Management Science during Destabilization Global Perspective

Management Science during Destabilization

Global Perspectivevol. 6

Management Science during Destabilization

Global Perspectivevol. 6

Scientifi c editors:Prof. Tengiz Chachibaia, Ph.D.

Halina Łyszczarz, Ph.D.Agnieszka Żak, Ph.D.

Cracow – Tbilisi 2015

Scientifi c editors:

Prof. Tengiz Chachibaia, Ph.D.

Caucasus International University

Halina Łyszczarz, Ph.D.

Cracow University of Economics

Agnieszka Żak, Ph.D.

Cracow University of Economics

Scientifi c reviewers:

Prof. Nino Chkhartishvili, Ph.D.

Business & Agricultural Business, Caucasus International University

Prof. Fulbright Scholar Kakhaber Djakeli, Ph.D.

Business & Marketing & Management, Caucasus International University

Associated Prof. Maya Meladze, Ph.D.

Business & Tourism, Caucasus International University

Prof. Wakhtang Svanadze, Ph.D.

Business & Finance & Stock exchange , Caucasus International University

Prof. Janusz Teczke, Ph.D.

Head of International Managemet Department, Cracow University of Economics

Cover design:

Teresa Bubak-Mitela

Publication coordination:

Dominika Guja, M.Sc.

Monika Sady, Ph.D.

Piotr Sedlak, M.Sc.

Composition and typeset:

Studio Grafi ki i DTP Grafpa, www.grafpa.pl

© Copyright by International Management Foundation,

Cracow University of Economics, Cracow 2015

Polish ISBN 978-83-937642-4-2

Georgian ISBN 978-9941-0- 77 86-9

Print:

Drukarnia GS sp. z o.o.

43 Zabłocie Street

30-701 Cracow

Poland

Contents

Preface

Chapter 1. Theoretical Approach

Andrzej Herman, Tadeusz Oleksyn

Values in Management. Theoretical Refl ections ..........................................................................................................................13

Grzegorz Urbanek

Challenges in Brand Valuation – How to Grasp a Real Brand Value ......................................................................................... 27

Andrzej Szromnik

Consumer Ethnocentrism vs Consumer Xenocentrism – an Attempt to Identify the Anatomy of the Phenomenon .........39

Irena Hejduk

The Impact of Modern Technologies on Employee Safety Knowledge Management ........................................................59

Agnieszka Żak

The Theory of Crossvergence between Foreign Branches of Corporations .........................................................................69

Chapter 2. Functional Approach

Bogdan Nogalski, Przemysław Niewiadomski, Agnieszka Szpitter

Flexibility of the Manufacturing Plant’s Functioning as a Manifestation of its Strategic Business Relations

on International Markets – Case Study ..........................................................................................................................................83

Jerzy Kisielnicki, Celina M. Olszak

Agility in R&D Project on the Example of Organizational Creativity Support Design ........................................................ 103

Tomasz Czapla

Functional and Process-Based Approach to the Analysis of the Business Model of the Organization ........................ 119

Hanna Włodarkiewicz-Klimek

The Infl uence of Human Capital on Shaping Agility of a Knowledge–Based Organization ............................................. 129

Renata Oczkowska

Image of the Employer in the Concept of Personnel Marketing ............................................................................................. 139

Halina Łyszczarz

Relationship of Responsibility in Economy ................................................................................................................................. 149

Piotr Sedlak

From Salary to Total Rewards – The Evolution of Compensation .......................................................................................... 159

Malgorzata Machaczka

Leadership in the Context of Cultural Diversity............................................................................................................................167

Chapter 3. Network Approach

Maria Romanowska, Agnieszka Sopińska

Resource Strategies of Companies during the Crisis ................................................................................................................ 181

Michał Trocki, Mateusz Juchniewicz

Good Practice in Project Management – Research Results .................................................................................................. 195

Piotr Jedynak, Monika Jedynak

Business Networking – the Essence, Rationale, Practices ....................................................................................................207

Krzysztof Machaczka

The Concept of Outsourcing Organization as an Alternative to Modelling a Contemporary Company .........................221

Czesław Zając

Strategic human resource management in capital groups ...................................................................................................237

Preface

For many disciplines contemporaneity has always been a source of inspiration, cre-

ation of new theories and concepts, element of unpredictable, but also projected phe-

nomena. Many concepts turned out to be erroneous, but their criticism often became

a leaven of new thoughts and scientifi c discoveries. From this perspective twenty-fi rst

century is no diff erent from previous ones. Created concepts- often under a new name

and with minor changes- refer to the views enunciated earlier, but also new innovative

concepts and current research trends are formulated. In many areas of science own sci-

entifi c achievements are enriched by achievements taken from other disciplines. In the

management sciences and economics one formulates expectations of a better under-

standing of both the organization and the turbulent environment. Th e environment has

always been “turbulent” and “unpredictable” since it has been analyzed by using avail-

able test methods. Is it possible therefore to predict the future of modern management

and whether its results will be included in research and their exemplifi cation?

Due to their diversity, the papers contained in this publication cannot be evalu-

ated, but they are certainly a source of inspiration and scientifi c discussion. First volume

of the publication, called “Global Perspective”, contains more general studies, going

beyond the experience of Georgia and Poland. Th e term “global” was used in a general

sense, universal, general, and not as in management- concerning “the world”. Consid-

erations included in this volume allow to divide them into those that can be regarded

as a fundamental theoretical topics, those in which the principal emphasis was placed

on the analysis of one or several management functions and those where the nature of

relationships was specifi ed as “networking”.

Papers assigned to the fi rst volume, Th eoretical Approach, are “Values in man-

agement theoretical refl ections”, “Challenges in brand valuation – how to grasp a real

brand value”, “Consumer ethnocentrism vs consumer xenocentrism – an attempt to

identify the anatomy of the phenomenon”, “Th e impact of modern technologies on em-

ployee safety knowledge management” and “Th e crossvergence theory between foreign

branches of corporations”.

Chapter number two, Functional Approach, includes following papers: “Flexibil-

ity of the manufacturing plant’s functioning as a manifestation of its strategic busi-

ness relations on international markets”, “Agility in R&D project on the example of

organizational creativity support design”, “Functional and process-based approach to

the analysis of the business model of the organization”, “Th e infl uence of human capital

on shaping agility of a knowledge–based organization”, “Image of the employer in the

concept of personnel marketing”, “Relationship of responsibility in economy”, “From

salary to total rewards – the evolution of compensation” and “Leadership in the context

of cultural diversity”.

Last part of the publication, regarding Network Approach, includes: “Resource

strategies of companies during the crisis”, “Good practice in project management”,

“Business networking – the essence, rationale, practices” and “Th e concept of outsourc-

ing organization as an alternative to modelling a contemporary company”.

Th e second volume, called “Local Insight”, to a greater extent refers to the experi-

ence of Poland and Georgia, but also includes the European dimension recognized as

the connector of community.

European Perspective includes “Integrated territorial investments as a tool of the

“new regional policy”, “Transition of academic culture in European universities”, “Change

management in an international partnership on the example of EU projects – a case study

of Cracow University of Economics”, “Th e impact of trust-based relations on fi rm’s per-

formance: evidence from transition economies”, “Risk management in entities generating

energy from renewable sources on the example of a wind turbine”, “Th e role of the LNG

terminals in security of gas supplies in the Baltic sea region” and “Public relations in self-

government in the context of the governance concept management”.

Th e experience of Georgian management is presented in second part: “Quanti-

tative analysis of domestic tourism”, “Market equilibrium modeling for the nonlinear

demand-supply dynamics”, “Country brand building by factors of irrationality and the

new advantages of its acceptability, aff ordability, accessibility and awareness”, “Th e im-

portance of leasing for the development of businesses and its perspective in Georgia”

and “Management of water resources; cases of Poland and Georgia”.

Th e entire publication is closed by papers regarding Polish Perspective: “Th e pro-

cesses of formation of dynamic capabilities in Polish companies”, “Th e role of family

business in the development of market economy (the case of Poland)”, “Th e problems

and decision-making processes in managing the restructuring of contemporary com-

panies”, “Th e intelligence of Polish enterprises during the period 2007–2011”, “To-

wards a new paradigm of strategic management: some results of research on knowl-

edge management in creative clusters in Poland”, “Th e system of management of the

environmental protection in Poland and in Georgia”, “Cultural bases of leadership style

in Polish holdings”, “Risk in operations of service companies noted on Newconnect”,

“Perception of lobbying in the Polish society”, “Eff ects of introduction of the process

management in the public administration on the example of the social security institu-

tion” and “Th e role of the internal audit within corporate risk management viewed from

the perspective of the corporate governance function”.

Th is publication is the result of the eff orts of many outstanding authors, whom on

behalf of the editorial committee I would like to thank. I am also grateful to the Com-

mittee on Organizational and Management Sciences of the Polish Academy of Sci-

ences for supporting following monograph and the Conference of Polish Management

Professors. Conference co-organizer, Caucasus University, helped to popularize Polish

management in Georgia, but also allowed to learn the heritage of Georgian manage-

ment. I express deep gratitude to the University authorities and its Employees.

I’d like to give special thanks to the Employees of the Department of International

Management, Piotr Sedlak, Dominika Guja and Monika Sady, for their support and

preparation of this publication.

Chapter 1

Theoretical Approach

VALUES IN MANAGEMENTTHEORETICAL REFLECTIONS1

P . A H , P .D.P . T O , P .D.W S E

Introduction

Management is based on values, although they are various and not always dis-

played. Probably, it is similar with economics, although one can sometimes argue that

economy is devoid of values and morality. Even if it is so, it is worth remembering, how-

ever, that in its scientifi c beginnings (in the modern times) it was initially referred to as

the moral economics and later political economics – which, of course, does not imply

that politics cannot be moral.

Th e values are understood diff erently in diff erent domains. It is most commonly

assumed that value is a feature, constituting an outstanding virtue of something or

someone [Great Dictionary of Polish Language (Polish: Wielki Słownik Języka Polskiego),

2008 p. 883].

Economics is characterized by the utility and exchange value. In management, val-

ues are often understood as advantages; they are the continuation of the Ancient Greek

virtues; etymologic virtue (gr. arete, lat. virtus), meant strength, courage, therefore a vir-

tuous person is someone strong and brave. In fact, one (still) has to be strong and brave

to lead people and organization towards the achievement of goals, at the same time re-

specting and promoting the defi ned values, not allowing the violation of the legal and

ethical principles, fi ghting pathologies.

Commonly recognized values can be the binder of an organization and a given

community. Th ey can bring closer and integrate people, facilitate understanding and

cooperation, motivate.

Values form defi ned systems, namely a relatively consistent sets of values – individual,

social or absolute/universal [Reber, 2002, p. 830]. Axiology, as a philosophy discipline, is

1 Research of Warsaw School of Economics in 2014

concerned with values. It is studying the nature of values, determining norms and criteria

of evaluation as well as systems of values, [PWN Encyclopaedia, vol. 1 p. 31]. A number

of diff erent fi elds of axiology has been developed and is still developing; it is possible to

talk about i.e., economic axiology and management axiology. Th e former is referred to in

the text of Andrzej Herman, while the latter in the work of Tadeusz Oleksyn.

Economic axiology and measurement of values2 Andrzej Herman

Th e historical view of axiology proves that it was established on the grounds of

Ethics and its object of research is the general theory of values and evaluation. To put

things more precisely, axiology’s research fi eld refers to searching for the essence of any

values (of course including economic), criteria of values, their gradation and methods of

evaluation – together with attempts of their quantifi cation. Axiology is a study, combin-

ing theoretical and practical sciences and any value seen with its perspective is the basic

criterion of assessment of human behaviours. It applies both to theoretical and practical

axiology. By nature, it is a category with a dynamic character, as it is greatly dependent

upon still evolving method of human perception of the world. Axiology, so understood,

is the general philosophy of values, with the use of which it is attempted to obtain as

adequate as possible, real image of the changing world. As this image cannot be static,

therefore, the main development tendencies should be presented in it .

Selection of such values, determines not only the directions of development, but

also has a great impact on goals adopted for their realization, confl icts occurring be-

tween them and, to a signifi cant extent, decides on the ways and methods of implemen-

tation. For these reasons, in the history of philosophical terms, axiology is one of the

most important and has a growing infl uence on any practical human activity.

Until recently axiology developed in the environment of social acceptance of fi xed

values, standards and criteria that originated from Ethics. In the ancient times, two the

most renowned minds of that period, Plato and Aristotle, as well as the Stoics have

undertaken an attempts to create an uniform and universal theory of the highest good.

However, the increase or decrease of usefulness and diff erent forms of economic impact

were beyond their interest.

Not all philosophical schools in the ancient Greece were concerned with such at-

titude. For example, the Epicureans who were the opponents of the Stoics, assessed the

moral values of acts from the perspective of the achieved usefulness, although they were

also trying to pay attention to the need of minimizing evil, if only it was possible.

However, in the modern times, these discussions were reopened by Immanuel

Kant, who argued the main axiological dilemma is not connected with the instrumental

2 Th ese matter is described in more detail in the article Aksjologiczne aspekty teorii i praktyki zarządzania wartością „Kwartalnik nauk o przedsiębiorstwie”, 2015 no. 2, p. 19–37.

14 Andrzej Herman, Tadeusz Oleksyn

values (usefulness) but with values he defi ned as „end in itself“, namely values which at

the same time are means and ends. From his point of view, the morality of a given act is

decided by selfl essness (obligation) and what he specifi ed as moral imperative.

Th is was the turning point of the modern Ethics. From that moment the interest in

the philosophy of values was gradually getting weaker and the naturalistic ethical trend

which i.e. reduced the values of subjective emotions began to gain importance. Th e

practical consequences of this condition are still visible today. For example, it enabled

the development of the behaviourist trend in social sciences which presently is more

and more visible in the economics, management and fi nances. It is also one of several

signifi cant reasons that resulted in the fact that behavioural fi nances are presently expe-

riencing so great prosperity.

Th is situation progressed at the turn of 20th and 21st century. As a result, the val-

ues, ethical standards and criteria in both their content and methods of interpretation

are being relativized more often and faster. Th us, the basis for the traditional Ethics is

weakening.

At present, the economic axiology more visibly becomes the basis for the theory

and practice of management. Th anks to it, we can discuss the philosophy or various phi-

losophies of management which are becoming the foundation of subsequent theoretical

generalizations via experience resulting from management practice. Th erefore, there is

a specifi c feedback that transfers onto the relationship between the higher levels and the

microeconomic level of actions.

It is also worth noting that the practice of management, in all of its aspects, most

frequently exceeds the theory of it. In such situation the theoretical generalizations are

being postponed. Th ey are created after gathering of suffi cient empirical material from

the practice of management. Global consulting companies access this material in the

fastest and most effi cient way, and they are not willing to make their knowledge and

experience promptly available to the academic world. Because of it, the academic theo-

retical generalizations are postponed as compared to practice. It is exactly as what Max

Weber noticed, stating that the practical assessment of some phenomena as deserving

the evaluation, rejection or approval can be done after some time.

Regardless of the existence of this pan-human moral foundation, the values, crite-

ria of evaluation and ethical norms are currently relativized more often and faster. Th is

applies both to their content and methods of interpretation. Similarly to the ancient

Philosophy which, at the beginning, included into the scope of its interest the full gam-

ut of the knowledge about the world and later on abstracted particular, more specifi ed

sciences from it, presently, the same process takes place for the contemporary axiology.

It is a refl ection of growing phenomena of social pluralisation and the changes in the

articulated values accompanying it.

Along with this, the so far basis for the traditional ethics and axiology disappears,

is being changed and limited. Th e theory of values has been progressively fragmented

into diff erent specialized areas. Th ose various, numerous areas of values and attempts of

Values in Management... 15

their specifi c improvement have become the objects of interest of philosophers of val-

ues. In consequence, gradually decreasing number of researchers is looking for an an-

swer to such basic questions as: what is the Omni value (what is its nature?) what are

the universal values, are there any (or can they be achieved?), and also, how to attempt

the integration of these highly fragmented areas? How to prevent the reduction of val-

ues to the material level only and putting them in opposition to the symbolic meaning

in practice of management?

