified Novell Administrator and has recently achieved Diplomas in Medical & Dental and Pharmacy academic programs. Dr. King’s educational background expands across Australia, Europe, Africa and North America. He is keen in teaching Networking Systems, Computer Systems Security, Applied Information Technology, Relational Database Management Systems, Management Information Systems, E-business Strategies, Knowledge Management, Data Mining, Artificial Intelligence, Business Process Reengineering and ERP Application Systems.

Dr. King’s research work is in the areas of: Computer-Mediated-Communication, The Internet and Psychology, E-Learning and Distance Education, The Internet and Global Collaboration, Foreign Aid Projects in Developing Nations, Accounting Information Systems, Knowledge Management, Intelligence & Homeland Security Systems, Health Information Science & Management, Research Methods and Design. He has published in several top Information Systems Conference Proceedings and Journals (IFIP, ACIS, PACIS, IRMA, JAGR, JISTP, etc.). In addition, Dr. King serves on several editorial boards in the research community. He has received several research presentation “Best Paper” awards in Seattle, USA, Bangalore, India, Las Vegas, USA, and Venice, Italy. As new research disciplines develop, Dr. King expands his horizons, investigates, experiments and contributes to intellectual consortiums and forums. He serves as the Chair for the Intellectbase International Consortium conferences and leads the Editors Excellence Review Panel (EERP) for the International Handbook of Academic Research & Teaching (IHART) Proceedings. In adiition, he currently serves as the Program Coordinator for International Institute of Academic Research.

Contributing Editors Dr. Jiri Strouhal, Assistant Editor

Intellectbase International Consortium

European Affiliate

Ms. Wenting Xie, Managing Editor

Intellectbase International Consortium

United States Affiliate

Senior Advisory Board Dr. Cheaseth Seng, Associate Editor Dr. Devendra Prasad, Associate Editor

Paññāsāstra University of Cambodia, Cambodia University of Massachusetts Lowell, USA Dr. Jun Yang, Associate Editor Dr. Tehmina Khan, Associate Editor

University of Houston – Victoria, USA RMIT University, Australia

ISSN: 1940-9524 Print ISSN: 1940-9540 CD-ROM ISSN: 1940-9532 Online

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International Journal of Accounting Information Science and Leadership

Volume 6, Issue 16

IJAISL

Published by Intellectbase International Consortium (IIC) 1615 Seventh Avenue North, Nashville, TN 37208, USA

Editor’s Message

My sincere gratitude goes to the Intellectbase International Consortium (IIC) program committee for their

hard work in producing Volume 6, Issue 16. In addition, I want to thank all of the Reviewers’ Task Panel

(RTP), Executive Editorial Board (EEB), Senior Advisory Board (SAB), and the Contributing & Managing

Editors (CME) for their efforts, which has made IJAISL a successful and indexed academic Journal. They

work hard to review, comment and format the various research papers to fulfill accreditation standards. The

articles in this issue offer intellectual contributions and focus on the broadening of academic resources, a

continuous development and exchange of ideas among global research professionals.

The IJAISL is an intellectually reviewed Journal of present-day research in quantitative accounting,

information science and qualitative leadership practices. Examinations of empirical work in Accounting,

Economics and Finance, Information Processing and Leadership which are useful for the understanding of

their respective behaviors at regional and international levels are the core of this Journal.

The goal of the Journal of Accounting Information Science and Leadership (IJAISL) is to provide significant

research materials to the business, government, and academic communities by helping to promote the

interdisciplinary exchange of ideas on a global scale. IJAISL seeks international input in all aspects of the

Journal, including content, authorship of papers, readership, paper reviews, and Executive Editorial Board

Membership. We continue to look for individuals interested in becoming a reviewer for Intellectbase

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feedback (based on what is known and accurate) to author(s).

For upcoming Intellectbase International Consortium (IIC) conferences, please visit the IIC website at:

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A COMMITMENT TO ACADEMIC EXCELLENCE Articles published in the International Journal of Accounting Information Science & Leadership

(IJAISL) have undergone rigorous blind review.

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Reviewers Task Panel and Executive Editorial Board

Dr. David White Dr. Dennis Taylor Roosevelt University, USA RMIT University, Australia

Dr. Danka Radulovic Dr. Harrison C. Hartman University of Belgrade, Serbia University of Georgia, USA

Dr. Sloan T. Letman, III Dr. Sushil Misra American Intercontinental University, USA Concordia University, Canada

Dr. Jiri Strouhal Dr. Avis Smith University of Economics-Prague, Czech Republic New York City College of Technology, USA

Dr. Joel Jolayemi Dr. Smaragda Papadopoulou Tennessee State University, USA University of Ioannina, Greece

Dr. Xuefeng Wang Dr. Burnette Hamil Taiyun Normal University, China Mississippi State University, USA

Dr. Jeanne Kuhler Dr. Alejandro Flores Castro Auburn University, USA Universidad de Pacifico, Peru

Dr. Babalola J. Ogunkola Dr. Robert Robertson Olabisi Onabanjo University, Nigeria Southern Utah University, USA

Dr. Debra Shiflett Dr. Sonal Chawla American Intercontinental University, USA Panjab University, India

Dr. Cheaseth Seng Dr. Jianjun Yin RMIT University, Australia Jackson State Univerrsity, USA

Dr. R. Ivan Blanco Dr. Shikha Vyas-Doorgapersad Texas State University – San Marcos, USA North-West University, South Africa

Dr. Tahir Husain Dr. James D. Williams Memorial University of Newfoundland, Canada Kutztown University, USA

Dr. Jifu Wang Dr. Tehmina Khan University of Houston Victoria, USA RMIT University, Australia

Dr. Janet Forney Dr. Werner Heyns Piedmont College, USA Savell Bird & Axon, UK

Dr. Adnan Bahour Dr. Mike Thomas Zagazig University, Egypt Humboldt State University, USA

Dr. Rodney Davis Dr. William Ebomoyi Troy University, USA Chicago State University, USA

Dr. Mohsen Naser-Tavakolian Dr. Joselina Cheng San Francisco State University, USA University of Central Oklahoma, USA

Reviewers Task Panel and Executive Editorial Board (Continued)

Dr. Mumbi Kariuki Dr. Khalid Alrawi Nipissing University, Canada Al-Ain University of Science and Technology, UAE

Dr. Rafiuddin Ahmed Dr. Natalie Housel James Cook University, Australia Tennessee State University, USA

Dr. Regina Schaefer Dr. Nitya Karmakar University of La Verne, USA University of Western Sydney, Australia

Dr. Ademola Olatoye Dr. Anita King Olabisi Onabanjo University, Nigeria University of South Alabama, USA

Dr. Dana Tesone Dr. Lloyd V. Dempster University of Central Florida, USA Texas A & M University - Kingsville, USA

Dr. Farhad Simyar Dr. Bijesh Tolia Chicago State University, USA Chicago State University, USA

Dr. John O'Shaughnessy Dr. John Elson San Francisco State University, USA National University, USA

Dr. Stephen Kariuki Dr. Demi Chung Nipissing University, Canada University of Sydney, Australia

Dr. Rose Mary Newton Dr. James (Jim) Robbins University of Alabama, USA Trinity Washington University, USA

Dr. Mahmoud Al-Dalahmeh Dr. Jeffrey (Jeff) Kim University of Wollongong, Australia University of Washington, USA

Dr. Shahnawaz Muhammed Dr. Dorothea Gaulden Fayetteville State University, USA Sensible Solutions, USA

Dr. Brett Sims Dr. Gerald Marquis Borough of Manhattan Community College, USA Tennessee State University, USA

Dr. Frank Tsui Ms. Katherine Leslie Southern Polytechnic State University, USA American Intercontinental University, USA

Dr. John Tures Dr. David Davis LaGrange College, USA The University of West Florida, USA

Dr. Mary Montgomery Dr. Peter Ross Jacksonville State University, USA Mercer University, USA

Dr. Frank Cheng Dr. Van Reidhead Central Michigan University, USA University of Texas-Pan American, USA

Dr. Vera Lim Mei-Lin Dr. Denise Richardson The University of Sydney, Australia Bluefield State College, USA

Reviewers Task Panel and Executive Editorial Board (Continued)

Dr. Robin Latimer Dr. Reza Vaghefi Lamar University, USA University of North Florida, USA

Ms. Alison Duggins Dr. Jeffrey Siekpe American Intercontinental University, USA Tennessee State University, USA

Dr. Michael Alexander Dr. Greg Gibbs University of Arkansas at Monticello, USA St. Bonaventure University, USA

Dr. Kehinde Alebiosu Dr. Mike Rippy Olabisi Onabanjo University, Nigeria Troy University, USA

Dr. Gina Pipoli de Azambuja Dr. Steven Watts Universidad de Pacifico, Peru Pepperdine University, USA

Dr. Andy Ju An Wang Dr. Ada Anyamene Southern Polytechnic State University, USA Nnamdi Azikiwe University, Nigeria

Dr. Edilberto Raynes Dr. Nancy Miller Tennessee State University, USA Governors State University, USA

Dr. Dobrivoje Radovanovic Dr. David F. Summers University of Belgrade, Serbia University of Houston-Victoria, USA

Dr. George Romeo Dr. Robert Kitahara Rowan University, USA Troy University – Southeast Region, USA

Dr. William Root Dr. Brandon Hamilton Augusta State University, USA Hamilton's Solutions, USA

Dr. Natalie Weathers Dr. William Cheng Philadelphia University, USA Troy University, USA

Dr. Linwei Niu Dr. Taida Kelly Claflin University, USA Governors State University, USA

Dr. Nesa L’Abbe Wu Dr. Denise de la Rosa Eastern Michigan University, USA Grand Valley State University, USA

Dr. Rena Ellzy Dr. Kimberly Johnson Tennessee State University, USA Auburn University Montgomery, USA

Dr. Kathleen Quinn Dr. Sameer Vaidya Louisiana State University, USA Texas Wesleyan University, USA

Dr. Josephine Ebomoyi Dr. Pamela Guimond Northwestern Memorial Hospital, USA Governors State University, USA

Dr. Douglas Main Dr. Vivian Kirby Eastern New Mexico University, USA Kennesaw State University, USA

Reviewers Task Panel and Executive Editorial Board (Continued)

Dr. Sonya Webb Dr. Randall Allen Montgomery Public Schools, USA Southern Utah University, USA

Dr. Angela Williams Dr. Claudine Jaenichen Alabama A&M University, USA Chapman University, USA

Dr. Carolyn Spillers Jewell Dr. Richard Dane Holt Fayetteville State University, USA Eastern New Mexico University, USA

Dr. Kingsley Harbor Dr. Barbara-Leigh Tonelli Jacksonville State University, USA Coastline Community College, USA

Dr. Joan Popkin Dr. William J. Carnes Tennessee State University, USA Metropolitan State College of Denver, USA

Dr. Chris Myers Dr. Faith Anyachebelu Texas A & M University – Commerce, USA Nnamdi Azikiwe University, Nigeria

Dr. Kevin Barksdale Dr. Donna Cooner Union University, USA Colorado State University, USA

Dr. Michael Campbell Dr. Kenton Fleming Florida A&M University, USA Southern Polytechnic State University, USA

Dr. Thomas Griffin Dr. Zoran Ilic Nova Southeastern University, USA University of Belgrade, Serbia

Dr. James N. Holm Dr. Edilberto A. Raynes University of Houston-Victoria, USA Tennessee State University, USA

Dr. Richard Dane Holt Dr. Cerissa Stevenson Veterans' Administration, USA Colorado State University, USA

Dr. Rhonda Holt Dr. Donna Stringer New Mexico Christian Children's Home, USA University of Houston-Victoria, USA

Dr. Yu-Wen Huang Dr. Lesley M. Mace Spalding University, USA Auburn University Montgomery, USA

Dr. Christian V. Fugar Dr. Cynthia Summers Dillard University, USA University of Houston-Victoria, USA

Dr. John M. Kagochi Dr. Barbara-Leigh Tonelli University of Houston-Victoria, USA Coastline Community College, USA

Dr. Yong-Gyo Lee Dr. Rehana Whatley University of Houston-Victoria, USA Oakwood University, USA

Dr. George Mansour Dr. Venugopal Majur Shetty DeVry College of NY, USA Multimedia University, Malaysia

Reviewers Task Panel and Executive Editorial Board (Continued)

Dr. Peter Miller Dr. Carolyn S. Payne Indiana Wesleyan University, USA Nova Southeastern University, USA

Dr. Ted Mitchell Dr. Veronica Paz University of Nevada, USA Nova Southeastern University, USA

Dr. Alma Mintu-Wimsatt Dr. Terence Perkins Texas A & M University – Commerce, USA Veterans' Administration, USA

Dr. Liz Mulig Dr. Sue-Jen Lin University of Houston-Victoria, USA I-Shou University, China

Dr. Robert R. O'Connell Jr. Dr. Kong-Cheng Wong JSA Healthcare Corporation, USA Governors State University, USA

Dr. P.N. Okorji Dr. Azene Zenebe Nnamdi Azikiwe University, Nigeria Bowie State University, USA

Dr. James Ellzy Dr. Donn Bergman Tennessee State University, USA Tennessee State University, USA

Dr. Padmini Banerjee Dr. Yvonne Ellis Delaware State University, USA Columbus State University, USA

Dr. Aditi Mitra Dr. Elizabeth Kunnu University of Colorado, USA Tennessee State University, USA

Dr. Myna German Dr. Brian A. Griffith Delaware State University, USA Vanderbilt University, USA

Dr. Robin Oatis-Ballew Mr. Corey Teague Tennessee State University, USA Middle Tennessee State University, USA

Dr. Dirk C. Gibson Dr. Joseph K. Mintah University of New Mexico, USA Azusa Pacific University, USA

Dr. Susan McGrath-Champ Dr. Raymond R. Fletcher University of Sydney, Australia Virginia State University, USA

Dr. Bruce Thomas Dr. Yvette Bolen Athens State University, USA Athens State University, USA

Dr. William Seffens Dr. Svetlana Peltsverger Clark Atlanta University, USA Southern Polytechnic State University, USA

Dr. Kathy Weldon Dr. Caroline Howard Lamar University, USA TUI University, USA

Dr. Shahram Amiri Dr. Philip H. Siegel Stetson University, USA Augusta State University, USA

Reviewers Task Panel and Executive Editorial Board (Continued)

Dr. Virgil Freeman Dr. William A. Brown Northwest Missouri State University, USA Jackson State University, USA

Dr. Larry K. Bright Dr. M. N. Tripathi University of South Dakota, USA Xavier Institute of Management, India

Dr. Barbara Mescher Dr. Ronald De Vera Barredo University of Sydney, Australia Tennessee State University, USA

Dr. Jennifer G. Bailey Dr. Samir T. Ishak Bowie State University, USA Grand Valley State University, USA

Dr. Julia Williams Dr. Stacie E. Putman-Yoquelet University of Minnesota Duluth, USA Tennessee State University, USA

Mr. Prawet Ueatrongchit Dr. Curtis C. Howell University of the Thai Chamber of Commerce, Thailand Georgia Southwestern University, USA

Dr. Stephen Szygenda Dr. E. Kevin Buell Southern Methodist University, USA Augustana College, USA

Dr. Kiattisak Phongkusolchit Dr. Simon S. Mak University of Tennessee at Martin, USA Southern Methodist University, USA

Dr. Reza Varjavand Dr. Jay Sexton Saint Xavier University, USA Tennessee State University, USA

Dr. Stephynie C. Perkins Dr. Katherine Smith University of North Florida, USA Texas A&M University, USA

Dr. Robert Robertson Dr. Michael D. Jones Saint Leo University, USA Kirkwood Community College, USA

Dr. Kim Riordan Dr. Eileen J. Colon University of Minnesota Duluth, USA Western Carolina University, USA

Mrs. Patcharee Chantanabubpha Mr. Jeff Eyanson University of the Thai Chamber of Commerce, Thailand Azusa Pacific University, USA

Dr. Neslon C. Modeste Dr. Eleni Coukos Elder Tennessee State University, USA Tennessee State University, USA

Mr. Wayne Brown Dr. Brian Heshizer Florida Institute of Technology, USA Georgia Southwestern University, USA

Dr. Tina Y. Cardenas Dr. Thomas K. Vogel Paine College, USA Stetson University, USA

Dr. Ramprasad Unni Dr. Hisham M. Haddad Portland State University, USA Kennesaw State University, USA

Reviewers Task Panel and Executive Editorial Board (Continued)

Dr. Dev Prasad Mrs. Donnette Bagot-Allen University of Massachusetts Lowell, USA Judy Piece – Monteserrat, USA

Dr. Murphy Smith Dr. Ya You Texas A&M University, USA University of Central Florida, USA

Dr. Jasmin Hyunju Kwon Dr. Christopher Brown Middle Tennessee State University, USA University of North Florida, USA

Dr. Nan Chuan Chen Dr. Yajni Warnapala Meiho Institute of Technology, China Roger Williams University, USA

Dr. Zufni Yehiya Dr. Brad Dobner Tree Foundation - London, USA Tennessee State University, USA

Dr. Sandra Davis Dr. Ibrahim Kargbo The University of West Florida, USA Coppin State University, USA

The International Journal of Accounting Information Science and Leadership (IJAISL) is published semi-annually

by Intellectbase International Consortium (IIC). IJAISL provides a forum for academics, practioners and decision-

makers to advance their presumptions in diverse disciplines that have an international orientation. Articles

emerging in this Journal do not necessarily represent the opinion of Intellectbase International Consortium (IIC) or

any of the editors or reviewers. IJAISL is listed in Cabell's Directory of Publishing Opportunities in Accounting, ProQuest, Ulrich’s Directory, ABDC and JournalSeek. In addition, IJAISL is in the process to be listed in the

following databases: ABI Inform, CINAHL, EconLit new books, ACADEMIC JOURNALS DATABASE.

TABLE OF CONTENT

THE MIS OF ACCOUNTING INFORMATION SYSTEM

Richard Pitre ................................................................................................................ 1

ETHICAL ANALYSIS OF THREE MODES OF MEDICAL BUSINESS SOCIAL DARWINISM: RADICAL, ECOLOGICAL, AND METROPOLITAN

Kamal Dean Parhizgar and Suzan S. Parhizgar ........................................................... 9

DISABILITY ADJUDICATION: THE EFFECT OF EMOTIONAL INTELLIGENCE AND HEURISTIC BIASES ON DECISION-MAKING

Rockie C. McDaniel ................................................................................................... 23

LEGAL AWARENESS AND PERCEIVED ETHICAL LEADERSHIP OF EDUCATIONAL ADMINISTRATORS IN STATE UNIVERSITIES AND COLLEGES (SUCS) IN REGION 3

Robert P. Pena .......................................................................................................... 71

COST MATTERS: HIGHER EDUCATION AND COMMUNITY BASED CARE ORGANIZATIONS

Kimberly Handy1 and Wanda Gwyn2 .......................................................................... 82

MANAGING HIGHER EDUCATION AS PUBLIC GOOD: CONTROVERSY, STAKEHOLDERS, SOCIAL RESPONSIBILITY, ACCOUNTABILITY AND SUSTAINABILITY OF THE MODEL

Samir T. IsHak ........................................................................................................... 87

ROLE OF KNOWLEDGE MANAGEMENT IN CULTURAL PERSPECTIVE: MAJOR CORPORATE SECTOR OF ISLAMABAD, PAKISTAN

Amna Fahim and M Fahad Fahim ............................................................................ 104

Richard Pitre IJAISL - Volume 6, Issue 16 (2013), pp. 1-8

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THE MIS OF ACCOUNTING INFORMATION SYSTEM

Richard Pitre Carlton Perkins, USA

A central feature of accounting in today’s business world is the interaction of accounting professionals with computer-based information systems. As primary users of information

systems in organizations, accountants must participate in their design and implementation; and

understand their operation. Accountants must measure and evaluate the performance of the

information system, assess the quality of information processing and evaluate the accuracy of

data input and information output.

The Objectives of AIS should be to:

Provide an in-depth understanding of key business processes of an organization, and

how the data captured during the business process flow through to management and

financial accounting. Train students to model key business process activities and identify risk and control

issues related to a business process. Provide comprehensive knowledge about AIS packages and enterprise resource

planning (ERP) packages and examine how AIS/ERP packages are implemented. Provide students with an overview of some key modules of an ERP and teach

students the skills of using an industry standard package such as SAP.

However, most AIS course descriptions are as follows:

The AIS course is an introduction to accounting information systems and their roles in the

accounting environment. Systems covered include manual accounting, computerized

accounting, and Internet electronic commerce applications. Emphasis is upon developing

students' abilities to understand the processing of accounting data and the controls that are

necessary to assure accuracy and reliability of the data processed by the accounting system.

Objectives #3 and #4 are generally not covered.

Enterprise Resource Planning (also known as ERP) is an effective approach that most

businesses implement to enhance their productivity and performance. Before implementing

this system, it is necessary that business owners and board members have an extensive look

at the benefits and risks associated with the use of the ERP system. Known as a systematic

Full Article Available Online at: Intellectbase and EBSCOhost IJAISL is indexed with Cabell’s, JournalSeek, etc.

International Journal of Accounting Information Science & Leadership

Journal Homepage: www.intellectbase.org/journals ©2013 Published by Intellectbase International Consortium, USA

The MIS of Accounting Information System

2

approach that most industries use to organize resources as well as improve efficiency and

performance, Enterprise Resource Planning (also known as ERP) is usually implemented by

corporations to centralize the databases and functions of every department in a single system.

The system features various components including software modules, which integrate and

manage all the business and private records of firms. With the proper use of this system, firms

can decrease their losses and increase their profits.

How would an AIS course integrate the (1) providing a comprehensive knowledge about AIS

packages and enterprise resource planning (ERP) packages and examine how AIS/ERP

packages are implemented and (2) provide students with an overview of some key modules of

an ERP and teach students the skills of using an industry standard package such as SAP. This

paper offers the following:

ERP INTEGRATION One of the essential factors that affect the efficiency of an ERP system is corporate integration.

To ensure that the system works appropriately, business records and data should be

integrated successfully. Data migration and consolidation can be done by following these

simple steps.

First, identify the records that should be transferred to the system. Set the date when the

migration will be done. Look for data templates that are very useful in organizing the records.

Remember to secure or freeze the tools to be used in the data transfer. Finally, remember to

examine and review the archive set-ups of the ERP system.

The Model Enterprise Resource Planning System A model ERP system features databases that are organized into several software modules,

which include financial, human resources and manufacturing. Other modules that are present

in this system are projects, data warehouse, customer relationship management as well as

supply chain management. These modules are important to consolidate records related to

business tasks such as work flow management, supply chain planning and customer support

systems.

ERP and Corporate Productivity Enterprise Resource Planning is one of the keys to enhance corporate productivity. Since all

the data or records of a firm were consolidated in a single system, then employees can get

updates on processes that are important to the supply and production chain. With the proper

use of the software, it will be easy for department heads to communicate with each other

whenever there are problems with the performance of the company.

Richard Pitre IJAISL - Volume 6, Issue 16 (2013), pp. 1-8

3

Implementation of an ERP System To maximize the use of an Enterprise Resource Planning system, there are some services that

should be featured in the software. Consulting services are important to the first phase of the

implementation of ERP because these will enhance workflows and product training activities.

Additionally, support services are also essential to the maintenance of the system. Lastly,

customization services are significant to assign codes that can hide and secure private and

confidential data.

Adding these two additional components will provide students with an understanding of how

the system integrates internal and external management information across an entire

organization, embracing finance/accounting, manufacturing, sales and service, customer

relationship management, etc. The purpose of ERP is to facilitate the flow of information

between all business functions inside the boundaries of the organization and manage the

connections to outside stakeholders.

Characteristics ERP (Enterprise Resource Planning) systems typically include the following characteristics:

An integrated system that operates in real time (or next to real time), without relying on

periodic updates.

A common database, which supports all applications.

A consistent look and feel throughout each module.

Installation of the system without elaborate application/data integration by the

Information Technology (IT) department.

Functional Areas The following are common functional areas covered in an ERP System. In many ERP Systems

these are called and grouped together as ERP Modules:

Financial Accounting General Ledger, Fixed Asset, Payables, Receivables, Cash Management, Financial

Consolidation[disambiguation needed]

Management Accounting Budgeting, Costing, Cost Management, Activity Based Costing

Human Resources Recruiting, Training, Payroll, Benefits, 401K, Diversity Management, Retirement, Separation

Manufacturing

The MIS of Accounting Information System

4

Engineering, Bill of Materials, Work Orders, Scheduling, Capacity, Workflow Management,

Quality Control, Manufacturing Process, Manufacturing Projects, Manufacturing Flow, Product

Life Cycle Management

Supply Chain Management Supply Chain Planning, Supplier Scheduling, Order to Cash, Purchasing, Inventory, Product

Configurator, Claim Processing

Project Management Project Planning, Resource Planning, Project Costing, Work Break Down Structure, Billing,

Time and Expense, Performance Units, Activity Management

Customer Relationship Management Sales and Marketing, Commissions, Service, Customer Contact, Call Center Support

Data Services Various "self–service" interfaces for customers, suppliers and/or employees

Components

Transactional database

Management portal/dashboard

Business intelligence system

Customizable reporting

External access via technology such as web services

Search

Document management

Messaging/chat/wiki

Workflow management

It is important that students have the ability to assess the advantages and disadvantages

associated with the use of the system, such as enhanced productivity and corporate financial

performance, improved business forecasting as well as organized work flows. On the other

hand the students should understand the disadvantages of using this approach such as the

need for allotting extra budget for the consolidation of all the databases and the need for the

development of an efficient re-engineering business plan.

The ERP selection process is an important step in the future financial and operational success

of an organization. Researching the vendor selection process for ERP systems revealed the

following as three of the most popular ERP systems:

Critical Success Factors in ERP Implementations.

Richard Pitre IJAISL - Volume 6, Issue 16 (2013), pp. 1-8

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Following are 10 tips for successfully selecting and implementing an ERP system:

1. Choose the right product – the right balance of flexibility, reliability, functionality, focus

(on your specific industry) of pre-designed processes – is essential if the team is to

have any chance of delivering against the business case. This means having the right

selection process and going beyond “tick box” analysis.

2. Choose the right implementation partner. There are many roles to fulfill within the

project requiring different skill levels and understanding. It is often better to have a mix

of skills, experience and rates to match to the level and complexity of each deliverable.

You need to look realistically at the support you need, technical, application, business,

change, process – most companies will need partners in more than one area. Note

that the right partner might be someone other than the ERP vendor.

3. Be ruthlessly commercial about your selection, negotiation and contracts.

Commercials are far more important here than the finite legal position (which will

almost certainly be that any liability on the vendor will be dependent upon you proving

that you did everything you were expected to do – which believe me is more difficult

than it sounds). The more you can document in terms of risk mitigation and shared

liability for project over-runs the better the working relationship.

4. Vendor management is key – while vendors are your partner in the project, you should

never forget they have their own drivers, wants and needs. You will both want a

“successful” project but their definition of success will be very different to yours.

5. Aim for the right goals – make sure you have a vision for where the system will be after

the initial phase, after two years and after five years. Be realistic about how much you

can implement at the outset and how much change your organization can take before

it breaks. Buy for the future state, while bearing in mind you will never get the same

discount on any software modules.

6. Use a third party to help with selection, planning, progress management, change

management and dispute resolution. Most people only do one or two ERP

implementations in their career – spending money with people who have completed

dozens or hundreds is always worthwhile.

7. If you have an ERP project that is off track, get the project reviewed and take advice

as early as possible – the faster you understand where you are and how to get control,

the more likely it is you will turn the situation around.

8. Use a tool to manage information, project milestones, budgets, resource allocation and

time/materials bookings. You need to know exactly where you are in the project and

The MIS of Accounting Information System

6

how much time and money you have spent to date in order to predict the cost and

timeline of the entire project.

9. Review and update the business case regularly – as you move through the project you

will find items that will boost your ROI, and you will find items that will increase your

costs. Being up-to-speed with this situation will help if you need to negotiate with the

CFO regarding re-shaping the budget.

10. Maintain constant senior management involvement. Support goes beyond what you

say. As mentioned earlier, this project will affect every part of your organization. The

risks in getting it wrong are immense and cost of losing control is hugely punitive.

Conclusion The target for most ERP implementations is to integrate the business, reduce the “silo” mentality, get information out of spreadsheets and into a single system, and get knowledge out

of peoples’ heads and into defined and repeatable processes. Key issues are granularity, accuracy, uniformity and consistency of data combined with a standard method of delivery to

improve decision making and focus attention where it is most needed.

ERP implementations are about unification, bringing people together, improving flow,

increasing visibility and delivering business effectiveness. The technology is both an enabler

and a tool. The results come from how you build, define, articulate and communicate the

strategy, as well as how you support the change. All ERP programs have a technology partner

– isn’t it equally important that they have a business partner?

ERP COMPARISON Comparing ERP vendors is a major activity in an ERP Selection Project. Many companies try

to focus on feature comparison as their method to compare vendors. Today there are many

websites and services that provide feature comparisons for free and for fee. The three

companies were chosen using the following criteria:

Company – understanding the size of the vendor, its resources, its, mission, markets

served, and its direction in the market. Does this vendor have the resources to keep

our company abreast of technology changes? Can this vendor be a great partner for

the next 15 to 20 years?

Technology – is the vendor’s technology direction in alignment with our client’s technology strategy?

Function fit – evaluate how their software meets our client’s business process future

state

Support – understand how the vendor provides a support “ecosystem”: education, web site, user group, partners, consultants, industry focus groups, and other

customers in our clients industry.

Richard Pitre IJAISL - Volume 6, Issue 16 (2013), pp. 1-8

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Cost of ownership – evaluate the total cost of ownership over at least five years:

license fee, annual fee, implementation fees, and internal support costs, ongoing

internal and external costs.

SAP ERP Overview Founded in 1972, SAP provides business software applications and services to companies of

all sizes in more than 25 industries. With subsidiaries in over 50 countries, the company is

listed on several exchanges, including the Frankfurt Stock Exchange and the New York Stock

Exchange (NYSE) under the symbol SAP. SAP employs more than 48,500 people in over 50

countries. Today, more than 89,000 companies in over 120 countries run SAP software.

Dynamics GP by Microsoft Microsoft Business Solutions (NASDAQ: MSFT), which includes the businesses of Great

Plains, Microsoft bCentral, and Navision a/s, offers a range of business applications for small

and mid-market businesses. Microsoft Business Solutions applications can help automate

end-to-end business processes across the following areas.

Financials

Distribution

Project accounting

Electronic commerce

Human resources (HR) and payroll

Manufacturing

Supply chain management (SCM)

Business intelligence (BI)

Sales and marketing management

Customer service and support

Microsoft was established in 1975 and is headquartered in Redmond, Washington (US).

Microsoft Dynamics GP (formerly Microsoft Business Solutions Great Plains eEnterprise)

was originally released in July 1994. It meets the needs of over 34,500 small, mid-market, and

corporate account customers. This enterprise resource planning (ERP) solution is extensible

and has a modular approach. It provides functionality for financials, inventory and order

processing, human resource management, customer relationship management (CRM), field

service, e-commerce, project management, manufacturing, and analytics and reporting.

JD Edwards EnterpriseOne by Oracle Oracle JD Edwards EnterpriseOne (formerly PeopleSoft) is a suite of modular, pre-integrated,

industry-specific business applications designed for rapid deployment and ease of

administration on pure internet architecture. It is suited for organizations that manufacture,

The MIS of Accounting Information System

8

construct, distribute, service, or manage products or physical assets. It includes financial

management, asset lifecycle management, project management, supply chain management

(SCM), relationship management, human capital management, supply management,

applications technology, and performance management modules.

For more information, visit the company’s web site.

Founded in 1977, Oracle Corporation (NASDAQ: ORCL) supplies software for information

management. With annual revenues of more than $10.9 billion (USD), the company offers its

database, tools, and application products, along with related consulting, education, and

support services, in more than 145 countries around the world.

Headquartered in Redwood Shores, California (US), Oracle develops and deploys Internet-

enabled enterprise software across its entire product line, which includes database, server,

enterprise business applications and application development, and decision support tools.

Oracle offers e-business solutions that extend from front-office customer relationship

management (CRM), to back-office operational applications, to platform infrastructure.

CONCLUSION The target for most ERP implementations is to integrate the business, reduce the “silo” mentality, get information out of spreadsheets and into a single system, and get knowledge out

of peoples’ heads and into defined and repeatable processes. Key issues are granularity, accuracy, uniformity and consistency of data combined with a standard method of delivery to

improve decision making and focus attention where it is most needed.

ERP implementations are about unification, bringing people together, improving flow,

increasing visibility and delivering business effectiveness. The technology is both an enabler

and a tool. The results come from how you build, define, articulate and communicate the

strategy, as well as how you support the change. All ERP programs have a technology partner

– isn’t it equally important that they have a business partner?

K. D. Parhizgar and S. S. Parhizgar IJAISL - Volume 6, Issue 16 (2013), pp. 9-22

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ETHICAL ANALYSIS OF THREE MODES OF MEDICAL BUSINESS SOCIAL DARWINISM: RADICAL, ECOLOGICAL, AND METROPOLITAN

Kamal Dean Parhizgar1 and Suzan S. Parhizgar2

1Texas A&M International University, USA and 2North Texas Osteopathic Medical College, USA

ABSTRACT he main objective of this article is to analyze different ethical and legal dimensions of human medical rights within the boundaries of natural human rights and civil rights concerning application of the medical business Social Darwinism

philosophies. There are three major domains of Medical Business Social Darwinism Philosophies: (1) The Radical Medical Business Social Darwinism Philosophy: “The poor are poor because they are supposed to be that way due to their socio-cultural and political inferior power-set and econo-political class stratification and they should barely have access to medical care services and the rich are rich due to their socio-cultural and econo-political superior status and they should enjoy from the highest possible medical care services.” (2) The Ecological Medical Business Social Darwinism Philosophy: “Existence and survival of naturally endowed fortunate individuals are prosperous and the unfortunate deprived individuals (handicapped, retarded, low education, and low-income citizens and residents) who are sank to the bottom for having born there are unworthy and deserve to tolerate pain and suffering and die in poverty.” (3) The Metropolitan Medical Business Social Darwinism Philosophy: “The survival of the fittest, mightiest, and wealthiest and the demise of the sickest, weakest, and poorest.” Fittest, mightiest, and wealthiest deserve to have access to the best available, affordable, and advanced medical facilities and sickest, weakest, and poorest patients because of both weaknesses of their natural and socio-economic conditions not to have access to advanced medical facilities and live with pain and suffering and die in misery.” Keywords: Social Darwinism, Evolution, Ecological, Radical, Metropolitan, Philosophy,

Biosophy, Technosophy, Paliobiology, Hypothetic-Deductive, Permaculture, Affordability, Accessibility, Colonias

INTRODUCTION Darwin was an excellent hypothetico-deductive philosopher. He advanced his scientific views

in multiple fields, including morphology, biology, psychology, sociology, and finally in evolution.

First, he claimed that evolution is a historical science that does not need to satisfy the

requirements of the hypothetic-deductive methods because the evolution of organisms is a

T

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Ethical Analysis of Three Modes of Medical Business Social Darwinism: Radical, Ecological and Metropolitan

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historical process that depends on unique and unpredictable events, and thus is not subject to

formulation of testable hypotheses and theories. The second kind of his analysis concerns the

elucidation of mechanisms or processes that bring about evolutionary changes. These

inquiries deal with causal and processes rather than consequential relationships. In biology,

population genetics, population ecology, paleobiology, and many other similar branches of

knowledge are the relevant disciplines. Similarly, foundations of Social Darwinism philosophies

are based upon historical changes happened among different species to be descriptive-base

and classified-stratification. Descriptive-base and classified-stratification of historical

evolutionary socio-economical characteristics of different social groups are necessarily known

as causal activities in all types of populations that through social interactions make distinctions

between advanced and retarded socio-economical groups of populations in all ecological

conditions.

From the standpoint of evolutionary theory of Social Darwinism, we assume that all people

prefer values based upon general consensus agreements about ethical issues in civilized

societies. Such a consensus view relies on a framework of equitable natural professional

treatments of all mankind in clinical interventions. Among those natural professional values

(not necessarily civil values); medical ethics is about committed codes and oaths of

professional medical authorities to protect natural rights and human rights of patients in

medical practices. Medical ethics in general and applied ethics in clinical intervention practices

in particular, are objectively oriented systems of thoughts and actions that help people to live

with dignity and integrity. However, there are different types of political-economical ideologies

that make distinctive signs of medical cost-affordability and accessibility among different

groups of people.

This article has analyzed inherent moral, ethical, and legal issues and problems of which

physicians, clinicians, and their team members should be familiar with during the time of

making decisions, performing surgical procedural operations, and presenting their professional

expertise opinions and forensic deliberations during court hearings. In particular, we describe

and analyze deontological, intellectual, and popular utilitarian principles and mechanisms by

which physicians and clinicians may assure that cross-cultural understanding are being

reviewed in very depth in order to prevent further conflicting consequences. Nevertheless,

attending physicians and clinicians should be familiar with patients’ background: religious faith, cultural values, and lifestyles upon choices are adequately respected and protected. Finally,

we are going to review different clinical interventions through analyzing different sociocultural

and econo-political scenarios from the viewpoints of cultural backgrounds, patients’ categorical characteristics, patients’ family members’ concerns, healthcare insurance companies, and governmental regulatory agencies as stakeholders. It should be noted that Petrella (2012: 3)

indicated: “Signed by President Obama on March 23, 2010, the Patient Protection and Affordable Care Act (PPAC) [or Obamacare] contains an ‘individual mandate’ that requires uninsured Americans to purchase health insurance if they do not fall within one of the

individual’s exceptions… This policy directive expressly requires U.S. citizens and legal

residents to have federal government-approved ‘qualifying’ health insurance coverage by

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January, 2014. Those who refuse to purchase a government-approved (NOT government run,

mind you) health insurance plan will incur a penalty of $695 per year or 2.5% of their annual

income, whichever is higher.” Such a medical legislative act has been approved by the U. S. Supreme Court as a tax bill and all citizens and residents should observe it.

WHAT ARE OBJECTIVES OF HEALTHCARE? As Parhizgar and Parhizgar (2011) stated, first, we will elaborate on the positive side of the

wellbeing that is the objective of healthcare insurance systems. The courses of action will have

some or all of the following objectives for the healthcare insurance services:

Promotion of health through observation of psychosomatic exercises and meditation.

Maintenance of health through observation of descent dietary habits.

Prevention of diseases through observation prudent decisions, directions, and actions.

Enhancement and improvement of functional status of compromised desires to be

healthy.

Following educational and counseling advices and directions on the basis of their

conscious awareness and avoidance of miserable actions.

Prevention of early death by following the healthy direction of a balanced life.

Avoiding harm to self in the courses of prevention and enhanced healthy condition.

Promotion of psychological, mental, and spiritual life.

Observation of hygiene directions.

Promotion of health within the contextual boundaries of natural aging.

Achievement of the above objectives is the benefit of healthcare insurance systems.

Frequently, all or most of these objectives can be achieved simultaneously. Now we would like

to turn to the opposite side of healthcare which is medical care.

WHAT ARE OBJECTIVES OF MEDICAL CARE? Medicine aims to cure diseases, to treat patients’ abnormal symptoms, and to restore or maintain patients’ natural normal functional abilities. Medicine has never been interested in healthcare functions unless as treatment and/or therapeutic objectives in dealing with patients

against patients’ infections. On the other hand, the healthcare services emphasize on the

positive side of creation and maintenance of a normal life through prevention and offensive

mechanisms against diseases, physical weaknesses, emotional disorders, and societal

maladjustments. In medical care the courses of action will have some or all of the following

objectives:

To eradicate patients’ symptom of infections. To restore healthy conditions of patients.

To improve the quality of a patient’s life who needs and seeks medical care services.

Ethical Analysis of Three Modes of Medical Business Social Darwinism: Radical, Ecological and Metropolitan

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To return a sick or ill or injured person back to a normal life by appropriate treatments

and/or therapeutic techniques.

To restore defected organs and convert them into normal functions.

To convert unable patients into able people after accidents.

To intervene patients’ abnormalities by reducing uncomfortable functioning of physical

body and maintenance of functions to the maximum capabilities.

To rehabilitate injured and/or aged patients into a normal functioning of life style.

To rehabilitate addicted patients to quit their addiction through restoration and

maintenance of a clean life.

To reduce profound depression of unpleasant experiences of patients such as physical

difficulties, disfigurement, blindness, limb amputation, plastic facial changes through

grafting, and limitation of dynamic activities into possible normal life.

To restore, maintain, and improve sanctity and quality of a patient’s life.

WHAT ARE EVOLUTIONARY SOCIAL DARWINISM PHILOSOPHIES? Evolution was in its origin, a philosophical rather than a scientific concept. Jean-Baptiste

Lamarck (1744-1829) and Charles Lyell (1797-1875) were pioneers in arguing that individual

species changes in such a way that entirely no species come into existence. But it remained

for Charles Darwin to expound a fully development theory of evolution in his Origin of the Species (1859), (Powell, 1967: 417). Within such a historical trend, what Darwin did, was to

stamp evolution with the seal of science. Darwin theorized that the scientific evolutionary social

theory occurs when species are able to adapt to changing environmental conditions and

thereby they survive while those lest fit will be destroyed. He believed that human beings are

mutable within the contextual boundaries of their origins; somatic DNAs and econo-political

national genes; cultural values. Accordingly, the discipline of medicine came into its existence

from its anthropological evolutionary trends from old beliefs of shamans as tribal religious

medical authorities to the present medical doctors as artistic-technological healers. Therefore,

all evolutionary changes are viewed as the result of “necessity in needs.” They need to be adjusted, adapted, and modified to the changing conditions of the environment.

Evolution means that change whereby something becomes different as a result of modification

of its own species’ structural characteristics and functions. In the conceptual reasoning of the

theory of evolution, the new things are always related to something that existed before. As

applied in biosciences, evolution attempts to explain the progressive development of more

complex forms of life from simple ones. Moreover, as Ayala (1994:230) indicated, there are two

major views concerning evolutionary theory: (1) one concerns history. Some philosophers of

science have claimed that the evolutionary biology is historical science that does not need to

satisfy the requirements of the hypothetic deductive method. The evolution of organisms, it is

argued, is a historical process that depends on unique and unpredictable events. (2) The

second kind concerns the elucidation of mechanisms or processes that bring about

evolutionary changes. This dimension deals with causal, rather than historical relationships.

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Also, Parhizgar and Parhizgar (2006: 380) indicated: “As factual belief, human beings are living within two integrated environments: (1) the natural (we can identify it as ecology) and (2) the

artificial (we can identify it as a culture). From the standpoint of material view, the ecological

environment provides all organic elements including human beings, animals, plants, and other

substances like air and water with appropriate conditions to survive. However, the artificial

environment (a culture) provides specific human-made social conditions to survive. Those

conditions that are an authoritatively approved set of political ideas are ideologies… A political ideology is a set of political ideas: a formalized belief system that explains and justifies a

preferred political order for society. Ideologies offer a socio-political and cultural strategy

(processes, institutional arrangements, programs, and hierarchical power for their attainment

(Mullins, 1972: 498)… Ideologies are worldviews, which are built upon and reinforced by a set

of powerful dominant class of beliefs and values in social interactions.”

Nevertheless, the main objective of this article is to analyze different ethical and legal

dimensions of human medical rights within the boundaries of natural human rights and civil

rights concerning application of the Medical Business Social Darwinism philosophies. There

are three major domains of Medical Business Social Darwinism philosophies: (1) The

Evolutionary Radical Medical Business Social Darwinism Philosophy, (2) The Evolutionary

Ecological Medical Business Social Darwinism Philosophy, and (3) the Evolutionary

Metropolitan Medical Business Social Darwinism Philosophy.

I. THE EVOLUTIONARY RADICAL MEDICAL BUSINESS SOCIAL DARWINISM PHILOSOPHY

The Evolutionary Radical Medical Business Social Darwinism Philosophy is based on the

following hypothetical assumption:

H-1: “The poor are poor because they are supposed to be that way due to their socio-cultural and inferior power-set and econo-political class stratification and they should barely having access to affordable advanced medical care services and the rich are rich due to their socio-cultural superior status and econo-political capabilities and they should enjoy from the highest possible advanced medical care services.”

Any type of sociocultural and econo-political ideology concerning natural rights and civil rights

of individuals needs comprehensive cognitive understanding and construing its own rational

reasoning. Darwin believed that evolutionary social changes in species are not the result of

purposeful activities in the organism. Essentially, it is the results of historical conditional social

chances. This means that people should be in the right time and in the right places in order to

flourish. Genetic inherit characteristics of individuals are the basic principles of their existence

and survival. This means that in order to survive they should be adaptive to the new conditions.

Adaptation to the new environment is not based on the wishes of individuals; it is based on the

preset cultural characteristics of being poor or being rich. Since poor people do not have strong

sociocultural and politico-economic power infrastructure, they remain behind and those rich

people that have strong sociocultural status and econo-political resources will progress and

Ethical Analysis of Three Modes of Medical Business Social Darwinism: Radical, Ecological and Metropolitan

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flourish. Therefore, the gap between rich and poor will exist to an extent that poor will be

weaker and weaker in order to be destroyed within the impoverish culture and poverty; and the

rich people will survive within the prosperous context of wealth and power. Nevertheless,

despite poor species that they try very hard to survive, because of their inherent conditions,

they will not be able to be upgraded as they wish in a short period of timeline. In sum, there are

three major characteristics for poor people as following:

A struggle for existence

Resulting to cope with present conditions

Because of inferior historical sociocultural and econo-political characteristics of

species, poor people remain and survive within the “poor culture” and wealthy people because of their capabilities will improve their status and upgrade their future species

The Radical Medical Business Social Darwinism Philosophy does not view an individual to be

healthy because he/she is the differentiated part of the historical national class stratification.

Within the contextual boundaries of such an assumption, nature is no longer in harmony with

poor people. Poor people should struggle to survive because nature is viewed as a world of

tooth and claw. In supporting such a statement Kennedy (2012) has indicated: “By 2010, 15 of the population owned 42% of financial wealth, while 80% of the population owned only 55 of

financial wealth… the bottom 80% pay the hidden interest charges that the top 10% collect,

making interest a strongly regressive tax that the poor pay to the rich… Public banking may be a radical solution, but it is also an obvious one.” Within such a competitive environment,

eliminating poor people is rational because they should not use limited resources. Even, with

such a radical ideology, struggling for destroying poor people might even be considered well

because poor are not efficient in creation of wealth and technology. Consequently, they will be

as a burden in society and society should not reward the lazy, incompetent, and irresponsible

people. Therefore, for poor people the wealth includes healthy food, clean air, pure water,

fertile land, healthy and happy children, high quality of education, high quality of healthcare,

medical care, and pain care management, safety and security, and mental and spiritual status.

In addition, poor are consumers without productivity and prosperity. Also, Kennedy (2012) has

stated: “A stunning 35% to 40% of everything we buy goes to interest. This interest goes to

bankers, financial, and bondholders, who take a 35% to 40% cut of our GDP. That helps

explain how wealth is systematically transferred from Main Street to Wall Street.”

In contrast, wealthy people believe that productivity and prosperity are viewed as cardinal

foundations of good economy. Therefore, the wealth for rich people is capital, resources,

assets, access to resources, catching the inflationary rates, added capital gain, and profitability

within the individualistic, competitive, and aggressive free market economy. For the rich

through the lens of the Evolutionary Radical Social Darwinism, competition for survival is the

law of nature and the driver of progressive compiling numbers of financial wealth.

In regard of medical care, poor patients will not be able to afford the medical costs of visiting

specialists in hospitals and clinics and/or buying comprehensive and expensive healthcare

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insurance packages. They refer to the retail clinics, in-store clinics, and mobile street clinics

and will be hooked to the cheap generic type B medications and counter medicine or no

medicine. Within this type of treatment, the major controversial question put medical providers

to diagnose and treat those people that are energetic, productive, and wealthy. For example, in

the early of the 20th century, in the United States of America, there were many humanitarian,

religious, and county clinics and hospitals that used to provide free diagnoses and treatments

for needy and poor people through donation of goodwill and good faith people. In the late 20th

century most of these medical institutions were sold to the commercial (profit-making) medical

groups and needy or poor people left without doctors and healthcare services. For example,

the sale agreement between the former Mercy Sisters Hospital in Laredo, Texas as a non-

profit medical institution and the Laredo Medical Group as a profit-making hospital. It left many

families and classes of people without humanitarian medical attention. Residences in Laredo

do have any philanthropic andor county hospital to treat poor people and non-documented

alliances who work in the city. Also, Brown et al., (2012:118) indicated: “In recent years, there has been unprecedented population growth in Texas’s counties near the Rio Grandie because of the North America Free Trade Agreement (NAFTA) and immigration. Unfortunately, the

population growth has outstripped the substantial economic growth, and the traditionally poor

border region now has even more poor people. The counties in the Mexican border area

between El Paso and Brownsville are among the most impoverished places in the country.

Many of the poor live in colonias (depressed housing settlements often without running water

or sewage systems). It is estimated that there are currently about 2,300 colonias in Texas. As

many as 400,000 Texans live in substandard conditions in these settlements”. Such a status was extended nationwide to the point that forty five million citizens, residents, and no

documented immigrants have been left without resources to be treated against diseases. In

addition, professional medical authorities lost their expertise power and private healthcare

insurance and/or organizations (e.g., HMOs, PPOs, and MCOs) gained privileges to run the

national medical care services.

Parhizgar and Parhizgar (2008: 246) stated: “We human beings, like other predator species;; like the lion, the wolf, the wale, and the eagle, are the interlocutors between chaos and order,

playing a vital creative role in keeping all natural species including human beings in balance.

Human beings possess the ability and capability to be creators. Promethean utilitarian

biosophical believers believe in creation of evolutionary forms of holarchy in which they

perceive moral life should be based on amorality. They do not perceive themselves as

creatures to be managed by other extra Gs’ power (Gods and/or Governments). This means that they do not perceive life as an absolute phenomenon. They believe life is a balance

between right and wrong, good and evil, just and unjust, beautifulness and ugliness, rich and

poor, and worthiness and worthlessness. What is right for the wale is catching the fish or the

death of the deer is not evil or wrong because the deer is a means to a wolf’s end. This is the biosophy of balance of nature, which carries capacity the whole ecosystem to be maintained.

From the utilitarian Promethean biosophical view, our human-oriented amorality should not

regard all sufferings and pains including death as evil or immoral, because sentient life and

death are either good or evil. They are integral parts of natural holarchical life experiences and

Ethical Analysis of Three Modes of Medical Business Social Darwinism: Radical, Ecological and Metropolitan

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processes. They believe death and suffering to be caused by human beings rather than by

natural means. They view it as legitimate reasoning because they are creating a balance

between life and death.”

Lenders are the economical first class people who will survive with prosperous medical care.

Reich (2012) has indicated: “These financiers have so much power over the rest of the

economy they get average taxpayers to bail them out when their bets in the casino called the

stock market go bad. They have so much power they even shred regulations intended to limit

their power.” Life-time struggling debtors as the middle-class people will pay interest to

lenders. Patients may survive without medical care services and die in misery and not only are

they borrowing more money to pay their current medical debts, but as well as the interest on

prior unpaid debts. Finally, this is the struggling process among three main groups: the Wall Street creditors and lenders, the Main Street debtors, and the featherbedding Floor Street healthcare insurance companies.

II. THE EVOLUTIONARY ECOLOGICAL MEDICAL BUSINESS SOCIAL DARWINISM PHILOSOPHY

The Evolutionary Ecological Medical Business Social Darwinism Philosophy is based on the

following hypothetical assumption:

H-2: “Existence and survival of naturally endowed fortunate individuals are prosperous and the unfortunate deprived individuals who are sank to the bottom for having born there are unworthy and deserve to tolerate pain and suffering and die in misery.”

Generally, the Evolutionary Social Darwinism Philosophy has undergone theoretical changes

resulting in reassessment of the nature of systems, the locus of changes in systems, and the

models by which changes occur within living systems (Svyantek and Hendrick, 1988: 243).

Along with such a revision, the idea of the struggle for existence and survival possesses two

general characteristics: (1) the ecological and (2) the sociocultural. Through ecological

evolutionary characteristics, kinetic natural characteristics may affect natural life-span of

species in long-run. For example, if you look at two types of bodies of water: compare an

ocean with a pond, you will realize that species will be different. The ecological characteristics

of an ocean breed vales and giant creatures, and the ecological characteristics of a pond

breed worms and flies. Wales and giant creatures possess long lives and worms and flies

possess very short lives. Accordingly, Ecological Social Darwinism Philosophy indicates that

there are superior and inferior creatures to be existed and they have survived differently in

different ecological conditions.

In the field of Medical Business Social Darwinism Philosophy, there are some issues that may

be appropriate to be considered in such settings. These issues are patients’ cultural value systems, ethnic background, nationality, religion, language and acceptable colloquial forms of

communication, lifestyle, family composition and relationships, intelligence, education,

profession, economic and social status, habits, customs and traditions, beliefs, faith,

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ideologies, mental health, self-esteem, levels of tolerance concerning pains, sufferings, and

deprivations, sexual orientation, cultural perceptions of the role of genders, and ethical and

moral conceptions concerning trustworthiness or expectations from physicians, clinicians,

nurses, and staff. With respect to cultural and religious value systems of patients, the following

questions should be addressed:

What are cultural perceptions of patients concerning sick care, well care, and total

quality care in relationships with religious faiths and economic conditions?

What are patients’ perceptions concerning national health care systems?

What are patients’ preferred cultural values concerning having access to the preferred medical choices?

What is the cultural nature of endemic and/or pandemic diseases as opposed to

illnesses among particular groups?

Do patients perceive diseases as having an evil eye connotation?

Do patients have trust on physicians to cure their illnesses or sicknesses or they look

at them as mediums between them and God that patients through praying ask God for

recovering and physicians through their wisdom and knowledge work hard to heal

patients?

If given oral medications, will the patient ingest them as directed, or place them in

“mummy bundle” in the corner of his/her room and expect an efficacious result? After

all, if the medicine is really “magic,” it can work anywhere and need not to be taken by the patient. This belief is held by many Native Americans (Rasinski-Gregory M.D., et

al., 1998: 15).

Are intramuscular or intravenous injections more valuable and effective than oral

medications? The Chinese place such a value on paternal medications.

Are sicknesses, illnesses, accidents, and disabilities seen as the “will of God?” Does the patient have a cultural belief to accept whatever his/her fate is (whatever it

should be happened it will happen despite of the aggressive attitude of fighting back

against the consequences of the disease on his/her life)?

Does the patient’s religious faith construe health or sickness as part of God’s will?

Does the patient have a religious faith that exposure to acute diseases are the results

of his/her earthly misbehavior and/or sinful actions that caused God to punish him/her

as he/she deserves not to be recovered?

Does the patient have a sincere assurance that God will help him/her to be recovered

from sicknesses and illnesses because he/she has had good intentions, goodwill, and

good deed in his/or her life?

Does a patient accept pain and suffering as parts of earthly life in order to have God’s

graceful peace, harmony, and revelation after death as a gift for the eternal blessing?

Such a strong faith will mitigate the patient’s complaints and aggressiveness. It is a spiritual mental reinforcement to resent pain, suffering, and early death for fulfilling the

enriched life.

Ethical Analysis of Three Modes of Medical Business Social Darwinism: Radical, Ecological and Metropolitan

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Does a patient have consistent beliefs through his/her past religious practices to

manifest a strong faith that God will help him/her to be recovered or recently he/she is

a believer that God will help him/her to be recovered?

Does the patient have a spiritual belief through praying and giving away some material

wealth for the goodness of his/her physical and mental health recovery?

Does the patient have a spiritual advisor, counselor, priest, pastor, rabbi, ayatollah,

monk, and medicine-man to indoctrinate him/her with religious chants and

ceremonies?

How much the patient has been provided liturgical (public group praying) support or

customs of his/her religious faith?

Does the patient believe in “sacramental provision” for healing?

Does the patient believe in sacrificing animals (like Moslems, Jews, and Ibrahimian

believers) for the sake of recovery and healing?

How the hospital handles the body of a deceased person with respect to conducting

autopsy and other types of funeral clothing and perfume substances (in the Moslem

faith, all deceased corps before burial should be washed and groomed and to be

wrapped in a white fabric; Kafan).

How body part transplantation will affect the recipient’s socio-economical and

psychological characteristics?

The patients’ religious faiths and ceremonies are critical elements in how they interact with physicians, clinicians, and medical care institutional policies and procedures. For example,

Ransinski-Gregory et al., (1998: 16) indicated:

In the treatment of the dying patient, the Jewish belief in the infinite value of life plays a vital

role. According to the Talmud, “one who is in a dying condition is regarded as a living person in all aspects.” The condition is compared to flickering flame inasmuch as, if one touches it, that

flame might be extinguished. The patient in such a state, according to Orthodox Jewish

tradition, may not be washed, his pillow may not be touched, his eyes may not be closed, and

he may not be moved. In short, nothing should be done that might hasten his death. All efforts

needed to protect and nourished the “flickering flame” must be undertaken. This may become a serious problem in treating an elderly Orthodox Jew, who is obviously terminally ill and dying

in an ICU. For that patient (and/or his/her family to permit his/her moved would be a violation of

Jewish law).

In sum, cultural beliefs and religious faiths held by patients may influence their understanding

of their illnesses. Religiously, patients ask themselves: Why am I ill? Why among all people

me? How can I be healed by God or by physicians and/or by both (e.g., Christian Scientists

and Moslems)? What does God want me to do? Do I have power to save myself? Can a

physician make a miracle to heal my chronic illness (e.g., progressive cancerous cells and/or

AIDS/HIV?) Therefore, fate or destiny would be a matter of faith concerning life and death

among religious people. That is a reason that some patients strongly believe in God’s will (e.g., in the Moslem faith: Ensha Allah) and pray for their recovery. In addition, through some

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religious faiths, virtuous individuals believe that people, who are exposed to acute diseases,

are the results of their sinful and unjust earthly behavior to themselves and/or to others during

their life-time and deserve to suffer from their ill-fated behavior and illnesses. Other religious

denominators like Confucianism, Hindus, Buddhists, Taoists, and Shintoists through their

etiquette believe that heaven and hell are located on Earth.

In sum, Evolutionary Ecological Medical Business Social Darwinism Philosophy is based on

the geographical locations of birth, socio-cultural and economical condition of life, and both

natural genetic characteristics of genes and the DNA characteristics of cultural values of both

physicians and patients. All will affect existence and survival of physicians and patients. In

addition, since existence and survival of human species are subject to a historical somatic-

psychological heredity through generation by generation, therefore, each generation may carry

their ancestral physiological and psychological characteristics that through long term changes

will be adaptive to the ecological conditions. Within such an evolutionary belief, medicine may

be effective for mitigating pain and suffering, but eventually will be transferred to the next

generation with both good and bad consequences.

III. THE EVOLUTIONARY METROPOLITAN MEDICAL BUINESS SOCIAL DARWINISM PHILOSOPHY

It may come as a surprise to many that anybody can call into question the existence of

diseases and normal lives. Epistemologically, illnesses, sicknesses, and injuries are full of

unknown causes, processes, and consequences. We need to attest that we live in a global

village in which people must live side by side in an environment, if they desire to peacefully

coexist. We must assume that human values are based upon general agreements about

ethical issues and humanitarian notions of permacultural (sub-superb) values. Such an

agreement relies on a societal framework of equitable treatments of all mankind. What people

need? They need to be ethical and moral in all aspects of their daily lives. The Evolutionary

Metropolitan Medical Business Social Darwinism Philosophy is based on the following

hypothetical assumption:

H3: “The survival of the fittest, mightiest, and wealthiest and the demise of the sickest, weakest, and poorest: fittest, mightiest, and wealthiest patients deserve to have access to the best available, affordable, and advanced medical facilities and sickest, weakest, and poorest patients because of both weaknesses of their natural and preset socio-economic conditions not to have access to advanced medical facilities and live with pain and suffering and die in misery.”

The permaculture is an ethical promising path to create a sustainable environment. It is

founded on the basis of deontological theory of ethics which focuses upon the importance of

axiological shared values in highly developed metropolitan inhabitants. The permacultural

values emphasizes on caring for the planet Earth, caring for humans, caring for animals, caring

for clean air and clean water, and caring for the holistic existence. It is hard to believe that a

modern democratic and industrialized nation should not protect, promote, and enhance

Ethical Analysis of Three Modes of Medical Business Social Darwinism: Radical, Ecological and Metropolitan

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healthcare, medical care, and pain care management of its population. Junda et al., (2008:

604) stated “Yet the United States is the only major industrialized nation without universal health-care system. Rather, the United States has what is perhaps best described as a

patchwork system of care designed to cover different segments of the population – but not all

citizens in the nation. In addition to private insurance, which many Americans receive as

benefit of employment, government programs to provide health care [not necessarily medical

care and/or pain care management] include Medicare, primarily for the elderly; Medicaid, for

the qualified poor;; and the State Children’s Health Insurance Program (SCHIP), for children in needy families.”

As we said before, evolution means that change whereby something becomes different as a

result of modification of an organism in its own structure and/or adaptation to the ecological

new conditions. In the conceptual reasoning of the theory of the Evolutionary Metropolitan

Medical Business Social Darwinism Philosophy, the new species are always related to

something that existed before. Also, as applied in biosciences, businesses, and healthcare

insurance, evolution attempts to explain the progressive development of more complex forms

of life spans from simple ones. Such a rational reasoning is applicable to the evolutionary

processes of healthcare, medical care, and pain care services within the contextual boundaries

of Evolutionary Metropolitan Medical Business Social Darwinism Philosophy.

The modern industrial societies like the United States of America have polarized citizens and

residents into metropolitan, suburbia, rural, and colonials (e. g., people living around Grande

River without public services, swage, and clean water in South Texas). All of the above

categories of people have their own inherent group multicultural characteristics concerning

accessibility to and affordability for being entitled to healthcare, medical care, and pain care

insurance. Also, from the standpoint of wealth and poverty in different industries, there are

some corporations that have the most capital resources and power in the free market economy

(e.g., banking, oil, information, pharmaceutical, and insurance). Nevertheless, being healthy is

a matter of political debate in a nation.

All nations according to their econo-political ideologies and technosophical structures have

established different classes of citizens and residents within affordability to have access to

healthcare, medical care, and pain care management systems. Some nations believe that to

be healthy is one of their civil rights. Therefore, they have social medicine. These types of

nations use the term “healthcare” to cover all related issues concerning “preventive care,” “corrective sick-care,” and “promoting total-quality-care systems.” Other nations such as the United States of America believe that to be healthy is a privilege not as a natural entitlement.

The U. S. Constitution is silent about healthcare, medical care, and pain care management

systems concerning citizens’/residents’ rights. Tozzi (2012: B16) stated: “Affordability means healthcare premiums, co-pays, and deductibles can’t cost citizens’ and/or residents’ more than 9.5 percent of their family income… ” It has assumed that all those phenomena are subject to

the commercial and economical affordability of citizens and residents within the contextual

boundaries of the free market economy. In other words, healthcare, medical care, and pain

K. D. Parhizgar and S. S. Parhizgar IJAISL - Volume 6, Issue 16 (2013), pp. 9-22

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care management systems are viewed as commodities to be bought or sold in the marketplace

between providers and patients through financial agencies which are called healthcare

insurance companies and/or HMOs, PPOs, MCs. The reason that in the United States of

America in a commercial term doesn’t use the terms of “medical care” or “pain care” is related to providing insurance company’s legitimate reasons to deny many dimensions of diagnoses, treatments, prognoses, and therapies for “sick care” and total “quality care,” because of

preexisting conditions as the result of “natural selection.” Therefore, patients are viewed as customers to buy “health” and physicians, clinics, and hospitals are viewed as sellers and/or financial providers to sell “health.” Nevertheless, in 2014, the Obamacare may eliminate some

of financial burdens on the US citizens and residents but also it may not include 22 million

undocumented aliens who are living and working in the United States. However, through

government funding policies (e.g., Social Security, Disability, and Welfare) insurance

companies use “Medicare and/or Medicaid” at the federal level and at the state level such as in California they use it as “Medi-Cal” rather than healthcare. Also, according to the notion of commercialization of medical care and pain care systems, government provides funds as an

opportunity for insurance companies and private and semi-private hospitals and clinics (state

funded medical colleges – teaching hospitals and clinics) with excessive profit rates to meet

the escalating costs for diagnoses, treatments, prognoses, and therapies of patients’ maladies. All these types of institutions are located within the metropolitan areas of major cities.

Nevertheless, medical care and pain care management systems become expensive and

exclusionary, now offering patients a lifetime of debt payments. Instead to provide them

comfort in order to be healthy, they have created another obstacle for families that it might be

called “Medical Generation Debtor.” Such issues are related to the market demand and

supply. All of these issues are assumed within the individualistic states of liberty. However,

there is a natural, built-in tension between free enterprise economies and democratic

government because they embody equally legitimate but competing value systems. Free

enterprise values include economic efficiency, self-interest as a major motivator. Democratic

governments are the major regulatory agencies to protect citizens and residents against

monopolies.