As a result of the lack of unequivocal answers to the above questions, further radi-

cal changes occurred in the philosophy of values, Ethics and ethical standards. Also,

there has been the far reaching transformations in axiosphere. At this point, it is worth

referring to the ecophilosopher, Wiesław Sztumski, who emphasized the fundamental

change which in the evolution of Ethics. He emphasizes that, because of it, currently

the ethical norms are relativised more often and faster – both in their contents and

methods of their interpretation. As it is noted by Szumski: „over the centuries the axiol-

ogy was built on the basis of the fundamental ethical values characterized by a very high

commonness (universality), absoluteness and stability. However, the experience of the

twentieth century showed that there are no such values. Now, as a result, we are deal-

ing with the Ethics based on the changeable values, adjusted to the requirements of the

currently prevailing technologies and politics, as well as those made for use of diff erent

social groups, in particular corporations“ (Sztumski, 2013, p. 58–59).

Wiesław Sztumski‘s opinion that, currently, there is no common and permanent

values, is probably excessive. Th ey are present in the Ethics off ered by all great religions

(it is very similar in all of them, as opposed to religious doctrines which strongly dif-

fer in some matters) as well as resulting from the human rights, accepted by almost all

countries of the world. We are rather dealing with a co-existence of two phenomena.

Th e fi rst is the rebirth and discovering anew the universal values in tedious process of

their critical review in the context of often extremely diffi cult historical experiences and

sometimes no less diffi cult individual experiences. Th e second is associated with the

belief that in the pluralistic world, there are diff erent systems of values and completely

diff erent possible interpretations of the same phenomena or process, including the eco-

nomic. Th is often happens on the basis of the analysis of the same empirical material.

Subsequently, such a situation transfers into a diff erent results obtained in the processes

of management. Th is results in a diff erent degree of implementation of the assumed

goals as well as in diff erent eff ects – both desired and undesirable.

As it has been already mentioned, currently, the frequent starting point for the re-

search conducted by axiologists is the assumption of the multiplicity and relativity of all

values, which also includes the economic one. Such a situation caused the gradual mar-

ginalization of the studies of the mutual relations between the cause-and-eff ect analysis

and the interdependencies between various fi elds of the economic value.

In this situation, incorporating the issues of the economic value into an empiri-

cal research and building a practical strategy of an enterprise generally begins with tri-


als measuring its various attributes – their parameterisation and quantifi cation to fi nd

a way to some kind of systematization. It is often forgotten that precision of measure-

ment of the economic value using various measures not so much depends on their ex-

cellence, as they are inherently neutral – but on their selection, reliability and the ac-

curacy of interpretation, hence, to a large extent, also on the professional qualifi cations

and morale of the interpreters.

In such context Ladislau Dowbor aptly stresses that: However, the key is to over-

come a tradition of make-believe objectivity in economics, as if it were only restricted

to modelling what is happening; economics often seems so complicated because diff er-

ent interpretations merely serve diff erent interests and we face contradictory analyses

because the interests are diff erent.“ [Dowbor, 2009, p. 31].

Hence, we can not only make many expensive mistakes, but also occur many mis-

uses and manipulations may occur (the example of which is the so-called „ creative ac-

counting“). It is also necessary to clearly emphasize that measuring the economic value,

its evaluation or in a broader perspective, measurement (not only quantitative, but also

qualitative) – have currently became „conditio sine qua non” of any reasonably conducted

processes of management.

Because of it, further changes have occurred. Th e theory of the economic value has

been progressively fragmented into diff erent specialized areas. Th ose various, numerous

areas of values have currently became the objects of interest of philosophers of values.

Also, gradually less and less researchers are looking for an answer to the question: what

is the Omni value (what is its nature?) what are the universal values, and also, how to

attempt the integration of these fragmented areas.

Currently in Poland, approximately forty various kinds of ethical codes of profes-

sional groups can be found. In fact the so called sets of desired rules of behaviour are

just ethical standards, namely principles of how it should be (what pattern of the desired

behaviour is to be like). When analysing them, it is diffi cult to fi nd any universal values

to validate them and to justify their reasons to exist. Th e mere fact of their existence

should also induce a question, whether everything is going well in these groups, if there

is the need for creating this kind of documents.

Adopting diff erent axiological assumptions leads to various conclusions. As a re-

sult, this enables completely diff erent interpretations of the same phenomena or a pro-

cess (on the basis of the analysis of the same empirical material). Th e assumption of the

multiplicity and relativity of values, including the economic value, became the starting

point for many research projects conducted by axiologists. Th e studies on the mutual re-

lations of the cause-and-eff ect analysis of various areas of values were marginalized. As

a result, incorporating the issues of values into an empirical research started from trials

measuring its various attributes – their parameterization and quantifi cation.

Precision of measurement of the economic value using various measures depends

not only on their excellence (they are inherently neutral), but on reliability and accuracy

of their interpretation, namely to a large extent, on the interpreters. Hence this is also


an area where it is possible to make many expensive mistakes and where many misuses

and various manipulations can occur.

Measuring the economic value, its evaluation or, in a broader perspective, measure-

ment, not only quantitative, but also qualitative – have currently became the “conditio

sine qua non” of the management processes.

Because of this, a clear and increasingly stronger relationship was established in

economics between one of the fi elds of axiology, namely the axiology of the econom-

ic value and the striving to fi nd and improve various methods of its measurement.

Perception of socio-economic life from the perspective of recognised values means

the increase in their practical importance. Th is requires widening and enriching the

scope of cognitive interests of axiology. Not only processes of implementation of values,

but also the entities which are their creators and at the same time the participants of

these processes should be widely incorporated in its area of interest.

Clearer and stronger relationship between axiology and measurement of values

opens a new cognitive possibilities and research areas in economics, management and

fi nances as well as creates a chance for launching a large, long-term, internation-

al, Polish and Georgian research project and an important educational trend in the

fi eld of the theory and practice of the economic value management.

Th e results of the research conducted by SGH3 in 2014Tadeusz Oleksyn

Subject, Implementers, the aims of the research

Research subject THE MANAGEMENT RESPECTING AND PROMOTING

VALUES was implemented in 2014 and preceded by the development of methodology

and tools – surveys in the initial and research versions, scheme for examining of case

studies and IT system supporting the research and facilitating the results compilation.

Th e Author of IT system was Piotr Stańczyk, MSc., Eng. Th e subject was implemented

under statutory research of SGH (KNOP/S/03/14).

Th e 2014 research were preceded by a wider analysis of the literature on the subject

and studies related to the concept of management by values, (Management by Values),

performed in 2012.

Implementers of the 2014 research from the Warsaw School of Economics

(SGH) were Professors Andrzej Herman and Tadeusz Oleksyn and doctoral candidate

of SGH, mgr. Andrzej Metelski. Research team was extended with Izabela Stańczyk,

Ph.D., from the Institute of Economics and Management of the Jagiellonian Univer-

sity in Cracow and Grzegorz Sobieckiego, Ph.D. from the Department of Economic

– IT system of the Warsaw University of Life Sciences (SGGW).

3 Szkoła Główna Handlowa w Warszawie/WARSAW SCHOOL OF ECONOMICS


Th e main purpose of the research was to determine the situation of the issue of

respect and use of values in management in organizations operating in Poland. Th e

opinions of the representatives of two groups were studied: managers and specialists,

which enabled to at least consider two partially diff erent points of view – the executives

and employees. Th e aim of the research was also to confront with reality the current,

generally critical and very critical opinions about the values in management.

Specifi c goals were the following:

(1) determining the importance of diff erent groups of values in management and re-

spective priorities;

(2) identifi cation of the impact of values on management in organizations of diff erent

types;

(3) determination of which values gain importance and which lose;

(4) determination and examination of the common values, (very often called corpo-

rate) of the examined organizations;

(5) recognition of values respected in the personnel policy (with decisions about em-

ployment and layoff s, promotions and demotions, evaluations of work and employ-

ees, salary, intangible awards);

(6) determining to what extent and how the values can be used in professional man-

agement – including the specifi c nature of entities with various legal and organiza-

tional forms.

Research theses

Th e main adopted thesis is as follows: Th e management respecting the recognized val-

ues – not only economic – increases the credibility and the eff ectiveness of an organization,

corresponds to the contemporary needs and expectations of the executives and employees, fosters

integration of people in the organization, facilitates conduct of personnel policy.

Detailed theses:

1. Values are always considered by the management and have the moving spirit even, if it

happens unknowingly. Understanding this may have a positive eff ect on the attitude the

executives and employees have towards the values. A similar thought can be expressed

in words: Management devoid of values is impossible, it does not exist in practice

– even if managers programmatically distance themselves from the values respect-

ing management. Hence, the question is not about the fact whether to respect the

value – because some are always respected4 – but which values are considered im-

portant and what is their hierarchy, as well as which values are reality (not in the

postulates or intentions) motivating to take action.

4 Profi t, profi tability of business activities is also a values. Th us, if the entrepreneur or other manager claims that the profi t is the exclusive goal of his/her business activity, then they also opt for the specifi ed value, although probably too unilaterally.


2. Professional and eff ective management through values only is impossible. Th erefore, the right

way is to seek compilatory, integrated techniques, where values have some, however, inherent-

ly limited, role to perform or use the management respecting and promoting values, instead of

MBV. Hypothesis (2) assumes that although values in management are necessary and

utilized, restricting only to management by values (MBV) would not be a good idea,

because it would make the management too soft and “imprecise”, hinder (perhaps even

make impossible) its operationalization. Th erefore, it would seem advisable to rather

assume the compilatory techniques, where MBV is one of the two or more manage-

ment techniques – for example, next to the management by objectives, management

by results, off ensive management or other method, according to the needs of the or-

ganization. Hypothesis (2) contains the belief that values should enrich management,

rather than strip it from any “hard” elements, concreteness and calculability. Intentional

creating and popularization of the illusion that adherence to specifi c values is suffi cient

for an eff ective and effi cient management would not be advisable.

3. Referring to the tyranny of values by Nicolai Hartmann [Koza – Granosz, 2009]

we would like to express a belief that absolutism and excessive promotion of any single

values or a homogenous group of values is not purposeful.

4. Th e economic values are dominant in large corporations, especially in joint stock compa-

nies. In the smaller entities, not being the joint stock companies larger sustainability of

economic and extra-economic values takes place.

5. Operationalization of management with the use of values is not easy and the entire

process is, in general, hardly advanced in enterprises.

Th e research report

Th e research report – Th e management respecting and promoting values, editors An-

drzej Herman, Tadeusz Oleksyn and Izabela Stańczyk, – has 307 pages (including

82 tables and 53 charts). Has been positively reviewed by Professor Dr. hab. Krzysztof

Marecki, Ph.D. and is currently prepared to be published. It consists of three parts:

I. Results of surveys (N = 512)

II. Four case studies, referring to the organizations distinctive within the good practices.

Th ese are:

(1) Capgemini, global and multicultural corporation of French origin, operating

in 44 countries, performing consulting services for management, IT technolo-

gies and outsourcing; Capgemini employs more than 130 thousand employees

all over the world, including nearly 6 thousand in Poland.

(2) Indigenous Polish engineering company Qumak S.A. one of the greatest in-

tegrators of the Polish data communications market. Qumak passed a long

way in a short time – from a small company established by a group of friends

– students then engineers, graduates of the AGH University of Science and

Technology in Kraków to one of the most important companies from the so-


called. “Th e List of 500 Largest Polish Companies”. Despite such signifi cant

development it was manageable to maintain the partnership culture type.

(3) Family owned company Five O’clock, established by the Brzezicki and Siess

families, whose key activity is the popularization of the culture of drinking

vintage types of coff ee and tea and the related cultural and social activity; this

company has its shops in all the largest Polish cities and maintains close rela-

tionships with producers in several dozen countries all over the world.

(4) Joint stock company Delphi Automotive S.A., the world leading supplier

of electronic solutions and technology systems in automotive, aviation and

telecommunication industries Th e concern owns 100 production plants and

33 technical centres in 32 countries worldwide, including in Poland; employs

more than 100 thousand employees, including 4 thousand in Poland.

Two original studies – by Andrzej Herman on the axiology of the economic values

and by Tadeusz Oleksyn on nature of values and catalogue of values proposal (present-

ing and describing 34 values, as well as their utilisation methods for the purposes of

management,).

Th e book- research report – THE MANAGEMENT RESPECTING AND PRO-

MOTING VALUES- THE RESEARCH REPORT will be published by the end of

2015 and at the beginning of 2016.

Signifi cant arrangements

1. Th e survey results are more optimistic and encouraging than expected. It turned

out that, at present, there is a propitious climate for popularization of management

with a greater use (at the same time, promotion) of values, and that the subject is

widely discussed in organizations.

2. Th e economic values are commonly regarded as important, however, 36% of the

respondents of the joint stock companies and 33% from other companies acknowl-

edge them as the most important. It does not confi rm the current views, sometimes

common in the lecture rooms that profi t or the company’s market value are the

most important as this answer was indicated by only one third of the respondents.

It turned out that the majority of the respondents appreciates the meaning of also

other than economic values.

3. Most often, the respondents perceive the impact of values on the management sys-

tem in an organisation as strong. It applies especially for the impact values on:

– the external image of the organization (79.6% of the respondents regard it as

strong or quite strong);

– motivating employees (72.9% indicate the impact as strong or quite strong);

– strengthening of the organizational and work discipline (72.5 % of the re-

spondents assess it as strong);

– overcoming crises (72.1% such indications);


– the increase of eff ectiveness of the organisation’s activities (71.6% of people

state that it is strong or quite strong);

– integration of people in the organization (66.3% people indicate as above).

However, there are some, generally not very signifi cant, diff erences between the eff ect

of the values on the organisation management depending on its legal and organi-

zational forms and the area of activities. Generally speaking, the impact of values

on management in the joint stock companies is slightly weaker than in other com-

panies and organizations from the public sector.

4. Th e meaning of the values is not stable in time – some gain importance, other lose

it relatively. Th e increase in importance of eff ectiveness (and profi tability) was in-

dicated most often, which can be connected with both high economic values in

the society and the profi le of education of the respondents (economics, manage-

ment): creativity, knowledge, professional development, competitiveness were also

very highly situated.

5. Th e research confi rms mentioned also by other researchers decrease in importance

of such values as trust (indicated most often) and subsequently: respect, social soli-

darism/solidarity as well as loyalty, understanding, fairness, health and life protec-

tion, friendliness, fl exibility, empathy, discipline and patriotism (in 10th place on

the declining list).

6. Th e sustainable development concept (and, at the same time, this value) is strongly

supported (93%), although two times more people than the number of people ex-

pressing an opinion that it is already implemented at the satisfactory level say that

it is not suffi ciently implemented. Th e support ratios are the highest in the joint

stock companies, although diff erences in assessments between them and other

types of organizations are not large.

7. Th e opinions regarding CSR are generally positive: 67% of the respondents ex-

pressed an opinion that the approach to social responsibility of their organization,

is “comprehensive and responsible” and 29% stated that their organizations are nei-

ther favourable nor unfavourable as compared to others. However, organizations

where standardized ethical audit is applied are in the clear minority.

8. With regard to the so-called. respect-based values (respect, dignity, friendliness,

observance of human freedom and privacy, etc.) 48% of respondents believe that

those are the actual pillar of creating relations with people both within the or-

ganization and beyond it; of creating the relations with customers, partners, local

communities, etc. however, 32% believe that those values are mainly declared, not

necessarily adhered to and 16% respondents is convinced that those values are re-

garded as secondary. Few percent of statements (3%) contained – in free descrip-

tions-critical opinions about the lack of respect for human dignity and low culture

and communication skills of executives. It is, however, a margin.

9. Among the respondents, the opinions related to the trust in “their” organisations are

generally better than those presented in the national research. Relatively many, 61%


of the respondents of our research claimed that “we can manifest trust and we are

trusted” and 35% believed that trust has to be strengthened, improved, because is not

the best. However, the CBOS survey (2012) shows that only 23% of Poles believe

that most people can be trust and 35%.trusts large companies. Compared to this, the

results of the research in question show more optimistic image. However, it is neces-

sary to point out that our research are related to the educated, professional people,

they refer to the own environments rather than external and were not representative.