CONCLUSION It is very important to recognize that activities of a business are not like a game or a sport to

entertain an investor’s egoism. The objective is to manufacture valuable products and/or render effective services that can serve the utility of consumers’ lives. In such a competitive

environment, it is not fair to protect some businesses by providing them with incentives in order

that their investors enjoy free gains. Protectionism is an ethical doctrine designed to evaluate

actions that have both good and evil consequences. In sum, the Obama Healthcare Act

provides opportunities for all citizens and residents to eradicate differences among economical

classes of people without discrimination against fittest, wealthiest, and mightiest and poorest,

sickest, and weakest people concerning their natural selection characteristics and their

preexisting conditions of maladies to be covered by healthcare insurance.

Ethical Analysis of Three Modes of Medical Business Social Darwinism: Radical, Ecological and Metropolitan

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Parhizgar, K. D. and Parhizgar, R. R. (2006). Multicultural Business Ethics and Global Managerial Moral Reasoning. Lanham, MD: University Press of America: 380.

Parhizgar, K. D. and Parhizgar, S. S. (2008). Multicultural Biomedical Ethics and Global Biosophical Moral Logic. Lanham, MD: University Press of America: 246.

Parhizgar, K. D. and Parhizgar, Suzan. (2011). “Comparative Analysis of the Ethical Views Concerning Medical Natural Rights and Civil Rights: Medical Business Social Darwinism

Philosophies.” Competiveness Forum. Petrella, C. (2012). “When Health Care Reform Comes to America?” Nation of

Change.http://www.Nationofchange.org/when-health-care-reform-comes-america…

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Svyatek, D. J., and Hendrik, H. L. (1988). “The Nature of Change: An Extension of New Development in Evolutionary Theory to the Study of Organizational Systems.” The Association of Human Resources Management and Organizational Behavior Proceedings.

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DISABILITY ADJUDICATION: THE EFFECT OF EMOTIONAL INTELLIGENCE AND HEURISTIC BIASES ON DECISION-MAKING

Rockie C. McDaniel

Corolado Technical University, USA

ABSTRACT he disability adjudicator for the Social Security Administration is presented with multiple types of evidence regarding claimants, and, utilizing primarily clinical judgment must weigh and integrate this information before rendering a disability

decision. The need to process large amounts of evidence in this fashion can result in the use of cognitive simplification strategies in the form of decisional bias, which can produce judgment error. The purpose of this research was to explore the relationship between emotional intelligence and heuristic bias (empathy) that influence decision-making. More specifically, this investigation proposed and empirically tested hypotheses consisting of behaviors in which emotional intelligence (EI) abilities would prompt the use of judgment biases that could affect the final disability decision. Quantitative measurements occurred using the Mayer-Salovey-Caruso Emotional Intelligence Test (MSCEIT™) for EI and Davis’ Interpersonal Reactivity Scale 2 (IRI2) for empathy. Pearson’s correlation test, multiple regressions, Pearson’s product moment correlation (PPM), and Spearman’s rho test were performed to determine and analyze the relationship between empathy and EI. The study’s findings led to the conclusion that a statistically significant relationship does not exist between empathy and EI, but there was a correlation of EI and educational attainment. Therefore, Social Security Administration leaders should exercise caution when using EI and empathy alone in determining constructs for effective decision-making within the hiring process of new adjudicators. REVIEW OF THE LITERATURE

The purpose of the quantitative correlational study was to determine if a significant relationship

existed between emotional intelligence (EI) and heuristic biases (empathy). The traditional

paradigm of decision-making is changing (Bielski, 2007; Goleman 2001; Kinsman, 2006;

Kristof, 1996;; D. Smith, 2006;; Spors, 2007). Today’s organizational leaders are seeking to hire and retain leaders and employees with high EI skills (Cherniss & Goleman, 2001; Goleman,

1998; Wakeman, 2006), assuming that high EI skills lead to effective decision-making

(Erdogan & Bauer, 2005; Frase, 2007; Landen, 2002; D. Smith). The importance of ethical

decision-making and its impact on organizational culture (Autrey & Daugherty, 2003),

T

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Disability Adjudication: The Effect of Emotional Intelligence and Heuristic Biases on Decision-Making

24

citizenship behaviors (Cooper-Thomas et al., 2004), work attitudes (Ambrose et al., 2008;

Chatman, 1991; Kristof-Brown et al., 2005), workplace socialization (Autrey & Wheeler, 2005;

Chatman), work performance (Coppola & Carini, 2006), and job satisfaction (O’Reilly et al., 1991) have been well documented.

Individuals with high EI skills are able to recognize emotions in themselves and others and use

emotions effectively to manage their behavior and relationships with others (Mayer, Salovey, &

Caruso, 2004). The literature reviewed revealed support for EI’s role in leadership (Daus & Ashkanasy, 2005; Dulewicz & Higgs, 2003; Goleman, 2001), workplace outcomes (Carmeli &

Josman, 2006), self- awareness, behavior (Carmeli, 2003; Macrae, 2004), workforce retention,

behavior, job satisfaction, workplace socialization, interpersonal communication, employee

commitment, acclimation, and professional success (Bradberry & Greaves, 2005; Carmeli;

Goleman, 1998, 2001). The literature review (a) introduced, defined, and explained the EI,

heuristic biases, and ethical decision-making constructs with a focus on germinal research for

each variable; (b) reviewed literature linking the constructs; and (c) reviewed literature citing

measurement strategies for each. Results of the study may be applicable to leaders who are

searching for ways to increase organizational effectiveness using EI and ethical decision-

making models and frameworks.

Germinal Foundation of EI EI has its origins in Thorndike’s social intelligence theory (Dulewicz & Higgs, 2000; Landy,

2005; Mayer et al., 2004; Thorndike, 1920). Thorndike suggested that variances in the

outcomes of his study on the predictive ability of IQ could be affected by personal qualities

such as “dependability, loyalty, readiness to shoulder responsibility for [one’s] own acts, freedom from conceit and selfishness, readiness and ability to co-operate” (Thorndike, p. 27). Thorndike attempted to distinguish traditional forms of intelligence from social intelligence

theory but was unable to accomplish this goal (Seal et al., 2006). Thorndike and, later,

Wechsler (1944) were pioneers in theories of social intelligence. Weschler (1944) offered a

definition of intelligence that suggested multiple components of intelligence. Weschler defined

intelligence as “the global capacity to act purposefully, to think rationally, and to deal effectively with his environment” (p. 3). Weschler was the first to offer an intelligence test, the Wechsler’s Adult Intelligence Scale. The scale differed from today’s traditional intelligence scales in that it included components of social intelligence. Leeper (1948) published an article that essayed to

establish a connection between emotion and thought. In his article, Leeper discussed the

concept of “disorganization emotion” (p. 11). Disorganization emotion was described as a person’s negative response to a situation in which he or she has no ready response. Leeper argued that emotions could produce negative and positive behavioral responses. Many writers

cited Salovey and Mayer (1990) as the first to coin the phrase emotional intelligence. The

phrase was used by Leuner in 1966 in the German journal Praxis der Kinderpsychologie und

Kinderpsychiatrie (Matthews et al., 2004a). In Leuner’s article, a group of adult women was

described as having low EI due to their inability to adjust to their social roles.

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The second mention of the EI construct was in Payne’s (1985) doctoral dissertation. Payne used the construct in an educational context advocating the use of EI by suggesting that

schools take students’ feelings into consideration (Matthews et al., 2004a). While Salovey and Mayer were the first to use the term EI, Goleman (1995) popularized the construct.

Historical Overview of EI Emotional intelligence (EI) has been defined in many ways, a fact that

has contributed to its characterization as a nebulous and elusive construct (Dulewicz & Higgs,

2000; Locke, 2005; Matthews et al., 2004a, 2004b; Murphy & Siderman, 2006). Matthews et al.

(2004a) defined EI as “the competence to identify and express emotions, understand

emotions, assimilate emotions in thought, and regulate both positive and negative emotions in

oneself and others” (p. xv). Landen (2002) described an emotionally intelligent person as one who can regulate his or her emotions and respond positively to the needs of the organization

and of fellow employees. Socialization, defined as acclimating individuals to the organization,

is touted as the key to workforce retention. The emergence of the integrated study of emotion

and intelligence evolved during 1970-1989 (Mayer et al., 2002). The study of EI in the early

seventies was mainly in the academic arena (Sharma, 2008). Sharma (1983; 1985) conducted

studies during this period on the cognitive issues affecting academic success. During this

period, Gardner (2004), with his multiple intelligence theory, challenged educators to look for

several types of intelligences, for those with diverse learning abilities. Gardner is credited with

reintroducing the discussion around research aimed at discovering alternatives to traditional

intelligence (Seal et al., 2006). In his multiple intelligence theory, Gardner (2004) introduced

the concept of “personal intelligences” (p. 239). Gardner sought to examine internal and external ways in which an individual processed and reacted to information. Internal processes

included ways in which the individual was aware of his or her own feelings, moods, and

temperament. External personal intelligence included “one’s ability to notice and make

distinctions among other individuals and, in particular, among their moods, temperaments,

motivations, and intentions” (p. 239). Wagner and Sternberg (1985) introduced their concept of “practical intelligence” (p. 437). The authors proposed that practical intelligence, that is, the use

of one’s “emotions and feelings” (p. 437), was also an important factor in assessing intelligence. It was during this period that the phrase emotional intelligence was used for the

first time in a dissertation by Payne (1985).

The period 1990-1993 saw a definitive theory of EI developed by Salovey and Mayer (1990),

which marked a milestone for focused study and research in the field. The authors addressed

the usage of the phrase emotional intelligence and offered the first definition of the construct.

Salovey and Mayer also attributed skills to the EI construct. The authors also offered a way in

which to measure EI as a mental ability. The result was an abilities-based method that used

color and design elements to determine one’s ability to identify emotional states.

EI study during the nineties focused on the study of emotions and the meanings behind

emotions and thought (Salovey, Brackett, & Mayer, 2004). Researchers focused on how

emotions and mood influenced personal thought processes and one’s judgment (Palfai &

Disability Adjudication: The Effect of Emotional Intelligence and Heuristic Biases on Decision-Making

26

Salovey, 1993-1994; Salovey & Birnbaum, 1989; Salovey et al.). Early studies were conducted

with depressed and bipolar individuals.

The field of EI was popularized between 1990-1994 by Goleman, a psychologist and journalist,

in his book Emotional Intelligence (Mayer et al., 2002). Goleman’s book was based on the research and writings of previous authors in the EI field. Goleman suggested that EI might be

the most important predictor of success (Mayer et al.). It was during this period that

psychologists, educators, and human resource professionals began to use the EI construct as

one way to achieve organizational success (Salovey et al., 2004). Salovey and Mayer

contended that Goleman changed the meaning of EI, making it more of a social behavior than

a cognitive construct. The authors proposed that the change in meaning categorized

Goleman’s theory of EI as representative of personality rather than intelligence. The next section traces the historical evolution of EI models, frameworks, and measurement.

EI Models and Frameworks While there have been many attempts to conceptualize the EI construct, three models are

pervasive in the literature: (a) Bar-On’s model of EI and social intelligence, (b) Mayer and Salovey’s abilities-based model and (c) Goleman’s EI- based theory of performance. EI models

are categorized as either mental-ability or mixed models. In mental-ability models, researchers

examine the interaction between emotions and thought. In mixed models, though based on

ability models of EI, researchers examine cognitive mental abilities as well as non-cognitive

personality traits such as motivation (Caruso et al., 2004). While mental-abilities models may

be better able to predict outcomes, mixed models are also valuable (Buontempo, 2005; Daus &

Ashkanasy, 2005; Mayer et al., 2004).

Bar-On’s model of emotional and social intelligence (mixed model) Bar-On is credited with coining the phrase emotional quotient (Matthews et al., 2004a). Bar-On

referred to his theory as “a model of emotional and social intelligence” (p. 206) and defined EI as “an array of non-cognitive capabilities, competencies, and skills that influence one’s ability to succeed in coping with environmental demands and pressures” (p. 15). Bar-On’s conceptualization of the construct appears to include personality traits and consists of five

competencies, each with multiple components.

Models of Emotional Intelligence There are various comprehensive models of emotional intelligence that utilize alternative

theoretical frameworks to conceptualize the construct. These models are not contradictory, but

they do approach the concept of emotional intelligence from diverse perspectives (Buontempo,

2005). While Gardner (1983) did not actually utilize the term emotional intelligence, as

specified by Schutte et al. (1998), his concepts of intrapersonal and interpersonal intelligences

essentially provided a foundation for later models of emotional intelligence. At the heart of

intrapersonal and interpersonal intelligence is the ability to understand one’s own emotions and the emotions and intentions of others, respectively.

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Ability Model of Emotional Intelligence According to the ability model, emotional intelligence is a set of interrelated cognitive abilities

possessed by individuals to deal with emotions. In their initial model, Salovey and Mayer

(1990) conceptualized emotional intelligence as being comprised of three categories of

adaptive abilities: appraisal and expression of emotion, regulation of emotion, and utilization of

emotion. A revised model of emotional intelligence developed by Mayer and Salovey (1997)

emphasized more of the cognitive components of emotional intelligence and suggested that

intellectual and emotional growth may characterize emotional intelligence. The model

described four related abilities: The ability to perceive emotions, to access and generate and

emotions to assist thought, to understand emotions and emotional knowledge, and to regulate

emotions reflectively to promote emotional and intellectual growth. As an intelligence-based

and ability-oriented approach to the study of emotional intelligence, the Mayor-Salovey model

emphasized how both thinking and adaptive behavior can be facilitated by emotions. As

specified by Caruso, Mayor, and Salovey (2002), the ability model has to do with how people

think, decide, plan, and create. They further indicated that this model was skill-based and that

emotional intelligence was considered to be a unique class of mental attributes, either

cognitive capacities that were parallel to but distinct from traits (e.g., McCrae & Costa, 1996) or

as a special class of traits referred to as ability or cognitive traits (Cattell & Warburton, 1967, p.

10; Mayer, 1995, p. 859-864). Furthermore, objective, ability-based measures can be used to

measure emotional intelligence when it is conceptualized as an ability. For example, the

Mayer-Salovey model subsequently led to the development of an ability-based measure of

emotional intelligence: the Mayer-Salovey-Caruso Emotional Intelligence Test (MSCEIT). In

addition, Mayer, Caruso, and Salovey (2000) have demonstrated that the four components of

emotional intelligence were distinct but also related to a single construct.

Mixed models of emotional intelligence As described by Caruso, Mayer, and Salovey (2002), mixed models of emotional intelligence

were based on the ability model but included other psychological attributes. For example,

Goleman’s (1995) initial approach to emotional intelligence included the following components:

knowing one’s emotions, managing emotions, motivating oneself, recognizing emotions in other people, and handling relationships. There is substantial overlap among these five

components and emotional intelligence as conceptualized by Salovey and Mayer (1990).

However, Goleman (1995) somewhat expanded the construct to include a number of specific

social and communication skills influenced by the understanding and expression of emotions.

Goleman (1998a) expanded his definition of emotional intelligence to include 25 competencies

grouped into essentially the same five components, although the names of the components

were altered. These five components with their associated competencies included Self-

Awareness (emotional awareness, accurate self-assessment, self confidence); Self-Regulation

(self-control, trustworthiness, conscientiousness, adaptability, innovation); Motivation

(achievement, commitment, initiative, optimism); Empathy (understanding others, developing

others, service orientation, diversity, political awareness); and Social Skills (influence,

communication, conflict management, leadership, change catalyst, building bonds,

Disability Adjudication: The Effect of Emotional Intelligence and Heuristic Biases on Decision-Making

28

collaboration/cooperation, team capabilities). This emotional intelligence model was therefore

based on a competence approach. Caruso, Mayer, and Salovey (2002) indicated that Goleman

(1998a) had essentially combined both emotional abilities and the outcomes of those abilities

in the same model (Buontempo, 2005).

Goleman’s model, there are other mixed models of emotional intelligence, the most recognized

is Bar-On (1997), which developed the Bar-On Emotional Quotient Inventory (EQ-I). The broad

categories comprising Bar-On’s model included intrapersonal skills, interpersonal skills, stress management, adaptability, and general mood. Within these categories were included the

following competencies of skills: Intrapersonal skills (emotional self-awareness, assertiveness,

self-regard, self-actualization, independence); interpersonal skills (empathy, interpersonal

relationship, social responsibility); stress management (problem solving, reality testing,

flexibility); adaptability (stress tolerance, impulse control); and general mood (happiness,

optimism). The Bar-On model took a different perspective than did the Mayer-Salovey model in

that it viewed emotional intelligence as a collection of non-cognitive capabilities, skills, and

competencies that enabled one to cope with environmental pressures and demands. The Bar-

On model essentially related to emotionally intelligent behavior.

According to Buontempo ( 2005) with regard to mixed models of emotional intelligence,

Caruso, Mayer and Salovey (2002) indicated that the multitude of traits utilized in such models

had face validity, resonated well with leaders, and covered most of the current thinking on

leadership effectiveness. However, they further specified that the traits included in mixed

models were essentially covered by the five factor model of personality (Digman, 1990), in

addition to much of the leadership trait research (e.g. Hogan, Curphy, & Hogan, 1994; Yukl,

1981). For example, there was significant overlap between 14 leadership behaviors in Yukl’s (1981) model of leadership and some competence-based mixed models of emotional

intelligence. Yukl’s (1981) 14 leadership behaviors included planning and organizing, clarifying,

informing, monitoring, consulting, recognizing, and networking, rewarding, mentoring,

delegating, team building and conflict resolution, problem solving, supporting, and motivation.

In addition, Caruso, Mayer, and Salovey (2002) also reported that some researchers (i.e.,

Davies, Stankov, & Roberts, 1998) believed that a mixed model approach to emotional

intelligence failed to distinguish the construct from other aspects of personality. These authors

collected data on a diverse set of instruments, claiming that personality measures and traits

offered better descriptions of emotional intelligence than models without personality measures

and traits. The substantive composition of the posited emotional intelligence must now be

identified.

Components of Emotional Intelligence (Mayer & Salovey, 1997) The conceptual overlap between emotional intelligence as defined by mixed models and other

individual difference factors, such as those presented in the give factor model of personality

(Digman, 1990) or in much of the leadership trait research (Brackett, Rivers, Shiffman, Lerner,

& Salovey, 2006). Hogan, Curphy, & Hogan, 1994; Yukl, 1981) may ultimately result in a

narrow conceptualization of emotional intelligence. Therefore, in the present discussion, Mayer

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and Shalvey’s (1997) four-branch ability model of emotional intelligence, in which emotional

intelligence was represented as a multifaceted set of abilities, was conscripted as the primary

conceptualization of emotional intelligence for this study. This ability model of emotional

intelligence has utility in that it offered new contributions to the understanding and prediction of

leadership effectiveness. In addition, as will be elaborated on later, emotional intelligence

taken from an ability perspective can be useful in the context of judgment biases. According to

Buontempo (2005), this model, emotional intelligence involved Perceiving and Identifying

Emotions, Using Emotions to Facilitate Thought, Understanding Emotions, and Managing

Emotions. Each of these four branches will be discussed in terms of the abilities that were

associated with it, according to Caruso, Mayer, and Salovey (2002).

Perceiving and identifying emotions. This first branch of the ability model referred to

perceiving and identifying emotions in both the self and in other people. It involved being aware

of and identifying emotions in one’s own thought (Buontempo, 2005). It also involved being aware of and identifying emotions in other people, which promoted a certain level of social

acuity that was crucial to working with others. Accurate expression of both one’s own emotions and the emotions of others was another ability that was subsumed under this component of

emotional intelligence. Empathy may play a role in accurately expressing others’ emotions. Differentiating between accurate and inaccurate feelings, both in oneself and in others, was

also important to consider in this component of emotional intelligence, in terms of the

consequences such differentiation may have for both an accurate level of self-awareness and

having correct data and information about the individuals in one’s surroundings.

Using emotions to facilitate thought. This second branch of the ability model included the

ability to direct attention to important events. It involved generating emotions to assist judgment

and facilitate decision-making. Furthermore, within this component of emotional intelligence,

mood swings were recognized as means to consider multiple points of view and promote

flexibility. In addition, different emotions were employed to encourage different approaches to

problem solving. How individuals felt influenced how they thought. A sad mood may cause one

to view the world one way, while a happy mood may result in a different interpretation of the

same events. For example, those in a sad or negative mood tended to be more likely to be

detail-oriented and search for error, while those in a more positive mood tended to be better at

generating new ideas and creative solutions to problems. In essence, this component of

emotional intelligence involved the ability to generate emotion, and then to reason with this

emotion.

Understanding emotions. This component of emotional intelligence involved the ability to

understand complex emotions and emotional chains, that is, how emotions transitioned from

one stage to another. It involved the ability to label and recognize relationships among

emotions. Furthermore, by understanding emotions, one was able to recognize the causes of

emotions and interpret the meanings that emotions conveyed. One was also able to assess the

consequences of emotions. Valuable information may be contained in emotions. Therefore, the

ability to understand this information and think about it was crucial in daily interactions. This

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ability enabled individuals to understand why they were feeling a particular way or how another

individual felt if something were said to them. Such emotional knowledge was crucial for both

insight into us, thus promoting self-awareness, and insight into others, which enabled one to

exhibit social acuity when interacting with others.

Managing emotions. The managing emotions component of emotional intelligence essentially

encompassed the ability to manage emotions in one and in others. It included the ability to be

aware of and stay open to one’s emotions, even those emotions that may not be pleasant. It involved engaging or detaching from an emotion and solving emotions-ladened problems

without necessarily suppressing negative emotions. In addition, this component of emotional

intelligence also included the reflective monitoring of emotions, for example, determining

whether a particular emotion was clear or atypical. By staying aware of one’s emotions, learning from them, and utilizing the valuable information they contain, one may be able to

make better decisions and take appropriate action. The managing emotions component of

emotional intelligence thus included a more active dimension of emotions (Caruso, Salovey, &

Mayer, 2004; Kerr, Garvin, Heaton, & Boyle, 2006; Vigoda-Gadot & Meisler, 2010).

In summary, emotional intelligence refers to the ability to recognize the meanings of emotions

and their relationships and to reason and problem-solve on the basis of them. Given that

emotional intelligence meets the criteria for a standard intelligence (Mayer, Caruso, and

Salovey, 2004), it is important to consider the domain of standard intelligence in which

emotional intelligence resides. Various researchers for many years have considered the non-

cognitive aspects of intelligence to be crucial for success in life (Gardner, 1983, 1993;

Sternberg, 1997; Thorndike, 1920; Wechsler, 1940, 1943). Therefore, it is not new to consider

forms of intelligence such as emotional intelligence and the influence they have on topics such

as leadership effectiveness. In recent years, there has been an increase in interest in the role

of multiple forms of intelligence, such as cognitive intelligence, practical intelligence, social

intelligence, and emotional intelligence, in leadership effectiveness. There are various

comprehensive models of emotional intelligence that utilize alternative theoretical frameworks

to conceptualize the construct. There are ability models of emotional intelligence (e.g. Mayer

and Salovey, 1997) and there are mixed models of emotional intelligence (e.g. Goleman, 1995;

Bar-On, 1997).

In the present discussion, emotional intelligence was conceptualized primarily by Mayer and

Shalvey’s (1997), four-branch ability model of emotional intelligence, since it offered new

contributions to the understanding and prediction of leadership effectiveness in the context of

heuristic-based biases. According to this model, emotional intelligence involved four

components: Perceiving and Identifying Emotions, Using Emotions to Facilitate Thought,

Understanding Emotions, and Managing Emotions. Each of these four components was

comprised of particular abilities that may be examined in individual leaders in order to

determine their influence on leadership effectiveness.

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EMPIRICAL WORK OF EMOTIONAL INTELLIGENCE According to Buontempo (2005), Goleman (1998a), a myriad of studies have shown that

effective leaders used more emotional intelligence competencies every day than less effective

leaders. As specified by Goleman (2000), the late David McClelland also found that leaders

with strengths in a critical mass of six or more emotional intelligence competencies were far

more effective than peers who lacked such strengths. Effectiveness was measured by annual

salary bonuses based on the leaders’ business performance, the performance of their divisions, and their annual performance reviews. Goleman (1998a) discussed many studies

conducted by researchers in Boston where results were found in support of the importance of

emotional competencies in leaders. For example, it was found that on average, emotional

intelligence accounted for close to 90 percent of the success of star leaders, emotional

competencies were twice as important in contribution to excellence as were pure intellect and

expertise in star performers versus average performers, and in a study of more than 300 top-

level executives from fifteen global companies, it was discovered that six emotional

competencies distinguished stars from the average: influence, team leadership, organizational

awareness, self-confidence, the drive to achieve, and leadership itself (Buontempo, 2005).

In a study of fourteen hundred employees at a major pharmaceutical company, Cavallo and

Brienza (2001) demonstrated that the highest performing managers had significantly more

emotional competence than other managers in an article that supported the case for the

contribution that emotional intelligence can make to the bottom line in any work organization.

Cherniss (2000) described one study involving a sample of 515 senior executives in Latin

America, German, and Japan where it was found in all three cultures that emotional

intelligence was a better predictor of success than either relevant previous experience or high

IQ. In addition, in an examination of the effects of the emotional intelligence of both leaders

and followers on their performance and attitudes, Wong and Law (2002) demonstrated that the

emotional intelligence of the leaders had a marginally significant effect on the job satisfaction

of subordinates and a significant effect on their extra-role behaviors.

THEORETICAL WORK OF EMOTIONAL INTELLIGENCE Various researchers examining leadership have proposed the importance of qualities

associated with emotional intelligence for various outcomes such as leadership effectiveness

(Badea & Pina, 2010; Boal & Hooijberg, 2000; Burke, 2002; Day, 2000; George, 2000;

Hooijberg, Hunt, & Dodge, 1997; Ramesar, Kootzen, & Oosthuiszen, 2009; Caruso, Mayer, &

Salovey, 2002; Sternberg, 1997). In their examination of how emotional intelligence could

assist various leadership functions and thus contribute to effective leadership, Caruso, Mayer,

and Salovey (2002) discussed why leaders need to be able to identify emotions, use emotions,

understand emotions, and manage emotions. The ability to identify emotions enabled leaders

to be aware of their own feelings and emotions, to accurately identify the emotions of both the

group or of individual followers, to express emotions accurately, and to distinguish between

both honest and false expressions of emotions. Leaders who were able to use emotions

appropriately could understand and motivate others by making emotions available, were able

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to facilitate planning through the use of multiple perspectives, and could engage in activities

that are facilitated by emotions. Othman, Adbullah, and Amed, (2009) and Caruso, Majer, and

Salovey (2002) indicated that leaders who were adept at understanding emotions were able to

recognize relationships between emotions, determine meanings conveyed by emotions,

comprehend complex feelings, and recognize the transition of emotions from one state to

another. Managing emotions enabled leaders to handle stressful events that may occur, such

as disappointing sales, or to not be paralyzed by disappointing or fearful events that may

cause them to make poor decisions. Using the emotions created by a particular situation to

diagnose and solve and underlying problem resulted in an emotionally intelligent response to

problem solving (Mayer & Salovey, 1993).

Contribution of Emotional Intelligence to Effective Leadership George (2000) has made an extensive theoretical argument for how emotional intelligence

may contribute to effective leadership. Utilizing Mayer and Shalvey’s (1997) ability model of emotional intelligence, she conceptualized emotional intelligence as the appraisal and

expression of emotion, the use of emotion to enhance cognitive processes and decision

making, knowledge about emotions, and management of emotions. George (2000) then

proposed how emotional intelligence contributed to effective leadership emphasizing give

essential elements of leadership effectiveness. These elements included both outcome and

process criteria of effective leadership. Among the outcome criteria were the development of

collective goals and objectives and the establishment and maintenance of a meaningful identity

for an organization. The process criteria of effective leadership noted by George (2000)

included instilling in others an appreciation of the importance of work activities, generating and

maintaining enthusiasm, confidence, optimism, cooperation, and trust, and encouraging

flexibility in decision-making and change.

Emotional Intelligence influencing Decision-making As decision-making was one contribution element of effective leadership, the present

discussion focuses on the points George (2000) and Sahoo & Mohanty (2010) made for how

the emotional intelligence abilities of leaders may influence their decision-making processes.

According to Buontempo (2005), she specified that when leaders know and manage their

emotions, they might be able to use them to improve their decision-making. Given the many

demands that leaders face, emotions could be beneficial as signals to direct leaders’ attention to pressing concerns in need of immediate attention (Easterbrook, 1959; Frigda, 1988; George

& Brief, 1996; Mandler, 1975; Simon, 1982; Kerr, Garvin, Heaton, & Boyle; Sahoo & Mohanty,

2010). With regard to ranking such demands, an important role could be served by emotions

and the causes with which they are connected. Managing emotions becomes important for

effective decision making when leaders realize that emotions resulting from low priority

demands are interfering with more pressing concerns.

In addition, George (2000) and Sahoo and Mohanty (2010) stated that emotional intelligence

enable leaders to both effectively utilize emotions when making decisions and manage

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emotions that may interfere with effective decision making. For example, leaders who

accurately perceive their emotions and determine their causes can establish whether emotions

are associated with any particular opportunities, problems, or anticipated courses of action and

as a result, utilize such emotional input in decision-making (Schwarz, 1990 & Clore, 1988;

Buontempo, 2005). Furthermore, a leader may manage or discount a particular experienced

emotion identified as being irrelevant and prevent it from becoming a source of error in

decision- making.

Sahoo and Mohanty (2010) also pointed out that knowing and managing emotions enable

leaders to improve the flexibility with which they approach problems, consider alternative

scenarios, and avoid being rigid in their decision-making. George (2000) described how shifts

in emotions could lead to the generation of multiple points of view and options (Mayer, 1986;

Salovey & Mayer, 1990). The cognitive processes of leaders and the alternatives they consider

differ according to whether they were experiencing positive or negative moods and emotions.

Through meta-mood regulation (Deshpande, 2009; Salovey, Mayer, Goldman, Turvey, &

Palfai, 1995), a leader may realize that a current mood, either positive or negative, may be

responsible for the way in which he or she was approaching a particular decision, and may

thus revisit that decision in a more neutral or opposite mood in order to gain a more rich,

flexible, and objective point of view. Furthermore, George (2000) specified that emotions could

be utilized in actually choosing among options and making decisions. For example, anticipating

how one would feel if certain events occurred could help decision-makers choose among

multiple options (Damasio, 1994; Deshpande, 2009).

There has been some empirical work that has assessed the relationship between emotional

intelligence conceptualized as a set of competencies (mixed model of emotional intelligence),

and effective leadership, assessed primarily through leader performance (e.g. Goleman,

1998a). In addition, theoretical work suggesting a connection between emotions intelligence

and different aspects of leadership effectiveness, such as decision-making, is on the rise (e.g.

Buontempo, 2005; Sahoo & Mohanty, 2009; George, 2000; Mayer, Salovey, & Caruso, 2002).

George (2000) has made a compelling case for how emotional intelligence may contribute to

effective leadership. Of particular interest to the present discussion are the points George

(2000) has emphasized for how the emotional intelligence abilities of leaders may influence

their decision-making processes. It potentially follows, then, that when leaders know and

manage their emotions, they may be able to utilize them to improve their decision-making.

However, no empirical work has been done that associated emotional intelligence with

effective decision-making in leaders (Buontempo, 2005). Therefore, what is clearly needed is

empirical research that assesses the influence that the emotional intelligence abilities of

leaders may have on their decision-making behaviors.

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HEURISTICS: JUDGMENTAL BIASES IN DECISION MAKING Germinal influence of Biases in Decision-making When examining decision- making, there are a variety of different perspectives one may take.

The perspective utilized in the present discussion involves the judgmental biases in decision-

making that may occur through the use of heuristics. When making crucial organizational

decisions it is important that effective leaders formulate accurate judgments. Given the range

of negative consequences that can occur when biases affect one’s ability to make a decision objectively, it is no wonder that the topic of judgment biases is now receiving increased

attention in the decision-making literature. What follows is a delineation of these various

automatic ways of thinking, and how they can create problems in decision-making

(Buontempo, 2005).

Bass (1990) emphasized the importance of judgment in leadership in various early leadership

studies. For example, Belingrath (1993), Drake (1944), Flemming (1935), and Web (1915)

reported correlations of 0.60, 0.34, 0.28, and 0.69, respectively, between judgment and

leadership. As specified by Moutier & Houdé (2003) and Brodt (1990), research on decision-

making has experienced a revolution that has placed an emphasis on inferential shortcomings

and whims of human judgment and decision-making. Within this context, the individual

decision maker must be cognitive of the processes of decision-making and the influence of

heuristics and the importance of consideration. This has led to recent psychological research

on the role of heuristics, or rules of thumb, in judgment and decision-making. Such heuristics

are meant to reduce the information-processing demands of decision-making, that is, they

reduce difficult mental tasks into simpler ones. However, through their inappropriate

application, they may also cause individuals to make systematically biased mistakes in their

decision-making (Buontempo, 2005). Tversky and Kahnerman (1974) stated that people rely

on a limited number of heuristic principles, which reduce the complex tasks of assessing

probabilities and predicting values to simpler judgmental operations. In general, these

heuristics are quite useful, but sometimes they lead to severe and systematic errors (p. 1124).

As further indicated by Moutier and Houdé (2003) and Brodt (1990), because both correct and

erroneous judgments are potentially explained by these judgmental heuristics, they represent

the basis of intuitive judgment and decision behavior (Anandarajan, Kleinman, & Palmon,

2008; Arkes & Hammond, 1988; Kahnerman, Slovic, & Tversky, 1982; Nisbett & Ross, 1980).

There has been frequent documentation of various heuristics that may result in systematic

biases and errors in decision-making. For example, the anchoring and adjustment heuristic

may lead to the bias of overconfidence, which occurs when individuals are overconfident of the

correctness of their answers when asked to respond to questions of moderate to extreme

difficulty (Bazerman, 2002). As noted by (Anandarajan, Kleinman, & Palmon, 2008; Brodt,

1990; Paul Meehl, 1954) first demonstrated this phenomenon by observing a significant

discrepancy between the prediction accuracy of individuals and their genuine belief about the

quality of their performance. Furthermore, this human conceit (Arkes & Hammond, 1988) has

revealed that confidence and accuracy were often not related (Bailey, 1986; Fischhoff, Slovic,

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& Lichtenstein, 1977; Oskamp, 1965; Schneers & Topol, 1987). Essentially, overconfidence

can be described as not knowing that one does not know. According to Brodt (1990), there

were various generalizations that could be made with regard to overconfidence. For example,

overconfidence occurred more often with relatively difficult tasks than with relatively easy tasks

(Lichtenstein & Fischhoff, 1980; Lichtenstein, 1977). With regard to the relation of

overconfidence to the anchoring and adjustment heuristic, (Anandarajan et al., 2008; Tversky

and Kahneman, 1974) explained that in problems assessing overconfidence, individuals were

asked to set a confidence range around their particular answer. Their initial estimate served as

an anchor that biased their estimation of confidence intervals in both directions. With the

anchoring and adjustment heuristic, adjustments from an anchor were usually not sufficient

and resulted in a confidence and that was overly narrow (Buontempo, 2005).

The overconfidence bias can be applied to an organizational context. Bazerman (2002)

provided a common scenario in an organization in which such excess confidence could result

in adverse effects: An individual has developed a marketing plan for a new product and is so

confident in the plan that no contingencies for early market failure have been developed

(Buontempo, 2005). If there were to be problems in the first stage of the plan, instead of

implementing changes in the marketing strategy, an overconfident individual might be blinded

to its flaws and might not take any action. Brodt (1990) indicated that when it comes to staffing

decisions, the employment interview might result in interviewers engaging in the

overconfidence bias. Employment interviews are popular and highly regarded among

interviewers. However, the employment interview may be subject to undue confidence by the

interviewer, since empirical evidence has revealed that the validity of interviews are

questionable (Anandarajan at al., 2008; Dunning, Griffin, Milojkovic, & Ross, 1989; Oskamp,

1965). Brodt (1990) further specified that the breakdown of the negotiation process may be

due to negotiator overconfidence. For example, Bazerman (1983) and Neale and Bazerman

(1985) found that negotiators were inappropriately confident about their judgments regarding

five key elements of the negotiation process: (1) A neutral third party position; (2) the likelihood

that a third party would accept their position; (3) the amount of compromise necessary for

success in arbitration; (4) the relative strength of their cases in relation to their partners; (5) the

probability that their partners would ultimately concede.

The Heuristic of Anchoring and Adjustment The anchoring and adjustment heuristic may also result in the bias of insufficient anchor

adjustment, which occurs when individuals estimate values based on an initial value, which

can be obtained through means such as random assignment or from past events, and arrive at

a final value by making insufficient adjustments from that anchor (Buontempo, 2005). This bias

is based on the notion that estimation often begins with an initial starting point, which is a value

that is convenient or known, and then moves forward through a sequence of adjustments until

a final answer is achieved. This initial starting point, or anchor, may be obtained from the

particular problem itself or may be generated by the individual who is making the estimate

(Brodt, 1990). Some research has demonstrated that anchoring and adjustment can result in

systematic misjudgments that are biased in the direction of the initial anchor, even if it is

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irrelevant (Anandarajan et al., 2008; Northcraft & Neale, 1987; Slovic & Lichtenstein, 1971;

Tversky & Kahmeman, 1974). For example, Tversky and Kahnerman (1974) provided

empirical evidence for this anchoring effect when they asked participants to estimate the

percentage of African countries in the United Nations. Subjects first reported whether their

estimate was higher or lower than a randomly selected number obtained from the spin or a

roulette wheel. They were then asked to develop their best estimate of the precise percentage.

It was found that the arbitrary number from the roulette wheel had a significant impact on the

estimates. For example, those individuals who received 10 countries and 65 countries as

starting points estimated 25% and 45%, respectively (Buontempo, 2005).

Applications of the insufficient anchor adjustment bias to an organizational context can be

made in the realm of salary negotiations (Bazerman, 2002). For example, employers often ask

job applicants to reveal their current salaries because they may be looking for a value from

which they can anchor and adjust. If an employee is worth far more than his or her current

salary, the firm will make an offer that is lower than the employee’s true value. Since an employee’s current salary may not be indicative of this or her true worth, the use of such

systems of compensation utilizes past inequities as an anchor and makes insufficient

adjustments from that initial point. Such a bias may also be applied to the evaluation and

performance appraisal process (Bazerman, 2002). For example, when measuring performance

and allocating resources, managers may have numerous potential anchors, such as goals and

group norms, which they can utilize for assessments purposes. There is a tendency for them to

anchor their assessments on the past performance of employees, which may be based on

factors such as those employees who had received accolades in the past through high ratings.

Huber, Neale, and North craft (1987) found that the employees who received high ratings in

the past continued to receive positive feedback, received larger increases in pay, were told that

they were more likely to be promoted, and were less likely to be perceived as being in need of

training than those employees who had received lower ratings in the past. In addition, a more

general application of the insufficient anchor adjustment bias involves what has been referred

to as the first-impression syndrome. Initial impressions we gain from individuals we meet for

the first time may serve as anchors on which we inadequately adjust our opinions at a later

date (Bazerman, 2002).

Heuristic of Availability The availability heuristic may lead to the bias of ease of recall in which individuals judge events

that are more easily recalled from memory, as a result of vividness or recency, to be more

numerous than events of equal frequency that are less easily recalled. (Anandarajan,

Kleinman, & Palmon, 2008; Tversky & Kahneman, 1974) contended that when an individual

utilizes the availability of an event to judge the frequency with which that event occurs, an

event of equal frequency occurs where instances are less easily recalled. That is, frequency

and likelihood are inferred by assessing the ease with which instances can be anticipated or

retrieved from memory. It is assumed that likely events are more easily imagined or recalled

from memory but unlikely events are less easily imagined or recalled from memory (Brodt,

1990; Buontempo, 2005).

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In addition to frequency, there are various other factors that may influence the ease of

construction and retrieval of events. First, information that is vivid and dynamic and is therefore

salient disproportionately captures people’s attention and may bias judgment (Taylor, 1982). Brodt (1990) indicated that according to Nisbett and Ross (1980) information is vivid to the

extent that is (a) emotionally interesting, (b) concrete and imagery-provoking, and (c)

proximate in a sensory, temporal, or spatial way (p. 45). In addition, vivid information is

predicted to have more impact than pallid information, since vivid information comes to mind

more easily than pallid information, independent of the information’s validity. Nisbett and Ross further demonstrated that three factors are responsible for the ease with which vivid

information can be accessed from memory. First, vivid information attracts attention, and as a

result, is processed more fully during acquisition. Second, a mental image is often evoked by

vivid information, which enhances the encoding, and retrieval in information from memory.

Lastly, people often respond emotionally to vivid information, which facilitates retrieval

(Buontempo, 2005).

Second, familiarity with information also has an influence on the irretrievability of that

information, independent of judgments of frequency. For example, Tversky and Kahnerman

(1982) illustrated the fame effect in which males were judged to be more frequent than females

in a list containing 19 more famous males and 20 fewer famous females and vice versa. Third,

recency also influences availability, independent of frequency, that is, recent events, even

those that may be highly atypical, are more readily available than events that occurred in the

past (Anandarajan, Kleinman, & Palmon, 2008). Lastly, an individual’s belief and values may lead to preconceptions that focus attention on specific events, as well as make such events

more readily available in memory.

The events ease of recall bias resulting from the availability heuristic can be applied to

organizational context. With regard to evaluation and performance appraisal, Bazerman (2002)

specified that vivid instances of an employee’s behavior, whether they are positive or negative in nature, will appear more frequent than more common incidents, and a result will receive

more weight in the performance appraisal. For example, if only instances of an employee’s poor performances are vivid enough to come to mind, the evaluator may conclude that poor

performance is more frequent than superior performance and that, overall, the employee is a

poor performer. In addition, the recency of events may also play a role when it comes to the

per performance appraisal process. For example, managers may place more emphasis on an

employee’s performance during the three months preceding the evaluation than to the previous nine months of the evaluation period. Therefore, an employee who is generally a superior

performer but has recently experienced a failure on a project may be at a disadvantage when it

comes to the performance appraisal as a result of the recency of the single failure.

The Heuristic of Representativeness The representativeness heuristic may result in the base-rate fallacy, which occurs when

individuals are assessing the likelihood of events and ignore base-rates, or information about

the prior probability of any event, if any other descriptive or concrete information is provided,

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even if such information is irrelevant and less valid and reliable than the base-rate information

(Anandarajan, Kleinman, & Palmon, 2008; Ginosar & Trope, 1980; Hamill, Wilson, & Nisbett,

1980; Nisbett & Ross, 1980; Taylor & Thompson, 1982; Tversky & Kahneman, (1974).

However, when no other descriptive information is provided, base-rate data are utilized

correctly (Kahneman & Tversky, 1974). More generally, the representativeness heuristic is the

simple rule of thumb that individuals utilize to make judgments about category membership

and numerical prediction. According to Buontempo (2005), as specified by Brodt (1990), the

representativeness heuristic aims to reduce a complex task to a simple goodness of fit

assessment between object A and the essential properties of category B or between outcome

A and the essential properties of the process B. To the extent that A resembles B, A is judged

to be a member of category B. Similarly, if outcome A resembles process B, then outcome A is

believed to be the result of process B (p. 233).

Kahnerman and Tversky (1973) conducted a series of studies that connected the base-rate

fallacy to the representativeness heuristic. In one set of studies, comparisons were made

between assessments of probability and similarity. One group of students provided estimates

for the percentage of graduate students enrolled in various academic disciplines. These

estimates served as proxies for the actual base-rates and represented people’s perceptions of the base-rate frequencies. After reading a brief description of Tom W, a second group of

participants was asked to specify how similar he was to the typical graduate student in each

academic discipline. The third group of students also read the description of Tom W, but was

instead asked to predict the likelihood that Tom W. was a graduate student in each of the

disciplines. The results revealed that there was an almost perfect correlation between the

likelihood estimates from group 3 and similarity ratings from group 2. Essentially, the

participants’ probability estimates were not affected by the fact that some academic disciplines were large and others were small (Buontempo, 2005).

The base-rate fallacy can be applied to making selection decisions in organizations. For

example, Huber (1986) found that even though participants were told about an interviewer’s accuracy rate and the likelihood that any individual who entered could perform a specific job,

the participants’ subsequent predictions reflected an underutilization of base-rates.

Anandarajan, Kleinman, & Palmon, (2008) and Brodt (1990) imply that personnel decision

makers are expected to combine extensive knowledge about classes of individuals and jobs

and specific information about candidates when they are making choices, and that the

challenge for researchers is determining the boundaries and conditions under which these

factors may not serve the needs of neither the individual nor the organization.

According to Mantel (2005), the false-consensus bias occurs when one’s own behavior and responses to situations are considered typical and appropriate, while other alternatives are

considered unusual and inappropriate. This results in the tendency for people’s own beliefs,

values, and habits to bias their perceptions of how widely they are shared by the general

population (Givlovich, 1990). Ross, Greene, and House (1977) provided early evidence for this

bias by demonstrating that when participants were asked to decide between two alternatives

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for resolving a specific conflict situation, there was overwhelming belief among the participants

that the alternative they chose would be the more common alternative. As further specified by

Brodt (1990) the false-consensus bias has many implications for social perception. First, it

results in individuals overestimating the commonness of their beliefs, behavior, attitudes and

opinions. Second, false-consensus may lead to belief perseverance such that there is low

motivation to question one’s beliefs or opinions as a result of the assumption that these beliefs or attitudes are consistent with respectable people in the rest of the world. Third, regarding the

derivation of estimates from the data available to the inferential process, false-consensus

utilizes a biased sampling process that is based on one’s own beliefs or attitudes (Buontempo, 2005). This compounds the difficulties inherent in social inference. Fourth, serious social and

professional ramifications may result from biased judgments about the typical nature of one’s beliefs. For example, if an individual mistakenly believes that most people respect

independence, he or she may be surprised to receive negative feedback on a performance

appraisal after behaving in independent ways that may demonstrate a lack of team effort or a

lack of respect for authority. Lastly, biased estimates of commonness and deviancy may have

implications for understanding social behavior and making causal attributions. It has been

found that individuals believe that deviant behavior, behavior that is contrary to one’s own, is more indicative of an actor’s disposition than is behavior that is consistent with one’s own (Ross, Greene, & House, 1977; Buontempo, 2005).

The false-consensus bias can be applied to organizational contexts, for example, the

evaluation and performance appraisal process in organizations. This bias can have negative

implications for the notion of a fair and equitable appraisal. With false-consensus, a manager

conducting a performance appraisal may believe that his or her decisions and behavior are the

norm and therefore, when a subordinate excels, the manager may believe that he or she would

have done the same thing and thus not reward that particular behavior. The subordinate, in

turn, may think less of the accomplishment and pass it off as being mediocre. Therefore, the

false-consensus bias can potentially devalue excellence in the workplace (Brodt, 1990; Mantel,

2005).

In sum, the formulation of accurate judgments is important to consider when it comes to

effective decision-making because there are various distortions or biases that may occur in the

context of judgment and decision-making. This has led to recent research on the role of

heuristics, or rules of thumb, in judgment and decision-making, thus placing an emphasis on

individual decision-makers cognitive processes. These heuristics are meant to simplify difficult

mental tasks, and thus reduce the information-processing demands of decision-making. There

is a tendency for systematically biased errors in judgment and decision-making to result when

such heuristics are improperly applied in decision-making situations. As previously discussed,

such biases include overconfidence, insufficient anchor adjustment, ease of recall, insensitivity

to base-rates, and false-consensus. Therefore, such serious biases in judgment resulting from

the use of judgmental heuristics are important to consider in the context of effective decision-

making behaviors.

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The Effect and Use of Heuristics Emotions are intertwined in the processes by which individuals think, behave, and make

decisions. The stereotypical irrational decision-maker is an individual who cannot disregard

emotions when contemplating the best way to deal with a particular problem (George, 2000). In

addition, according to Buontempo (2005), research has demonstrated that one affected with

emotion makes one more prone to engage in general heuristics behavior which can influence

rational decision-making (Anandarajan, et al., 2008; Forgas, 1995; Isen, Means, Patrick, &

Nowicki, 1982; Schwartz & Clore, 1988). Kahnerman (2003) proposed the Two-System View,

originally labeled by Stanovich and West (2002), of the cognitive processes involved in

judgment. The use of heuristics would fall under the operations of System 1, which Kahneman

(2003) described as typically being automatic, effortless, associative, implicit (not available to

introspection), and often emotionally charged (p. 698). Such operations may also be subject to

habit and, as a result, may be difficult to manage or alter. Furthermore, Forgas’ (1995) affect infusion model (AIM) provides a framework for understanding the conditions under which affect

may influence cognition, social judgment, and decision-making. The AIM model suggests that

affect has a tendency to directly inform judgments when decision-makers employ a heuristic

processing strategy as individuals utilize their affective state as a shortcut to deduce their

judgment. As specified by Forgas (1995), heuristic processing is most likely to occur when

decision- makers are making judgments that are simple, highly typical, and not very personally

relevant, there are no specific motivational objectives, the situation does not require accuracy

or detailed consideration, and there is a limitation in cognitive capacity as a result of other

demands on current information processing at the time (Buontempo, 2005).

Isen, Means, Patrick, and Norwicki (1982) proposed that positive affect influences the decision-

making process itself, that is, the strategies, motivations, and the criteria central in making a

decision. More specifically, they hypothesized than an individual in a positive affective state

who is faced with making a judgment or solving a problem will reduce the complexity of the

judgment or decision task and engage in faster, simplified types of processing. In a series of

studies, Isen et al. (1982) found that positive affect resulted in attempts to simplify the

particular decision-making situation at hand which resulted in speedy, efficient decision-

making, but sometimes biased or incorrect solutions, depending on the circumstanced

involved, such as the nature of the task or the feasibility of the participants’ initial hunches. Additional support has been found for the notion that individuals experiencing positive affect

tend to process information less systematically in a more heuristic manner, focusing primarily

on cognitive shortcuts and broader knowledge structures as opposed to more careful and

logical thought (Bless, Bohner, Schwarz, & Strack,1990; Forgas, 1991; Mackie & Worth, 1989;

Mattison, 2000; Schwarz, Bless, 1991; Sinclair, 1988).

Emotions play a crucial role in both judgment and decision-making. Research has consistently

demonstrated that affect makes one more prone to engage in general heuristic behavior

(Badea & Pana, 2010; Forgas, 1995; Isen, Means, Patrick, & Nowicki, 1982; Schwartz & Clore,

1988). Given the important role that emotions may play when it comes to the utilization of

heuristics, the concept of emotional intelligence, which essentially describes the ability to foster

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effectively a connection between emotions and reasoning, to utilize emotions to facilitate

reasoning, and to reason intelligently about emotions (Othman, Abdullah, & Ahmad, 2009; Mayer & Salovey, 1997), is important to consider in terms of how it may affect heuristic-based

biases in judgment and decision-making.

SKILLS: SELF-AWARENESS, EMPATHY, AND CREATIVITY There are various skills, such as self-awareness, empathy, and creativity, associated with the

different components of emotional intelligence that may influence the use of various

judgmental heuristics and their ensuing biases that tend to inhibit effective decision-making.

The rationale for incorporating each of these particular skills into the present discussion is that

each may be a skill that is both characteristic of a particular component of emotional

intelligence and whose presence may influence some of the factors that may lead to a specific

judgment bias. Following will be a brief discussion of common definitions of each skill, how that

skill may be related to a particular component of emotional intelligence as conceptualized by

the ability model of emotional intelligence (Majer & Salovey, 1997), and how its presence may

ultimately influence a specific judgment bias.

Self-Awareness Self-awareness involves self-focused attention in which an individual directs attention to his or

her thoughts, feelings, behaviors, or appearance. It involves individuals reflecting on

themselves and making decisions or plans that involve themselves (Fenigstein, Scheirer, &

Buss, 1975). A higher level of self-awareness may result when individuals are able to both

perceive and identify their own emotions and understand their emotions, that is, why they may

be feeling a particular way. In addition, the self-focused attention characterizing self-awareness

may help to reduce the human conceit (Arkes & Hammond, 1988) that may characterize the

overconfidence bias, in which individuals overestimate the quality of their performance.

Furthermore, with regard to the ease of recall bias, self-awareness may also enable individuals

to be more attentive to the emotional reactions to information that is particularly vivid or salient

and, thus, they may be less likely to let such reactions influence their judgments of the

likelihood of specific events.

Empathy Empathy can be defined as the intellectual or imaginative apprehension of another’s condition or state of mind without actually experiencing that person’s feelings (Hogan, 1969, p. 308). In

essence, empathy involves being willing and able to take the perspective of another individual

and modifying one’s behavior as a result. A higher level of empathy may result when individuals are able to perceive and identify the emotions of others and take the perspective of

others in order to understand why they may be feeling a particular way. In addition, being

empathic toward the beliefs or behaviors of other people may enable an individual to be less

susceptible to the false-consensus bias, since empathy may enable individuals to consider that

the beliefs and behavior of others, even if such beliefs are discrepant with their own, might also

be appropriate in a given situation. Empathy may enable an individual to be less likely to jump

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to conclusions and make judgments about others from available descriptive information but,

instead, take the perspective of the particular individual involved and assess specific

information about the individual as it may pertain to any base-rate information, this potentially

reducing the occurrence of the base-rate fallacy.

Creativity Creativity involves the capacity to generate ideas that are novel, of superior quality, and fitting

to the situation at hand and to have these ideas well received in a specific domain

(Csikzentmihalyi, 1994, 1996; Gardner, 1983; Simonton, 1984; Sternberg & Lubart, 1995).

When individuals are able to utilize emotions to facilitate their thinking, they may be better able

to increase their flexibility, consider multiple viewpoints, and generate novel ideas and

solutions to problems, thus potentially leading to a higher level of creativity. Furthermore, an

individual with a high level of creativity may be less susceptible to the bias of insufficient

anchor adjustment since he or she has the capacity to generate novel, high-quality ideas as

opposed to demonstrating the inflexibility that may come with overemphasizing an arbitrary

initial starting point or anchor that may be available. Therefore, self-awareness, empathy, and

creativity, are introduced into the present discussion to develop a conceptual link between

emotional intelligence and judgment biases. Such skills are briefly defined and then discussed

in terms of how they may be characteristic of a particular component of emotional intelligence

as conceptualized by Mayer and Salovey’s (1997) ability model. In addition, mention is then made of how the presence of each skill may influence some the factors that may lead to a

particular judgment bias. Self-awareness, empathy, and creativity are, therefore, introduced as

mediating variables in the relationship between emotional intelligence and judgment.

Culminating Effect of Emotional Intelligence, Skills, and Judgment Biases A framework consisting of abilities, skills, and behaviors is proposed in this case, such that

emotional intelligence abilities lead to skills such as self-awareness, empathy, and creativity,

which may affect certain biases in judgment involved in the decision-making behaviors of

disability adjudicators. In this framework, a skill is viewed as being a characteristic

encompassed by a broader, overarching ability. This general ability-skill-behavior framework

has been utilized before in the context of leadership research. For example, Beach, Barnes, &

Christensen-Szalanksi, (1986), Badea & Pana (2010), and Mumford, Zaccaro, Harding,

Jacobs, and Fleishman (2000) proposed a multi-faceted model in which complex decision-

making skills and knowledge mediate the effects of cognitive abilities, motivation, and

personality on leader problem solving and performance. The incorporation of intervening

variables or explanatory processes into the chain explaining how abilities such as emotional

intelligence can affect an outcome such as the use of different judgment biases that may inhibit

effective decision-making. Badea and Pana (2010) and Moutier and Houde (2003) specified

that the exclusion of different explanatory processes, such as potential intervening variables,

from the examination of any significant correlations between individual leader attributes and

criteria of leadership effectiveness may be one of the reasons why early trait research failed to

find any traits that would guarantee leadership success. In addition, as cited by Connelly et al.

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(2002), Lord and Hall (1992) indicated that studies of leadership do not always consider the

possibility of mediators, either by failing to mention interrelationships among variables, or by

utilizing contingency explanations for differences in what leader traits predict in different

conditions or situations.

Ethical Decision Making The majority of the literature available on ethical decision-making is in reference to those

decisions made in a professional capacity by people who are in the medical professions or

social work. Moreover, many professions have published codes of ethics to guide their

decisions. Nonetheless, people make ethical decisions in every line of work as well as in

everyday life.

Historical Overview Ethics is a branch of philosophy that deals with the question of what actions are morally right

and how things ought to be, which guide the code of conduct that directs an individual to act in

accordance with the values that person professes (Garrett, 1994; Mattison, 2000;

Woodward, Davis, & Hodis, 2007).). Therefore, any choice that involves contradictory ethical or

moral principles is an ethical decision, and strategies to rank the conflicting principles are

problematic. In such an ethical dilemma, all possible alternatives may be correct, but to make

one choice over the other requires reasoning that is often difficult and time consuming to

determine all the serious consequences. Woodard et al. (2007) suggested a method for

making such choices by carefully considering all sides of the conflict, the ethical codes

involved, and personal values that enter into the equation that may inject personal biases.

Following those considerations, the next step is seeking compromises that minimize negative

consequences and that will be acceptable to all parties concerned. Woodard et al. (2007) and

Mattison (2000) affirmed that ethical decisions are fashioned by the decision-maker and by the

process used to resolve ethical dilemmas; hence, discretionary judgments form the ultimate

choice of action. In other words, although ethical decision-making involves a concentrated

focus on the particular details of the dilemma, it should also include reflection throughout the

process as well as in retrospect to activate self-knowledge and insight. The individual can then

later use this reflective self-awareness to make corrections or adjustments to influence future

ethical decisions. There is seldom any option that is entirely satisfactory; therefore, the action

generally desired is the one that results in greater degrees of good. However, actions can be

justified by the consequences they create and the belief that the desired ends will be met,

thereby justifying the means. This realization led to Mattison’s belief that ethical decision-

making in everyday life must never be considered a discrete act or a task that is unremittingly

logical or scientific by nature. Mattison further stated that even though systematic guides for

solving ethical dilemmas may offer a logical approach to the decision making process, to some

extent, discretionary judgment is inevitable, because context and situational preferences lead

to exceptions to following one particular systematic approach. The process a person chooses

for making such decisions is forged by the prejudices and prejudgments brought into the

process. Initially, the reasoning process helps the decision-maker establish, understand, and

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organize the complex facts related to the particular situation. Yet, the ultimate decision for

resolving an ethical dilemma lies in the circumstances and the value system or preferences of

the decision-maker.

Other influences on the decision may include prior socialization and developmental stages as

well as situational factors. In addition, Mattison reiterated that ethical decision-making is

sensitized by cultural background and beliefs, which often inadvertently cast judgments on the

rightness or wrongness of attitudes and behaviors. Character, conscience, personal

philosophy, attitudes, and biases help to determine choice of action. In addition, ethical

decision-makers bring to the process a tendency to select an action that is in line with personal

preferences, professional roles, commitment to laws and policies, practical experience,

motivations, attitudes, and other individualized perspectives. Mattison (2000) and Woodard et

al. (2007) declared that ethical problems are usually pressing, but often subtle and without

clear signs and symptoms, as in petty theft, accepting gifts or remuneration for special

services, or division of loyalty. Different religious, ethnic, socioeconomic, political, familial, and

workplace groups are likely to hold different values and rules of behavior regarding what is

acceptable to all parties. This would lead to differing moral conclusions about a particular

problem, and thereby cause conflict between peers, organization and employees, family

members, or other members of the social group involved. Signs that a person is facing an

ethical problem may include heightened emotional sensitivity, avoidance, anger, or even a

vague sense that something is amiss.

Culture of SSA Disability Like the Social Security system of which they are a part, the operational mandate is to treat all

citizens who apply fairly and equitably. This standard is achieved through uniformity in

disability decision-making, which protects viable applicants from inequity and federal coffers

from illegitimate claims.

To ensure that the disability programs meet these objectives, Social Security devised

substantive and procedural mechanisms to adjudicate the claims of each American who

applies. Of these mechanisms, the following five are considered essential to ensure equal

treatment: (a) the Listings of Impairments that form a standard measure of disabilities; (b) the

requirement that disabling conditions be verified by objective medical evidence; (c) the

Medical-Vocational Guidelines, or the “Grid,” that considers factors;; (d) the five-step sequential

evaluation that dictates the order in which decisions are made; and (e) the appeals procedure

that grants dissatisfied applicants a hearing before an impartial Administrative Law Judge (SSA Disability Professionals Blue book, 2005).

The listings of Impairments are lists of medical criteria against which every applicant’s medical condition is compared. The listings describe more than 100 medical conditions by their

symptoms, signs, and laboratory findings. For each condition, the Listings also establish levels

of severity that can usually be presumed to result in an inability to work.

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The Listings standardize the disability application because they measure each recognized

condition by the same criteria. For example, an applicant who is mentally retarded will be

judged “disabled” according to the Listings if his or her IQ falls between 50 and 59;; and a claimant who has congestive heart failure will be judged “disabled” under the Listings if his or her heart disease persists despite prescribed treatment. If, however, a claimant’s condition does not meet the criteria of the Listings, he or she will be judged on additional criteria,

including age, education, and previous work experience.

Disabling Conditions Verification To recognize a condition as disabling, the Social Security system requires that the symptoms

be verified by “objective medical evidence,” that is, by visible signs or laboratory findings

declared by physicians (SSA, 2003). This requirement is considered central to ensuring that

the application process is fair and unbiased and that it disqualifies all but the truly deserving.

The objectivity of medical evidence, however, naturally depends on the physicians who

generate, interpret, and explain it.

Four types of physicians play critical roles in the disability decision-making process: the

applicant’s treating physician, Consultative Examiners (CEs), Disability Determination Services

(DDS) physicians, and medical experts (MEs). The most influential of these four groups is the

applicant’s own physician because Social Security regulations grant preferential weight to the opinions of treating physicians as long as they are supported by clinical and laboratory

findings. Treating physicians provide disability adjudicators with clinical impressions and

diagnoses in the form of medical records and reports.

Consultative evaluators are paid by a state agency to examine an applicant to provide medical

findings and reports only when he or she cannot afford a treating physician or when a treating

physician refuses to cooperate or is deemed unqualified. In every case, Disability

Determination Services (DDS) physicians evaluate the applicant’s medical file at the initial and the reconsideration stages to determine what medical evidence is credible and what additional

tests are needed. Unlike consultative evaluators, Disability Determination Services physicians

have no direct contact with the applicant. Finally, Medical Experts advise Administrative Law

Judges (ALJs) in cases where judges require assistance in interpreting medical evidence.

Typically, MEs decide whether an applicant meets or equals a listing and the extent identified

medical impairments limit the ability to perform job-related activities.

The Grid The Medical-Vocational Guidelines, commonly referred to as the “GRID,” are a standardized

set of rules from the Code of Federal Regulations that are laid out in grid format. These

medical-vocational factors become relevant in a disability claim when an applicant’s condition does not meet or equal the Listings. Adjudicators are required to render disability decisions

based on the Grid’s recommendation. In cases in which impairment restricts an applicant’s physical capabilities, disability adjudicators rely on the Grid as follows: Adjudicators take into

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account the applicant’s remaining physical capabilities, “residual functional capacity,” along with other factors, including age, education, and work experience. They then refer to the Grid

for an “objective” determination of what employment possibilities still exist. For example, according to the Grid, a physically disabled 55-year-old woman with an 11th grade education

and previous experience as a retail salesperson would be found “not disabled” if she had the residual functional capacity to perform telephone sales sitting at a desk (Social Security

Evaluation of Disability- Bluebook, 2005)

The Five-Step Sequential Evaluation Process The five-step sequential evaluation process, the fourth mechanism designed to increase

objectivity and promote uniformity in disability decision-making, requires adjudicators to

evaluate each disability claim in a prescribed order. Adjudicators are bound to follow the five-

step sequence throughout the application and appeals process. In step one, the process of

determining each disability claim begins with the DDS, a state agency that the federal

government hires to evaluate the medical grounds of the claim and to supplement them as

needed. The federal government contracts this function out to states’ DDSs so that initial and reconsideration state medical work-ups and evaluations are made in the claimant’s home state. This delegation makes sense because state-run agencies have stronger institutional ties

with the professionals and local agencies needed to process and adjudicate claims (Social

Security Evaluation of Disability- Bluebook, 2005).

A team of DDS examiners, which includes a DDS physician, well versed in the rules carries out

a DDS evaluation. Disability evaluators base their decisions exclusively on medical and related

records and reports; they have no fact-to-face interview with the applicant. As the first step of

the sequential process, DDS adjudicators establish whether the applicant is working. Work is

defined as an activity involving significant and productive physical or mental duties done for

pay or profit. If the claimant is working, benefits are denied. If the claimant is not working, the

case proceeds to step two. In step two, evaluators determine whether the claimant’s impairment is “severe.” Impairment is considered severe when it significantly affects a person’s ability to work. If the claimant’s impairment is considered non-severe, the claim is denied; if it is

found to be severe, the claim proceeds to step three, wherein evaluators consider whether the

applicant’s medical condition as claimed meets or equals his or her condition as defined in the Listings of Impairments. If the condition matches or exceeds the Listings requirement, he or

she automatically qualifies for benefits. If the condition is closely related but not identical to the

definition in the Listings, the DDS adjudicators determine whether the impairment is “c lose

enough” to the Listings. If they assess the documented condition as “close enough,” the claimant is found disabled on the theory that the condition “equals” the description in the listings. If the applicant’s condition is assessed as less severe, or is not included in the

Listings, evaluators proceed to step four (Social Security Evaluation of Disability- Bluebook,

2005).