10. Balancing professional work and other areas of life is quite signifi cant in the sense

of existence and the quality of living. Th e research proved that only in every fourth

organization, this problem is perceived as requiring system interactions in the scale

of the organization which may be surprising. In 50% of cases, it is believed that this

is the issue which have to be sorted out (exclusively) between employees and their

direct superiors. Although, only 22% of the respondents speaks critically about the

lack of interest and any activities, nevertheless the results can prove that the inter-

est in the topic, sense of initiative and activity are insuffi cient.

11. In 65% of cases (in the joint stock companies in 79%, in the examined entities from

the public sector in 49%) respondents inform that in their organisations the com-

mon (corporate) values have been identifi ed. Th ey are considered important and

expected to be observed. Most often the quantity of these common values is within

3 to 7. Relatively often these are: eff ectiveness, quality, customer satisfaction, re-

sponsibility, professionalism, business orientation, cooperation and teamwork, cre-

ativity and innovation, entrepreneurship. In most organizations, (70%) there is not

any single value recognized as the most important of all. Th e knowledge of these

values among the managers and employees is common in 34% of entities, quite

high in 51%, and small in 14%. Only 15% of respondents believe that utility of

these common values is very low and does not matter.

12. Th e values are taken into account in personnel policy and human capital manage-

ment, especially with regard to recruitment and selection of staff , in promotion

policy, evaluation of employee salaries, intangible awards. However, the associa-

tions are most often fragmentary, moderately important, visible approximately in

one third of organizations. Operationalization creates many diffi culties. Undoubt-

edly, this aspect of the chosen research subject requires more thorough research (we

have them planed), as well as new ideas and searches.

13. Th e main thesis has been confi rmed many times as a result of the studies. Among

the fi ve supplementary theses: the fi rst, fourth and fi fth were fully confi rmed by the

research. Second and third thesis were confi rmed only partially. It results mostly

from abandoning the fi rst more comprehensive version of the survey where a sep-

arate block of questions focused on confi rmation or reject of the second thesis.

However, we have concluded that a survey having 14 pages has small chances to be

fi lled in by anybody and that the block of questions about the second thesis in the

longer version of the survey was most diffi cult to provide answers to. Th us, we have


limited it to the eight-page survey containing 39 questions – which also could have

been troublesome for the respondents.

14. Th e case studies provided a number of specifi c, interesting and instructive exam-

ples of both respect and promotion of values in management, as well as eff orts

of managers to ensure the comprehensive personnel development, their welfare,

environment integration and good atmosphere at work. Undoubtedly, the enti-

ties selected have an exceptional management with ample amount of humanism

and the managers not lacking good will and creativity. Th ese studies prove that the

management respecting and promoting values is possible and may be profi table for

owners – which is proved by the distinctive business performance – and employees

who benefi t from more interesting and developing environment, possibility of cul-

tivation diff erent, not work-related interests with the help of the organization and

release of stress and tensions related to the professional work.

15. We believe that the term “Management by value” (MBV) is not the most suitable,

since it is impossible to manage through values only. As noted by i.e. contemporary

German philosopher Hans Joas [ Joas H., 2009, p. 212] the values are hardly sub-

ject to operationalization (if any) and management only by values would have to

resemble the management by appeals – diffi cult to accept by professional managers

and not recommended by us. Th at is why in the title of the report under the name

formally adopted for the research- “Management by value” – we have added the

subtitle “Th e management respecting and promoting values”.

16. Some added value, stated in the report, is author’s suggestion of the Catalogue,

covering 34 organizational values (most of which were non-economic, but gener-

ally positively aff ecting also economic ones). Th e Catalogue is a non-binding sug-

gestion for the organizations. It seems that the selection and description of these

values can facilitate the works on management more respectful of and better pro-

moting values, as well as further research on the values in management. A great

weakness of the latter happens to be the lack of defi nition. For example, a tremen-

dous international research conducted every few years (Poland also participates in

it), by ECCO the International Communications Network, including 11 countries

and thousands of companies, receive from them tens of thousands of values names.

It does not make sense, because the work is performed on an unsorted sets, the di-

visions are vague, the results misleading and their interpretation largely false.

Conclusions

1. Especially, the contemporary history confi rms the importance of relevance and

usability of axiology – also in the fi elds of Economics and Management (man-

agement sciences and, in particular, practice). It justifi es the larger interest in the

topic of values in the economics and management, including the need for scien-


tifi c refl ection and research – especially since the practice most often exceeds the

theory of it.

2. Th e clash of two orientations is visible: (1) the weighting towards the universal val-

ues, although continuously undermined and verifi ed, dismantled and reconstructed

– with the belief of their indispensability, and (2) restricting the importance of the

universal values, their challenging and sometimes even rejection, in various ways

justifi ed. Th is dichotomy will not be changed for a long time.

3. Objectivity of the economics is problematic, since extremely important role here is

played by the discrepant interests, which aff ects points of view, adopted interpreta-

tions and recommendations. Inevitably, it has aff ected the axiology. Ideologization of

economics and economic policy has a destructive and limiting eff ect on the independ-

ence of thoughts, untrammelled exchange of views, freedom of speech and searches.

4. Th e research conducted and briefl y described here revealed the favourable climate

for management respecting and promoting values in organizations. Th e vast ma-

jority of managers and employees want compliance of values and propagated and

actually binding principles; above all, they want for the professed values and prin-

ciples to exist and to be really binding.

5. Th e research confi rmed that neither profi t, nor increase in value for the owners/

shareholders is the most important objective – though it is certainly valid. Th e opin-

ion that the well-being of all stakeholders should be secured gained a wider approval.

Th e goals, adopted by the organizations are also more thoroughly perceived.

6. Th e meaning of values changes over time. Th e research demonstrates that in recent

years in particular the eff ectiveness, knowledge, development creativity, competitiveness

are becoming more important. Also, innovativeness and honesty are more appreciated,

although there was less indications in this case. Trust decreased the most and further

subsequently: respect, solidarism/solidarity, loyalty, understanding fairness, friendliness,

fl exibility, empathy, discipline and patriotism. It is diffi cult to resist an impression that

perennial “crack of Poland” into two parts and embarrassing political quarrelling with

common origin have also infl uenced the results of the study in this matter.

Bibliography

Blanchard K., O’Connor M. (1997), Managing by Values. Berret – Koehler Publishers,

San Francisco

Dowbor L.(2009), Demokracja ekonomiczna, Instytut Wydawniczy Książka i Prasa,

Warszawa

Encyklopedia PWN (1999), Warsaw

Herman A. (2015 nr 2), Aksjologiczne aspekty teorii i praktyki zarządzania wartością,

„Kwartalnik nauk o przedsiębiorstwie”


Joas H. (2009), Powstawanie wartości. Ofi cyna Naukowa, Warsaw

Koza – Granosz M.(2009), Tyrania wartości N. Hartmanna. Online Philosophical Ma-

gazin „Hybris” nr 9 z 2009

Reber A.S. (2002), Słownik psychologiczny, Wydawnictwo Naukowe Scholar, Warszawa

Sztumski W. (2013), Transformacja nowym paradygmatem ewolucji społecznej. „Trans-

formacje. Pismo interdyscyplinarne”. Centrum Badań Ewaluacyjnych, Akademia

Leona Koźmińskiego, p. 58–59

Great Dictionary of Polish Language (Polish: Wielki Słownik Języka Polskiego) (2008). Kra-

kowskie Wydawnictwo Naukowe, Kraków

Th e management respecting and promoting values – Th e research report (2014), editors Andrzej

Herman, Tadeusz Oleksyn and Izabela Stańczyk, Warsaw School of Economics


CHALLENGES IN BRAND VALUATION – HOW TO GRASP A REAL BRAND VALUE

P . G U , P .D. U L

Abstract

Th e main aim of this paper is to present current state of art in the methodolo-

gy of brand valuation, in a context of major pitfalls and ambiguities surround-

ing this process. Brands as strategic assets of many companies, are valued for

diff erent purposes: brand management, internal and external transaction or

reporting. Many of these valuations are fl awed in terms of underlying as-

sumptions. Based on literature studies and author’s own experience, a criti-

cal review of the most popular approaches to brand valuation was conducted.

Author underlines the necessity to defi ne, as a fi rst step in valuation process,

assumptions regarding: legitimacy, purpose and objective of valuation. Arti-

cle more thoroughly refers to valuation methodology – relief from royalties.

A general procedure used in this approach is presented, as well as recommen-

dations regarding the selection of appropriate royalty rate, especially in the

context of Polish market conditions. Th e research methodology applied in

this study includes critical review of subject literature, analysis of source ma-

terials and the method of deduction and induction.

Introduction

Issues connected with intangibles are currently arousing a great interest among

theorists and practitioners of management. In the last three decades in the world of

business, a transition has been made from industrial capitalism based on fi nancial capi-

tal to “new economy”, where the main sources of value creation are intangibles. During

the period of industrial economy the companies which used to dominate the stock ex-

change markets, were big production companies from the automotive, aviation, chemi-

cal or engineering industries, which build their position on fi nancial capital and tan-

gible assets. However these types of assets currently became commodities that can be

easy to obtain and replaced. According to Barney (1991) resources, which contribute to

the competitive advantage of a companies have to share the following characteristics:

they have to be valuable, rare, hard to copy and not having substitutes. Th ese criteria

are met by intangibles. As a result, today the most valuable companies are those which

utilize intangible assets like: knowledge, brands, relationships with customers and busi-

ness partners, patents , etc. Th ese companies usually operate in the widely understood

service sector and the value of tangible and fi nancial assets constitutes only a minor part

of their market value. Th e utilization of intangibles in connection with fi nancial capital

allows them to create of a unique off er for customers and as a result – excess returns.

Among intangibles, the major position – from the point of view of the capability to

creating value for companies – is taken by brand. Strong brand can be the basis of a sus-

tained competitive advantage, which is associated with high returns and fi nally, value

creation for a company. From this point of view, the brand of a company is its strategic

resource, which substantially and often decisively contributes to the fulfi lment of the

basic objective of the company – maximization of its value.

Brands have been functioning in business for centuries, however they received

a wider interest, especially in in the area of brand valuation, in the 1980s in Great Brit-

ain. It was connected with numerous company acquisition transactions characterised by

the fact that the purchase price of companies considerably exceeded the value of their

net assets. Th e main part of this surplus was being attributed to the value of the brands

owned by the targeted companies, which were not disclosed in their balance sheets

(Murphy, 1990).

Th e issue of revealing brand value in the balance sheet of a company is currently

the subject of many discussions. Th e brands can be acquired or created by a company

internally. In the light of accounting standards, in general brands created internally by

a company cannot be revealed on the balance sheet (Walińska, 2005). A partial solution

to this problem is revealing brand value in fi nancial statement notes.

Th e main aim of the article is to present current state of art in the methodology of

brand valuation in the context of its practical application in Poland. Article also highlights

major problems and controversies around the process of brand valuation. Th e starting

point for discussion is the introduction of the role of brand in creating value for the com-

pany. Next the most important motives and perspectives of brand valuation are presented.

In the following part, a review of most commonly applied approaches in brand valuation,

along with a discussion about important limitations in their practical application. Th e ar-

ticle is ended by conclusions and recommendations regarding practical aspects of brand

valuation. Th e research methodology applied includes critical study of subject literature,

analysis of source materials and the method of deduction and induction.

28 Grzegorz Urbanek

Evolution of brand functions

In a common understanding a brand refers to the name under which a product is

marketed. Th e diff erence between just a name and a brand consists in the fact that the

name itself has no associations going beyond its original meaning. A name becomes

a brand when the consumers associate it to other things (Calkins, 2005). A strong brand

constitutes the basis for a relationship with the customer based on mutual trust. Th e way

of perceiving a product is shaped by its brand. Th is perception of a product is very often

more important than its objective features in determining customer choices. Since cus-

tomers are usually not able to evaluate product features themselves, they make a choice

based on how they perceived product brand.

Over the last twenty years brands have transformed from a symbol of ownership

into a cultural phenomenon. In the beginning, the most important role of the brand

was to provide a physical manifestation – brands used to be what they were embody-

ing. Later, brands become what the consumers were feeling and experiencing. Nowa-

days many brands are becoming a socio-cultural phenomenon. Th ey can be analysed in

terms of class, race, power and gender. Th ey can also privilege, marginalize, exclude, etc.

(Berthon et. al., 2011).

Th e term “brand” is used in practice very often, and depending on the context

can have diff erent meanings. According to the “classic” marketing defi nition – a brand

is a particular name, term, sign or symbol or a combination of the above designed to

identify the product or service of a seller or a group of sellers and distinguish it from

the off er of the competitors (Kotler & Armstrong, 1994). Th e brand indicates to the

consumer, the origin of product or service and protects the customer and manufacturer

from competitors, who could off er products which look identical.

From a brand valuation perspective, it is important to treat brand as an economic

category, generating determined benefi ts for the owner of the brand as well as its user.

For the owner, the brand creates benefi ts in the form of additional cash fl ow, above

these which would be possible to obtain with sale of analogical products, but not brand-

ed. For the user brand creates benefi ts, which can be of functional, economic and psy-

chological nature. Functional benefi ts are connected with physical features and prod-

uct parameters, economic emerge from the perception of relation – value/paid price,

psychological are connected with the level of the fulfi llment of user’s intangible needs.

Brand and value creation for a company

Brand very often is the most valuable asset of many companies. On the global scale

brands constitute a third of the overall wealth. 100 most valuable brands of the world

in 2008 were jointly worth 1.2 trillion $ (Clifton, 2009). In the case of a single com-

pany, the contribution of brand to its market value may be dominant – in the case of the

Nike brand it is 84% of the value of the whole company (Gerzema and Lebar, 2009),

Challenges in Brand Valuation – How to Grasp a Real Brand Value 29

while for instance in the case of Polish company Żywiec its brands contribute to 84% of

market value in 2010. Further evidence for links between brand and company fi nancial

performance is delivered by the results of numerous researches (ex. R. Kerin and R. Se-

thuraman, 1998; Conchar et. al., 2005; Mizik and Jacobsen, 2005; Madden et. al., 2006;

Urbanek, 2010, 2011).

A strong brand may infl uence four sources of revenue for the company: an increase

in the number of clients, an increase in brand activity by current clients, an increase

in the client loyalty and the possibility of brand expansion for new products (Schultz

& Schultz, 2003). A strong brand can also be a source of additional revenues due to

possibility to license it. Finally strong brands can also contribute to lowering costs due

to economy of scale eff ect, possibility of cheaper attraction of new customers as well as

obtaining more benefi cial trade conditions.

Th e impact of the brand on the company’s value can be traced on the basis of a fi -

nancial model which shows the key determinants of value creation. Th e basic value crea-

tion model is described by the following equation (Koller et. al.,2005):

Where:

NOPAT1 – net operating profi t after tax,

wacc – weighted average cost capital,

ROIC – return at invested capital,

g – operating profi t growth rate.

Th e strong brand may infl uence all determinants of value creation presented in

above model, thus aff ecting the value of the company. Strong brand can infl uence

NOPAT and ROIC through higher margins, NOPAT and g through higher revenues

and fi nally wacc, due to lower volatility of company’s profi ts. In the last case customer

loyalty contributes to stability in the profi tability of the company, thus contributes to

risk reduction. Brands also serve as an additional channel of communication with the

investors, who prefer to trade and hold shares of companies that are exposed by the

brand on the market. Th is improves shares liquidity and, as a consequence, leads to a de-

crease in the cost of capital (McAlister et. al., 2007).

Defi ning valuation circumstances

Before any attempt to conduct brand valuation, several valuation assumptions must

be determined, which together set up the valuation circumstances. Th ese are: legitimacy,

purpose and objective of valuation. After setting assumptions, a proper method to con-

duct calculations is chosen.

30 Grzegorz Urbanek

Legitimacy

Not all brands can be assigned a monetary value, since not all names generate iden-

tifi able benefi ts to their owners. Th erefore, valuation process should be preceded by the

analysis of its relevance. To assign a specifi c economic value to the brand, it must meet

jointly the following requirements:

• brand must be identifi able asset of the company – the company should sell its

products consistently under unambiguously defi ned identifi ers (names, logos, etc.).

• brand must create a benefi ts for the company – the brand must generate identifi -

able cash fl ows for the company, through higher margins or/and additional sales.

• the brand must be protected against the possibility of its use without permission

by other entities. Th is means that the brand (trademark) must have legal protection

that may arise, for example, from its registration or copyrights.