In step four, a claim is denied if evaluators conclude that the applicant’s condition does not prevent him or her from doing work formerly done. If the applicant is found to be incapable of

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performing the work, evaluators move to step five (Social Security Evaluation of Disability-

Bluebook, 2005). In this final step, adjudicators assess the claimant’s “residual functional

capacity,” whether the alleged medical condition affects the claimant’s ability to perform activities common to many kinds of work, including standing, bending, sitting, squatting, lifting,

following instructions, and thinking clearly. To make this assessment, adjudicators also

consider the applicant’s age, education, and work experience. Taking all these factors into account, evaluators decide whether the applicant is physically or mentally capable of doing any

full-time work in the nation’s economy. If the impairment is physical, the Grid is applied to make

that final decision; the adjudicator evaluates the claim in light of the physical and mental

impairments alleged. If the claimant is found capable of working, the disability claim is denied:

if found incapable, the claim is approved (Social Security Evaluation of Disability- Bluebook,

2005).

The Appeals Process The final mechanism designed to ensure applicants a fair and uniform determination is an

appeals procedure that grants dissatisfied applicants a hearing before an impartial ALJ. It is

useful to characterize the hearing process in the context of the overall application procedure.

Eligibility for disability benefits begins with an application, which is initially processed by a

claims representative at a Social Security district office. Social Security claims representatives

do not make substantive disability determinations. Rather, they help applicants fill out

necessary forms, forward all the relevant forms and paperwork to the DDS for a decision, and

process claims that are ultimately paid.

If the application is denied, the applicant has recourse to various levels of appeal. The first of

these, called reconsideration, allows the applicant to submit new medical evidence to a team of

DDS examiners but does not include a fact-to-face interview. The chances of a favorable

decision at the reconsideration stage are relatively low. Of the 1.5 million Americans whose

initial applications were reviewed in 1990, approximately 60 percent were denied benefits

(Committee on Ways and Means, 1991). That same year, 50 percent of those whose initial

applications were denied applied for reconsideration; 83 percent of these were again denied

benefits (Committee on Ways and Means, 1991).

Clinical Judgment and Decision-making Research The substantial body of literature pertaining to clinical judgment has relevance for disability

assessment and decision-making, A well-known early contributor, Meehl (1954), demonstrated

an advantage of actuarial (statistical based) over clinical prediction methods, a position that

has provoked a great deal of debate for 50 years. Recent literature continues to compare and

contrast the relative effectiveness of clinical versus mechanical approaches to clinical decision-

making. A large metaanalysis, for example, performed by Grove, Zald, Lebow, Smitz, and

Nelson, 2000, including over 130 articles involving a wide variety of psychiatric and medical

outcomes, found mechanical judgment more accurate than clinical methods 47% of the time. In

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only 6% of studies were clinical approaches found superior, however, comparable accuracy

rates were observed between the two methods just under 50% of the time. A factor that

appeared to limit the effectiveness of the clinical method was the use of a clinical interview.

Arguments have been put forth for a more balanced view of clinical versus mechanical

prediction efficacies (e.g., Ganzach, Kluger, & Klayman, 2000; Karon, 2000). Kleinmuntz

(1990), for example, argued that these two methods can be successfully used in combination,

given the complexity of many clinical situations and the fact that all decisions cannot be made

via statistical prediction. It should further be noted that some degree of clinical

judgment/decision making is needed to develop statistical decision rules. More recently,

Mumma (2001) stated that clinical decisions must often be made on the basis of various

amounts of clinician-integrated evidence and that decision aids, such as statistical prediction

rules, are not routinely available.

IMPEDIMENTS TO DECISION-MAKING AND CLINICAL JUDGMENT Heuristics Biases within the Disability Adjudication Process Tversky and Kahneman (1974) reported on three major types of decisional simplification

strategies, which, while useful in some situations, have the potential to introduce considerable

error into one’s judgments. Representativeness, availability and adjustment and anchoring, are heuristics that can impact the quality and accuracy of disability determinations.

Representativeness This heuristic tends to be used where there are questions about the correlation or directionality

of relationship between two (or more) events. According to Tversky and Kahneman (1974), the

degree of perceived relationship between events, under the representativeness heuristic, is

based on the similarity between the events rather than more meaningful probability

considerations. The fundamental error here is that judging the relationship between variables

on the basis of similarity alone disregards other potentially significant factors that should also

be considered prior to a determination or decision. Garb (1998) reported that diagnostic

decisions could be affected by the representativeness heuristic when clinicians base their

diagnoses on the degree to which an individual is thought to resemble those making up a

diagnostic category. Clinicians have subjective standards, which may include stereotypes (ie.

How similar is person X to the typical person in diagnostic category Y?), prototypes (ie. How

similar is person X to the person showing all characteristics associated with diagnosis Y?), as

well as exemplars (How similar is person X to those that the clinician has seen in their personal

work?). Within the context of disability assessment, one should remain open to the potential for

categorizing a claimant based upon the degree to which they are representative of one or more

subjectively held clinical standards (e.g., the stereotypic drug abuser), as contrasted with a

more objective integration of all available data (and use of decisional aides such as DSM-IV-

TR). Garb (1996) demonstrated the representativeness heuristic in a series of studies requiring

clinicians to make psychodiagnostic ratings and predictions based upon case history material.

Findings indicated that the representativeness heuristic was present when the judges were

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asked to make diagnoses but when the task involved predictions (e.g., of future violence or

substance abuse); whereas the representativeness heuristic involves the use of stereotypes or

prototypes in decision-making (rather than base rates or decision aides such as the DSM-IV),

the past behavior heuristic involves the use of previous behavior to predict future behavioral

outcomes. Tversky and Kahneman (1974) also contend that the representativeness heuristic

reduces the likelihood that judgments and predictions will incorporate base rate information.

Predictions of future events will be based more upon issues of similarity and resemblance than

on the actual frequencies with which these events have occurred in the past. Such objective

frequency probability data, where available, may be useful in forming predictions of future

events, especially in cases where prior probabilities are extremely high or low (Franklin &

Krueger, 2003; Garb, 1998; Meehl, 1973). It is important, however, to remain realistic about the

fact that base rate data alone is insufficient for clinical prediction purposes. Ruffalo (2003)

argued that base rate information often lacks precision, as it reflects sample group data Q that

is no substitute for the unique findings present in the individual case. Thus, knowledge that

disability applicants or patients involved in personal injury litigation, as a group, are more likely

to exaggerate symptoms (Griffin, Normington et al., 1996; Williams Lees-Haley, & Djanogly,

1999) should not be considered a basis for a clinical judgment until a broader review of all

available data is conducted. Ruffalo (2003) emphasized the need for careful intraindividual

comparisons over time and across tasks, which differ in degree of similarity.

Another potential problem for disability examiners involves the (mis) interpretation of change

as representing true improvement or decline in a clinical condition. A basic statistical principle,

regression to the mean, asserts that extreme observations, scores, or performances on one

occasion will likely be followed by less extreme results on future occasions. In determining the

existence of a disability-level psychiatric impairment, and/or change in such impairment,

clinicians are often presented with multiple observations taken over an extended period of

time. A typical example involved the review of multiple sets of IQ data associated with

allegations of MR, learning disability (LD), traumatic brain injury (TBI), or other cognitive-

related impairments (e.g., HIV-related dementia). It is quite common to find considerable

variability between scores from evaluations separated by various periods of time. While many

variables can certainly contribute to score discrepancies (e.g., reason for testing, level of

motivation, and emotional status at time of examination), regression effects need to be

considered before deciding that a claimant, for example, has shown significant improvement,

given a 15-point increase in IQ values, which went from 65 to 80 in a period of 12 months.

Clearly, the interpreted meaningfulness of this change should not be based solely on score

difference but also on more global indicators, like day-to-day functional capacities. It is at least

theoretically possible that the 15-point change in this case was based upon factors such as

regression to the mean and not representative of actual cognitive change (Pincus, A. P.,

Kennedy, C., Simmens, S. J., Goldman, H. H., Sirovatka, P., & Sharfstein, S., 1991; Schretlen,

D., Wilkins, S. S., VanGorp, W. G., & Bobholz, J. H., 1992).

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Availability within clinical judgment The availability heuristic pertains to the situation where information used for prediction or

decision-making is that which is most easily accessed or recalled (Tversky & Kahneman,

1974). In a series of studies involving projective personality measures (Rorschach, Projective

Drawing Tests), Chapman and Chapman (1982) showed that even trained clinicians are prone

to perceiving test sign–symptom correlations that have not been established by the empirical

literature. They further showed that these perceived correlations (e.g., between large eyes in a

projective drawing and paranoia, or broad shoulders and worry about manliness Q) tend to

persist even in the face of information to the contrary. In fact, the tendency to rely on such

illusory correlations was similar for both clinicians and students. Similar findings were seen

with the Rorschach. The authors raised a concern that, without proper attention to the

availability heuristic, decisions may be made by clinicians based more on their personal

associations and projections than on data that was descriptive of the individual being

evaluated. The psychologist making a disability-related decision (e.g., presence of drug

addiction and abuse (DA&A) materiality) based upon unsupported and subjective signs (e.g.,

presence of a DWI arrest in the history) may well be operating under the availability heuristic

and, more specifically, an illusory correlation. Recall of information may also be impacted by

availability and factors such as vividness (Tracey & Rounds, 1999; Tversky & Kahneman,

1974). It may, for example, be easier to recall more vivid events in a record (e.g., attempted

murder of a relative) as compared with less extreme, yet important, information about a

claimant (e.g., extent of treatment involvement and response). Factors such as examiner mood

state or ability to imagine a particular event/outcome may similarly impact the ease with which

information can be accessed from memory and thereby made available for decision-making.

The problem here is that accessibility alone does not guarantee recall or subsequent judgment

accuracy.

Adjustment and anchoring within clinical judgment The third heuristic outlined by Tversky and Kahneman (1974) typically is seen in situations

requiring some type of numerical prediction Q and where some data relevant to the task are

present. The usual task here is one that requires an adjustment of some initially available value

(or anchor) point in an attempt to arrive at a final determination. The general tendency is

toward error in prediction based upon inaccurate data adjustment. Bias is demonstrated via

estimates or predictions that are overly influenced (i.e., anchored) by the initial data. Garb

(1998) described the tendency for final judgments to be biased in the direction of initially

reviewed data as an example of anchoring. Rather than suspend judgment until all evidence

was reviewed and appropriately weighed, a final disability decision may be strongly grounded

in case information reviewed first, when, in fact, a more reasonable conclusion would result

from some modification or adjustment of the initial impression. Elstein and Schwarz (2002)

pointed out that anchoring may be seen in situations where evidence was reviewed in a

sequential fashion. This would suggest the potential for disability reviewers to reach different

opinions regarding the same evidence in the event that this evidence was reviewed in different

sequences. It also raises the possibility of a more systematic type of judgment error when

individual reviewers elected to consistently consider pieces of evidence in the same order

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(e.g., psychometric data, followed by mental status findings, followed by claimant self-report,

etc.). Anchoring may also be seen in the tendency for conclusions regarding novel clinical

information to be influenced by the type of patients or clinical work that one does on a regular

basis (Garb, 1998). Thus, primarily seeing patients with one type and severity of

psychopathology may contribute to inaccurate decisions regarding patients with dissimilar

clinical circumstances. Essentially, the clinician’s primary reference point (needing adjustment) was their personal experience base, which may deviate from a point of clinical neutrality.

Elstein and Schwarz (2002) appeared to identify a core feature of the heuristic problem in their

observation that many judgments based on clinical intuition were at odds with probabilistic

logic, as put forth in Bayes’ theorem (e.g., see Franklin & Krueger, 2003). This was not an easily resolved problem, given the complexity of clinical decisions and the lack of statistical

rules to use in complex determinations, such as the presence or absence of psychiatric

disability.

Bias and Disability-Related Decisions Much has been written about the potential role of bias in clinical decision-making within the

administrative disability adjudication process. In providing a general framework for

understanding the impact of systematic bias on human judgment, Kerr, MacCoun, and Kramer

(1996) made reference to three types of error associated with biased judgment. First, sins of

imprecision were demonstrated via a comparison of judgments and criterion outcomes based

(theoretically) upon an unbiased criterion. Bias here was present when judgments

systematically deviated from conclusions that would be reached if data were considered within

a formal logic system, such as probability theory. The second variety of biased judgment,

categorized as sins of commission, involved the consideration of information that was not

relevant to the decision. Within the realm of disability determination, an example might involve

assigning undue weight to factors such as claimant literacy level or visual acuity in cases of

alleged disability based on agoraphobia. Bias was deemed to be present under this condition

to the extent that the irrelevant evidence played a role in the final judgment, such that a

different conclusion would be reached using only relevant data. The third bias category

involved sins of omission. It is here that the decision maker neglected or overlooked data that

were relevant to the judgment (e.g., third-party observations of functional decline in cases of

alleged schizophrenia and other physical impairments).

To follow is a review of specific types of decisional bias that deserve consideration in the

disability assessment process. It should be noted that while discussed separately, it is certainly

possible for a combination of heuristics and bias to impact a particular judgment or clinical

prediction.

Response Bias and the Judgment of Credibility When establishing the presence of a medical determinable impairment (MDI), an assessment

is made regarding the credibility of a claimant’s allegations. This involves an attempt to rule out

the presence of malingering or less extreme forms of dissimulation, which would raise

Disability Adjudication: The Effect of Emotional Intelligence and Heuristic Biases on Decision-Making

52

concerns about the validity of evidence and assessment results. Research, within adjudication

of mental impairments, has demonstrated measures of response bias in the assessment of

dissimulation. Within the context of SSA disability determination, psychometric data are often

unavailable (due, at least in part, to financial considerations), such that a careful assessment of

the consistency of test and non test data in the record is crucial in establishing the credibility of

a claimant’s psychiatric allegations (Griffin, Normington, & Glassmire, 1996).

Griffin et al. (1996) studied the methods of assessing deception and dissimulation among SSDI

applicants. They noted that such assessments within the Social Security Program are typically

based upon clinical judgment, which carries a risk of bias. The authors obtained a composite

malingering score (CMS) based upon sections of the Minnesota Multi-phasic Personality

Inventory (MMPI-III), M Test, Millon Clinical Multi-axial Inventory-II MCMI-II), and Beck

Depression Inventory (BDI) administered to several groups with various degrees of assessed

motivation to exaggerate their symptoms. Participants included individuals already on the

disability rolls, disability applicants, as well as disability analysts (familiar with the SSA

program) instructed to malinger. It was discovered that this composite psychometric measure

was effective in differentiating between subject groups. A tentative estimate of 19% was

proposed regarding the malingering rate of SSDI applicants in the population studied. Griffin

(1996) further made the important point that some degree of dissimulation may be present in

individuals who actually meet the requirements for Social Security disability. In any event, while

the CMS used in the Griffin’s research is not a part of the routine disability determination assessment performed by SSA, it does demonstrate the potential usefulness of such a tool in a

program that must routinely make credibility judgments.

Williams, Lees-Haley, and Dianogly (1999) provided a number of guidelines for assessing the

credibility of self-report in forensic settings, many of which can be applied to the disability

determination arena. They emphasized the importance of realizing that such cases must be

viewed differently than typical psychotherapy cases that successful malingering can and does

occur even in the presence of trained clinicians, and that pre-evaluation coaching of

examinees has been known to occur by various advocate groups. Williams suggested the use

of well-developed psychological instruments with validity scales, careful review of both self-

and other-report data, review of any relevant historical records, the use of objective mental-

status examination findings, and decision making based upon internally consistent data from

multiple sources.

Zasler and Martelli (2003) also addressed the issue of response bias in evaluations and mild

traumatic body injury (TBI). They outlined a response bias continuum ranging from denial of

impairment, through normal demonstration of symptoms, to symptom exaggeration, and finally,

outright malingering. It was contended that the role of financial incentives was more

pronounced in cases of mild (vs. more severe) trauma brain injury (TBI). Recommended

methods of reducing response bias included routinely assessing for examinee motivation,

considering available symptom base rate information, suspending assessment decisions until

all evidence was considered, and obtaining feedback from objective peers.

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Diagnostic Overshadowing The overshadowing bias exists when the presence of one impairment or condition results in a

reduced likelihood that another existing impairment will be identified. Often, the primary

overshadowing condition is particularly salient and has the effect of inhibiting further data

exploration or processing activity by the clinician and adjudicator. This type of bias has been

found to occur frequently in cases of mental retardation, which account for the majority of

psychiatric disability beneficiaries (SSA, 2003). Jopp and Keys (2002) studied factors related

to overshadowing in cases where MR coexisted with other types of psychiatric conditions.

They pointed out that diagnostic overshadowing may be an example of either decreased

clinical sensitivity (i.e., increased false negative error rates) or potentially even reduced

specificity (with an excessive diagnosis of disorders not present). The literature reviewed by

Jopp and Keys indicated the presence of overshadowing, despite the type of coexisting

psychopathology, order in which evidence was reviewed, professional experience of examiner,

specific experience with MR populations, severity of MR, or examiner work setting. It appeared

that higher levels of clinician cognitive complexity reduced the overshadowing bias; however,

precisely defining this concept was problematic. It was further pointed out that this bias has

primarily been demonstrated via analogue research paradigms, although its existence in the

real world seemed highly likely.

In a study that has relevance for disability assessment, Walker and Spengler (1995)

demonstrated that individuals with AIDS were less likely to be referred for treatment of a

coexisting major depression than were patients with terminal cancer or no medical problem.

There was some support for the position that clinician cognitive complexity (in the form of

greater information about AIDS) moderated the overshadowing bias. Clinicians with greater

cognitive complexity were more likely to acknowledge the need for psychiatric treatment in

AIDS patients. The authors speculated that the overshadowing seen with AIDS patients may

reflect a clinician’s tendency to view depression as an expected reaction to a stigmatizing

illness, which then reduced the likelihood of a mental health treatment referral.

It would appear that diagnostic overshadowing could play a role in the disability determination

process, given the fact that an individual claimant may allege a number of impairments

(medical and/or psychiatric), some of which may stand out as more prominent than the others.

The adjudicator must give careful consideration to all alleged impairments to properly arrive at

an accurate determination, especially because disability allowances can be based upon

functional limitations produced by a combination of physical and psychiatric factors.

Spengler and Strohmer (1994) studied the moderating effect of two clinician-based variables

(preference for work with an MR patient population and degree of clinician cognitive

complexity) on diagnostic overshadowing. Predictions included expectations of less

overshadowing bias by clinicians with more interest in the MR population and greater

complexity as a feature of their information processing style. Findings demonstrated the

importance of cognitive complexity but not population preference. In fact, clinicians in the low-

cognitive-complexity condition demonstrated the overshadowing bias at a rate three times that

Disability Adjudication: The Effect of Emotional Intelligence and Heuristic Biases on Decision-Making

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seen in the high-complexity condition. Such a finding was important, as it highlighted a variable

that appeared to increase clinician susceptibility to at least one type of judgment bias. These

findings also raised the question of whether clinicians can be instructed in more complex data-

processing strategies (e.g., generating and testing multiple hypotheses) that are part of the

high-cognitive complexity style. Difficulties with this, however, involved precisely defining

cognitive complexity, as well as clarifying which types of judgment tasks required more versus

less complex information processing.

Confirmatory Bias Another impediment to accurate information gathering, processing, and recall involves the

tendency to selectively attend to information that is in line with one’s viewpoint while minimizing or disregarding data that may disconfirm this position. A disability file containing a large

amount of evidence, some of which is internally inconsistent and in need of clarification, can

easily set the stage for a selective data review, which simplifies task complexity and allows for

the illusion of having performed a more thorough evaluation. Ganzach, Kluger and Klayman

(2000) showed that clinical adjudicators tended to overemphasize pathological as contrasted

with non-pathological findings. This was found to be associated with a confirmatory bias aimed

at supporting the hypothesis that a patient’s psychopathology was severe. Clinician

adjudicators were found to consistently assign greater weight to findings associated with

psychotic (vs. neurotic) score patterns in contrast to more objective criterion models. According

to Ganzach et al. (2000), clinical adjudicators relied primarily on information associated with

psychosis, and ignored information associated with neurosis. This diagnostic strategy was not

justified, since, with regard to the criterion, the importance of these two types of information

was about the same. Strohmer et al. (1990) also demonstrated the existence of confirmatory

bias in a study on clinical information processing. Findings revealed that, when provided with

various clients’ information, master’s level counselors were significantly more likely to subsequently recall that which confirmed their hypotheses, even when relatively more

disconfirmatory data were made available to them. It was further discovered that counselor

certainty regarding their viewpoints increased as a function of amount of confirmatory data

recalled. These findings implied that the confirmatory bias seen in information processing and

recall may also set the stage for unrealistic confidence estimates, which only further hampered

the decision-making process for the adjudicator. Confirmatory information processing thus

appeared to persist even in the face of contradictory evidence, a finding that clearly has

relevance for any type of assessment activity. They noted the existence of a related

phenomenon, framing, which occurred when the same medical evidence, presented in different

ways, led to different conclusions. The potential certainly exists for a disability determination to

be impacted by both selective recall of confirmatory information and the justification of

decisions within the framework of the highlighted evidence.

Hindsight Bias Dawson (1995) defined hindsight bias as the tendency for people considering a past event to

overestimate the likelihood of having predicted its occurrence. This study required participants

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to review a case history and predict the likelihood of various primary diagnoses. Some

participants were additionally required to make note of evidence in the case history that could

support each of the provided diagnoses. Other participants were provided strong cues in the

case material regarding the primary diagnosis and were not asked to consider evidence

specific to other provided diagnoses. Findings revealed that the debiasing intervention used

with the former group was effective in reducing the presence of hindsight bias relative to the

group-making judgments on the basis of case history with strong diagnostic cues. The latter

group, according to the author, exemplified the frequently observed situation where clinician

adjudicators contended they knew it all along after having been told an outcome and, thereby,

saw no reason to question their prediction skills. Systematically considering alternative

explanations or outcomes was suggested as a possible means of reducing hindsight bias, as it

would encourage the clinical adjudicator to consider a wider range of possibilities prior to

(overconfidently) arriving at an adjudication decision. Within the realm of disability decisions,

one might apply these findings by searching out evidence contrary to the arrived at conclusion

(i.e., disabled or not disabled) prior to the final determination. Hindsight bias can be influenced

by the degree to which feedback on a decision reflected positively or negatively on the decision

maker. It appeared that positive decisional feedback (whether accurate or not) increased the

likelihood that one will invoke the I-knew-it-the-entire-time viewpoint.

The implications of the above research include a possibility that a self-serving mechanism

plays a role in hindsight bias and that this can be suppressed via education about the tendency

to make internal attributions for success, regardless of objective accuracy. There are also

implications for an intervention aimed at encouraging a more realistic view of the prediction

situation and how one rates one’s degree of proficiency. It would not be difficult to imagine the

development of hindsight bias in a large disability assessment setting, where a lack of negative

feedback (e.g., from quality assurance reviewers) regarding a case decision is construed as

confirmation or approval regarding all of the many conclusions and judgments that were part of

the case adjudication process. At the very least, caution may be in order under conditions of

favorable decision feedback, especially in the absence of a debiasing strategy.

Biases and Characteristics Variables such as age, gender, cultural background, and health status have additionally been

studied within the context of judgment bias. Wrobel (1993), for example, examined the manner

in which age and gender influenced the diagnostic, therapeutic, and prognostic decisions made

by clinical psychologists. Findings indicated an increased frequency of physical and organic

disorder diagnoses with increases in patient age, whereas younger individuals with identical

symptoms were most often classified as depressed. Furthermore, older patients were most

often viewed as in need of supportive treatment, whereas younger patients were considered

good candidates for cognitive–behavioral, medical rehabilitation and pharmacological

interventions. Prognostic ratings were also more negative for the older participants. Wrobel

stated that such findings suggest bias, given an empirical database showing the effectiveness

of several treatment modalities in depressed elderly individuals. It also appeared that the

clinical adjudicators attended to different case history information, depending upon patient age.

Disability Adjudication: The Effect of Emotional Intelligence and Heuristic Biases on Decision-Making

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There was more attention, for example, given to suicide potential in younger participants when

such a risk may actually be greater in older age groups. Participants with poor health were also

rated more negatively in terms of interpersonal attributes (interpersonal bias). According to the

author, it is likely that a heuristic assumption regarding the desirability and treatability of both

physically impaired and older patients affected ratings and may operate in everyday clinical

practice. As age and health status are factors considered in all disability assessments,

concern is warranted regarding the types of judgment bias identified in this research.

Cultural Bias Cultural bias has been addressed in the empirical literature and would also have relevance for

disability assessment. Malgady (1996) asserted that in evaluating individuals from ethnic

minority groups, psychologist adjudicators should not assume that standardized test results

were free of bias, unless this hypothesis has been carefully evaluated for the specific minority

group(s) under consideration. In fact, absent of a demonstration of measurement equivalence,

Malgady contended that the prevalence of bias should be expected in the test results of

minority examinees. One step toward reducing this concern involved the use of multi-method

assessment strategies, which allowed for a variety of response and measurement formats.

Like age and health, culture was also an issue to be considered in disability assessments,

especially when interpreting the results of psychological tests normed only within the

mainstream culture. Even nonverbal tests, which are frequently used in disability assessment,

cannot be assumed to be completely free of cultural influences.

Measurement of Disability Outcomes In 2006, over 6.8 million disabled workers received benefits from the Social Security Disability

Insurance (SSDI) program, with an average monthly payment of somewhat more than $900

(SSA, 2007). An additional 2.8 million disabled working-age adults received income from the

means tested Supplemental Security Income Program, which provides guaranteed incomes to

the elderly, blind, and disabled. These programs were designed to ensure the well being of

disabled workers and their dependents and provide an important safety net for those unable to

work, yet too young to qualify for Social Security retirement benefits. In addition to the financial

transfers, the programs provide health care coverage. Social Security Disability Insurance

(SSDI) recipients are entitled to Medicare two years after the onset of disability, while SSI

recipients are eligible for Medicaid immediately upon the determination of eligibility.

Financial Consequences of Disability At a first glance, the benefits from these two programs appeared to be of substantial

importance to recipients. Social Security estimated that over one-half of disabled-worker

families would have incomes below the poverty line if SSDI benefits were excluded (SSA, n.d.).

Furthermore, several studies have shown those older workers’ application rates responded to changes in SSDI benefit rates (e.g., Burkhauser, Bulter and Gumus, 2003; Autor and Duggan,

2007), suggesting that some workers might choose SSDI receipt over employment.

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However, despite the financial protection offered by the SSDI/SSI programs, the receipt of

benefits may come with costs greater than would first appear. Although the formula for SSDI

recognized the necessarily shorter work period that disabled applicants would have relative to

retired workers, and therefore required fewer covered quarters for eligibility and benefit

determination, benefits were lower than the individual’s average index monthly earnings and may be lower than what old age and survivor insurance (OASI) benefits would be, were the

individual to work until the normal retirement age. Thus, not only is income for recipients of

disability likely to be lower during the prime age working years, the lower income levels will

likely remain throughout their lives.

Other financial consequences of disability may be less immediately apparent. Depending on

the age at disability, the disabled worker will likely lose much of his potential pension wealth

and any employer-provided retiree health insurance to which he would have been entitled had

he continued to work (Mitchell & Phillips, 2000). Additional restrictions on both future earnings

(for SSDI and SSI) and wealth accumulation (for SSI) ensure that households remaining on

these programs will experience modest standards of living, at best, throughout their lives. The

long-term financial security of people who were rejected for SSDI or SSI is not well understood.

Could it be due to the differences of EI and heuristic biases that are influencing the decision-

making within the adjudication process? McGarry (2008) concluded that those having ever

applied for SSDI/SSI appear to be a marker for a particularly adverse wealth and income shock

that goes even beyond the obvious differences in education, occupation, race/ethnicity, or self-

reported health. In part, the lower wealth (even conditional on income) may be explained by

government restrictions of the decision-making process.

CONCLUSION McGarry (2008) revealed some preliminary results in measuring the longer-term outcomes for

people who applied for (and may have received) SSDI/SSI. Surprisingly, only modest (and

often insignificant) differences were found between those accepted, and those rejected for

SSDI/SSI. According to McGarry (2008), this slight negative finding was consistent with a

possible explanation. It was possible that all those who applied for SSDI or SSI were

legitimately unhealthy, but the application and adjudication process were so complicated (and

disability so difficult to discern) that the adjudicators were influenced by heuristic biases and

had various levels of emotional intelligence thereby, decision-making failed to adequately

distinguish between those truly unable to work and those who could.

SUMMARY The literature review offered an in-depth review of germinal, historical, and current literature on

EI, heuristic biases and decision-making, including ways in which the constructs have been

conceptualized, operationalized, and measured. A large amount of literature existed for each

construct. Foundational research for the EI construct was found in Thorndike’s (1920) social intelligence theory. The most cited heuristics theorist was Kahneman & Tversky (1974) George

(2000) who both have written several reviews and offered in-depth analyses of the heuristic

Disability Adjudication: The Effect of Emotional Intelligence and Heuristic Biases on Decision-Making

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biases concept. While the EI construct had been studied for many years by Mayer et al.

(2004), posited that their mental abilities-based model of emotional intelligence (EI), could be

categorized as a true intelligence, Goleman (1995) popularized the construct. Heuristic biases,

decision-making, and EI have been studied in many different environments. During the course

of this review, no publications were found in which researchers explored the existence of a

relationship between the constructs. Consequently, a gap in the literature exists revealing little

or no research completed to show if there was a relationship between EI and judgmental

biases and the possible influences on decision-making. An exhaustive search showed no

research on EI, biases, and decision-making within the disability adjudication of the Social

Security Administration. Given the lack of empirical research in this area, the quantitative

correlational study’s goal was to add to the body of knowledge by determining if a significant

relationship existed between EI and heuristic biases (empathy), which ultimately influences

decision-making. design used to determine the existence of a significant relationship between

empathy and EI.

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LEGAL AWARENESS AND PERCEIVED ETHICAL LEADERSHIP OF EDUCATIONAL ADMINISTRATORS IN STATE UNIVERSITIES AND

COLLEGES (SUCS) IN REGION 3

Robert P. Pena Pampanga Agricultural College, Philippine

ABSTRACT

his study determined the ethical leadership behavior and legal knowledge of administrators in State Universities and Colleges in Region III. A correlation of the respondents’ profile (i.e., age, educational attainment, academic rank, years in

position) was established with their ethical leadership behavior and legal knowledge. A descriptive type of research was utilized to correlate respondents’ ethical leadership behavior (ELB), legal knowledge, and demographic profile. An ELB scale was drawn from the studies of Brown, Trevino, and Harrison (2005) and a legal knowledge test (LKT) was constructed by the researcher. The content of the LKT are cases drawn from the decisions of the Supreme Court (Criminal Law, 1987 Philippine Constitution, Civil Code of the Philippines, Sexual Harassment Act, Education Act of the Philippines, and Government Service Insurance Act). Pearson correlation, Chi-square, frequency, and percentage were the statistical instruments used to analyze the collected data. Major findings in terms of demographic profile revealed that there were 143 administrators who were mostly holding office for more than 10 years, have high academic ranks, and are holders of Doctorates. In terms of the respondents’ ethical leadership behavior (ELB), most of the respondents strongly agreed with the statements found in the ELB. The result showed that respondents strongly value professional code of ethics in matters of legal decisions. In terms of the respondents’ legal knowledge, respondents were described as Competent in all topics in the legal application test. However, the respondents had poor legal knowledge on some details such as legal terms, procedural laws and legal processes. It was further established that the correlation established between demographic profile and ethical leadership behavior was not significant. On the other hand, the correlation established between ethical leadership behavior and legal knowledge was slight in particular with Criminal Law and Education Act of the Philippines. In summary, the findings in the legal knowledge test suggested that administrators should strengthened their knowledge such as laws relative to state policies, academic freedom, duties and responsibilities, administrative rules, and administrative sanctions. In addition, findings in the ethical leadership behavior of the respondents suggest that SUC administrators should reevaluate their legal discernment or judgmental powers towards issues or concerns that they might encounter.

T

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Legal Awareness and Perceived Ethical Leadership of Educational Administrators in State Universities and Colleges (Sucs) in Region 3

72

Keywords: Ethical Leadership, Legal Awareness, Administrators.