Purpose of brand valuation

Th e purpose of valuation indicates what decisions will be infl uenced by its result and

to whom it is addressed. First and most obvious purpose of valuation is transaction pric-

ing and structuring. However, in practice brand valuation only sporadically is done for

this application, since brands are very rarely the subject of transaction as separate assets.

If it comes to the change of the brand’s owner, usually it is a part of a larger transaction

regarding the whole company or it is the eff ect of brand owner bankruptcy. Nevertheless,

conducting separate brand valuation in these cases can serve the purpose of determining

what elements constitutes the total price of acquired company. Th us brand valuation can

be helpful in determining the price of purchase of the whole company and can account

for its justifi cation, when this price exceeds the net value of assets. Increasingly ownership

rights for brands can serve as collateral for bank loans or credits, particularly if any other

of the fi rm’s assets are already debited. In this situation the brand valuation can be used to

determine the value of collateral. Brand valuation can make up the base for the determi-

nation of license fees in the case of brand back-licensing to its original owner.

Growing area of brand valuation are needs connected with court disputes. Th ese

disputes usually involve, however not entirely, the infringement of intellectual property

by unauthorized usage of brand. In this case the valuation serves the determination of

level of incurred losses and can constitutes the base for evaluating the amount of claim.

Another purpose of brand valuation is tax optimization. In this case ownership

rights connected with brands are transferred to companies in countries with lower in-

come tax rates. Th an brand names are licensed back to the country of their origin for

given rates. As a result, additional profi ts are realized in tax paradise country, at the ex-

pense of lower taxable profi ts in high tax country. In this case brand valuation can help

to justify to the tax authority, the amount of license fees that are paid by licensee.

Finally – brand valuation can be helpful in the evaluation of the eff ectiveness of

management, as well as people responsible for using brands, constituting an element of

a motivational system in a company. Th e change in the value of brands allows for the


determination of the effi ciency of undertaken activities and can be used to evaluate the

marketing campaign, as well as the team responsible for it.

Objective of valuation

Th e objective of valuation should indicate a specifi c scope of brand valuation –

what is understood by valued entity, and standard of value – what type of value is being

estimated (Reilly, Schweihs 1999). Th e detailed description of the subject brand should

be prepared, since understanding of brand can vary signifi cantly. Generally we can apply

the following three basic levels of valuation (Schultz, 2005):

• narrow – valuation of brand understood as an estimation of value of chosen identi-

fi ers connected with brand e.g. name, logo, or symbol; this type of valuation treats

benefi ts connected with the subject of valuation narrowly, and limits them only to

the specifi c identifi er on its own, without considering the business context of its

application. In practice, sole valuation of single trademark is performed rarely, since

trademarks are usually accompanied by other intellectual property rights, which

together infl uence customer choices and consequently create additional benefi ts

for a company. Possible application of this approach is valuation of a given trade-

mark in new fi eld, for example PKP logo on a toy train.

• intermediate – a wider scope of elements is taken into account together under

brand valuation: names, logos, colors, dresses, copyrights, formulas, etc. Th is ap-

proach is the most commonly utilized in brand valuation. Th e presumption here is

that additional benefi ts for a company are the result of joint impact of the bundle

of interrelated elements connected with given name.

• broad – a value of all benefi ts connected with the concept of business conducted

under a given brand is determined. In this level of valuation the joint value of

trademarks, symbols, slogans, colors, design, as well as the particular organization

culture, management skills, etc. is estimated. In this approach brand value is an

equivalent of branded business value. Broad level of brand valuation may be ap-

plied for determining the results of alternative brand building strategies.

Th e concept of value is of subjective character – “the value is refl ected in the eye of

the owner”. Th e same brand can have a diff erent value depending on, what cash fl ow it

will generate for its present or potential owner, in its present or potential usage. Th ere-

fore one of the essential elements in brand valuation is identifi cation of the valuation

standard – perspective from which it will be conducted. Th e most common valuation

standards are (Reilly, Schweihs, 1999):

• fair value – the amount that will fairly compensate the owner in voluntary transaction.

• market value – the most likely price for a brand in an competitive and open market.

• acquisition value – the price that an identifi ed buyer would pay for brand, taking

into account his/her unique benefi ts obtain due to transaction.

• use value – the value of brand in specifi ed (not current) use.

• owner value – the value of brand for its current owner.

32 Grzegorz Urbanek

Methods of brand valuation

Over the years several methods of brand valuation have been proposed. Th ey were

developed by diff erent type of entities, like: auditing companies, consulting and adver-

tising companies, intellectual property specialists, lawyers, and academicians (Salinas

2009). Salinas (2009) listed no less than 39 diff erent proprietary valuation models that

have been proposed by diff erent providers and scholars. It should be underline, that

none of the proposed methods of valuation have received common acceptance, what

partially explain their multiplicity.

Generally methods of brand appraisal can be divided into fi nancial and non-fi -

nancial. Non-fi nancial methods serve the measurement of diff erent components of the

brand equity: awareness, association, perceived quality, prestige etc. Singular measures

can be used to control the eff ectiveness of undertaken activities regarding to its par-

ticular aspect. Financial methods determine the value of brand in monetary terms. Th e

brand value can be defi ned as the present value of additional benefi ts for its owner,

which can be obtained from selling products marked with a given brand above benefi ts,

which could be obtained from the sales of exactly the same products, but not marked

with a brand. All valuation models fall under four general valuation approaches: cost ap-

proach, market approach, income approach (Smith and Parr, 2000) and option pricing.

Cost Methods

In the cost approach the value of brand is connected with the costs of its creation.

Among diff erent cost methods, three main approaches can be identifi ed: historical cost,

reproduction cost and replacement costs. Th e most direct way of brand valuation using

the cost approach, is capitalization of historical costs, incurred while creating the brand.

In a more advanced form, historical costs are revaluated to present using infl ation indi-

cator from the previous years. Th e method of reproduction cost, relates brand value to

costs, which need to be incurred for the obtaining of the exact brand replica. In the case

of replacement cost, brand value equals to the costs that have to be incurred for obtain-

ing a brand of the same utility, as the valuated brand. Th e cost methods for brand valu-

ation can only have a very limited practical application. Its main defect is that, it does

not consider the potential of creating value by brand in the future. From an economic

point of view, the value of a given factor (here: brand), is not decided by cost of its ob-

taining but by its power to create value now and in the future. Th ese two values can only

be similar accidently. Hence utilization of cost methods underestimates the economic

value of brands, which have achieved market success and overestimates the value of

brand, which were not accepted on the market.

Despite of the above presented defects, the historical cost method can fi nd a spe-

cifi c practical application – for the appraisal of the eff ectiveness brand building strategy.

In this case the sum of historical costs incurred for building the brand are compared

with achieved results – the brand value estimated by income methods.


Market methods

In basic market valuation method, brand value is estimated based on recent transac-

tions related to similar brands for which data on transaction price is available. Th e applica-

tion of the market approach goes along with several limitations. First of all, the price from

a single transaction, cannot always be accepted as a market value. In the case of an indi-

vidual transaction, its participants could act under the infl uence of non-economic factors

e.g. compulsion of sale. Another limitation is the change of market conditions between

the time of benchmark transaction and time of brand valuation. Signifi cant problem in

utilization of market methods arises from uniqueness of brands and resulting diffi culties

in their direct comparison. Finally, open markets for brand transactions are very narrow

and as a result, necessary data to conduct valuation are not available. Most of the times

when it comes to a market transaction with the brand involved, it is part of a wider deal

– usually sell of the whole company, without separate specifi cation of the brand value.

Another market valuation method – relief from royalty – is based on the premise

that company which owns brand does not have to pay royalties to third party for li-

censed brand. Th ese savings are treated as benefi ts connected with brand possession and

are used for brand valuation1.

Income Methods

In the most popular income approach to valuation – discounted cash fl ows (DCF)

– the brand value is equal to the present value of the future cash fl ows connected with

a brand. Application of this method requires identifi cation of the future benefi ts which

will be obtained due to brand and discount them to the present value. Th e DCF method

is thus prospective and relates present value of brand to its future application. In the

discounted cash fl ow approach, present value of brand is calculated from the following

general formula:

Where:

CFj – Cash fl ow connected with brand in the year j,

k – Required rate of return (cost of capital) associated with cash fl ow,

n – Number of years for which cash fl ows will be obtained.

In the DCF method the estimation of brand value requires the determining of the

three basic parameters: cash fl ows connected with brand in the future years, the length

1 Th e royalty relief can be classifi ed as market method, because it is based on a comparable market license rates and income method, because the present value of brand is estimated by discounting future benefi ts. A wider description of method can be found in the further part of the article.

34 Grzegorz Urbanek

of obtaining these cash fl ows and cost of capital. Each of these issues will be addressed

separately.

Th e determination of the length of obtaining brand related cash fl ows is connected

with the expected economic life of a brand. Th e economic life of a brand ends at the time,

when it stops bringing identifi ed benefi ts. In the case of a brand, infi nite period of its us-

age is often assumed, based on the premise that a proper brand strategy and its legal pro-

tection can enable its utilization without time limitations. Another signifi cant param-

eter in the DCF methods is the estimation of the required rate of return. Th is rate should

take into account the risk associated with future cash fl ows connected with brand. In

practice in most valuations, cash fl ows associated with brand are discounted with the

weighted average cost of capital (WACC) of a company. Th e underlying assumption

here is that cash fl ow connected with brand is as risky as total fi rm’s cash fl ow. Such logic

can be justifi ed in a situation, when all of the company’s cash fl ow is connected with the

sales of products under single brand or with the usage of several brands with the same

market strength. When the company off ers products using portfolio of brands with dif-

ferent market response (strength), the cost of capital for each brand should be calculated

separately, with consideration of its relative market position.

Th e most diffi cult and thus controversial part of brand valuation with discounted

cash fl ow approach is determination of future cash fl ows attributable to the brand. Th e

key problem to resolve is how to separate from all of the economic benefi ts generated by

a company, a part which can be assigned purely to the brand. From fi nancial theory per-

spective, the most appropriate approach in separating brand benefi ts is the direct method,

which compares the cash fl ows of company with a brand, with the cash fl ows of the same

company, but without a brand. Th e diff erence between the two constitutes the brand ben-

efi ts. In practice the application of this method is very diffi cult, because in real world in-

formation for the same “branded and non-branded” company is not available. Th eorists

and business practitioners developed dozens of approaches to separate brand benefi ts.

Salinas (2009) listed several of them, including: price premium, royalty savings, demand

drivers, comparison of gross margin or operating profi t, comparison with theoretical prof-

its of a generic product, incremental cash fl ow, excess earnings and others. Among multi-

tude of diff erent approaches to separate brand benefi ts, the most widely used is relief from

royalty. According to many fi eld specialists this method, while imperfect, combines practi-

cality with reliability better than any other method (Salinas, 2009). An important factor in

favor of the use of this method is that it has been accepted by many fi scal and jurisdiction

authorities as proper method of brand valuation (Salinas, 2009). Th e typical procedure in

application of relief from royalty methods, consists of the following steps:

• estimating of future sales under brand three to seven years.

• identifying of an appropriate royalty rate based on market data, (from databases) or

using 25%/75% rule.

• multiplying future sales level by royalty rate to obtain future gross savings attribut-

able to the brand.


• subtracting from future gross brand savings income tax rate to obtain net savings

attributable to the brand.

• calculating cost of capital for brand savings.

• calculating terminal brand value based on estimated growth rate using perpetuity

formula.

• discounting future brand benefi ts with cost of capital.

Th e crucial and the most controversial step in brand valuation using relief from

royalty method is determination of appropriate royalty rate. In practice, due to the lack

of data on a market royalty rate for an exact match for the brand being valued, data from

databases (ex. royaltysource, royaltystat) are used. Databases deliver information on roy-

alty rates in license agreements in transfer pricing. Th e main problem with royalty rates

from databases is that they refer to agreements from developed countries, most of all

from American market. Direct application of these rates for valuation of brands from

the Polish market may lead to overvaluation, since in general Polish companies on av-

erage are less profi table than American. A possible solution to this problem is to check

of the appropriateness of royalty rate „extracted” from database by comparing it with

royalty rate calculated based on 25% rule (Razgaitis, 2003). Th is rule states that royalty

rate ought to be equal to 25% of operating profi t generated from utilization of intellec-

tual property factor. If „extracted” royalty rate considerably exceeds rate from 25% rule,

it should be treated with caution.

Real options in brand valuation

Option pricing models can be used in brand valuation. Th ey can grasp additional,

optional value, for a brand with established, strong market position. In the standard

income approach to brand valuation, its value is calculated by discounting additional

cash fl ows, associated with brand. Th is type of approach allows to account for the fu-

ture direct benefi ts attributable to brand, however omits the indirect eff ects connected

with the occurrence of new possibilities of action in the future. Option can be defi ned

as a right to choose among diff erent alternatives of action, as a reaction to changing cir-

cumstances. Real options theory allows for application of fi nancial option pricing mod-

els into non-fi nancial assets, including brands. Options connected with brands include:

increasing or lowering the investment in brand market expansion, postponing brand

building investment or abandoning of brand.

Th ere are two main methods for calculating option value: binominal model and

Black-Scholes equation. In both methods, their application requires determination of

the following parameters: risk free rate, cost of project realization (strike price), current

market value of project, duration of an option, volatility of the underlying asset. Real

options approach to valuation is criticize for ambiguities in terms of determination of

its key parameters. As a result, this approach is susceptible to manipulation. Th erefore

its practical application is limited and eventually obtained results should be treated

with caution.

36 Grzegorz Urbanek

Conclusions

Th e signifi cant growth in the importance of intangibles for company’s success in the

„new economy”, causes a necessity for development of tools for their management and

measurement. Brand play a special place among intangible assets, as its input into value

creation for many companies is decisive. Brand which is well established on the market,

can be the main source of a sustained competitive advantage of a company. Since brands

are becoming strategic assets for many companies, there is growing necessity for valuing

them for diff erent purposes, like: brand management, internal and external transaction

or reporting. Brand valuation is becoming more and more popular also in Poland. As

a result many valuation are conducted by companies internally or using consulting fi rms.

However, Author’s experience leads to the conclusion that many of these valuations are

fl awed in terms of underlying assumptions. Wrong assumptions leads to wrong results.

Consequences of brand mis-pricing may be signifi cant for example if it is done for tax

optimization purposes. Th erefore brand valuation ought to be performed thoroughly,

with regard to valuation theory and specifi c situation of its object.

Unfortunately, there is lack of consensus among scholars and practitioners on the

best methodology of brand valuation. Th is results in existence of dozens of approaches

to valuing a brand.

Th e main aim of this paper was to present current state of art in the methodol-

ogy of brand valuation, in a context of major pitfalls and ambiguities surrounding this

process. Based on literature studies and author’s own experience, a critical review of the

most popular approaches to brand valuation was conducted. Author underlines the ne-

cessity to defi ne, as a fi rst step in valuation process, assumptions regarding: legitimacy,

purpose and objective of valuation. Th ese assumptions together put foundations for val-

uation and, to large extent, determine the methodology that have to be applied. Article

more thoroughly refers to valuation methodology – relief from royalties. Th is method is

the most widely used for brand valuation, also in Poland. A general procedure used in

this approach is presented, as well as recommendations regarding the selection of ap-

propriate royalty rate, especially in the context of Polish market conditions.

Findings and conclusions from conducted studies contribute in the development

of knowledge in the scientifi c fi elds of management and fi nance. Th ey also contribute

to the development of practical knowledge regarding brand valuation, which may result

in improvement of the quality and reliability of this process.


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38 Grzegorz Urbanek

CONSUMER ETHNOCENTRISM VS CONSUMER XENOCENTRISM – AN ATTEMPT TO IDENTIFY

THE ANATOMY OF THE PHENOMENON

P . A S , P .D.C U E

Introduction

Th e decision making process of purchasing goods and services, its course and de-

terminant, have been the subject of interest of economists, psychologists and sociolo-

gists representing diff erent scientifi c communities, as well as practitioners of economic

life communities, including traders, sales managers, specialists in the fi eld of market-

ing or product designers. Appropriate attitudes and buying behaviour have been a very

interesting topic of studies, analyses and modelling. Th e more complex and unpre-

dictable they became, the bigger number of factors and circumstances determined the

consumer`s choice (Becker, 1990).