INTRODUCTION/BACKGROUND/OBJECTIVE In any organization, conflicts or disputes arise between subordinates and supervisors from a

myriad of reasons. Administrators usually rely on their managerial experiences, interpersonal

skills, and professional judgment to settle disputes. Moreover, other demographic (e.g. gender)

and social factors (e.g., personality, leadership styles) relatively influence settlements,

decisions and moral reasoning of an administrator.

Ethical leadership is a demonstration of normatively appropriate conduct through personal

actions, interpersonal relationship, and the promotion of such conduct to followers through two-

way communication reinforcement, and decision-making (Brown & Trevino, 2006). In this view,

leadership is rooted on human aspects of supervision (Bago, 2010) or reflective supervision

(Blase & Blase, 1998; Osterman, 1990). According to Bago, leadership in this sense espouses

reflection and transformation rather than inspection and control (p.27). The type of leadership

that any administrator should espouse will highly be crucial to the settlement/unsettlement of

any organizational disputes.

Bazerman and Messick (1996) posit that there is a need to identify and confront tendencies of

poor decision-making to improve ethical quality of decisions among executives. In their views,

there are three types of theories that executives use in making decisions; – theories about the

world, other people, and ourselves. These theories underscore reasons for any decision –

culture, organized beliefs, and perceived knowledge or capacity. In other words, decision-

making is influenced by personal values and beliefs and consequently greatly affecting others.

Actions by school officials are likely to be strongly influenced by personal values and

professional code of ethics built on the values and experiences (Shapiro & Stefkovich, 2005).

The premise of ethical leadership underscores empowerment and transformation of followers

while grounding decisions in morals and values (Copper, 1993). This view is in consonance

with the multiple paradigms posited by Shapiro & Stefkovich (2005). The paradigm view ethics

of justice, ethics of care, and professional ethics (Shapiro & Stefkovich, 2005) as very

important framework in decision-making. It is crucial to decision-making because it serves the

best interests of student. In addition, obligations of educational leaders are said to be fulfilled.

Research on ethics and leadership has becoming more interesting and significant to

educational leaders. It has only been in the past decade that ethical leadership has been

systematically explored (Brown & Trevino, 2006). Ethical decision-making models sensitize

decision-makers to a variety of moral issues. They become more conscious on how their

decisions could affect others; the reasons for their decisions; and how they could rectify wrong

decisions; and even avoid possible dangerous situations. However, researchers on ethics and

ethical leadership are equivocal in the view that theoretical frameworks developed as research

models for ethics training have several limitations (e.g., Elenkov, D., Kuntz, J.P. & Kuntz,

J.R.C., 2011). First, models and measurement tools are designated to cater to a specific

professional group such as counselors, accountants, marketing professionals. This means that

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tools to gauge ethical leadership seemed to be scarce in some professions such as in

education. In addition, authentic measurement tools are imperative to obtain valid results.

Second, individual moral orientation is overlooked in dilemma identification and ethical

reasoning. These variables were investigated in relation with educational leaders’ perceived leadership behaviors - personal values, ideals, culture, demographic profile, managerial

experience, education, personality are some of the factors which have been found to influence

professional judgment and ethical leadership of educational administrators (e.g., Elenkov et al.,

2011).

This study investigated legal knowledge of administrators on education-related laws (i.e., basic

state policies, academic freedom, duties and responsibilities, administrative rules, penalty and

administrative sanctions). In addition, their ethical leadership behaviors were examined.

Specifically, the following research questions were addressed:

1. What is the demographic profile of the respondents?

2. How can the respondents’ ethical leadership behaviors be described?

3. How can the respondents’ legal knowledge (or ethical reasoning) on ethical dilemmas be described in terms of:

a. Criminal Law

b. 1987 Philippine Constitution

c. Civil Code of the Philippines

d. Education Act of the Philippines

e. Sexual Harassment

f. Government Service Insurance Act

4. Is there a significant relationship between respondents’ demographic profile and ethical leadership behaviors?

5. Is there a significant relationship between respondents’ ethical leadership behaviors and their legal knowledge?

METHODOLOGY, FINDINGS, ANALYSIS & DISCUSSION This study utilized descriptive type of research. Ethical leadership behaviors of the

respondents were determined and results were correlated with their legal knowledge and

demographic profile. Respondents of this study were key policy makers from State Universities

and Colleges in Region 3. Respondents have similarities in terms of their administrative

positions. This means that all of the respondents in the selected SUCs are keyplayers of

government-run educational institutions, policy/decision makers, and school officials

Furthermore, they hold administrative and supervisory functions, and have judgmental powers.

The study determined the perceived ethical leadership behaviours and legal knowledge of

educational administrators from State Universities and Colleges in Region III. When the

researcher has obtained the exact number of respondents per selected SUC, letter of invitation

Legal Awareness and Perceived Ethical Leadership of Educational Administrators in State Universities and Colleges (Sucs) in Region 3

74

and request was personally delivered by the researcher. Then, when a schedule was

arranged, the researcher administered the following:

1. Ethical Leadership Scale

2. Legal Knowledge Test

3. Evaluative Test

RESULTS The grand mean score of all the statements in the ELB scale was 4.6 which means that the

respondents strongly agreed with the ethical behaviors. In terms of ranking, number six (6)

statement “Sets an example of how to do things the right way in terms of ethics” was ranked

first (or highest). This means that respondents strongly value professional code of ethics in

their execution of any legal decision. On the other hand, Statement 2, “Having the best interest of employees in mind” was ranked tenth (10th). This finding agrees with the ethical

frameworks postulated by Elenkov, Kuntz, JP, Kuntz, JRC (2011). Educational leaders tended

to be more conscious on how their decisions could affect others.

Table 2: Mean Scores of Respondents’ Ethical Leadership Behavior (ELB) No. Statements in the ELB Mean Score Descriptive Rating

1

Listens to what employees

have to say. 4.44 Agree

2

Has the best interest of

employees in mind. 4.42 Agree

3

Makes fair and balanced

decisions. 4.64 Strongly Agree

4 Can be trusted. 4.59 Strongly Agree

5

Discuss business ethics or

values with employees. 4.65 Strongly Agree

6.

Sets an example of how to

do things the right way in

terms of ethics. 4.76 Strongly Agree

7.

Disciplines employees

who violate ethical

standards. 4.55 Strongly Agree

8.

Defines success not just

by results but also the way

that they are obtained. 4.66 Strongly Agree

9.

When making decisions,

asks, “What is the right thing to do?” 4.60 Strongly Agree

10.

Conducts his/her personal

life in an ethical manner. 4.62 Strongly Agree

Grand Mean 4.6 Strongly Agree

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Relationship between Respondents’ Demographic Profile and Ethical Leadership Behavior Table 4 shows the relationship between the respondents’ age and ethical leadership behavior. Results revealed the p value, .129 which is greater than the critical value .05. This means that

there is no significant relationship between the age of the respondents and ethical leadership

behavior. The results suggest that the age of the respondents was not an indicator of their

ethical leadership behaviors.

The Table also shows the relationship between respondents’ years in position and ethical leadership behavior. Results revealed the p value, .250 which is greater than the critical value

of .05. This means that the respondents’ number of years in position is not significantly related

to their ethical leadership behavior.

The relationship between the respondents’ educational attainment and ethical leadership behavior showed that the p value .082 is greater than the critical level of .05. This means that

there is no significant relationship between the respondents’ educational attainment and their ethical leadership behavior. The result suggests that the degree earned by the respondents

does not affect their responses in the ethical leadership behavior scale.

The relationship between the respondents’ academic rank and ethical leadership behaviors revealed that the p value .676 is greater than the critical value .05. This means that there is no

significant relationship between the respondents’ academic rank and ethical leadership behaviors.

Table 4: Chi-Square Test on Respondents’ Age and Ethical Leadership Behavior Variables Value (sig. 2 tailed) Remark

Age .129 Not significant

Number of years

vs Ethical Leadership .250 Not significant

Behavior

Educational attainment

vs Ethical Leadership .082 Not significant

Behavior

Academic rank

vs Ethical Leadership .676 Not significant

Behavior

Relationship between Respondents’ Ethical Leadership Behavior and Legal Knowledge The relationship between the respondents’ Ethical Leadership Behavior (ELB) and legal knowledge in Criminal Law showed the r value, .325** which means that there is a low or slight

correlation between respondents’ ELB and their legal knowledge in Criminal Law. The result

Legal Awareness and Perceived Ethical Leadership of Educational Administrators in State Universities and Colleges (Sucs) in Region 3

76

suggests that the respondents’ legal competence in Criminal Law is associated with their ethical leadership behavior. In other words, as the respondents agreed with the ELB, there is a

slight possibility of getting higher scores in the legal application test in Criminal Law.

It also shows the relationship between the respondents’ Ethical Leadership Behavior (ELB) and legal knowledge in the 1987 Philippine Constitution. Results revealed the r value, -.104, which means that there is a negligible correlation between respondents’ ELB and legal application in the 1987 Philippine Constitution. The result suggests that the respondents’ legal knowledge (in the 1987 Philippine Constitution) was not significantly related to the

respondents’ ethical leadership behaviors. In other words, even if the respondents strongly agreed with the statements in the ELB scale, their scores in the 1987 Philippine Constitution

were not high enough to be statistically significant.

The relationship between the respondents’ Ethical Leadership Behavior (ELB) and Legal Knowledge in Civil Code of the Philippines revealed that the r value, is .008, which means that

there is a negligible correlation between the respondents’ ELB and their legal knowledge in

Civil Code of the Philippines. The result suggests that the respondents’ legal knowledge in Civil Code of the Philippines was not significantly related to their ethical leadership behaviors. In

other words, the respondents may have higher/lower scores in the legal knowledge test but

may disagree/agree with the statements found in the ELB.

The Table also shows the relationship between the respondents’ Ethical Leadership Behavior (ELB) and Legal Knowledge in Education Act of the Philippines. Results revealed the r value, .222* which means that there is a low or slight correlation between the respondents’ ELB and their legal knowledge in Education Act of the Philippines. The results suggest that there is a

significant relationship with the respondents’ legal knowledge in Education Act of the Philippines and their ethical leadership behaviors. In other words, the more that respondents

agreed with the statements found in the ELB scale, the higher their scores in the legal

knowledge test in Education Act of the Philippines.

The relationship between the respondents’ Ethical Leadership Behavior (ELB) and their legal

knowledge in Sexual Harassment Act revealed that the r value is -.077, which means that there

is a negligible correlation between the respondents’ ELB and their legal knowledge in Sexual

Harassment Act. Result suggests that there was no significant relationship between

respondents’ ethical leadership behaviors and their legal knowledge in Sexual Harassment Act. In other words, the respondents’ ethical leadership behavior was not an indicator of higher scores in the legal knowledge test in Sexual Harassment.

Lastly, the relationship between the respondents’ Ethical Leadership Behavior (ELB) and their legal knowledge test in Government Service Act revealed that the r value is , .080, which

means that there was no significant correlation between the respondents’ ELB and their legal knowledge in Government Service Insurance Act. The result suggests that the respondents’ legal knowledge in Government Service Insurance Act was not significantly related to their

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ethical leadership behavior. In other words, even as the respondents strongly agreed with the

statements found in the ELB scale, it was not an indication of higher or lower yield of scores in

Government Service Insurance Act.

CONCLUSION, LIMITATIONS AND RECOMMENDATIONS 1. There were a total of 143 respondents from 11 SUCs. In terms of demographic profile,

the following are summarized:

a. 61 or 42.7% belong to the 40 year-old and above group while 1 or .7% belong to

the 20-30 year- old group of respondents;

b. 65 or 45.5% of the respondents have been in the public service for one to 10

years; c. Fifty-three or 37.1% of the respondents were Directors, 21 or 14.7% were Deans,

2 or 1.4% were Vice Presidents, and one or .7% was a Principal;

d. Eighteen or 12.5% of the respondents were Professor 5. There were only two or

1.4% who were Instructor 2; and

e. Forty-seven or 32.9% of the respondents were Doctorates or Ph.D. holders. There

was only one or .7% who was an MBM or Masters in Business Management.

2. In terms of the respondents’ ethical leadership behavior, the following were the significant findings:

a. The grand mean score of all the statements in the ELB scale was 4.6 which

means that the respondents strongly agreed with the ethical behaviors. Ranking of

the statements showed that respondents strongly valued the statement “Sets example of how to do things the right way in terms of ethics”;;

b. The grand mean score of the respondents in the Legal Knowledge Test was 47.9.

3. In terms of the respondents’ legal knowledge to ethical dilemmas, the following were the significant findings:

a. The statement which most respondents answered correctly in Criminal Law was,

“Ignorance of the law is a valid excuse from compliance with the rules”. There were 119 respondents who answered False;

b. On the other hand, the question which most respondents did not answer correctly

was,”When a teacher who gave provocation was assaulted by a student, the latter is liable only for physical injuries and not for the crime of direct assault”. There

were 58 respondents who answered False;

c. The question which most respondents answered correctly in the 1987 Philippine

Constitution was,”Schools can refuse to admit student who failed to meet the retention policy. Students have no right to demand admission since the school, in the exercise of its academic freedom, has the power to promulgate reasonable rules for study, subject to fair, reasonable, and equitable requirements”. There

were 119 respondents who answered item B8 correctly;

Legal Awareness and Perceived Ethical Leadership of Educational Administrators in State Universities and Colleges (Sucs) in Region 3

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d. On the contrary, the question which most respondents did not answer correctly

was, “Due process requires that there be a trial. It cannot be done through pleadings.” There were 93 respondents who answered incorrectly;

e. The question which most respondents answered correctly in the Civil Code of the

Philippines was, ”The school exercises custodial and supervisory power over the enrolled students no matter what their ages are”. There were 125 respondents

who answered True; f. The statement which most respondents did not answer correctly was, “The power

of the school over its students cease absolutely when they leave the school premises, their conduct outside of school houses cannot be subject to school discipline”. There were 86 respondents who answered incorrectly;

g. The statement which most respondents answered correctly in the 1982 Education

Act of the Philippines was, ”Married professors may be charged with immorality if he carries on an affair with a female student even if the affair is carried on outside the schools”.. There were 122 respondents who answered the item correctly;

h. Most respondents did not answer the question correctly was, “Expelling a student is vested solely on the Secretary of Education”. There were 109 respondents who

answered incorrectly;

i. The question which most respondents answered correctly in Sexual Harassment

Act was, ”Respondent may appear before the Committee on the case of sexual harassment with the aid of a counsel”. . There were 111 respondents who

answered correctly;

j. The statement which most respondents did not answer correctly was, ”The complaint on sexual harassment may be prosecuted even if it does not conform with the standard procedure in handling a case, due to the unusual nature of the sexual harassment act. A mere letter may be sufficient to prosecute the case”. There were 52 respondents who answered incorrectly;

k. Respondents answered the question correctly in GSIS Act was, “Contractual employees who have no employer-employee relationship with the agencies they serve are excluded from the coverage of the GSIS Act”. There were 96

respondents who answered correctly;

l. The statement which most respondents did not answer correctly was, ”Retirement shall be compulsory for an employee at sixty-five (65) years of age with at least fifteen (15) years of service. If he has less than fifteen (15) years of service, he shall be allowed to complete the fifteen (15) years”. There were 53 respondents

who answered incorrectly; and

m. Respondents were rated Competent in all the topics in the Legal Knowledge Test.

4. In terms of the relationship between respondents’ ethical leadership behavior and demographic profile, the following were the significant findings:

a. There is no significant relationship between the age of the respondents and ethical

leadership behavior.

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b. Respondents’ number of years in position, educational attainment, academic rank were not significantly related to their ethical leadership behavior.

5. In terms of the relationship between the respondents’ ethical leadership behavior and legal knowledge, the following are the significant findings:

a. Respondents’ legal knowledge in Criminal Law and Education Act of the Philippines was slightly significant to the respondents’ ethical leadership behavior;

and

b. Respondents’ legal knowledge in the 1987 Philippine Constitution, Civil Code of

the Philippines, Government Service Insurance Act, and Sexual Harassment Act

were not significantly related to respondents’ ethical leadership behavior.

CONCLUSIONS Based on the findings of this study, the researcher posits the following insights:

1. The respondents of this study were mostly 40 years old above and have served State

Universities and Colleges in Region III on the average of 10 years. In addition,

respondents belong to higher academic ranks and educational attainment. Most

respondents hold offices that require judgmental powers in terms of policy-making and

rule-implementation;

2. Respondents strongly agreed with the statements found in the Ethical Leadership

Behavior scale. Respondents particularly valued or strongly agreed with setting an

example to subordinates. In other words, respondents are sensitive with how their

decisions affect others;

3. Respondents were Competent in their legal knowledge test in Criminal Law, Education

Act, Sexual Harassment Act, and Civil Code of the Philippines, Government Service

Insurance Act, and 1987 Philippine Constitution. However, respondents had poor legal

knowledge in:

a. issues concerning liabilities and possible litigations that a teacher may face after

physical altercation with students;

b. legal terms such as pleadings; c. views on extent of supervisory and administrative powers over students who

committed offenses outside school premises;

d. processes encompassed in delivering sanctions and directing expulsion/dismissal

case to appropriate officials;

e. following procedures in prosecuting sexual harassment cases;

f. views that concern retirement rules;

4. Respondents’ demographic profile such as age, educational attainment, years in

position, and academic rank was not significantly related to their ethical leadership

behavior. It could be implied from the findings that ethical leadership behavior of the

Legal Awareness and Perceived Ethical Leadership of Educational Administrators in State Universities and Colleges (Sucs) in Region 3

80

respondents may or may not be affected by their profile. Meaning, whether they were

young or old and had higher ranks; or have held positions in a very long time, their

ethical leadership behaviors would still be ideal or favorable; and

5. There was a slight correlation between respondents’ ELB and their legal knowledge in Criminal Law and Education Act. Respondents’ scores in these two topics have statistical value. Perhaps, the scores were higher because most respondents have

encountered similar situational cases in their respective institutions. Thus, they were

legally competent in their judgmental powers.

RECOMMENDATIONS 1. Administrators or SUC officials requiring legal discernments in their offices be given

adequate training. Costly litigations may be avoided if administrators and faculty

members who impose policies, implement rules and author sanctions are properly

guided and trained;

2. SUC Presidents may include a legal knowledge test in their screening and hiring

process. In addition, the legal knowledge test may be used as a tool to promote or

designate an aspiring dean or an administrator;

3. Faculty members should be properly oriented to laws concerning student’s rights and personal rights. A faculty manual should be made available to all SUC faculty. There is

also a need for faculty members to reevaluate their legal discernments towards

students, peers or colleagues, parents, supervisors or immediate heads;

4. Students who are majors of education, supervision, and administration should have

core or elective subjects (both in the undergraduate and graduate programs) that

challenges their decision-making abilities and tap or enhance their legal knowledge;

and

5. Studies that investigate and encourage programs on legal training planned by SUC

Administrators themselves are possible areas that other researchers can consider.

BIBLIOGRAPHY Beckner, W. (2004) Ethics for educational leaders, New York: Allyn & Bacon.

Brown, Michael E. (2007) Misconceptions of ethical leadership: How to avoid potential pitfalls,

Organizational Dynamics, Volume 36, Number 2, pp. 140-155.

Brown, Michael E., Trevino, Linda K., & Harrison, David A. (2005) Ethical leadership: A social

learning perspective for construct development and testing, Organizational Behavior and Human Decision Processes, Volume 97, pp. 117-134.

Dizon, L. (2003) Factors affecting the instructional leadership and administrative readiness of empowered elementary school principals in the division of Pampanga, Unpublished

Dissertation, Pampanga Agricultural College, Magalang, Pampanga.

Dungca, E. (2001) Administration and supervision problems commonly encountered and coping mechanisms applied by principals of selected public secondary schools in Region III, Unpublished Dissertation, Pampanga Agricultural College, Magalang, Pampanga.

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Elenkov, D., Kuntz, J.R. & Kuntz, Joana R.C. (2011) Ethical decision-making: an empirical

examination, Journal of Academy of Business and Economics, 11.1, p. 11.

Flores, F. (2006) Leadership styles of Deans in Nursing Schools in Region III in Relation to Nursing Board Passing Rate, Unpublished Dissertation, Pampanga Agricultural College,

Magalang, Pampanga.

Johnson, L. (2008) Teacher candidate disposition: moral judgement or regurgitation? Journal of Moral Education, Vol. 37, No. 4, pp. 429–444

Plinio, A. (2009) International Journal of Disclosure and Governance, p. 277.

Ponnu, C. & Tennakoon, G. (2009) The association between ethical leadership and employee

outcomes – the Malaysian case, EJBO Electronic Journal of Business Ethics and Organization Business, Vol. 14, No. 1, pp. 21-32

Reilly, E. (2006) Educational Leadership and Administration, 18, p163.

Shapiro, J. & Stefkovich, J. (2005) Ethical Leadership and Decision Making in Education,

Applying Theoretical Perspectives to Complex Dilemmas Second Edition. New Jersery:

USA, Lawrence Erlbaum Association, Inc.

Shi, J., Xu, S. & Yu, F. (2011) Ethical leadership and leaders' personalities, Social Behavior and Personality: An Iinternational Journal. 39.3. p. 361.

Soto, G. (1997) Leadership qualities of public schools district supervisors in region III: Its

implication to management. Unpublished Dissertation, Pampanga Agricultural College,

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Uglietta, J. A. (2001) Escaping the consequences: Two problems in consequentialist

moral theory. The John Hopkins University; AAT 993199.

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COST MATTERS: HIGHER EDUCATION AND COMMUNITY BASED CARE ORGANIZATIONS

Kimberly Handy1 and Wanda Gwyn2

1Walden University USA and 2Capella University, USA

ABSTRACT s non-profit sectors such as higher education institutions and community based companies look at how they prepare its students for the future, they must also take into consideration such variables as cost, social conditions, decision-making

influences, organizational interaction, but most importantly the human factors, which effect sustainability and growth of non-profit sectors. What can higher education institutions learn from other non-profit sectors? The non-profit sector is a large and valuable industry in the United States and it contributes to the domestic economy by serving the welfare of individuals, families, and culture through philanthropic, social service, and religious activities (Burlingame, 2004; Grobman, 2005). In 2008, the National Center for Charitable Statistics (NCCS) documented the non-profit sector to be over 1.4 trillion dollars in revenues and 1.34 trillion in total expenses. In 2009, the NCCS reported those figures amounted to 20% from contributions, gifts, and government grants; 70% from program services revenues, to include government fees and contracts; and 10% from “other” sources, including dues, rental income, special event income, and gains from goods sold. Those statistics demonstrated service revenues that received support from government fees and contracts as the major component of non-profit funding. In 1999, the NCCS recorded that there were 492, 693 501(c) non-profit organizations, which accounted for 41% of all organizations. By 2009, there were 453, 824 non-profit organizations, which accounted for 28.7% of all organizations. Sustainability in corporate America seeks to be the main goal for profit and non-profit organizations. BACKGROUND Just as non-profits across the globe are adhering to the needs of its community and

environment, higher education institutions must also become and remain cognizant of its

community and the people it serves. The community based care organization (CBC) Circuit 12

have the responsibility to act in a responsible manner by displaying corporate social

responsibility which is defined in the literature as a voluntary corporate action designed to

advance social conditions (Mackey, Mackey & Barney, 2007), or corporate actions not required

by law, which may benefit the organization (McWilliams & Siegel, 2000). Therefore,

A

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organizations that do not meet the expectation of managing their monies responsibly fall short

of forming a buffer, and stand exposed to potentially greater impacts (Sjostrom, 2009). For

community based care organizations (CBC) that new direction brought fresh opportunities for

collaborating with other organizations, state, and local government to promote a positive

community agenda.

Higher education must be community oriented and know the stakeholders they serve; they

must have a genuine feel for the community and not take a happenstance approach to the

needs of that environment. In addition, higher education must know the climate they serve:

students, teachers, counselors, and other administrators and from that develop a gauge on

which ways things may need to change or stay the same. Drury-Hudson (1999) examined the

decision-making between two groups of social workers with varying degrees of knowledge.

One group represented new workers and the other experts in the field of child protection. The

study particularly focused on what information the new would draw upon in order to base their

decisions. In relation to theory, Drury-Hudson (1999) focused on the relationship between

theory and practice and analyzed that new workers only drew upon theory after a decision

instead of using it as a basis for making a decision therefore, describing the use of theory as

unconscious, rather than a conscious act. However, during the study the experts tended to

view theory as more of a tool within the trade that assisted in the background of understanding

and interpretation (Drury-Hudson, 1999).

Dworkin (1990) pointed out that tension frequently exists between professional autonomy and

the environment in which practice takes place because of decision-making. The Dworkin’s study indicates discrepancies between professional and organizational expectations and goals

developed from community expectations and organizational procedure.

Tracy and Phillips (2007) and Zietlow (2001) both found that as nonprofit organizations

engaged in social enterprises, the intersection of the social service mission of the nonprofit

organization and the business mission of the social enterprise might raise questions about

understanding its uniqueness. Mozier and Tracey (2010) found social enterprises had both

social and commercial objectives that include managing a double bottom line, which

demanded a careful balance between resource utilization and engagement with the community

in order to build and maintain organizational legitimacy. As a result, the failure to strike an

appropriate balance between the two competing objectives threatens organizational

sustainability. Arguably, the manner and severity in which the organizational strain manifests

would vary among organizations and influences. For an organization to sustain there are

several definitions in which to draw upon for clarification.

Moxley (2004) explains that strategic planning is a means to maintain organizational

sustainability in human services noting that the objective is to align organizational behavior

with organizational desires. Moxley (2004) points out that the strategic planning model in non-

profit organizations tended to be vision based, where future direction was defined, envisioned,

and changes are implemented. Austin, Stevenson, and Weick-Skillern (2006) argued

Cost Matters: Higher Education and Community Based Care Organizations

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sustainability should be an overriding objective for any kind of organization; but for social

enterprise, it took on particular importance because of the uncertain and complex nature of

their operating environment. In their views, Austin et al. (2006) described that “corporate sustainability” might have been considered as a “company’s ability to achieve its business goals and increase long-term shareholder value by integrating economic, environmental and

social opportunities into its business strategies” (Symposium on Sustainability, 2001). Haugh

and Talwar (2010) described organizational sustainability as a broad and evolving construct

that defied an all encompassed definition. Haugh and Talwar (2010) in contrast to Moxley’s (2004) view of sustainability had more to do with organizational behavior and desires rather

than a broad nonspecific construct. In addition, the research performed by Austin et al. (2006)

was supportive of incorporating the economic, environmental, and social opportunities for

business strategies to gain sustainability rather than behavior or broad concepts. Moreover,

within research there is emerging consensus that there are three pillars of sustainability,

economic, social, and environmental (Elkington, 1998; Schmidheiny, 1992; Rondinelli & Berry,

2000; Bansal, 2005).

PROBLEM STATEMENT Higher education must also play a reoccurring role in the lives of the families it serves as well.

Focusing just on the student not the entire student’s ‘family,’ which it brings with him or her as they walk through the front doors brings about a disenfranchised student and community. The

literature shows that the human factor plays a large role in the implementation of services in

type and cost. Depending on the service needed an organization could in theory struggle with

sustaining when tasked with providing a service that is not covered by a purchase of service

agreement? For non-profits, Kaplan (2001) focused on the financial outlook and recommends

agencies spend within their budgets; however, budget variances did not provide an indication

of organizational performance but was important for assessing said performance. As such,

financial processes often focused on increased funding levels, sustainability, efficiency, and

cash flow. Social return on the community could be the prime concern for social enterprises,

and must accentuate financial measures as a means for sustainability, and move away from

grant dependency. Instead, making it grant supported but provide additional financial streams

independent of government contracts.

Higher education sees the needs for an organizational evolution and strategic planning. Higher

education can take a section from the lesson plans of local CBCs. Organizational evolution

moves the organization from one phase in development to another. Based on the study

results, the CBC arguably is in need of new and innovative ideas that can stop the financial

bleeding associated with decisions made regarding service choice. Clearly, by simply dividing

the issue into multiple sections with an attempt to fix each section separately may no longer be

enough to effect a system wide change. However, utilizing a systems thinking approach may

benefit the organization as a whole and move it into a new developmental stage. A systems

thinking approach focuses on the part of the system that needs changing by studying how it

interacts with the other parts of the system and how those elements interact to produce

behavior of the process being studied (Aronson, 1996). The CBC needs to look at how and

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what is affecting the budget and causing the organization to struggle financially and put in

place a system that will allow it to address organizational needs at a stage less than critical.

CONCLUSION Decision-making, staff edification and cultivation are paramount in ensuring that case workers

are up to date with empirical information that can support decisions and communications held

within the community. Accompanying decision-making is the impact of outside decision

makers such as the courts and child abuse investigators from other agencies and management

policies and procedures that may order an action contradictory to current information. These

outside forces coupled with an already strained system impacts the CBC’s ability to fund areas

appropriately.

The desire to make changes is derived from the viewpoint of a new system that centers on

developing a plan of operation designed to increase the effectiveness of the organization.

Organizational activities that support change activities often involve large monetary

investments and time to execute. A successful organization can execute change and evolve

by effectively implementing an aggressive and focused management team and gain favorable

impact on organizational performance and effectiveness. Rigorous studies have expressed

very diverse outcomes without committing to any type of consensus methodology to apply and

achieve effective change.

REFERENCES Aronson, D. (1996) Overview of systems thinking. Retrieved December 27, 2011, from:

www.Thinking.net: http://www.thinking.net/Systems_Thinking/systems_thinking.html

Austin, J., Stevenson, H., & Wei-Skillern, J. (2006) Social and commercial entrepreneurship

same, different, or both?, Entrepreneurship Theory and Practice, (30), pp. 1-22.

Burlingame, D. (2004), Religion and philanthropy, In philanthropy in America: A comprehensive

historical encyclopedia, 2. Santa Barbara, CA: ABC-CLIO, Inc.

Drury-Hudson, J. (1999) Decision-making in child protection: The use of theoretical, empirical,

and procedural knowledge by news and experts and implications for fieldwork placement,

British Journal Social Work, 29(1), pp. 147-169.

Dworkin, J. (1990) Political, economic and social aspects of professional authority, Families in Society, 71(9), pp. 534-41.

Elkington, J. (1998) Cannibals with forks: The triple bottom line of sustainability, Gabriola

Island, BC: New Society Publishers.

Hage, J. (1999) Organizational innovation and organizational change, Annual Review of Sociology, 25(1), pp. 597-622, Doi:10.1146/annurev.soc.25.1.597

Kaplan, R. S. (2001) Strategic performance measurement and management in non-profit

organizations, Non-profit Management & Leadership, 11(3), pp. 353-370.

Mackey, A., Mackey, T. B., & Bamey, J. (2007) Corporate social responsibility and firm

performance: Investor preferences and corporate strategies, Academy of Management Review, 32, pp. 817-35.

Cost Matters: Higher Education and Community Based Care Organizations

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McWilliams, A., & Siegel D. (2001) Corporate social responsibility: A theory of the firm

perspective, The Academy of Management Review, 26(1), pp. 117-127.

Moxley, D. P. (2004) Factors influencing the successful use of vision-based strategy planning

by nonprofit human service organizations, International Journal of Organization Theory and Behavior, 7(1), pp. 107-132.

Mozier, J., & Tracey, P. (2010) Strategy making in social enterprise: The role of resource

allocation and its effects on organizational sustainability, Systems research and behavioral science, System research, 27, pp. 252–266.

Sjostrom, E. (2009) Shareholders as norm entrepreneurs for corporate social responsibility,

Journal of Business Ethics, 94, pp. 177-191.

Tracey, P., & Phillips, N. (2007) The distinctive challenge of education social entrepreneurs: a

postscript and rejoinder to the special issue on entrepreneurship education, Academy of Management Learning and Education, 6, pp. 264–271.

Weick, K. E., & Quinn, R. E. (1999) Organizational Change and Development, Annual Review of Psychology, 50, pp. 361-388.

Zietlow, J. (2001) Social entrepreneurship: Managerial, finance and marketing aspects, Journal of Nonprofit & Public Sector Marketing, 9(1), pp. 19–27.