In the conditions of global manufacturing, the opening of economics to the world

and more and more effi cient international logistics, domestic markets are fi lled up with

unifi ed, global goods off er, which has bigger and bigger quantitative and structural

range. During the process of purchasing, consumers have to choose among hundreds

and thousands of goods, which represent manufacturers almost from all over the world,

items, which have unique features and utilities, which make traditional trading stock

more attractive (Bartosik – Purgat, 2006).

When a considerable number of imported goods appeared on the market, a new

phenomenon could be observed – the phenomenon of inter-product market competi-

tion, competition of certain manufacturers, suppliers and sellers to win customers. In

practice, domestic products were superseded as the typical and traditional ones, but

not innovative or distinguishable. Imported products, brought from abroad in limited

numbers, met with interest of buyers. Th ey were looked for and bought with pleasure,

playing the role of not usual ‘liquidator” of defi cit of market supply, but they were the

symptom of social status, possibilities and wealth (Kowalska, 2012).

Th e growing scale of international goods exchange and the phenomenon of massive

infl ow of foreign products connected to it, paid attention to negative eff ects of the full

opening of economies to foreign countries – to the infl ow of the capital and goods from

one`s own country, to the level of competition on the internal market, to the change-

able situation on the domestic labour market. Th e ethnocentric phenomena are more and

more often observed in diff erent spheres and areas of human activity as a counterbalance

of common presence of “strangers”- people, products, institutions and norms, they are

perceived and judged in diff erent ways, but more and more often as a defensive reaction

of market subjects, social and vocational groups, and even authority institution. Skilfully

monitored phenomena of preferring one`s own material and spiritual possessions in dif-

ferent guises and strength can be (and are) the target of external stimulation from the in-

terested social, political and economic authorities (Szromnik, 1998).

Ethnocentrism in social behaviour of individuals and groups, including consum-

ers` ethnocentrism is not a fully explained and explored phenomena (Shimp, Sharma,

1987; Sharma, Shimp, Shin, 1995). In the present elaboration the authors make an at-

tempt to identify consumer ethnocentrism and proper attitudes, behaviour and market-

ing decisions of individuals, which follow it. For that reason, they consider potential

mechanism of shaping the consumers` decisions, who prefer their own, domestic prod-

ucts and certain brands, including its component elements and dependencies among

them. A diff erent phenomenon has been contrasted to it, which is connected to prefer-

ences in doing shopping and consumption of foreign products, in this case, called by the

authors “consumer geocentrism” or „xenocentrism”.

From social ethnocentrism to consumer ethnocentrism

Behaviour of individuals and groups, which evinces itself in diff erentiating and prefer-

ential shaping of one`s own environment and proper structures, norms or ideas for it. Th e

behaviour is registered and recognizable in diff erent societies, in diff erent phases and devel-

opment. Th ey decided about their organisation and functioning in diff erent external con-

ditions, above all about their ethnic, cultural and economic distinctiveness. Accepted pre-

dominance of one`s own social group has transferred to treating appropriate organisational

and functional solutions as better than others, on distinguishing and recommending them.

Social ethnocentrism has evinced in diff erent forms and moments of human be-

haviour. In every case, however, it meant obeying one`s own organisation, its features

and structures as perfect and better, more effi cient than other social systems. In practice,

it was connected to rejection of diff erent norms and programmes, not acknowledging

them, as well as imposing one`s own order, customs, institutions and views (Falkowski,

Rożnowski, Witkowski, 1996).

Not trying to explain the phenomenon of social ethnocentrism in a deeper way,

only mentioned at this point, the following types of social ethnocentrism can be distin-

guished among others:

40 Andrzej Szromnik

– ethnocentrism relating to customs,

– educational ethnocentrism,

– denominational ethnocentrism,

– political ethnocentrism,

– economic ethnocentrism.

In each area of human activity mentioned, it is connected to acknowledging pre-

dominance and practical usage of such evaluated rules and norms of behaviour, pro-

grammes and concepts, methods and technologies, which are perceived in a certain

community as their own, domestic, the only ones appropriate, because they have been

created and checked in this environment.

Economic ethnocentrism has a special character and expression. According to the

essence of the ethnocentrism phenomenon, it evinces in acknowledging as the only

correct and right. Th at is why it is worth implementation in practice of husbandry, con-

cepts, ideas, recipes or one`s own technologies, off ered by domestic institutions or the

citizens of a country, thanks to this adapted to internal conditions and profi table to the

whole economy. Th erefore, economic ethnocentrism evinces itself in preferential treat-

ment of one`s own country oriented programmes, economic thought, internal market,

domestic enterprises and institutions. (Bogle, 2009). Appropriate solutions and deci-

sions are connected to them in the processes:

– privatisation, restructuration and modernisation of enterprises,

– supply in producing factors,

– in investments localisation,

– in penetration of outlet markets,

– introducing new technologies.

By having everything one`s own way means displacing and omitting the deci-

sion-making options, which come from abroad or are also connected with people or

institutions from diff erent countries, they concern foreign capital, brands and tech-

nologies. Th is way of thinking and acting, such determined making-decision processes

and appropriate products to them (also called “economic patriotism”) lead to closure of

a country`s economy, isolation from external income, based the whole system on eco-

nomic self-suffi ciency (Szromnik, Wolanin – Jarosz, 2012).

Some manifestations of economic ethnocentrism have been known in the environ-

ment of economists, enterprises, as well as managers, scientists, social and political activ-

ists in diff erent countries, especially in the ones of real socialism. Th ey have also appeared

to a small extent in the times of reforms and system changes, when the choices between

“my own” or “foreign” were the essence of socio-economic changes (Bywalec, 2010).

Th e victory of a wide concept of economic union, the opening of the economy to

the progress and innovations, in the result the infl ow of foreign capitals streams caused

coexistence of domestic companies sector and foreign companies sector in economy.

Ethnocentric orientation in managing has received a new form, this time in the area

of market decision making of consumers, by purchasing consumer goods in trade. Th e

Consumer Ethnocentrism vs Consumer Xenocentrism... 41

problem comes to the choice – to buy but in which enterprise, in which company invest

one`s purchasing power – in a domestic or foreign one? Th e appropriate orientation to

buy in the shops of domestic companies, which have home capital and local sellers, can

be called trade ethnocentrism.

Accenting local, regional or domestic origin of the trade capital and home property

of the companies can be found in socio-political programmes of many party organisa-

tions, federal and collective ones. Th e condition of their success is the awareness of the

subjects` ownership of market of commercial services – the knowledge about possessive

attachment of trading companies, including especially big organisations of supermarket

and hypermarket chains, the knowledge about trading cooperative activity and local fran-

chising networks. Only then, decisions of the place choice where to do the shopping and

appropriate organisation of retail trade will be decisions, no matter which country the in-

stitutional brand comes from, its name or marketing symbolism (Karcz, Kędzior, 1999).

Social identifi cation of the trade companies` owners (possessive attachment) is not

an easy case, mostly because of the fact that huge trading sales networks have a strategy

of imitating the nationally sourced capital and the same companies, or taking into con-

sideration multinational, their possessive structure (Gregory, 2013). Defi ning the coun-

try of origin of a super- or hypermarket, saloon, warehouse or shopping mall consider-

ably obstruct and relatively often darken the sales of the sales points in the whole chains

and enterprises among the participants of the global trade services market (Drawing 1).

42 Andrzej Szromnik

Drawing 1. “Th e Pyramid of Ethnocentrism” – from social to consumer

ethnocentrism

Source: own elaboration

Th e decisions of consumers concerning the choice of the trading place – the places

where people buy determine, to a large extent, the choice of the product bought. It re-

sults from the fact, that the foreign sales point usually off ers imported products. Th ere

is a dependency, between the country of origin of the trade capital (the company`s pos-

session) and the country of origin of the products sold. In the foreign networks of super

– and hypermarkets, in which foreign product brands dominate, the buyers have limited

possibilities of choice among the foreign products and the domestic ones. Th e decision

making process itself is ambiguous and darkened. Ethnocentrically directed consumer,

who looks for the products which come from their country, is on purpose deceived by

marketing announcements – names, signs, symbols (Ruta, Wysocki, 2010).

Consumer ethnocentrism, as a general phenomenon, which often has massive in-

tensity scale, has its deeper roots. It is connected, with general assessment and rela-

tions to foreign solutions and projects, recipes and technologies, to the presence of

„strange” enterprises on the domestic market and their participation in the socio-eco-

nomic changes (Figiel, 2004).

Consumer ethnocentrism as an eff ect of infl uence of social and economic macropowers

Consumer ethnocentrism, its range and intensity in a given social group is the ef-

fect of infl uence of diff erent factors, circumstances and social, political, technological

and economical conditions, factors, which have diff erent character and the direction

of infl uence. In the long run, they shape behaviour and market choices of individuals

and groups, which in the result, defi ne dispersion of purchasing preferences in regard

to domestic and foreign products. In the fi rst case, when the buyers are clearly domes-

tic products oriented, the phenomenon is defi ned by already analysed term “consumer

ethnocentrism”, in the second case, when the customers have a diff erent attitude and

purchasing preferences, the term “consumer xenocentrism” is used. In this way, unlike

the authors of many scientifi c- research works, two states of purchasing orientations of

consumers can be distinguished. Th ey are extremely diff erent – orientation towards do-

mestic products contra foreign ones (Szromnik, Figiel, 1997).

Acceptance and juxtaposition of two strictly connected phenomena, which have oppo-

site direction of changes (inversely related dependency) allows to examine them exclusively

as a unity, their mutual interdependency. Th e increase of ethnocentric behaviour on the

market weakens xenocentric tendencies and on the contrary. It should be assumed, how-

ever, that there is one mechanism, which explains complex processes of the changes of con-

sumer purchasing preferences. It refl ects their attitude towards the products, which come

from one`s country and the one from abroad. In this mechanism, which includes a “circle” of

ethnocentric attitudes and a “circle” of xenocentric attitudes, certain driving and hampering

forces exist. Th ey change the dynamics of certain phenomena, including the main consid-

ered phenomenon, which is for the authors consumer ethnocentrism (Drawing 2).


Th e intensity of consumer ethnocentric attitudes is connected with the activity of

developmental sub mechanism “powered” by the force of traditions and customs, addi-

tionally strengthened by:

– media campaigns of consumer organisations,

– marketing strategies of the companies, which stress the fact that “native” origin of

the products, semi-fi nished products or raw material is the most important,

– supporting regional products and their certifi cation,

– initiating and supporting social movement for development of domestic art, espe-

cially of small and middle businesses,

– performances and competitions of traditional cuisine – appropriate ingredients

and food processing technology,

– informational actions of domestic trade retail organisations, above all, family and

cooperative trade,

– involvement of political organisations and politicians` classes to promote domestic

brands and trade,

In this way, behaviour and decisions of consumers directed to shopping and

consumption (usage) of the goods, which come from one`s country and are made

there, thanks to the use of domestic production factors, are created, animated and

strengthened.

44 Andrzej Szromnik

Drawing 2. Th e main forces and mechanisms sharping consumer ethnocentrism


Maintenance of the high level of consumer ethnocentrism, and even further in-

crease of appropriate tendencies, is dependent on the strength of infl uence of the sec-

ond instrumental macro-power, namely from the globalisation processes observed in

the whole modern world. Th e globalisation processes and their basal progress, innova-

tions and liberalisation of international fl ow of information, funds, people and material

assets, changed domestic markets in geographical segments of the global market. Uni-

fi cation of stock off ers of the companies in intersection of the countries of origin of the

product and brands appeared on such regional markets. Taking into consideration the

structure, trade off ers are comparable on diff erent continents. Th ey are presented and

made available by global retailers and wholesalers.

Th e eff ect of market globalization are fast changes of purchasing and consumptive

habits of the inhabitants from diff erent countries. Th ey express, mainly in acceptance of

foreign products, which have global dimension, their distribution substituting and sup-

porting traditional, typical domestic brands. In this way, a traditional, home consumer,

who is clearly ethnocentrically orientated turned into a global consumer with prefer-

ences and satisfaction of someone who buys foreign products, which have global char-

acter, by identifying with an aware xenocentric buyer. Th e purchase of foreign products

allows him or her to know the world, people, their customs and consumptive prefer-

ences. Th e fact of consumptive distinction in his or her own social environment and

presentation of oneself as an enlightened and modern provides the person additional

satisfaction (Mazurek – Łopacińska, 2011).

Summing up, the presented hypothetical mechanism of shaping consumer ethno-

centrism, which includes two driving forces of shopping – consumption changes of pur-

chasers, which have opposite activity, the role of state policy and legislative acts, which

limit (exclude) the infl uence of one of the component mechanisms – the mechanism

based on the strength of traditions and social habits, or the globalisation mechanism

based on the progress and innovations, should be mentioned at this point (Chinen,

2010). Th e introduction of formal restrictions in supplying the market, isolating the

market and society, barriers in media communication, diffi culties in international fl ow

of capital and investments cause external interference in functioning the mentioned

above dynamic system, interfering in the whole mechanism. Th ese specifi c “clutches in

an engine” of consumers` social changes, changes in correctness of their shopping, deci-

sions and market choices (Burgiel, 2010).

Etno and consumer xenocentrism – continuum of changeability

According to the characteristics previously mentioned, ethnocentrism and xeno-

centrism are opposite poles allotting changeability of purchasing orientation of indi-

viduals and social groups, which make market choices – a domestic or foreign product?

Th ese are extreme points of changeability scale of consumer preferences, oriented on

the country of origin of a given product, including diff erent sides of intensity of orien-


tation on “home products” or on foreign products”. In this way, individual decisions and

appropriate choices of buyers accompanied by them, can be registered, not as dichoto-

mous decision making processes of the type “or or”, having the zero – one scale (0–1),

which are related to the domestic or foreign product choice, but as one from many op-

tions shown on the continuous scale, introducing smooth passage from extreme con-

sumer ethnocentrism to extreme consumer xenocentrism.

Acceptance of continuous scale measurement of a consumer shopping orientation

means, that his or her decisions of the choice of products can be related to any point on

the closed scale with two extreme states, showing potential shopping orientation of an

individual. Every choice and appropriate state of decision making consciousness can be

defi ned on the continuous scale, which refl ects intensity and changeability of considered,

cumulated benefi ts – satisfaction connected to purchasing domestic or foreign products.

Th e level of ethnocentrism or consumer xenocentrism of an individual or a group

is determined by cumulative magnitude of values – benefi ts – satisfaction, which is con-

nected to the purchase of a family or foreign product. Estimated, perceived and aware

summary value, including utilitarian and additional eff ects, material and spiritual, direct

and indirect, measurable and non-measurable connected to the purchase, manage the

buyers` decisions (Lizurej, 2009).

Accepted in the present considerations, continuation of measurement scale of con-

sumers` purchasing orientations or their groups, allows to indicate three appropriate

decision making spheres – the areas of choice of products in intersection of their coun-

try of origin. Th ey diff er with the level of intensity of certain orientations, that is:

– sphere I – the sphere of domination of orientation on foreign products, appropriate

for consumer xenocentrism,

– sphere II – the sphere of decisive compromise, which balances xeno and ethnocentric

tendencies – the sphere of indiff erence of infl uences, mixed purchasing orientation,

– sphere III – the sphere of domination of oriented on buying domestic products, the

sphere of domination of consumer ethnocentrism.

Every point (X) marked on the horizontal axis on Drawing 3 expresses diff erent

level of etno- or xenocentric intensity, in fact, diff erent proportion of distribution of

forces, which decide about buying certain products, from extreme domination of one of

them, by their relative balance, to domination of opposite forces.

Th e balance sphere takes a special place – the sphere of indiff erence, determined

by relative comparable etno aff ects – and xenocentrically. It corresponds those shopping

decisions, which are a compromise of a steady market balance of powers, they express

mixed, ambiguous and central buying preferences.

Full identifi cation and ultimately measurement of attitude of consumers to the

purchase of “native” products or “strange” ones, require introduction of more detailed

diff erentiations of the intensity levels of ethnocentrism and consumer xenocentrism.

According to such assumptions, in each from two considered cases, six stage phenom-

ena changeability has been introduced, that is:

46 Andrzej Szromnik

– ultraethnocentrism / consumer ultraxenocentrism,

– strong ethnocentrism / strong consumer xenocentrism,

– medium ethnocentrism / middle consumer xenocentrism,

– moderate ethnocentrism / moderate consumer xenocentrism,

– quasietnocentrism / consumer quasixenocentrism,

– trace ethnocentrism / consumer trace xenocentrism.

Th e proposed verbal scale of diff erentiated intensity of ethnocentric or xenocentric

tendencies in shopping and material goods consumption can be clarifi ed by additionally

introducing interval quantitative scale properly refl ecting changeability of the discussed

phenomena and their interdependency (disappearance of ethnocentric behaviour leads to

appearance of xenocentric attitudes and vice versa). Th e most adequate, in this case, seems

to be the two-poles scale based on the point measurement from 10 to – 10 points. Taking

into consideration that the values added would express the intensity of consumer ethno-

centrism and the negative values adequately consumer xenocentrism. Th e scale measuring

division (2, –2) would refer to the “temporary” level of the phenomena and would be their

changeability sphere, indefi niteness of consumers shopping behaviour. On the presented

graphic conceptualisation (por. Drawing 4) every level of changeability, according to the

verbal scale of the intensity of the consumers orientation measurement would respond to

two points of diff erence (10–8 p., which is consumer ultraethnocentric, 8–6 p. stands for

strong consumer ethnocentrism, 6–4 medium, etc. ).


Drawing 3. Th e spheres of consumer shopping preferences – the continuum

of choosing products changeability


In case of the use of American measuring tool to measure consumer ethnocen-

trism, in other words so called the CET-scale method based on 17-item questionnaire

and 7-step Likert scale, the measured level of ethnocentrism with the use of points, can

also be referred to six levels of the proposed verbal scale. If each result of an individual

measurement is in the range of 17–119 points, then 17-point range will diff erentiate

each one from the six levels of the verbal scale. Adequately consumer ultraethnoce-

trism can be referred to the people, who in the result of taking part in the CET-scale

method questionnaire had the possible maximum – the range 102–119 points, strong

consumer ethnocentrism 85–102 points, medium 68–85 p., moderate 51–68 p., con-

sumer quasiethnocentrism 34–51 p. and strong ethnocentrism in case of receiving only

17–34 points (Szromnik, Wolanin – Jarosz, 2013).

A domestic product and a foreign product – general spectrum of perceiving

Diff erent associations, references, assessments or the ways and criteria of recognis-

ing, which function as stereotypes in certain social groups, are connected to a „domestic

product” and to a „foreign product”. Th ese are not only synonyms or related concepts in

relations to the main category, but important psychological interpreters, which decide

48 Andrzej Szromnik

Drawing 4. Th e leves of changeability of orientation on domestic and foreign

shopping – from consumer ultraethnocentrism to consumer ultraxenocentrism


about positive, favourable, and even warm perceiving of the products, according to the

places from where they come from. It refers especially to the “domestic products”, which

can be defi ned as ours, close, known, local or other terms can also be used.

Eight associative terms in relations to the „domestic product” have been proposed to

the aim of the present elaboration. Th ey can undergo social assessment and arrangement.

Th e following terms have been introduced:

– close – accessible,

– own – native,

– certain – guaranteed,

– recognisable – known,

– traditional – habitual,

– easy in use,

– from this place – local,

– manufactured in our country.

All terms mentioned have a positive connotation, they express and are associated

with positive features of a product. Th eir meaning range allows to accept, appreciate and

value them because of the connection with one`s homeland. Th ere is not always like this

because sometimes for some people a “domestic product” can be associated with the fea-

tures like out-of-date, low quality, deceptive, typical, unoriginal, boring. Th e quoted refer-

ences widen the horizons of perceiving of home products in a double sense (Drawing 5).


Drawing 5. Th e meaning range of the term “domestic product”


Analogically, just like in case of the characteristics of the associational features of the

domestic products, the research- diagnostic approach can be used for the „foreign prod-

ucts”. Hypothetically, it has also been assumed that the group of eight statements, which

synthetically characterise the essence of such products, synonymous statements, that is:

– being discovered – surprising,

– prestigious – distinguishing,

– hard to fi nd – unique,

– profi table – advantageous,

– reliable – qualitative,

– new – unknown,

– original – special,

– enriching – broadening.

In case of the „foreign product”, the quoted typical statements, generalisations and

related terms. All of them create a set of positive features, however diff erentiated as far

as the scale of character is concerned (Drawing 6). In order to order them according to

the social acceptance of the associations given, appropriate frequency of their appear-

ances, they should also undergo representative survey studies by introducing addition-

ally at least a few negative terms like unnecessary – threatening, expensive – unadjusted,

unknown – diffi cult in use, strange as far as culture is concerned – bizarre or dangerous

– risky (Gutkowska, 2011; Th omke von Hippel, 2004).

50 Andrzej Szromnik

Drawing 5. Th e meaning range of the term “foreign product”


Perceiving the features of domestic and foreign products by consumers, usually in

subjective, accidental and individual, to a big extent refl ects in their interest in a certain

product, and fi nally in its purchase and consumption (usage). Th at is why a deep analy-

sis should be done to the way of identifi cation and valorisation of products according to

the countries where they come from, including the infl uence, so called the eff ect of the

country of origin of a product (Lampert, Jaff e, 1998).

A domestic or foreign product – identifi cation of the country where the product comes from

Th e basic condition of an aware purchase of a domestic or foreign product is rela-

tively fast, easy and correct identifi cation of a country of its origin. It is not an easy pro-

cess because of:

– lack of direct announcement about the country where the product is from,

– information about the product is given in a foreign language,

– information about the country ,where the product is from disappear in extensive text,

– announcements are inconsistent,

– the names of the countries are often no longer used but their economic communities,

– deliberate hiding information about where a product is from,

– giving incomplete and even untrue information,

– diffi culties with defi ning the country of origin of a product in case of production of

subcomponents, parts, semi-fi nished products, in diff erent countries.

Th erefore, a question appears, on the basis of which features, characteristics and

signs, a country of origin of a product can be recognised in a system – either domestic

or foreign and if something is from abroad, which country is it from? All features, which

are used to identify a product, are suggested to be divided into two big groups, that is:

– main identifi ers,

– supporting identifi ers.

In the fi rst group of the features allowing to defi ne the country where a product is

from, there is some information about the country of origin of the product brad. On the

basis of this knowledge, the country where the product itself is from can be shown with

a big probability. In this case it is assumed that the country of origin of a given brand

equals the place where the product itself comes from.

Additional information allowing to recognize the country of origin of a product

brings the brand symbol – a characteristic sign, graphic code, which includes typical

elements for a country, its location, geographical, social, religious, cultural features or

offi cial national symbols – emblem. Th e characteristic graphic sign – the brand symbol

can suggest a country or a group of countries (Barska, 2011).

Th e brand name of a product brings important contribution to knowing the coun-

try where the product was manufactured – the name showing its basic use, the spheres

of life or just its destination. It is especially crucial in case of specifi c, unique products,


consumed or used only in strictly defi ned countries. Additional, useful information,

which helps to identify the product, is the use of the country or region name itself in

the name of the product. It also concerns additional information, which can be found

on tags, labels, emblems. It completes and develop the name of the product (Rak, 2011).

Th e brand name, that is its verbal part, should be included as one of the main iden-

tifi ers of the country, where the product is from. Th e word or words used, their meaning,

construction or arrangement of the letters, the kind of font, can show directly or with

some kind of probability, the country of origin of a certain product. It is particularly

easy, when the brand name is popular and widely recognizable, because it refers to mass

produced consumption goods sold almost all over the world. It should be taken into

consideration, however, that fi rstly – brands change their owners and at the same time,

they refer to the products which changed their geographical derivation, and secondly

– the brand name can deliberately suggest the country of origin and prestigious features

of its products, although they are not completely connected with this country. In spite

of these objections, a brand name is an important component of the identifi cation pro-

cess of where the product is from (Wolanin-Jarosz, 2014).

Finally one of the most important geographical identifi ers of a product included to

the main feature group, the bar code, that is a geographical signage of a product (graph-

ic code). By appearing in diff erent conformations of lines, additionally completed with

numbers, it directly indicates the country where a certain product has been manufac-

tured. Th e fi rst three numbers are a numerous mark of the country where the product

has been completed (Drawing 7).

„Made in…”, w widely used English expression, undoubtedly indicates that a prod-

uct was manufactured in a certain place. On the grounds of it, it can be directly said that

52 Andrzej Szromnik

Drawing 7. Th e pyramid of the identifi ers of product’s country of origin


where, in which country a given product was produced, no matter what the pronuncia-

tion and identifi cations of other identifi ers are. Not always, however, this expression,

used obligatory in the international trade, can be found on the product itself, because it

often gets lost when put on a label or wrapping, it is liquidated along with their rejec-

tion, intended to recycling etc.

Recognizing the country of origin of the product by relying on the accessible, no-

ticeable information on the product itself, its wrapping or additional materials, can be

strengthened thanks to the “team” of additional signs and symbols as the identifi ers

supporting the whole process. Th e information showing the country can be included to

them according to:

– the origin of raw materials and subcomponents,

– design, where the idea comes from,

– characteristic symbolic use of colour,

– the use of product, its purpose,

– the language in which the product is described.

Th e identifying value of the product characteristics mentioned, is relatively small

and can only serve for additional justifi cation of a country where they come from. Th e

consideration of the above mentioned characteristics, makes the justifi cation, done by

a consumer diagnosis, reliable and impinges on the spectrum range of the products fea-

tures discussed (Drawing 8).

Th e characteristics of potential helpful features, being done while defi ning the geo-

graphical belonging of a product by a consumer or other interested person, allows to

draw one conclusion – the correct identifi cation of the country where the product is

from, is not often an easy problem, all the more automatic. It is easy to make a mistake

in this case by undergoing fragmentary and accidental verbal announcements and mar-

keting symbolism. It is especially diffi cult in case of the foreign products, which have

complex technological cycle, geographically dispersed production process and the de-

velopment of the international enterprises cooperation (Khan, Rizvi, 2008).

Taking into consideration quoted circumstances the authors made an attempt to

develop the issue of a foreign product „anatomy” by analysing structurally the produc-

tion cycle of a potential product in detail – the object of geographical identifi cation. Th e

whole procedure is based on determining belongingness of certain components of a cy-

cle of creating the product, using the two divisible “foreign country – domestic country”

scale. 8-element cycle has been accepted in the analysis, which means distinction of

eight phases of shaping its fi gure – market identity, that is:

1 – the idea for a new product,

2 – elaboration of the idea of the product,

3 – gaining raw material, semi-fi nished products, subcomponents,

4 – localisation of the assembly- production process,

5 – derivation of the capital, the property of the production company,

6 – the origin of the company brand,


7 – the origin of the product brand,

8 – dominating national affi liation of the company production labourers.

Depending on geographical assignment of every mentioned market features of the

product (in the foreign country – domestic country system) its “genesis” can be defi ned

by adequately grading connections with countries abroad. In this way, every product can

be classifi ed by being qualifi ed to one of the eight classes. Th ey respond to the following:

– a foreign product of the I grade (only one of the distinguished features is connected

with countries abroad, the remaining seven come from a home country),

– a foreign product of the II grade (two features come from countries abroad),

– a foreign product of the VII grade (seven features refer to countries abroad and

only one is connected with a given country),

– a foreign product of the VIII grade (all features – the production cycle phases refer

to countries abroad).

Absolutely domestic product or absolutely foreign product are the products, in case

of which every production phase, every element of its marketing concept is adequate-

ly domestic or foreign. In the verbal scale it equals with absolutely domestic product

through the product, conventionally domestic and domestic conditionally to absolutely

non-domestic products.

54 Andrzej Szromnik

Drawing 8. Th e anatomy of a product according to its country of origin – 8 grades

of domestic products


By using the concept of the morphological table, diff erent options of production

organisation and shaping the market concept of completed products can be presented

in the system 8x2, that is eight criteria of the product origin identifi cation and two-

dividable answers scale (foreign country – domestic country). Th e presented profi les of

intersections, correct production – market scenarios of the products, are broken lines

connecting certain points. Th ere are several dozen diff erent combinations and concept

of marketing preparation of the products. In a special case, that is, in relation to abso-

lutely foreign or absolutely domestic products certain intersections profi les will be re-

fl ected as a straight line – straight seven – element segment ( Table 1).

Th e condition of full recognition of a country, where the product is from, is pos-

session, by interested people, potential buyers in this case, reliable and completed infor-

mation about the product, its production – assembly process and marketing concept of

introducing the product on the market. In this case, some additional information can

be helpful like what is written on the product or attached label, previously gained envi-

ronmental information and one`s own market experience (Baruk, 2008).



Table 1. Products profi le intersection – the scenarios of market concept

of foreign / domestic product

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THE IMPACT OF MODERN TECHNOLOGIES ON EMPLOYEE SAFETY KNOWLEDGE

MANAGEMENT

P . I H , PH.D.

W S E ,

Abstract

Th e article was prepared on the basis of the report of the 1st stage of research

conducted by the team of employees of the Warsaw School of Economics on

the problem of improving work safety of young people. Th e objective of this

stage of the project, implemented under an agreement with CIOP (Th e Cen-

tral Institute for Labor Protection), within NCBiR (Th e National Center for

Research and Development) projects, was to prepare a new model of voca-

tional training with the use of explicit and tacit knowledge.

Introduction

Knowledge identifi cation becomes one of the basic functions of knowledge man-

agement and, within it, knowledge sharing and dissemination gains the status of a pro-

cess. However, although knowledge sharing is a process including provision of access to

knowledge for specifi c groups of employees, knowledge dissemination enables accessing

knowledge for all needy and becomes the necessary element of the education process.

Th e system of vocational training in our country is based to a considerable extent on

the transfer of explicit knowledge and formal knowledge, occurring in the form of e.g.

procedures or instructions (Nonanaka, Takeuchi, 2000), ignoring simultaneously tacit

knowledge, informal knowledge, generated by individual experience (Podgórski 2010;

Haukelid 2008; Mascini et al. 2008; Moulton, Forrest 2005; Grudzewski, Hejduk 2004;

Karwowski 2004, Borial 2002). Th is state of aff airs is connected partially with the char-

acter of tacit knowledge – this knowledge is often unrealized, diffi cult to verbalize as

well as practical (related to work context), which makes its acquisition and codifi cation

problematic (Polanyi, 1966 [quot.:] Nonaka, Takeuchi, 2000).

Some scientifi c evidence indicates that the use of tacit knowledge aff ects positively

the operation of companies, including especially in the work safety area (Mascini et al.

2008; Karwowski 2004, Schulte et al., etc., 2004). Th e employee knowledge manage-

ment process should also include acquisition, creation and dissemination of knowl-

edge among all employees of a company. Th e signifi cance of including elements of tacit

knowledge to shape safety culture is confi rmed by employee surveys, pursuant to which

hidden knowledge is usually complementary to explicit knowledge, as formal regula-

tions do not provide all risky situations and, even if so, the proposed ways of conduct

are not always the best for a specifi c situation. In addition, employees claim that a large

part of the content communicated during formal trainings is inadequate to the work

undertaken later, and learning about safe work performance should be connected with

gaining practical experience, rather than formal education (Podgórski 2010; Mascini et

al. 2008; Moulton, Forrest 2005; Aase, Nybo, 2002).

Despite interest that can be seen in relation to explicit knowledge, there have been

few reports on eff ective solutions from this scope in the area of occupational education,

related to occupational health and safety. Th us it is considered as justifi ed to conduct ex-

tensive research aimed at the eff ective use of the existing sources of explicit knowledge

and tact knowledge regarding occupational health and safety.

Impact of new technologies on employee safety

Th e potential impact of information technologies on work and safety can be ex-

amined in three aspects. Th e fi rst one covers changes in the way how people perform

their work; the second one is growth in using the existing technologies; the third one is

development and evolution of the method in which technology enables companies to

organize their work.