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MANAGING HIGHER EDUCATION AS PUBLIC GOOD: CONTROVERSY, STAKEHOLDERS, SOCIAL RESPONSIBILITY, ACCOUNTABILITY AND

SUSTAINABILITY OF THE MODEL

Samir T. IsHak Grand Valley State University, USA

ABSTRACT

igher education as a concept and practice has been plagued by controversy from the beginning of its initiation and formation. The related issues have sprung to the forefront of international and national debates which renewed scholarly inquiries

transcending academic discipline’s boundaries and led to an avalanche of research studies, doctorate dissertations and Journals’ publications. As an important issue of public policy, the topic deserves some further explanation of its significance and the multi-dimensionality of related implications. This paper is an attempt to present in a straightforward manner some answers to the most asked questions, including: Is Higher Education (HE) a Public good? A private endeavor or a public/private establishment? Is HE a national entity or an international organization due to its impact that transcends national boundaries? Whatever the classification maybe, what are the controversies that surround the nature of such configuration? Who are the ‘primary and secondary’ stakeholders of HE and of more importance what are their specific ‘stakes’? Can we, scholars and practitioners settle once and for all some of these controversies to the satisfaction of most or some of the primary stakeholders?; What are the specific social responsibilities of the institutions and of the managers of such institutions including (boards of control, presidents, administrators, faculty, students, legislators, citizens); To whom are the managers of the institutions accountable and for what? And finally, is the model which has been applied for the last century or so sustainable for the foreseeable future and if so at what cost? After providing some relevant answers to these questions, the paper shall present two studies assessing the impact of their institutions on the immediate environments, regionally and nationally. These two empirical studies illustrate the magnitude of the impact of institutions of higher education and would clarify some of the issues under study. A final section outlines an agenda for further research and future inquiries. Methodologically the author draws on his academic background, review of literature, experience with assignments with UNDP, International Institute of Educational Planning (IIEP), academic teaching and administration.

H

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Keywords: Higher Education, Academic Planning, Public Policy, Social Responsibility, Sustainability, Social And Economic Impact Of Universities, Public Good, International Impact Of Higher Education.

PUBLIC GOOD OR PRIVATE GOOD OR A HYBRID OF BOTH? The definition of what is “Public Good” is controversial and the controversy is not new. The concept of ‘Public Good’ has been defined in many ways. For example, Birdsall uses the source of finance as his differentiating criterion. “A public good is any good or service which is de facto provided for or subsidized through government budget finance” (Birdsall: 1965, p.235). Another set of definitions is based upon the technical characteristics of public goods and

services, specifically that of perfect public consumption. Samuelson (Samuelson: 1954:p. 334)

is actually credited as the first economist to develop the theory of public goods. He defined

public good as a “collective consumption good”.. “goods which all enjoy in common in the

sense that each individual’s consumption of such a good leads to no subtractions from any individual’s consumption of that good”. That is no excludability. This particular property has been known as the ‘non-rivalry’. In addition a public good exhibits a second property called

“non-excludability’ that is it is impossible to exclude any individuals from consuming the good.

It is important to elaborate on this important definition and its ramifications. By contrast, a

private good does not possess these two properties whereby the owner of the private good can

exclude others from using it, and once it has been used it could not be consumed again. He

further called a ‘good which is ‘rivalrous’ but none ‘excludable’ as a ‘common-pool resource’ which raise similar problems to public goods which he called the ‘tragedy of the commons’. This is a concept which Elinor Ostrom (Ostrom: 1971, 1973) later expounded on in detail.

Breton (Breton: 1954, p. 334) and Strotz (Strotz: 1961, p. 213) have used this characteristic.

Dorfman’s (Dorfman: 1971, p. 24) definition states ‘ there are certain goods that have the peculiarity that once they are available no one can be precluded from enjoying them whether

he contributed to their provision of not… these are public goods.. law and order is an example.

Haveman and Margolis (Dorfman: 1971, p.25) find such definition is narrow and prohibitive.

Instead ‘any publicly induced or provided collective good is a public good. when the coordinating mechanism for providing a collective good invokes the power of the state it is a

public good” This definition stresses the pluralistic nature of the courses of collective demands These demands may arise from technical characteristics of particular goods, e.g. defense or

from the market imperfections and failures or from other ‘divergences between collective and individual failures (Samuelson: 1965). However, Samuelson warns against confusing the

theory of ‘joint supply’ and the theory of ‘public goods’ in terms of welfare economics of the

optimality conditions. Through diagrammatical and mathematical models Samuelson

concludes that it would be misleading to characterize the public good case as a case of joint

supply. Higher education, at least the Public higher education, fits into any of the

abovementioned definitions as a public good or service

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On the other hand, we can look at Higher education from the standpoint of welfare economics

at least on the national level. William (Williams: 1966,p.18) was able to introduce a spatial

reference point in the provision of public goods which affects the availability between

communities that is the site of production is explicitly introduced as a relevant influence upon

pattern of consumption. He suggests a rather sophisticated definition of the “social optimum which entails allocative efficiency in the Paretian sense and which is also compatible with the

strictest interpretation, and implications regarding externalities and spillovers. However,

Brainard and Dolebear (Brainard, Dolbair: 1968,p.416) challenge William’s implication regarding the ‘oversupply or redistribution of real income that would occur whereby one of the communities would be worse off and thus would not be willing to agree to a reallocation of

such public good which William requires to define the ‘ social optimum”. This last point is important in that it may explain why communities would like to have higher education

institutions in their locality at the expense of other institutions thus the economy pays the price

of over supply and duplication of wasteful overlapping services. We shall return to this point

later.

There are some serious concerns about all these definitions. Is higher education a ‘public good’ or is it ‘for the public good’? This is not an epistemological question. If it is a public

good, then it follows that it is owned by the public in any form of ownership and as such would

be managed or controlled or monitored in the interest of the public that owns it. If it is ‘for the public good’ then it could be owned by other than the public, or jointly between the public and

the private sector, yet must also be managed or controlled in the common interests of the

public. If it is a private good or service, then this has a whole host of other issues related to

ownership, management, accountability and control. This latter is what David Reed (Reed:

2011) called “The higher education paradox: a public good but private cost”. Baum and McPherson (Baum and McPherson: 2011) argue that not many goods are ‘perfect’ public goods. … Some have one characteristic or the other.. as such higher education is not a pure public good. This means that it is possible to exclude people who do not pay, indicating that

there are positive externalities, e.g. not all benefits accrue only to students. Hence, who owns

and who pays and who controls.

A recent article by Marginson (Morginson:2011, p.411-433) came to an interesting conclusion

regarding whether universities are public or private goods, he stated ..” the nature of higher

education is policy-determined; and while limited by its form of production these themselves

are open to politically-driven change. In other words, the public character of higher education

is not so much a function of the timeless character of universities but grounded in social

practices. Higher education institutions are more or less ‘public’ and ‘private’ according to the policy and funding configurations chosen for them.

Marchesetti (Marchesetti: 2012) claims that “universities are not ‘public’ in the sense of having been founded or run by the government. A university is public because, among other aims, it

furthers the advancement of public knowledge; because it arises out of public charity (i.e. the

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free gifts of private individuals who want to benefit the public at large) and because it is open to

any member of the public who is willing and capable of learning”.

We tend to agree with this last conclusion related to the nature of higher education as having

the combination of characteristics of being public and private. The most pressing issue would

be: what are the implications of such consensus on the attendant issues of management,

stakeholders and accountability. ( see IsHak 2011, 2010); ( IsHak , Ostrom:1972, 2010)

REGIONAL OR NATIONAL OR INTERNATIONAL? There is consensus that higher education, regardless of being classified as public or private

good or a combination of both, has many externalities. Four questions must be answered:

what are these externalities and how can we identify them? Can we identify who are the

beneficiaries of each or all these externalities? Can we assess the value, qualitatively or

quantitatively, of each or the most important externalities? Who should pay for these

externalities, and in what form, to whom?

While the question of the nature of higher education seems to have been settled to a level of

universal prevalence, to consider it a public good in itself and it produces also public goods

with some particular characteristics, there is an emerging concern about higher education as a

commodity for trade. To consider this issue we must first determine the scope and magnitude

of the externalities of higher education.

First what are the externalities? (Papandreou:1998) defines externalities as ..”Benefits conferred or costs imposed on others without compensation. An externality is a phenomenon

that arises when an individual or a firm takes an action but does not bear all the costs-

negative externalities- or receive all benefits – positive externalities. Externalities are primarily

seen as linked to and emanating from the activities of individual actors making it possible to

take policy action to encourage positive externalities or discourage negative ones”. The literature is rich with discussion on the effects of externalities- spillover and spillouts- on the

provision of local governments.

And the spillover of Public education costs and benefits (Marcus: 1964). In this context of

higher education these include all the following. Employment of those who are directly and

indirectly involved in the activities. Tax base for localities where an institution is located in the

forms of local , city , sales taxes, and other forms of revenue generation such as excise taxes

and fees on municipal agencies, legal services and other commodities or services. Same

applies to state revenues from taxation and related licenses. Such revenue sources finance

the municipal and state primary functions to all citizens, not just those who generated such

revenues. The beneficiaries include many who might have not contributed to generate the

revenues and could not be excluded from benefiting from the services. And the externalities

extend to the national level as well.

In addition there are the secondary beneficiaries of owners of housing, lodgings, food suppliers

and users. The multiplier effect could be estimated and the value could be quantified using a

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sophisticated econometric model. We shall illustrate this point with two examples from

Michigan.

Add to these the non-quantitative benefits which the neighborhoods, the cities, the region enjoy

and that are translated in quality of life and related amenities. The externalities transcend the

boundaries of the local environment to the nation at large in the form of educated and trained

or licensed human resources whose productivity could be measured and contributions could

be enumerated.

Hence, the externalities could be enumerated, the beneficiaries could be identified in groups or

classes and locations, the benefits, especially that could be assesses quantitatively could be

estimated and those that do not render themselves to quantification could be approximated.

Applying an input-output econometric model, a multiplier could be computed and the aggregate

valuation of the externalities could be developed.

Two questions remain: what is the cost of producing this public good we call higher education

and what are the sources of financing their services. Both questions are relatively easy to

answer. Since the providers of the service of higher education are clearly identified due to the

strict requirements by the federal and state governments and taxation agencies, the cost could

be estimated with a high degree of accuracy Budgets and statements of accounting and

auditing reports would provide answer. Sources of financing the provision of the related

services are equally easy to identify and their relative contributions could be computed and

accurately verified. Of course we are not discussing at this point the issue of efficiency of

delivery of the services or the effectiveness of managerial functions.

THE STAKEHOLDERS AND THEIR STAKES Regardless of higher education being classified as public or private good or a hybrid of both,

there are two sets of stakeholders. There are the primary and the secondary stockholders;

Each of these identified stakeholders has its own stakes. The stakes are defined interests in

the institution of higher education whereby the stakeholder has the means to defend and to

enjoy the relevant interests. However, the mechanisms of achieving the stakes and the

effectiveness of such mechanisms would be affected by the degree of being ‘pure public’, ‘pure private’ or a hybrid of both.

Of course we expect that the interests of any stakeholder would be directly related to the

espoused mission of the institution. But considering that most of such written missions are

nothing more than articulate prose of generic pronouncements that can warrant many

interpretations. Normally nobody can question or argue with their intentional vagueness or far

reaching promises.

In defining the relevant stakes of each stakeholder, we shall deviate from what they should be

in theory, to what they are in reality. This is based on our direct observation in academia for

over fifty years of teaching and short stints in administration.

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The Boards of Control These are either elected directly by the citizens of the state, or in case of private institutions,

elected by a selected group from within the owners or donors, of appointed by governors of

states based on political affiliations. Presumably, their primary stake is overseeing the policies

that help to implement the university mission. However, based on my close observation it

seems that their stakes are to satisfy some ‘self actualization need of feeling important and the image of making decision by a feeling of representing the ‘public interest’ however that maybe defined! Of course they put their stamp of approval on whatever the president refers to them

including the budget a, capital investments and fund raising for projects and new buildings.

For those who are appointed by a political entity they maintain some public image and

proximity to the legislator or governor who will appoint them or to the president who would be

inclined to nominate them. Their effectiveness is dubious at best. But they may use their

political clout in lobbying for more state funds, or donor contributions, or securing research

contracts or influencing some legislation to help the institutions.

The Academic Administrators These include the president and all levels of the hierarchy to the deans or director levels. Their

primary stake is to stay in office as administrators. While it maybe true that in some top

universities they consider administration as a privilege and public service for a noble cause

and some accept the privilege reluctantly, I venture to state that in my fifty years of teaching

and involvement with them, they are in administration for the glory, not the agony, of the

position. In our academic model in the USA the administrators are chosen, primarily by

appointment with the façade of elections by faculty under some form of ‘shared governance’. Their rewards are many. This includes: a sense of importance in managing faculty, higher

payment with higher fringe benefits that add up to a hefty differential at time of retirement,

guaranteed summer payment, staff and prestige, normally nominated for civil appointments in

the community, and other amenities the least of which they normally do not teach or teach

minimal courses of their choice on regular basis. Of course they have noble intentions and

high level of integrity befitting their primary allegiance to whom appoints them. “Somebody has to do it and I accepted the burden and responsibility” an adage I have heard so many times.

How do they protect their stakes? By simple rule, to please the boss who can remove them

from office anytime since their appointment is at the will of the higher level. It is not uncommon

to note that some administrators are so badly evaluated by their faculty yet they remain in their

positions because the provost likes them. There is enough literature to validate this assertion.

(Baldridge: 1971, Smith: 1969; Chronicle of Higher Education 2010, 2011, 2012)

The Faculty These are the real front line workers whose primary function is to deliver the services for which

the institutions are created, namely teaching and research. Their stakes are to do a good job

of teaching first to their satisfaction and to accommodate the other requirements of the job.

They like the status and the privileges that come with the ranks of professors. And of course

they like to continue being employed to pay their accrued debts from getting their degrees and

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to support their families. Job security is of paramount importance to them, albeit it has been

drastically eroded by administrators through the creation of alternate venues other than the

tenure system. New classifications of faculty have been invented to deviate from being tenure

track such as adjunct, part time, affiliates and the like. Most of the faculty I have known care

for their students and alumni, teach effectively and conduct quality research and outside

services. How do they protect their stakes? By abiding by the rules that are imposed on them

by their deans and that are ever changing to make the rules more stringent and grueling. (See

Gunsalus: 2006; Baldridge: 1971; perkins: 1966)

The Students These are the recipients of the services which we call public or private higher education.

There are millions of them throughout the nation and the world. They are going to colleges to

graduate, simple and straightforward. In the process they hope to learn what would be their

ticket to a paying position after graduation. Yes their stakes include: gaining knowledge that

they have no real choice in selecting yet hope to be able to apply in their future, gain some

experience, exposure to fields of inquiry, socialization, and graduating. They protect their

stakes by abiding by the rules that are set for them, without their input or participation, for

graduation; balancing their learning requirements and their working hours. Most of the

students are working 20-40 hours per week in addition to carrying full load academic courses.

Of course that affects their academic performance and not getting the full benefit of their

college years.

The irony is that although these students are the primary stakeholders of the whole process,

and they are the main consumers of the service, they are rarely if at all represented in

determining the requirements of graduation. Yes they evaluate their professors on regular

basis, but they do not select, or elect, or appoint or have any say regarding those who

determine the cost of their education and the conditions under which they are learning. It is

reported and verified that the cost of higher education has doubled over the past decade while

the rate of inflation increased by less than 15%! Consequently they graduate with a heavy

burden of debt that has been tripled over the past decade.

The Providers of Auxiliary Services These include book sellers, publishers, food services, maintenance personnel, security

officers, and related necessary activities for the proper functioning of the universities. Their

primary stake is to provide the needed services and in return be paid for it. This is predicated

on the continuous presence of the university. They protect their interest by diligently provide

the services and faithfully assume their responsibilities.

The Neighborhoods and the Society Their primary stake is to attract the institutions of higher education and their related activities to

their locations. The attendant stakes include the revenues from the different taxes and fees

which they collect, the job opportunities that creates, the commercial and industrial activities

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they generate, social, artistic, sport and cultural activities the universities provide which would

contribute to the quality of life of the communities involved, the image of the cities and counties

as attractive magnets for further businesses, industries and services. Each of these activities

has its own derivatives of income generation and benefits. They protect these stakes by

providing a host of incentives to attract the institutions and to retain their presence and

expansion. They improve the delivery of their respective public services and infrastructure and

recruit their personnel from the graduates. The agencies may contract the faculty for some

consulting or advising and civil organizations recruit them for boards and contributions.

As a public good – regardless of their ownership-higher education institutions have a wide

variety of stakeholders, each with its own stakes which they serve. The externalities are many,

with longevity and of large magnitude and favorable impact.

SOCIAL RESPONSIBILITY: WHAT AND TO WHOM Do the institutions that provide the public good which we called higher education have to

assume certain social responsibilities? If so, what are the deliverables? To whom these entities

are socially responsible? And what are the modes of assuming and delivering such

responsibilities?

By the very nature of their functioning within the public domain there are explicit and implicit

responsibilities. The fact that these institutions are totally or partially financed by public

agencies imposes further responsibilities. Moreover the very pluralistic nature of the services

and their dual characteristics of being ‘non-rivalrous and non-excludable’ magnify the

magnitude of the responsibilities and intensify their importance. They are responsible to the

following entities. Spatially, this covers the neighborhoods, the surrounding cities, counties,

boroughs, states from which they recruit their students, faculty and other personnel, to the

country at large and to the world where they export their graduates and businesses.

Temporally, they are responsible for as long as their activities are maintained and to the end of

the life of the output of their activities, that is their graduates. Financially, the responsibilities

are due to the financing sources and donors. Morally, to the humanity in its widest sense.

Internationally, to the world at large and all its environs. Academically, they are responsible to

teach and train to achieve one goal: the truth, Veritas. The ultimate of all noble endeavors of

education. It is indeed a long list of commitments and obligations to a wide variety of entities.

These have a diversified interests and a multitude of conflicting demands and far reaching

expectations.

What are the deliverables? The answer depends on the vision of the stakeholders and their

orientation. Students want education, but what kind? Conducting a survey among my students,

about 425 of them on the undergraduate and graduate levels I compiled a list of their wants:

the list includes: The education that can get them jobs, that is practical, relevant, applied,

realistic, advanced, prepare them for real world, technologically savvy, up to date and

interesting. They are not the least interested in ‘knowledge for knowledge sake’, or history, or political science or philosophy or sociology or even art. They are practical, impatient, the Y

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generation, and have no time, short time orientation and limited spatial horizon. Ironically, the

professors have another list of priorities that stress creating a rounded knowledge of a massive

dose of liberal arts and sciences and a host of pre-requisites that consume the first two years

of the students’ education before they get into their professional curriculum if they so choose.

Here we find a schism between the student’s wants and the professors’ mandates. The

question is: are the professors responding to the users of the service needs as they perceive

them? Is there a deviation between the producers’ of the service assumed responsibilities and the receivers perceived needs?

The expected deliverables to the society at large include: relevant education that would lead to

gainful employment in fields that are still in demand and will continue to be in demand for the

foreseeable future. That deliverable requires several commitments to be undertaken by the

university administration. This include: accurate forecasting of future demand on specific

occupations and or specializations, knowledge of the consumers of the education services,

namely the students wants, projecting what prospective employers needs for at least ten years

after graduation, reasonable return on the financing agents on their investments in higher

education. The synchronization among these commitments is indeed lacking. These are not

new challenges, yet they remain unmet (see Kertesz, 1971; Smith: 1969; Daedalus: 1975,

1976)

With the globalization and its continuing thrust into most of the globe, it is imperative that

higher education deliver internationally rounded graduates. The position of the USA graduates’ level of knowledge in basic science and math has progressively declined, not to mention

delinquency in teaching foreign languages or even proper English. USA functional illiteracy is

indeed discouraging. Yet, globalization is not a new phenomenon. Our exposure to other

countries and cultures has been continuing for a long time. Yet, our academic institutions have

been flagrantly delinquent to deliver the proper mix of graduates who meet the challenges of

foreign competition on many key scores.

Another responsibility is of paramount importance and that is the responsibility to meet

society’s needs and to find solutions to solve the endemic and expected problems facing this

society. It behooves academic institutions of higher education with all its acquired talents and

cumulative knowledge to define the present problems, be proactive in expecting potential

issues and devise the mechanisms to solve all of them by preparing the problem solvers, the

innovators and gurus of wisdom and practitioners of meeting the very difficult tasks. In the

words of Derek Bok, President emeritus of Harvard University “…Serving society is only one of

higher education’s functions; it is surely among the most important. At a time when the nation

has its full share of difficulties… the question is not whether universities need to concern themselves with the society’s problems but whether they are discharging this responsibility as

well as they should”. Among these problems are poverty alleviation, employment generation, social equality, gender empowerment, delivery of health services to all, narrowing the gap

between the rich and poor, and above all national security through economic and social

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development not the military race. Unfortunately universities have not lived up to the society’s legitimate expectations, yet.

There are several explanations for such delinquency in meeting the social responsibilities of

higher education. The nature of our Federal system which leaves a basic function like

education exclusively in the hands of the different states. The states in return abandon such

responsibility to the individual districts without any common thread of policy or priorities. In

addition the forms of financing education, on all levels, are amazing. The plethora of financing

schemes, sources, variations in levels of funding, different standards – or lack thereof- for

teachers and professors, the maze of accredited entities without any common denominators,

the absence of standards to measure outputs and a host of other excuses. All these

deficiencies lead to one conclusion: low standards for a long time to come. Yes there is a high

level of awareness by this administration, but the gestation period of long eighteen years to

reap any results is just too long to lose. Ironically the ideological divide between so called

conservatives and liberal regarding developing any resemblance of policy to establish

standards is so great to warrant any hope to bridge the gap in the near future. Apparently

education is not a top priority even on the state level.. The level of state funding to most of the

public universities has drastically declined leading to the massive increase in tuition, resulting

in heavy debts for families and students. Worse, in the name of cutting cost, universities had

to discontinue several important programs such as foreign languages and cultural studies to

name a few. The inevitable result is that our global competitiveness positioning has been

eroding and will continue to do so.

ACCOUNTABILITY The International Institute for Educational Planning is a UNESCO agency located in Paris since

1963 and was established with initial help from the World Bank and the Ford Foundation. Its

primary function is “capacity building in educational planning and management”. To this end the over hundred professionals addressed themselves to the issue of accountability of Higher

education institutions. The issue gained agency in the USA in the last decade due to several

factors. Due to the fierce competition among nations within a global competitive environment, it

became apparent that we have to evaluate our educational system and its outcomes. The

enormous funds that have been allocated to higher education and the financial squeeze on the

federal government and the states gave impetus to demand more scrutiny of the quality of

education and the preparation of the graduates to meet the challenges of global

competitiveness. Also, there is an absence of standards of universal applicability that can help

in measuring the performance of educational agents in a comparative manner whereby

learning of successful experiments would provide guidance for improvements. In addition there

have been urgent demands by professional licensing agencies to develop some standard

norms to measure efficiency and effectiveness of the education systems. Historically, there

existed some requirements that were developed by state regulatory agencies for compliance

accountability systems that were based on government statutes and regulations. The new

demands called for developing systems that measure performance by concrete results that

have been achieved, what is referred to a s ‘ result-based accountability systems’. Of course,

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especially in the USA, such systems must take into consideration the local conditions and must

be adapted accordingly to the cultural setting and political environment and fiscal constraints of

relative entities.

“Normally there are three main types of accountability systems. These are compliance with

regulations, adherence to professional norms and results driven systems. “As indicated earlier in this paper, the new trend is to address the system to two questions: accountability for what

and to whom. In developing any of these systems they must embody the prevailing societal

values and aspirations in addition to being pragmatic within the prevailing fiscal and financial

constraints. The objectives of any system must include the five components of clear

objectives, valid assessment, effective instructions, provision of resources and a transparent

set of rewards and sanctions. (Anderson: 2011)

It would be instructive to present two examples of accountability reports as developed by two

universities in Michigan. These are the Eastern Michigan University and Grand Valley State

University.

Eastern Michigan University Eastern Michigan University (EMU) is a 163 years institution in Michigan. They conducted their

economic impact study for 2008/2009 and are just completing the report for 2010/2012. They

applied an econometric model that was developed by an economist, Dr. Raouf Hanna who was

appointed as the ‘Executive Associate to the President for Strategic Planning” which indicates the seriousness of the central administration to produce an excellent study as a means to

achieve their goals through a valid strategic planning. The effort was assisted by several

participants drawn from most of the university’s constituents. Hence it was sophisticated and

well devised. It is a detailed and documented report in over 80 pages (:Hanna et al: 2009)

The following are the highlights of the study. It identified the spatial impact of the university by

the immediate environs (city of Ypsilanti, Washtenaw County and the State) and extended the

area to include, the other states in the nation and ultimately to the world. The expansion was

warranted by the fact that their alumni were tracked as serving in international organizations

throughout the world. The components that contributed to the economic base of the impacted

areas included: educational services in the forms of salaries for faculty and staff, other

expenditures by the university, placement of the graduates in high skilled jobs at the local,

state and national levels “more than those requiring only high school diplomas” basing their computation on the assumption that “ about two thirds of the total economic impact of spending on higher education comes from the higher earnings of these college graduates”. In addition

EMU study included a factor for “enhancing the quality of life of the local, regional communities through providing arts and entertainment, athletics events, radio and university support for

public service activities”. They added another variable estimating the value of “cultural events, services to businesses, research and development, the extensive volunteer activities of staff

and students”. The study quantified the impact of these components by reporting on the

different dimensions of the impact.

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The study was divided into two parts: economic and social impact. The first “dealt with the

direct and indirect spending of EMU and its constituents in the economy. The second dealt

with the university’s contributions through community and engagement and workforce

development.

The Economic Impact The basic data, upon which the impact was estimated included: the students enrolled in the

base year of 2008, the total degrees awarded in same year, the total number of employees,

the total operating expenses for FY 2008, the amount of salaries, wages and benefits for same

year, building construction budget for four years (2004-2008) and the expected building

construction cost for 2009-2011 since the budget was approved for such projects. Based on

these actual figures the study reached the following conclusions.

“Including the earnings premium from earning college degrees the total direct impact of EMU was more than $1.8 billion for the academic year 2008. The alumni earnings premium

accounts for more than 75% of EMU’s total direct impact on Michigan’s economy. When adding all indirect effects the total economic impact would estimate as more than $3.7 billion.” The study states that “while this type of regional impact analysis is not precise, the basic

numbers (premises) that have been developed are based on established methodological and

accepted multipliers that have been used for economic impact analyses in many settings

across the nation”.

Of more significance are the computations regarding the return on the State’s investment in EMU? Adding the figures of the State’s contributions in the forms of general appropriations, financial Aid, Grants and contracts and dividing the estimated value of the impact by that total,

the study showed that “the estimated impact on Michigan economy was $41.6 for each dollar

received from the State”. In addition ‘EMU estimated impact on State government tax revenue is @1.87 for each dollar received from the State”. Both are impressive figures and show that investment in higher education has positive financial impact on the economies of the affected

States.

The Social Impact It is a recognized fact that impact of universities on their surrounding communities and beyond

extends beyond pure economic measures since it permeates the social fabric of the entire

communities and their environs. This factor is directly related to the mission of universities as

agents of change and development and the stakes of a major stakeholder, namely the

immediate area and the whole society. There are national organizations that recognize

university engagement and contributions to the community. For example the Carnegie

Foundation for the Advancement of Teaching granted EMU their 2008 recognition for a

Community Engagement Classification. Community engagements take several forms. These

include: community outlets as venues for faculty and student activities; non-academic and

support units using facilities; mutually beneficial learning experiences; field experiences;

internships; social integration with the community through housing and related services; job

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related workforce development activities, outreach programs; student teaching; career

preparation activities and business consulting assignment or serving on civic boards and

committees. The problem in estimating the impact of such contributions is to devise a model

for quantifying the impact in concrete terms with valid assumptions and accurate parameters.

EMU did that. The university units which kept track of their involvement with the community –

and this is only a partial list- provided the raw data of their engagement programs. These

include: sponsoring or hosting events and the estimated number of attendees; receiving

outside funding for community-based programming and the number of organizations,

individuals, businesses and association; collaboration with different organizations engaging in

community services. Three other components were added to the list contributing to this part

of the impact. These are the workforce development which contributed to the economic

development of the State; interaction with alumni for mutually beneficial endeavors and retiree

contributions.

The report concludes with the following statement “The study has empirically illustrated the significant economic and social impact that EMU has on the various communities of which it is

a part. The information presented provides an understanding of the university that can be

presented to current and potential supporters. It also can provide guidance to all members of

the university community in developing and implementing programs that continue and increase

the value of the university to its students, its faculty and staff members and to the region and

State which it serves”. It is clear that the institution serves its primary and secondary

stakeholders and fulfills its espoused mission.

However, it is a contribution to initiate such a study and to document the university’s achievements, that is laudatory and a good public relations tool to get support.

Grand Valley State University The Grand Valley state University Accountability Report for 2012/2013 has just been released.

(GVSU accountability:2012). It starts with stating its “principles of Accountability. There are six ‘principles including: “measures of student success; access and affordability; diversity; GVSU

and the State of Michigan; Efficiency Measures; Private-Public Partnership and Economic

Development”. Under Executive summary it states: “GVSU fares well under metrics used, including those proposed by the Business leaders of Michigan….these facts show GVSU is a solid return on investment for students, their families, business leaders and those who pay

taxes in Michigan”. The first metric regardi9ng the measures of student success “show the

number of graduates in 2011/2012 who consistently scored higher than average on licensure

examinations and that 90$ recent graduates are employed or in graduate school”, and “that the graduates are successful and bring vitality to their fields of work and inquiry”. The other two metrics are not more specific other than to state that “GVSU is committed to providing opportunities for students… it serves students from every county, and keep its tuition in the lower half of all Michigan Public universities and it increases its financial aid which is nearly

$4000 per year.”. Diversity is proven by stating that “GBSU has diversity of thought and

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background as a cornerstone of its mission, efforts to enroll minority and international students

and make them feel welcome on campus”. The metric of “Grand valley and the State of Michigan is veri9fied by stating that GV documents its efficiency with the appropriation it

receives from the state which remains the lowest per student of any public university in

Michigan.. Nearly 84% of graduates remains in the state”. Efficiency measures are shown by stating that “GV efficient operations have been noted in Michigan and in national rankings, the

university’s lean operation is illustrated by administrative costs remaining incredibly low while

resources are pumped into the main operation of teaching students…and that GV is

internationally recognized as a leader in sustainable practices that save the environment and

dollars”. Public-private partnership is evidenced by “GV has proven to be a productive

recipient of gifts and grants... those private donations to the university are up again... that the

university works to secure millions of dollars of grants...” The last metric under economic

development shows that ‘GV has economic impact in the West Michigan region of more than

$730 million, nearly 11,000 people are working in the private sector because the university

exists.. many of the regions most notable companies have GV alumni in various positions of

leadership and that our activities surrounding Lake Michigan will protect this tremendous asset

for years to come”.!!! The report further provides more statistics in an attempt to show the accountability of the university to its constituents. These include: Median composite ACT sore

for fall 2011 at 24 which third high in Michigan; freshman to sophomore retention rate at 82%

(4th in Michigan); Graduation rate of 63% (4th ranking); pass rates of graduates on licensure

exams at 100% in many programs; and a host of self congratulatory national ranking and

recognition statements”. Additional historical figures are presented as evidence of

accountability including: recent graduates employed or in graduate school 89%; 54% increase

in enrollment over 12 years period which is highest in the state drawn from the surrounding

counties; the ten years tuition change reached 99.3% with increase in financial aid

commitments, noting that loans reached $184,709,255 in 2011-2012 about 72% of total

available sources with student default rate of 2.7 being second lowest in the state. It should be

noted that the universities achievement were achieved with lowest appropriation per student by

the state at $7,396 compared to the state average of $4694 and at the lowest level of the 15

public universities. It is ironic to reflect upon the responsibility of the state towards an institution

with the highest rate of growth in student enrollment and the continued lowest funding per

student. While the ratio of state aid to tuition declined from 53% in 1992 to 16.8% in 2013,

tuition increased almost doubles in the same period with the students and their families bearing

the brunt! This is a question for the state to ponder regarding its accountability for higher

education. The report concludes with a statement regarding the fact that GVSU is consistently

recognized for its commitment to sustainability.

SUSTAINABILITY Two questions regarding sustainability: One, what is the potential for sustainability of financing

higher education according the same models that persisted during past decades, and two,

would such mode of financing and lack of coordination and control lead to achieve the

aspirations of the stakeholders on the local, regional and national levels?

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There is strong evidence that the answer to the two questions is in the negative. This evidence

includes several indicators. The federal government in the USA has reduced its funding for

many academic programs and institutions. It funding for basic research, through contracts and

independent contractors have drastically declined due to the anemic increase in revenue and

the staggering expenditure on other than education. The states are in no better conditions;

they are much worse which has more direct impact on funding for public universities. Even

traditionally more supportive states like California have drastically reduced their contributions

to higher education institutions which led to massive protests and interruption of classes and

canceling of programs. Available funds for borrowing that were guaranteed by the government

dried up and the cost of borrowing from the remaining open sources has skyrocketed and

became hard to get. Universities were pressured to resort to one of the available resources

that is to increase tuition and all attending fees at staggering rates. With such an open end

source of financing, they continued spending at same level albeit their contention, unproven,

that they are ‘efficiently managing their resources.