In the new strategic OHS framework for the years 2014-2020, it can be seen that

information technologies give completely new possibilities regarding fl exible and inter-

active work processes. In consequence, we are dealing with a greater diversity of work-

force and a higher level of job rotation. It results in a greater uncertainty with regard to

employment, and, consequently, in a greater stress. From the Eurobarometer surveys, it

results that for the majority of the surveyed (53%), stress is the most important occupa-

tional hazard. 28% of the surveyed indicate repeated movements or uncomfortable po-

sitions when performing work and 24% of the surveyed indicate carrying or transfer of

heavy loads. Many physical hazards for health of employees have been limited as a result

of the Labor Code regulations. For instance, the employer, pursuant to Art. 227 of the

Labor Code, is obliged to employ means preventing occupational diseases and other dis-

eases related to any performed work and therefore is obliged to maintain both effi cient

devices restricting or eliminating factors harmful for health as well as devices used for

60 Irena Hejduk

their measurement. It is important, for instance in companies where employees are deal-

ing with some chemicals harmful for their health. From the quoted statistics, it results

that the most endangered element is mental health of employees of the European Union,

whereas a good health condition is a key for both stable life and active ageing. In Europe,

more and more attention is paid to stress management, risk with regard to stress and

psycho-social threats at the workplace. Th e following should be listed among the reasons

for the presence of psycho-social hazards, above all: incorrect planning, organization and

management at the workplace, and a low level of social culture. In the European Union,

which promotes healthy and safe workplaces, tools are developed that support the ef-

forts for restricting stress and psycho-social risks at the workplace. Particularly support

in diagnosing the aforementioned hazards is to be granted to small and medium-sized

enterprises. Under the new strategic OHS framework for the years 2014-2020, it is

pointed out that it is harder for small and medium-sized enterprises to conduct opera-

tions according to all the requirements regarding occupational health and safety, there-

fore it is necessary both to provide these entities with fi nancial support as well as tech-

nical assistance regarding the implementation of such tools, just to mention OiRA. Th e

OiRA solution has been developed in order to provide easy-to-use tools that will guide

micro and small organizations through the risk assessment process. Th e OiRA software

developed by EU-OSHA in 2009, used since 2010, is based on the Dutch risk assess-

ment tool called RI&E that has enjoyed a considerable success and is widely used. In

accordance with the assumption, OiRA is to repeat the scenario known from the Dutch

example and enjoy equivalent success at the European level. Over the recent months, in

OiRA several new tools have been published. Altogether, the available number of inter-

active tools (OiRA) has increased to 15. New tools relate to diff erent sectors, including

hairdressing, gastronomic services and private security. Th e tools have been developed in

several states, including in Belgium, Spain, Greece and Lithuania, and in cooperation

with EU social partners. It is a step further towards placing OiRA in the center of the

risk prevention strategy. At present, works are being carried out on subsequent 50 tools.

In addition, educational actions should be taken to increase awareness of the im-

portance of problem of occupational health and safety, and their impact on the quality

of human capital.

Assumptions of the research project

Th e main objective of the research project conducted by the team of workers of the

Warsaw School Economics and selected experts from other academic centers (including

expert from the University of Central Florida – Prof. Waldemar Karwowski, Ph.D.) is to

improve the system of shaping pro-safe attitudes among young people, in particular by

eff ective use of the existing sources of explicit knowledge and tacit knowledge regarding

occupational health and safety. Th e contemporary system of vocational training is based to

a considerable extent on the transfer of explicit knowledge and formal knowledge, occur-

Th e Impact of Modern Technologies on Employee Safety... 61

ring in the form of e.g. procedures or instructions (Nonanaka, Takeuchi, 2000). Ignoring

simultaneously tacit knowledge, informal knowledge, generated by individual experience

(Podgórski 2010; Haukelid 2008; Mascini et al. 2008; Moulton, Forrest 2005; Grudze-

wski, Hejduk 2004; Karwowski 2004, Borial 2002) – see p. 1.xxxx

At the same time, scientifi c evidence is published: it indicates that the use of tacit

knowledge aff ects positively the operation of companies regarding work safety (Mascini

et al. 2008; Karwowski 2004, Schulte et al., 2004). Th e signifi cance of including elements

of tacit knowledge to shape safety culture is confi rmed by employee surveys, pursuant to

which hidden knowledge is usually complementary to explicit knowledge, as formal regu-

lations do not provide all risky situations and, even if so, the proposed ways of conduct are

not always the best for a specifi c situation. Th ree detailed objectives of the project have

been specifi ed in the paper: they determine the existence of the following stages:

• the objective of the fi rst stage was to prepare a conceptual model of fl ow of knowl-

edge regarding OHS in the system of vocational training of young people;

• the objective of the second stage will be assessment of eff ectiveness of formal sources of

explicit knowledge and tacit knowledge related to OHS and education methods using

these sources, in the context of shaping young employees’ attitudes towards OHS;

• the objective of works planned under the third stage of the project is verifi cation

of the developed vocational training model with the use of explicit knowledge and

tacit knowledge.

Th e anticipated eff ect of implementing the project results will be, above all, im-

proving the system of vocational training of young people, in particular by the eff ective

use of the existing sources of explicit knowledge and tacit knowledge with regard to

safety, and hence streamlining the employee safety knowledge management processes

If knowledge management can be defi ned as all activities used to identify, preserve,

popularize and use explicit and tacit knowledge of personnel of a company to increase

effi ciency and eff ectiveness of their activities, knowledge management, from the tech-

nical point of view, may be understood also as a set of procedures and technical means

ensuring transfer of personal experience and knowledge of a member of an organiza-

tion to the database of an organization and ensuring storage and distribution of neces-

sary information among authorized members of an organization (e.g. collecting from

databases any information about binding procedures and regulations but also e-learning

training, etc.). Additionally, particular importance can be attibuted to modern technol-

ogies such as; mobile technologies, Cloud Computing, etc.

Research methodology and used research tools

Th e research method at the fi rst stage was analysis of world literature and Polish

language literature, dedicated to knowledge management and occupational health and

safety of juvenile employees. Under the research papers and monographs, articles from

scientifi c magazines, published in English and Polish, reports and legal acts of the Pol-

62 Irena Hejduk

ish and international law were analyzed. For the works on the collected material the

meta-analysis method was applied; it consists in a critical analysis of achievements of

the fi eld, combined with the formulation of arranged conclusions on this basis. To pre-

pare surveys, research questionnaires, verifi ed on a regular basis, were developed. Th e

research will cover selected OHS inspectors and young employees from industries with

the lowest and highest level of work safety. Young employees are, as defi ned by this re-

search program, employees whose job seniority does not exceed 3 years. Th e paper will

contain results of extensive discussions on the notion of a young employee and diff er-

ences between the notion of a young employee and a juvenile employee. Full interpreta-

tion of this notion should be one of results of the paper.

Description of conducted research and of the received results (product indicators) and their discussion

Th e objective of the project at the fi rst stage was to prepare a conceptual model

of fl ow of knowledge about work safety in the system of young employee occupational

training.


Normy BHP OHS standards

Baza danych o zdarzeniach Event database

Regulacje, przepisy i wytyczne BHP OHS regulations, provisions and guidelines

Umiejętność widzenia zagrożenia Ability to see risk

Doświadczenie zawodowe Professional experience

Intuicja w zawodzie Professional intuition

Skłonność do podejmowania ryzyka Tendency to take risks

Wiedza jawna Explicit knowledge

Wiedza ukryta Tacit knowledge

Postawy wobec bezpieczeństwa Attitudes towards safety

Kultura bezpieczeństwa Safety culture

Bezpieczeństwo pracy Work safety

Fig. 1 Conceptual model of fl ow of knowledge about young employee safety.

A starting point for the above mentioned model were discussions concerning or-

ganizational culture and safety culture.

Knowledge with regard to work safety of juvenile employees is broad, though there

are still few eff ective solutions in this fi eld. In addition, scientifi c knowledge is not suf-

fi ciently used in designing and implementing solutions aimed at ensuring work safety

to juveniles in Poland.

Th e planned eff ect of implementing the project results will be, above all, improv-

ing the system of young employee occupational training, in particular by the eff ective

use of the existing sources of explicit and tacit knowledge regarding occupational safety,

including the use of mobile technologies.

It is assumed that the project results will be employed by vocational schools and

companies to improve eff ectiveness of the young people education system and to shape

pro- safe behaviors at the workplace. Th e issues of health and occupational safety within

the European Union are examined in a wide perspective. It is possible to distinguish at

least several planes where the issue of occupational health and safety is noticed as im-

portant. Th e fi rst plane is economic competitiveness, thanks to high quality of human

capital; the second plane are savings related to avoiding losses resulting from absence at

work, health benefi ts, as well as premature withdrawal from the labor market; the third

plane is physical and mental health of the European Union inhabitants; the fourth plane

is contribution to the global development of safe work standards. By now, the Euro-

pean Union has been considered as a leader with regard to the working conditions and

is expected to keep on undertaking actions that promoting high standards of working

conditions, aiming at minimized the level of accidents at work, as well as vocational dis-

eases. Most legislative initiatives and non-legislative initiatives specifi ed in the strategy

for OHS for the period 2007–2012 have been implemented in the EU member states.

64 Irena Hejduk

According to the assumptions of “Th e Program for New Skills and Employment”,

the percentage of young people taking up studies at universities and technical univer-

sities should increase, and working conditions and jobs’ quality should improve. High

quality of work is listed as the main factor of competitiveness of the economy. Attention

is paid to the fact that survival of EU companies and their expansion depend on em-

ployment of the workforce, operating in high quality work environment, which ensures

safety and hygiene of working conditions. From the report “OECD HYPERLINK

“http://www.keepeek.com/Digital-Asset-Management/oecd/employment/oecd-em-

ployment-outlook-2014_empl_outlook-2014-en”EmploymentHYPERLINK “http://

www.keepeek.com/Digital-Asset-Management/oecd/employment/oecd-employ-

ment-outlook-2014_empl_outlook-2014-en” Outlook 2014” it can be concluded that

Poland has poor results in all main categories that aff ect workplaces’ quality, such as the

level of earnings, inequalities in salaries, risk of loss of work and unemployment, ben-

efi ts for people without work and comfort of work, therefore it occupies the 26th place

in the ranking.

It can be assumed that the project results will be implemented in at least 20 voca-

tional schools training 3000 future workers. Within 1 year from completion of the pro-

ject, it can allow increase in frequency of pro-safe behaviors among young employees

related to cooperating schools.

Conclusions

Th e changes in work organization, which result from accomplishments in the

fi eld of information technologies, especially accomplishments ensuring constant com-

munication, open huge possibilities with regard to fl exible and interactive work pro-

cesses. A growing diversity of workforce is noticed, which is refl ected by new non-

standard contractual determinations and work models, as well as higher level of job

rotation connected with shorter work orders, in particular in the case of young employ-

ees. Th e recommendations of the European Union Council for Poland for the years

2012-2016 include limitation of temporary contracts because it has adverse impact

on the quality of human capital, its effi ciency, as well as smaller possibilities of partici-

pating in vocational education. Recommendations cover also increase in cooperation

between schools and employers, and improving the quality of education. As it results

from the forecasts of the European Center for the Development of Vocational Training

(CEDEFOP), until 2020 in Poland the demand for highly qualifi ed employees will

be growing, with simultaneous drop in the demand for work of medium and poorly-

qualifi ed employees. For this reason, it is necessary to raise qualifi cations and skills, by

permanent learning by the employees themselves. Th e learning ability depends on the

dispositions of individual, their willingness and capacities and often also on fi nancial

possibilities. At this point it is important that education provided not only by public

institutions school system, but also by various business entities be recognized. Th ese


changes mean the adoption of new, more eff ective directions of investing in education

(education and training), such as, among others:

- arranging and developing the system for recognition of competences acquired be-

yond formal education (validation system),

- implementing systems of gathering and transfer of educational achievements, con-

sistent with European systems, implementation of national frames of qualifi cations,

Th e project where we expect, among others, incorporation of mobile technologies

into the educational process, is compatible with most recommendations of the Euro-

pean Union, including especially the use of new technologies in educational processes

which, as a target, should also improve working conditions and work safety.

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THE THEORY OF CROSSVERGENCE BETWEEN FOREIGN BRANCHES OF CORPORATIONS

A Ż , P .D.C U E

Abstract

Competitive pressure present in the contemporary business environment

leads to a situation, where international corporations attribute an ever in-

creasing role to global integration and control processes. In the light of the

above, the minimization of cultural diff erences between individual branches

of multinational companies, and the unifi cation of their cultures are, among

others, becoming a priority.

Th is article focuses on the convergence and divergence processes that have an

impact on the changes occurring within corporations. Contemporary com-

pany branches may experience the impact of these processes simultaneously,

by becoming structurally and technologically uniform, but at the same time,

preserving their cultural diff erences. Th e concept of crossvergence, which ex-

plains the paradox of parallel acceptance by managers of the professional val-

ues propagated by headquarters (corporate culture), and the infl uence of their

national culture will also be addressed.

Convergence as a consequence of globalization

Globalization leads to the growing mutual penetration and integration of markets

and the internationalization of production, distribution, marketing, and the acceptance

by companies of global operational strategies. As a result, markets and production in

diff erent countries are becoming more and more interconnected and interdependent 1.

Similar consumption systems appear, especially among numerous groups living in cities,

similar management systems become prevalent, particularly in large companies; many

areas are becoming similar, e.g. technology or science2.

According to G. Yip3, the changes taking place indicate that in many branches of

industry, the global strategy will probably be adopted, as the most eff ective. One such

change is the increasing level of standardization of consumption and lifestyle patterns.

Other types of changes include: a reduction of tariff and non-tariff trade barriers, the

unifi cation of standards, technological investments on a global scale, and ease of com-

munication. Th e consequences of the globalization of management are visible in the

economic, political, social and cultural realms.

Operating within the global market facilitates the popularization of principles and

market institutions, and the standardization of organizational structures, management

methods, production systems, data processing methods (e.g. Microsoft computer pro-

grams), as well as communication, regulation mechanisms and legal systems4. Th e glob-

al telecommunication and transport system enables immediate transfer of ideas, goods,

information and capital. Th ere is also a related phenomenon, i.e. “the world getting

smaller” – events, information or ideas immediately reach recipients all over the planet.

Th e global information revolution has caused signifi cant changes in production, fi nanc-

es, international exchange and business functioning5.

A question arises, whether globalization leads to unifi cation or to a division of the

world? Some people (mainly globalists), claim that globalization leads to convergence

and the homogenization of the world. Others (usually opponents), argue that globaliza-

tion is the process of diff erentiation of the world, leading to its polarization. However,

much indicates that both of these, seemingly opposing and mutually exclusive concepts

may be true6, they are concurrent eff ects of globalization, yet each of them concerns dif-

ferent reasons and areas of this process.

Globalization promotes world convergence, yet only in some areas of contempo-

rary life – it seems to apply mainly to technical, organizational and legal aspects. Mo-

dernity is expressed as scientifi c and technical progress, and the application of high

technology, which, in turn, requires unifi cation (or at least a signifi cant confl uence) of

economic and political decision-making processes, and necessitates the consolidation of

1 Globalizacja. Mechanizmy i wyzwania, ed. B. Liberska, PWE, Warsaw 2002, p. 17.2 J. Kleer, Globalizacja gospodarki a integracja regionalna; [in]: Globalizacja gospodarki światowej

a integracja regionalna, Dom Wydawniczy Elipsa, Warsaw 1998, p.183 Yip G., Strategia globalna, PWE, Warsaw 2004, p. 284 Globalizacja. Mechanizmy i wyzwania, op. cit., p.305 Ibidem, p.31.6 P. Kennedy, U progu XXI wieku (przymiarka do przyszłości), London, 1994, [from:] Problemy

i kontrowersje wokół globalizacji, ed. E. Okoń -Horodyńska, Prace Naukowe, AE Katowice 2003, p. 19.

70 Agnieszka Żak

common technical and legal standards7. On the other hand, as a result of consumption

globalization, mainly by global mass media and the eff ect of demonstrations, a gradual

unifi cation of lifestyle and consumer culture across the world, is taking place.

Globalization, while facilitating a new division of work and redistribution of wealth,

results in diversifi cation and increased polarity of the world. Polarization concerns the di-

versifi cation of development opportunities and income levels both in international (cen-

tre-peripheries), and intra-social (elite-plebeian) aspects, that are increasingly dependent

on roles in the world economy (mainly creative–leadership and standard–executive)8.