There is another explanatory variable to explain that the present mode of operation will

continue, hence exasperating the situation further. There are no quantifiable measurements to

assess accountability of the producers of the services we call higher education via universities

and other institutions. Most of the accountability criteria is still generic, qualitative, altruistic

and mundane. From what we have seen of the so called accountability reports, they are self

congratulatory accolades that can fit under public relations rhetoric. With the open spigot of

tuition and fees, there is no real incentive for administrators to cut cost since there is no system

of rewards and penalties for deviation from established standards of performance. Absence

objective criteria for measuring efficiency and effectiveness, and the two concepts are not the

same, there is no model for comparative studies.

Some may argue that accrediting agencies can serve as a conduit to devise specific criteria for

evaluation. We beg to differ. We think they are self-serving, profit making agencies that have

contributed to the problem. But that is another topic. They are not the solution nor are they to

meet the needs to establish normative and innovative criteria to demand accountability

adherence to standards. As evidence we have for over a century a multitude of such

accrediting agencies and we are still deficient and in disarray in this regard. They have not

succeeded so far nor, in our judgment, they are capable of succeeding albeit they maybe able

to play a role in the process of initiation and of monitoring implementation.

OUTSTANDING ISSUES There are several outstanding issues that need to be addressed and which space and scope of

this paper did not allow for further elaboration. Let us outline three of these issues.

One is the global impact of higher education especially in an age of open frontiers and

globalization of labor, and other factors of production. The benefits of higher education have

transcended national boundaries. They are what Stiglitz (14) calls ‘global or international public

goods’. Actually Stiglitz identified five such global goods, including: international economic

Managing Higher Education as Public Good: Controversy, Stakeholders, Social Responsibility, Accountability and Sustainability of the Model

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stability, international security or political stability, international environment, international

humanitarian assistance and knowledge. With the fast pace of technological advances in

communication, all these ‘global goods’ are interdependent. Their indicators of their

prominence are glaringly transparent and clear. The primary mechanism to deal with them,

individually or collectively is glaringly obvious. It is education first and last. It is education,

especially higher education institutions cross borders and inter cultural.

Two, the control of higher education administration is so lacking and is practically absent. The

ideology of granting the universities autonomy and self governing status might have proven

valid in the past; it is no longer valid today. There is a role for central governments to play and

to dictate. Europe has started a serious dialogue on this issue and is coming with some valid

conclusions and practical recommendations without disregarding national cultures and the

attendant historical, or political sovereignty peculiarities. The damage from wasteful use of rare

resources transcends college campuses. The dangers of misguided ideological convictions

should give way to pragmatic consideration for the public interest. This issue is a national

security issue of a magnitude larger than a war. Wars end after a while, but the need for

accountability to deliver what is needed for future generations and the continuity of our race

must be of the most paramount importance.

Three, the present modality of higher education must be revisited. It is time to consider a new

modality of Higher education as a tradable commodity available for those who deserve it and

whose services upon graduation are needed. Higher education should not be considered a

birth right or a constitutional mandate. That is what seems to be the prevailing philosophy in

the USA. It is not the dominant ideology in Europe or the rest of the world. Alternative modes of

education and avenues must be pursued. There is a dominant role for central governments to

set national priorities and to make sure to achieve them.

CONCLUDING REMARKS The field of managing higher education is not in its infancy. Volumes have been written about

it. Yet, we in the USA are still debating some issues which other countries have settled. We

elaborated on the controversy surrounding whether higher education is a public good or private

good or a hybrid of both. We came to the conclusion that while primarily it is public good it has

far reaching ramification to render it an international good. We identified the primary and

secondary stakeholders with their attending stakes. We further discussed the issue of

accountability and presented two recent accountability reports outlining the deficiencies and

shortcomings of the practice. We concluded by outlining three outstanding issues that deserve

further studying.

REFERENCES Ulam, A.B. (1974) Where do go from here, Journal of The American of Arts and Sciences, vol.

1, pp. 80-84.

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Skinner, B.F. (1974) Designing Higher education, Journal of The American Arts and Sciences, vol. 1, pp. 196-202 .

The Carnegie Foundation for the Advancement of Teaching, (1975), prospects for Higher

Education in a Period of Uncertainty, Jossey-Bass Publishers, London.

Anderson & Jo Anne (2005), ‘Types of Accountability systems’, The International Institute for Educational Planning (IIEP) , UNESCO 2005, Paris

Birdsall, W. (1965) A Study for Demand of Public goods, in R. A. Musgrave, ed., Essays in fiscal Federalism, Washington D.C. The Brookings Institution, pp. 235-292

Breton A. (1954) A Theory of the demand for Public Goods, Canadian Journal of Economics and Political Science, Vol. 32, August, pp. 334-344

Dorfman R. (1971) General equilibrium with Public goods, as quoted in Robert H. Haveman

and Julios Margolis, Public Expenditure and Public Policy, (Chicago) p.24

‘Economic and Social Impact of Eastern Michigan University 2008-2009, Raouf S. Hanna et

al., Ypsilanti, Michigan July 2009

Grand Valley state University Accountability report 2012-2013, Allendale Michigan USA (2012)

IsHak, S.T. & Amanda IsHak (2012) Ignoring Social Dimension of Development and

Sustainability as Prelude to Revolutions, Journal of Global Intelligence & Policy (JGIP), Vol. 1, Issue 2, pp. 84-97

London, S., Higher Education for the Public Good: A Report from the National Leadership

Dialogues.

Marginson, S. (2011) Higher Education and Public Good, Higher Education Quarterly, Vol. 05,

No 4, pp. 411-433.

McPherson, P. & David Shulenburger (2010) Understanding the Cost of public Higher

Education, Society for College and University Planning (SCUP), pp. 15-25.

Ostrom E. (1971) Institutional Arrangements and the Measurements of Police Consequences

in Urban Areas, Studies in political Theory and Policy Analysis, and Urban Affairs

Quarterly.

Prospects for Higher Education in a Period of Uncertainty’, The Carnegie foundation for the Advancement of Teaching, 1975.

Samuelson P. A. (1954) The Pure theory of Public Expenditure, Review of Economics and Statistics, Vol. 36, pp. 382-389.

Skinner B. F. (1974) Designing Higher Education, Journal of American Arts and Sciences, vol.

1, pp. 196-202.

Strotz R.,H. (1961) Two Propositions Related to Public Goods, Journal of Political Economy,

vol. 69, pp. 213-225.

Ulam, A.B., (1974) Where do we go from here, Journal of the American Arts and sciences, Vol.

1, pp. 80-84.

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ROLE OF KNOWLEDGE MANAGEMENT IN CULTURAL PERSPECTIVE:

MAJOR CORPORATE SECTOR OF ISLAMABAD, PAKISTAN

Amna Fahim1 and M Fahad Fahim2 1Air University, Islamabad and 2Independent Writer, USA

ABSTRACT

urpose - The purpose of this study is to find out the effects of knowledge management in the perspective of culture and its dimensions. Methodology - The methodology adopted for this study consists of random sampling technique and

the targeted population is from the privatized banks in the capital area of Pakistan.Findings - the findings of the study reported significantly positive results among the variables and strong significance are showing positive contrive. Implications - this study has practical implications for the human resource managers and top level management for the designing and implementation of the corporate strategy. Originality - Novelty in this study is the investigation of culture as a mediating variable between the KM and competitive advantage. Keywords: Knowledge Management, Culture, KM, Competitive Advantage. INTRODUCTION Globalization has changed the scenario of working practices and this shift in the market

brought changes in the managerial carry out. Knowledge management is now a day’s a hot subject in the organizations. Businesses are realizing the need to manage the information and

deal with it as a sustainable source to reach at the competitive level. Organization keeps an

eye on their performance and finally conforming about the fact that knowledge is ultimately the

major contributor towards the competitive advantage.

One of the key resources of organizations is their knowledge. According to DeLong & Fahey,

2000;; O’Dell & Grayson, 1998 benefits of market competition can b achieved by effective use

of inner knowledge. Knowledge management (KM) initiatives often are seen to encounter

issues from organizational culture and, as a result, to have restricted effect. An Ernst and

Young study determined culture as the greatest obstacle to transfer knowledge, stating the

lack of ability to change individuals' conducts as the greatest barrier to handling knowledge

(Watson, 1998). Knowledge and its effective utilization have been at the center of research

scholars’ interest for the last two decades. Knowledge is one of the main crucial achievements

P

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A. Fahim and M. F. Fahim IJAISL - Volume 6, Issue 16 (2013), pp. 104-116

105

aspects for formulation of any company's technique. The decision on type of knowledge that is

important for a company should be determined through its objective and ideal goals.

Knowledge Management (KM) is an effective ideal device, to develop different decision making

techniques (Carnerio, 2000). Harrison and Leitch, (2000) statedt that companies need to

replenish their knowledge source consistently for competition.

The availability of information and product options are providing creativeness in supervisors

and effective application of sources as part of modifying technique. The alternative techniques

help with ever modifying atmosphere. The employment of environmental knowledge can create

competitive benefits (Carnerio, 2000). The Functional efficiency and technique are both pre

requirements for excellent efficiency, which is the aim of any company. Competitive advantage

produces out of the total system of activities. Porter, (1996) contends that the fit among actions

either considerably decreases cost or improves difference. Competitive strategy is all about

holding a different strategy than your competition. Christensen (2010) contended strategy is

used as the plan management. If it is handled wisely, objectives will be obtained as organized,

otherwise outcomes will be different.

An organization can outwit competition only if it can make a change that it can maintain. It must

produce better value to clients or identify similar value at a cheaper or execute both. Malhotra

(2003, 2005: 66) attentively summarized the worldwide business atmosphere as, “radical discontinuous change”. The Knowledge is handled through individual and in ever modifying

situation, if procedures are arranged with technique and knowledge has been effectively used

the end outcome will be just what the company set out to accomplish. In the changing

atmosphere, being versatile is another crucial achievements aspect. This quality can be used

to acquire maintainable benefits as well as offer solutions as per client preferences.

Organizational Knowledge has to be modified consistently to stay competitive.

This will bring modification in strategy and procedures that help in retaining competitive

advantage (Weber, 2007; Hamid, 2008). In today's current changing fast environment,

durability of competitive advantage depends upon the usefulness of decisions. The ideal

strategy should be, doing the right thing that is performance, instead of doing things right

meaning performance driven strategy. It is known fact that efficient approach without being

effective will not succeed (Malhotra, 2005). It is recommended by (Malhotra, 2003) that

achievements is supposed to be to those who use knowledge before their competitors, and

create it outdated before they can use it. People and organizations started to appreciate the

significantly part of knowledge in the existing competitive atmosphere.

For years organizations have coded, saved, and transferred knowledge. The success of

knowledge management, in particular the generation and sharing of tacit knowledge is also

affected by organizational culture. It is hypothesized that certain size of organizational culture

motivate the generation and sharing of tacit knowledge. Many researchers have recommended

knowledge as a source of continual competitive advantage. Knowledge is challenging to mimic

since it is embedded in the enterprise such as in organizational culture, policies, techniques,

Role of Knowledge Management in Cultural Perspective: Major Corporate Sector of Islamabad, Pakistan

106

and workers. The thoughts of knowledge as resources and can be capitalized for business

competitive advantage should press all companies to institution appropriate knowledge

management system. However, companies should understand that knowledge is challenging

and complicated to handle. Therefore, although knowledge is so valuable for organizational

competitive advantage, companies should identify the needs to institution a proper system to

handle it properly.

Problem Identification For the survival of organization some challenging situations are created due to competitive

market circumstances. This shift in managerial practices rules out towards the enhanced

needs of the knowledge acquisition, sharing, dissemination and its retention in the

organization. A knowledge supportive culture which allows the sharing and distribution of

information across the organization is required for the infrastructural requisites and insufficient

processes. To assure the involvement of the employees and to ensure their adaptability which

paves the way towards the knowledge management and creation of organizational competitive

advantage a knowledge supportive culture is to be set in any organization.

Objectives of Study The core objectives of this study are:

To attain the competitive advantage of the organization

Analyzing the outcomes of knowledge management and their impact in perspective of

culture

To see the relationship between the knowledge management and competitive

advantage

To check the pattern of knowledge management in the organization and its effect on

culture.

Rationale of the Study This study consolidates the conceptual explanation about managing the knowledgeable

resources in a way to generate competitive advantage. The culture inside the organization sets

the way of acquisition of knowledge within the organization. Its dissemination along the role

performers is carried out with high involvement and adaptability of the employees. Knowledge

management leads towards the customer focus in an adaptable and highly involved culture.

Purpose and Significance of Study The purpose of this study is to evaluate the effects of knowledge management accordance

with culture. Knowledge management is to be seen in perspective of three dimensions .The

cultural imposition will be studied to attain the competitive advantage.

A. Fahim and M. F. Fahim IJAISL - Volume 6, Issue 16 (2013), pp. 104-116

107

This study makes it significant that knowledge management is a distinction object of

organization in-order to step into the growth phase and to retain development. This is quite

important for organizations those are at stage of growth inevitable to functionalize and motivate

the knowledge management in order to create competitive atmosphere to attain competitive

advantage and becomes at leading role in the industry. Employees working in knowledge

based system integrated with an adaptable and involved culture could be a source to create

competitive advantage.

LITERATURE REVIEW “Knowledge management refer to a systematic organization, planning, scheduling, monitoring

and development of people, process, technology and environment, with appropriate targets

and feedback mechanisms under the control of public or private sector concern, and

undertaken by such a concern, to facilitate specifically and explicitly the creation, retention,

sharing, acquisition, utilization and measurement of information and new ideas in order to

achieve strategic aims such as improved competitiveness and improved performance

subject to financial, legal, resource, political, technical, cultural and societal constraints.”(Peter sharp, 2006).

KM is highly associated with the intellectual capital of the firm, which in turn affects its

innovation and financial achievement (Wong, 2005). However, previous studies about how to

improve KM capability efficiently are still controversial (Birkinshaw et al., 2002). According to

Cardinal,(2001), his point of view is that acquired knowledge will have an effect on an

organization’s worth, knowledge amalgamation and procedures. “Absorptive capabilities” are known to be the acceptance of information value, assimilation of knowledge and possible

knowledge about the procedures and knowledge can be acquired from external environment.

Zahra and George (2002) claimed that possible absorptive competence include knowledge

attainment potential and knowledge incorporation potential, as well as well-organized

achievement and submission of exterior knowledge in eventually leads to modernization.

Zahra and George (2002) using vibrant competence scrutiny of the stream reinterpretation of

absorptive potential, that the absorptive potential is a psychotherapy of organizational

knowledge accretion and surge through the vibrant competence to produce and sustain the

organization aggressive improvement in the aggressive contemporary age.

Badii and Sharif (2003) believes that for innovation to take place, knowledge should be

integrated effectively so that the firm saves time and lowers cost of administering and securing

information. People come together from diverse backgrounds and areas, the wider the scope

of knowledge will be incorporated. Due to this diversity, people in the organization have better

communication and share more ideas. Therin (2002) states that a firm will be able to innovate

products and improve processes if the firm has the ability of attaining new knowledge and

integrating it with existing knowledge. Grant (1996) suggests that achieving continuous product

innovation depends on the capability of a firm to update existing knowledge.

Role of Knowledge Management in Cultural Perspective: Major Corporate Sector of Islamabad, Pakistan

108

Herskovits (1955) defines culture as “an ingredient of the upbringing of humans that is prepared (or modified) by human beings. Culture as the cumulative container of knowledge,

experience, beliefs, values, attitudes, religions, concepts of self, the other world and the

relationships between both , hierarchies of status, role expectations and time concepts

obtained by people from generations”.

Culture has also been defined by many authors in different ways. According to Webster’s New Collegiate Dictionary “the integrated patterns of human behaviour that includes thought,

speech and action which it depends on man’s capacity for learning and transmitting knowledge to succeeding generations.” Pettigrew (1979) stated that culture consists of various concepts

like “symbolism”, “myth” and “rituals” that can be considered in analysing the organizational

behaviour and aspects. Dandridge, Mitroff and Joyce, (1980) explained this concept by stating

how these myths and symbols could facilitate while understanding culture. According to Deal

and Kennedy (1982) “Culture is the way we do things out there” or “non-rational qualities of an

organization”.

The concept of collectivism in the society evolves thinking, to sort out methodology of

integration of individuals into group, in a manner that they can adopt external environment

benefiting the perceived values.

Advancement of society is emerging from singleness to community. It includes two aspects:

namely, moderating into a strong whole and then waving into external environment. To absorb

into the requirement of group living, learning played a crucial role and produced a set of shared

assumptions and beliefs, called culture.

Adkins et al., (1999) suggest that adaptability is the ability of the company to scan the external

environment and respond to the ever-changing needs of its customers and other stakeholders.

Customer satisfaction is the core factor of any effective organization. It helps employees to

become bold in performance of their function and adopt leaning behaviour (Collins et al., 1994;

Nadler, 1998; Senge, 1990). Carley & Ren (2001) have experienced that factor leading to

adaptability as an interim measure performance on the short run. Adaptability is woven in

creating change, customer focus and organization learning.

Adkins et al, (1999) are of the view that the extent to which the individuals are involved in a

collaborative manner is the pathway towards the accomplishment of enterprise goals. Dr.

Denison (1990) believes that “The sense of responsibility in an individual towards his task

refers to his involvement in that task”. the employee’s interest areas are empowerment, team

orientation and capability development. Jones et al., (2005) believe that more the employee is

involved more is the organizational performance with flexible provision of effort. Good

workplace practices are considered destiny to achievement of organizational goals as they

have high learning curve.

A. Fahim and M. F. Fahim IJAISL - Volume 6, Issue 16 (2013), pp. 104-116

109

Organizational culture supportive for knowledge management, may lead to improved

organizational effectiveness. (Brain Lehaney, Gillian Jack, Steve Clarke, Elayne Coakes, 2004)

states that employee attitude plays the mediating role between organizational culture and

organizational effectiveness. But it is very important to continually analyze and the realignment,

if needed, the organizational culture shortens the gap between espoused and existing

organizational culture which will take the organization towards knowledge management

(Kimberley Buch, David K. Wetzel, 2001). Organizational culture or environment plays a

significant role not only in the selection of knowledge management strategies but on the

implementation of knowledge management as well (Martin E. Gein, Tilo Bohmann and Helmut

Krcmar, 2007).

CONCEPTUAL FRAMEWORK On the basis of extensive literature review, some of the variables have been ascertain that

their effectiveness should be analyzed.

Schematic Diagram

Hypothesis Some of the hypothesis has been determined to analyses variable established in the

schematic diagram as under:

H1: Knowledge management has significant effect on competitive advantage H2: Knowledge management has significant effect on competitive advantage

METHODOLOGY Research Design

The method adopted for this study is in relation to the factors which are contributory and plays

their role in attaining the competitive advantage. Research design of this study consists of the

details about the targeted population, sample and measuring scale. The statistical tools and

techniques used to analyze the data from the selected sample represent the relationship

among the variables and trends of variation in them.

Knowledge

management

Assimination

Retention

Dissemination Culture

Involvement

Adaptability

Competitive

advantage

IV DV MEDIATOR

Role of Knowledge Management in Cultural Perspective: Major Corporate Sector of Islamabad, Pakistan

110

Population, Sample & Respondents The targeted population is of major Banking sector of Pakistan. Population constituted with

private banks of Islamabad Pakistan. Sample selected from the population consists of 350

respondents. Sample consists of first line and middle levels of officers at managerial positions.

The respondents are in the age range from 25 to 40 years and minimum qualification is

Masters with work experience not less than 1year.

Instrument & Measure Data collection is done through the structured questionnaire which is comprised of two

sections. The first section is about the personal information and second section consists of

details related to variables under study and their sub constructs. Questionnaire is adapted and

taken from the studies of previous researchers. Some of the elements are adjusted according

to the requirement. Items of questionnaire are measured against 5 point Likert scale. The

questionnaire used for data collection is self explanatory. Data collected from the respondents

is analyzed through the SPSS.

RESULTS & DATA ANALYSIS The factors contributory of the knowledge management and its effects on competitive

advantage is analyzed through SPSS and also the elements comprised knowledge

management with mediating effects of culture and their effects on competitive advantage have

been analyzed to determine the strength of relationship.

Table 1: Reliability and Validity of Variables

Cronbach’s Alpha Mean Standard Deviation

Involvement .733 3.756 1.281

Adaptability .712 4.011 .763

Knowledge Assimination .771 3.707 1.302

Knowledge Dissemination .765 3.805 1.105

Knowledge Retention .745 3.905 .950

Competitive advantage .771 3.707 1.302

Table 1 explains the reliability of the culture dimensions of involvement and adaptability are

.733 and .712 respectively as it shows acceptable level of reliability. Knowledge management

shows level of reliability .712, .771, and .765 of knowledge assimination, dissemination and

retention and depicts level of reliability in accepted range. Lastly, competitive advantage is

positioned on .771 level of reliability. All the reliabilities fall within the suggested and

acceptable range which concludes that data taken is reliable and can be used for further

statistical analysis and testing. In other words the knowledge management is built up with three

constructs i.e. assimination, dissemination and retention and culture consideration comprised

A. Fahim and M. F. Fahim IJAISL - Volume 6, Issue 16 (2013), pp. 104-116

111

of involvement and adaptability which particularly depicts that employees involved with their job

roles and adaptable with the situation can create the competitive advantage.

Table 2: Correlation among the Variables Correlations

CULTURE KM COMPETITIVE ADVANTAGE

CULTURE Pearson Correlation 1 .806** .856**

Sig. (2-tailed) .000 .000

N 45 45 45

KM Pearson Correlation .806** 1 .812**

Sig. (2-tailed) .000 .000

N 45 45 45

COMPETITIVE ADVANTAGE Pearson Correlation .856** .812** 1

Sig. (2-tailed) .000 .000

N 45 45 45

**. Correlation is significant at the 0.01 level (2-tailed).

Table 2 shows the knowledge management is positively correlated with the competitive

advantage. The data considerations reveal that the knowledge management has positive and

significant effect on the competitive advantage directly. It shows that the change is values of

knowledge management there would be change in the competitive advantage and the direction

of movement will be same. The relationship among the variables is held significant as the p

value is less than 0.05 and these are showing 86% effect of knowledge management in

creation of competitive advantage. Whereas the culture is affecting the competitive advantage

by 80.6% and it shows the strongly positive effect.

In brief the relationship amongst the both variables stay positive and highly significant. It shows

the aspect that the positive contribution of knowledge management makes the organization to

attain the competitive advantage and on the other side culture plays very important role in

contributing organization at the path of success. If any of the constructs of KM and culture

could not get success in contributing towards organization then competitive advantage would

be not pleasant. Hence H1 and H2 are positively significant and proved.

Role of Knowledge Management in Cultural Perspective: Major Corporate Sector of Islamabad, Pakistan

112

Table 3: Model Fit Summary Model Summary - 1

Model R R Square Adjusted R

Square

Std. Error of the Estimate

1 .812a .660 .652 .314595

a. Predictors: (Constant), KNOWLEDGE MANAGEMENT

ANOVAb

Model Sum of Squares df Mean

Square

F Sig.

1 Regression 8.245 1 8.245 83.311 .000a

Residual 4.256 43 .099

Total 12.501 44

a. Predictors: (Constant), KNOWLEDGE_MANAGEMENT b. Dependent Variable: COMPETITIVE_ADVANTAGE

Coefficientsa

Model Unstandardized

Coefficients

Standardized

Coefficients

t Sig.

B Std. Error Beta

1 (Constant) .239 .392 .610 .545

KNOWLEDGE_MANAGEMENT .872 .095 .812 9.127 .000

a. Dependent Variable: COMPETITIVE_ADVANTAGE

The values in table 3 shows significantly strong impact of the knowledge management on the

competitive advantage. The value estimated by statistics shows that 65% of knowledge

management amplification in the organization effectuates the resulting competitive advantage.

This critical value indicates that knowledge management is the core and important determinant

of the competitive advantage.

The model summary shows the strongly significant impact of the knowledge management on

the competitive advantage with culture as the mediating variable. The value estimated by

statistics shows that 72% of knowledge management amplification in the organization when

the cultural aspect is to be envisaged for the enhancement of resulting competitive advantage.

This critical value indicates that knowledge management with supportive culture is the

foundation and key determinant of the competitive advantage.

A. Fahim and M. F. Fahim IJAISL - Volume 6, Issue 16 (2013), pp. 104-116

113

Model Summary – 2

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .856a .734 .727 .278303

a. Predictors: (Constant), CULTURE

ANOVAb

Model Sum of

Squares

df Mean

Square

F Sig.

1 Regression 9.171 1 9.171 118.403 .000a

Residual 3.330 43 .077

Total 12.501 44

a. Predictors: (Constant), CULTURE

b. Dependent Variable: COMPETITIVE_ADVANTAGE

Coefficientsa

Model Unstandardized

Coefficients

Standardized

Coefficients

t Sig.

B Std.

Error

Beta

1 (Constant) 1.869 .182 10.291 .000

CULTURE .512 .047 .856 10.881 .000

a. Dependent Variable: COMPETITIVE_ADVANTAGE

DISCUSSION & MANAGERIAL IMPLICATION This study confirms the relationship between the knowledge management and competitive

advantage as it is a necessity for the organizations to innovate the process, product or service

inorder to make the survival possible and this study has provided empirical support and 80%

contribution of knowledge management is seen and its amplification proves the organization at

competitive position and the same was reported by Davey (2005) who has claimed and

reported the knowledge management is the integral part to achieve the competitive advantage

which embraces organization at competitive position. This proclamation describes that 92% of

knowledge management amplification to attain the competitive advantage. The same was

claimed by Solomon and Goldsmith (2005) realized the real value of KM to be the effective role

playing to achieve the competitive advantage. Hence the H1 is accepted.

Cultural aspect cannot be ignored in the modern practices era. Knowledge assimination and

dissemination is possible and resulting positively when the culture is highly adaptable and let

the personnel involved in it. Cultural aspects discussed by Hofstede () reported positive results

and significant effects of culture on organizational competitive advantage. This research

reported cultural infusion 72% which significantly proves its positive effects. Coakes (2004)

claimed 78% of cultural mediation to attain the competitiveness. Therefore the H2 is accepted.

On the basis of these facts following recommendations have been made:

Role of Knowledge Management in Cultural Perspective: Major Corporate Sector of Islamabad, Pakistan

114

Organizations should pay particular attention to manage the knowledgeable activities

across the hierarchal levels.

HR managers and practitioners should be engaged while making and organizing the

learning processes through which people could access knowledge easily

HRD practitioners should employ organizational knowledge management to figure out

an organizational learning culture, which in turn improves human resource practices.

CONCLUSION The employee involvement is the core requirement to establish the competitive advantage.

Moreover building up of an infrastructure requisite a knowledge supportive culture is to be

introduced in the organization to make the sharing and distribution of information possible. The

empowerment, team orientation and capability development of an individual relating to the

organization should be enhanced.

A knowledge based culture adapted with competitive environment and involved behavior

regarding the strategies to be implemented in functionalize and knowledge supportive

enterprise can increase the survival rate of organization and of course the competitive

advantage as well.

Futuristic perspective is to be linked up with the growth of knowledge management concept

and its implementation in organizations and seek towards the diversified methods of research

those could be needed to understand that how organization manages their resources and get

best out of these to create competitive advantage.

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INTELLECTBASE DOUBLE-BLIND REVIEWED JOURNALS

Intellectbase International Consortium promotes broader intellectual resources and publishes reviewed

papers from all disciplines. To achieve this, Intellectbase hosts approximately 4-6 academic conferences

per year and publishes the following Double-Blind Reviewed Journals

(http://www.intellectbase.org/journals.php).

JAGR Journal of Applied Global Research – ISSN: 1940-1833

IJAISL International Journal of Accounting Information Science and Leadership – ISSN: 1940-9524

RHESL Review of Higher Education and Self-Learning - ISSN: 1940-9494

IJSHIM International Journal of Social Health Information Management - ISSN: 1942-9664

RMIC Review of Management Innovation and Creativity - ISSN: 1934-6727

JGIP Journal of Global Intelligence and Policy - ISSN: 1942-8189

JISTP Journal of Information Systems Technology and Planning - ISSN: 1945-5240 JKHRM Journal of Knowledge and Human Resource Management - ISSN: 1945-5275

JIBMR Journal of International Business Management & Research - ISSN: 1940-185X

The US Library of Congress has assigned ISSN numbers for all formats of Intellectbase Journals - Print,

Online and CD-ROM. Intellectbase Blind-Review Journals are listed in major recognized directories: e.g.

Cabell’s, Ulrich’s, JournalSeek and Ebsco Library Services and other publishing directories. Intellectbase

International Consortium publications are in the process to be listed in the following renowned Journal

databases e.g. ABI/INFORM, ABDC, Thomson SCIENCE and SOCIAL SCIENCE Citation Indexes, etc.

Note: Intellectbase International Consortium prioritizes papers that are selected from Intellectbase conference proceedings for

Journal publication. Papers that have been published in the conference proceedings, do not incur a fee for Journal

publication. However, papers that are submitted directly to be considered for Journal publication will incur a US$195 fee to

help cover the cost of formatting, printing, processing, archiving, indexing & listing, postage & handling if accepted. Papers

submitted direct to a Journal may be emailed to JournalAbbreviation@intellectbase.org* (e.g. IJAISL@intellectbase.org*,

JAGR@intellectbase.org*, etc.).

* By submitting a paper, authors implicitly assign Intellectbase the copyright license to publish and agree that at least one (if

more authors) will order a copy of the journal.

International Journal of Accounting Information Science and Leadership Individual Subscription Request

Please enter my subscription for the International Journal of Accounting Information Science and Leadership

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Within the United States Outside the United States

Annual Individual Subscription - US$150 Annual Individual Subscription - US$150

Begin the annual subscription with the: Current Issue Next Issue

Single Issue - US$79 Single Issue - US$85

If you are requesting a single issue, which issue (Volume, and Issue) are you requesting ? ______________

Payment by check in U.S. Dollars must be included.

Make check payable to: Intellectbase International Consortium

Send this Subscription Request and a check to:

IJAISL Subscription

Intellectbase International Consortium

1615 Seventh Avenue North

Nashville, TN, 37208, USA

All e-mail enquiries should be sent to: ijaisl@intellectbase.org

International Journal of Accounting Information Science and Leadership Library Recommendation

(Please complete this form and forward it to your Librarian)

Dear __________________________________ (Librarian’s name)

I recommend that _______________________________________ (Library’s name) subscribe to the following

publication.

International Journal of Accounting Information Science and Leadership (IJAISL) ISSN: 1940-9524 (US$225

/Year)

I have indicated the benefits of the above journal to our library:

(1=highest benefit; 2=moderate benefit; 3=little benefit)

1 2 3 REFERENCE: For research articles in the field of Accounting, Information Science and Leadership.

1 2 3 STUDENT READING: I plan to recommend articles from the above to my students.

1 2 3 PUBLICATION SOURCES: This journal is suitable to my current research agenda.

1 2 3 PEER EVALUATION: This journal is highly regarded by my peers around the world.

Name ________________________________________________________________________________

Title ______________________________________ Telephone ( ______ ) ________________________

Mailing Address ________________________________________________________________________

_____________________________________________________________________________________

City ________________________________ State ____________________ Zip Code ______________

Library Subscriptions: Within the US - US$275

Outside the US (includes air mail postage) - US$295

Payment by check in U.S. Dollars must be included.

Make check payable to: Intellectbase International Consortium

Send this Subscription Request and a check to:

IJAISL Subscription

Intellectbase International Consortium

1615 Seventh Avenue North

Nashville, TN, 37208, USA

Tel: +1 (615) 944-3931; Fax: +1 (615) 739-5124

www.intellectbase.org

All e-mail enquiries should be sent to: ijaisl@intellectbase.org

For information about the following Journals, please visit www.intellectbase.org

IJEDAS-International Journal of Electronic Data Administration

and Security

JIBMR-Journal of International Business Management &

Research

JOIM-Journal of Organizational Information Management

JISTP-Journal of Information Systems Technology and

Planning

JWBSTE-Journal of Web-Based Socio-Technical Engineering

JKHRM-Journal of Knowledge and Human Resource

Management

JGIP-Journal of Global Intelligence and Policy

IHPPL-Intellectbase Handbook of Professional Practice and

Learning

RHESL-Review of Higher Education and Self-Learning

RMIC-Review of Management Innovation and Creativity

IJSHIM-International Journal of Social Health Information

Management

JAGR-Journal of Applied Global Research

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