Convergence and divergence process

Th e processes described above, occurring as a result of technological progress and

socio-economic changes within the “global village”, cause the increasing frequency of

mentioning the phenomenon of convergence in discussions, both in terms of develop-

ment, and culture among various countries and in companies – at the strategic processes

structural levels. While observing the economic reality, the ever-progressing process of

global market convergence – the process of homogenization of particular markets, and

expression by consumers of similar needs and preferences can be noticed. Th e devel-

opment of global-scale competition, forces international companies to utilize modern

techniques (e.g. lean manufacturing), ignoring their cultural origin. Th e IT revolution

promotes world convergence, by facilitating economic globalization and the dissemi-

nation of information and ideas9. By standardizing consumer behavior on the global

market, mass culture is developed. In many countries, in particular the highly developed

ones, a trend may be observed in recent years, proving the dissemination of some cul-

tural patterns, mutual penetration of standards and preferences, the universalization of

behavior, and homogenization of cultural backgrounds10.

Th e convergence of global markets observed at the level of a single company can be

defi ned as a process of interdependent changes, taking place in the fi eld of operations

and decision-making, aiming at achieving greater consistency of strategically oriented

internal moves intended to prevent radical or discontinuous changes11.

According to G. Aniszewska12 the convergence theory stems from the so-called in-

dustrialization logic. Management, arising from economics, focuses mainly on economic

goals of organizations. Companies, in a reasonable manner, respond to market conditions

7 Grupa Lizbońska, Granice konkurencji, Poltext, Warsaw 1996, p. 43-51.8 W. Szymański, Globalizacja: wyzwania i zagrożenia, Difi n, Warsaw 2001. 9 F. Fukuyama, Zaufanie. Kapitał społeczny a droga dobrobytu, Warsaw – Wrocław 1997, p. 394.10 E. Duliniec, Marketing międzynarodowy, PWE, Warsaw 2004, p.73.11 M.L. Tushman, E. Romanelli, Organizational Evolution: A metamorphosis model of convergence and

reorientation, „Research in Organizational Behavior” vol. 7, 1985. 12 G. Aniszewska, Współczesne organizacje – w stronę różnorodności czy homogeniczności?, MBA 4/2004, p. 40.

Th e Crossvergence Th eory Between Foreign Branches of Corporations 71

because the market is the fi rst and most basic frame of reference for their development.

Economic factors are thus universal. Another issue is the wide-spread of contemporary

market economy. Th is fact results in legal regulations and interventionism in the market

mechanisms transcending national and governmental boundaries, while companies op-

erate within transnational economic systems (e.g. EU, NAFTA). Management staff tries

thus to fi nd such evaluation criteria for their company, that would permit comparison

of its eff ectiveness in various conditions all over the world. Th is, in conjunction with the

development of global communication technology, and the popularization of standards

of international companies, may warrant mentioning a full convergence of economic and

management systems In such a perspective, the economy and technology determine the

character of a given organization and the manner of management13. Th e existence of simi-

larities between organizations (despite the diff erent cultural context) is also explained by

psychology – all people have similar needs and are motivated to work by similar factors14.

Since cultural diff erences do not have a fundamental eff ect on people’s behavior, organiza-

tions can work-out similar systems of assessment, remuneration and control.

Convergence may occur due to technological changes, company strategies, legal

and regulatory reforms, or a combination of any of these factors. It may take place only

in selected, or in many spheres of company operations. Th e range of the convergence

process in the company, depends on the adopted management strategy of a given com-

pany, and the merging of cultural and legal backgrounds of the countries where foreign

branches are located, with the country of origin. According to Fabiańska and Szafl ar-

ski the convergence processes are, at present, prevalent in global companies, focused

on “spotting”, relations and common features of particular national markets, and con-

sequently, the standardization of operations and processes15. Th e consequence of the

above is the development of the best way, to conduct business operations for every or-

ganization in the world; regardless of the context of said operations.

Th e convergence processes fi rmly incorporate “hard” management tools, i.e. strate-

gies, structures and procedures16. Th ese processes also apply to international educational

standards, in particular in the scope of technical and management sciences (e.g. MBA).

Th ey also superimpose consumer needs, which is connected with the standardization of

market and marketing strategies.

13 D. Pugh, D. Hickson, On organizational convergence [in:] M. Warner, P. Joint, Managing across Cultures, Th omson Learning, London, 2002 [from:] G. Aniszewska, Współczesne organizacje…, op. cit., p. 41.

14 W. Braun, M. Warner, Th e “culture free” versus “culture-specifi c” management debate [in:] M. Warner, P. Joynt, Managing…, op. cit., [from:] G. Aniszewska, Współczesne organizacje…, op. cit., p. 41.

15 K. Fabiańska, K. Szafl arski, Firma na rynku globalnym, GWSH, Katowice 1999, p.103.16 J. Child, Culture Contingency and Capitalism In the Cross-National Study of Organizations [in:]

L. Cummings, B. Staw, Research In Organizational Behavior, vol. 3, CT JAI Press Greenwich 1981[from:] J. Stankiewicz, Globalizacja a kultura organizacyjna, [in:] Zmiana warunkiem sukcesu.

Integracja, globalizacja, regionalizacja – wyzwania dla przedsiębiorstw, ed. J. Skalik, Prace Naukowe AE Wrocław, no. 963, Wrocław 2002, p. 522.

72 Agnieszka Żak

Yet, despite the far reaching convergence of the aforementioned hard manage-

ment elements, the cultural unifi cation process for example, does not usually proceed at

the same pace or with similar intensity17. Economic literature emphasizes that in real-

ity there are many barriers and restrictions, eff ectively impeding, and even preventing

the standardization of products and marketing strategies. Th is is a result of the pro-

cess, reverse to convergence – divergence, which can be defi ned as the process of dif-

ferentiation, present in both culture and in the sphere of international corporations 18.

Examples of divergence processes in the fi rst sphere mentioned are the emphasis on

attachment to national values, ethnocentrism, seeking self-identity, and in the second

– e.g. the diversity of economic systems of diff erent countries.

Th e usually listed, major causes of divergence include: a strong diversifi cation of

cultures (caused by diff erences in geographic location, the natural environment, history,

language, habits etc.), economic, legal, political, and technological limitations, (related

to various degrees of technical and technological advancement)19.

Divergence applies to the company work organization process itself, as well as the

role of work in a given community.

Cultural Convergence

Th e culture globalization mechanism can be identifi ed as a dissemination of diff er-

ent elements of culture, leading to cultural convergence.

National culture is a cumulative phenomenon that changes with time. It may be

identifi ed as a unique answer of a group of people to the surrounding environment, as

mechanisms allowing survival developed and transferred intentionally or subconscious-

ly to subsequent generations20. It is constituted of beliefs and values that are commonly

accepted by a given society in a given period. Culture aff ects decisions that a person

makes in everyday life. It is a tool for solving problems, it is everything we think about,

do, and have21.

17 B. Stępień, Internacjonalizacja kultury organizacyjnej – imperializm czy konwergencja?, [in:] „Regionalizacja i globalizacja w gospodarce światowej”, ed. J. Rymarczyk, Prace Naukowe AE we Wrocławiu, no. 976, 2003, p. 306.

18 J. Teczke, P. Buła, Dywergencja – próba analizy zjawiska w wybranych przedsiębiorstwach międzynarodowych,

[in:] Zarządzanie zasobami. Dostosowanie polskich przedsiębiorstw i instytucji do wymogów gospodarki

rynkowej, ed. R. Rutka, Zeszyty Naukowe Uniwersytetu Gdańskiego, no. 18, Gdańsk 2003, p. 325.19 Ibidem, p. 328-329.20 I. Kamińska–Radomska, Zachowanie świadomości kulturowej wobec zanikających barier politycznych

i ekonomicznych [in:] Procesy internacjonalizacji we współczesnej gospodarce światowej, ed. T. Sporek, Prace Naukowe AE Katowice, 2004, p.163.

21 R.T. Moran, J. Abbot, NAFTA. Managing the Cultural Diff erences. How to benefi s from the economic

and cultural integration of North America, Gulf Publishing Company, Houston Texas, 1994, p. 38, from: I. Kamińska –Radomska, Zachowanie świadomości kulturowej…, op.cit., p.163.


Globalization and the need for communication across cultures, have created the

need to conduct research on cultural diff erences, that would make it possible to prepare

for international contacts. Understanding another culture is a huge challenge of the

era of globalization22. Hofstede, working in the fi eld of international relations manage-

ment, emphasizes the multi-level nature of interpreting cultural expression, including

symbols (communication, behavior, education), rituals, national heroes, values23. Th e ba-

sis for culture and cultural diff erences still are values belonging to an internal, invisible,

unclear, and diffi cult to experience layer. Th ey provide the cognitive and interpretative

context of all manifestations of cultural expression.

Th e cultural dimension of globalization is based on the correlation and dissemina-

tion of cultural patterns, which manifests itself in their likeness and coalescence. Such

phenomena are supplemented by, among others, the internationalization of mass media,

the development of the Internet, popularization of international tourism, fashion and

the English language.

Bednarski,24 when discussing phenomena supporting globalization processes, lists

cultural convergence (becoming similar), which he defi nes as “mutual assimilation of

cultural patterns, standards and behavior”. Th e defi nition of cultural divergence, accord-

ing to this author, is in turn “the disassociation of cultures, seeking own self identity by

reconnecting with tradition”25.

On the whole, Cultural Convergence is, value estimation-wise, a neutral concept.

However, when confronted with imperialism, a symptom of convergence with clearly

negative connotations, meaning dictatorial treatment of other nations, and the intent to

conquer them by way of e.g. military action, it may take on a positive meaning. Within

the scope of management sciences, the term imperialism describes practices designed to

enforce specifi c views concerning management upon other entities (including cultural

expression)26.

Some authors agree with the thesis that globalization causes cultural convergence,

while others point out the cultural divergence caused by it. Supporters of divergence

claim that the unifi cation of the world is only apparent. Appadurai believes that glo-

balization does not lead to homogenization. Th e fact that the impact of elements of glo-

balization is not uniform, facilitated the forming of various new cultural confi gurations

that hinder standardization27. Smith, on the other hand, deems globalization projects

22 Ibidem, p. 165.23 E. Marx, Przełamywanie szoku kulturowego, Warsaw 2000, p. 73, from: I. Kamińska–Radomska,

Zachowanie świadomości kulturowej…, op.cit., p.165.24 A. Bednarski, Pułapy i pułapki globalizacji, TONiK, Toruń 1998, p. 22.25 Ibidem, p.124.26 B. Stępień, Internacjonalizacja kultury organizacyjnej…, op. cit., p. 305-306.27 A. Appadurai, Disjuncture and Diff erence in the Global Culture Economy [in:] Global Culture.

Nationalism, Globalization and Modernity, ed. M. Featherstone, Sage, Londyn, 1990, [from:] Ł.Sułkowski, Kulturowa zmienność organizacji, PWE, Warsaw 2002, p. 148.

74 Agnieszka Żak

as a utopia, because opposing national cultures use globalization elements as an instru-

ment to improve their own competitive position. For this reason the aversion to globali-

zation continues to grow, which may lead to global confl icts, both national and social28,

which are increasingly prevalent in the mass media.

According to some authors, the convergence of cultures does not exist at all29. Th is

theory is based on several facts. Th ere will always be barriers between consumers, stem-

ming from their upbringing in diff erent cultures. Despite the availability of similar

products and services, the buyers in diff erent communities assign them diff erent mean-

ing and interpret them diff erently. Culture also determines the informational sensitiv-

ity – refl ected in, for instance, acceptable ways of group functioning, the method of

conducting meetings, preparing reports, and also in management styles and decision-

making processes. An institutional point of view is also taken into consideration. Busi-

ness and management have diff erent institutional basis in diff erent societies, generated

by, among others, the family, the government, law, fi nancial and educational systems.

A combination of these infl uences is diff erent in every society, and consequently each

of them is guided by a separate logic of action30.

Th e divergence of cultures may therefore be identifi ed as a mutual dissociation,

seeking cultural identity, attachment to preferred values, invoking and cultivating tradi-

tion. It is also a particular (unique) perception of the world and oneself, as well as dif-

ferences in motivation and attitudes towards work31.

Globalization promotes the dissemination of management concepts, whereas

behaviors being both the “matter” subjected to techniques resulting from these con-

cepts, as well as the eff ect of their application, are being “Californized” at a signif-

icantly slower pace than, for example, market needs. “Globalication”(a compound

of globalization and location) means the co-existence of two tendencies: the fi rst is

the rush towards both globality and particularity, especially in the cultural sphere or

even “fragtegration”(simultaneous integration and fragmentation of the world) or

“chaorder”(chaos+ order, chaos and order in “one”)32. It results in the continuous pres-

ence of cultural diff erences between societies, forming specifi c environments, condi-

tioning the eff ectiveness of applying management concepts permeating from other cul-

tures. Considering all that, deliberations on the eff ect of culture on the behavior of

people within an organization become particularly relevant.

28 A.D. Smith, Towards a Global Culture, [in:] Global Culture. Nationalism…, op. cit, p. 188, [from:] Ł.Sułkowski, Kulturowa zmienność…, op. cit., p. 148-149.

29 See L. Hoecklin, Managing cultural diff erences, Wokingham, Addison-Wesley Publishing Company, 1995, M. Alvesson, Cultural perspectives on organizations, Cambridge University Press, Cambridge 1993, [from:] G. Aniszewska, Współczesne organizacje…, op. cit.

30 G. Aniszewska, Współczesne organizacje…, op. cit.31 J. Stankiewicz, Globalizacja a kultura organizacyjna, op. cit., p. 522.32 Zarządzanie wiedzą jako kluczowy czynnik międzynarodowej konkurencyjności przedsiębiorstwa, ed.

M.J. Stankiewicz, TNOiK, Toruń 2006, p. 271.


Th e crossvergence theory

Both phenomena – convergence and divergence – infl uence the functioning of

contemporary companies, operating in conditions of global competiveness, regardless

of the adopted corporate strategy. Along with the deepening internationalization pro-

cesses, organizations are increasingly becoming multicultural and global enterprises.

Th e leaders of such organizations must eff ectively work among diverse cultures, value

systems, beliefs and expectations.33

In the light of the deliberations on convergence and divergence, elaborations on

the concept of corporate consistency of an international entity become all the more rel-

evant. Taking account of the multidimensionality and diversity of international corpo-

rations, their headquarters must fulfi ll a diffi cult task – on the one hand they must per-

form many functions, on the other, seek a dynamic balance between strategies for the

entire corporation and the behavior of remote branches. Th at task is diffi cult because of

three hindrances34:

• the struggle for autonomy of the particular branches, as well as their “rooting” (em-

beddedness) in relations with local partners

• the needs of including specifi c environmental conditions wherein a given branch

operates, which necessitates the need for fi nding solutions adequate for specifi c

situations, rather than creating one model of relations between headquarters and

the branches,

• hazard that diff erent treatment of particular branches in diff erent countries (e.g.

a diff erent control, assessment and remuneration systems) may be perceived by local

managers as unjust, which consequently may lead to e.g. a revolt and actions incon-

sistent with corporate logic. According to Kim35 a multinational approach character-

ized, among others, by local diversity of organizational cultures, in corporate branch

offi ces, is mainly a source of expenses rather than benefi ts. Th e main underlying fac-

tor behind such a condition is employee migration, development of communication

technology, competitive pressure and the globalization of operating procedures.

Global corporate integration can be perceived from two sides36. An unquestionable

advantage is the fact that strong corporate cultures are seen as an insulating factor and

a vital element enabling dealing with turbulent environment in the long term. Consist-

ency in this case is also a synonym of a link connecting the diff erent branches into an

33 Organizacja przyszłości, ed. F. Hesselbein, M. Goldsmith, R. Beckhard, Business Press, Warsaw 1998, p. 294

34 Zarządzanie międzynarodowe. Teoria i praktyka, ed. K. Obłój, A. Wąsowska, PWE, Warsaw 2014, p. 3435 K. Kim, J.H. Park, J.E. Prescott, Th e global integration of business functions: a study of multinational

businesses in integrated global industries, “Journal of International Business Studies” 2003, no. 34 (4), p. 327-344, [from:] R. Mead, T.G. Andrews, Zarządzanie międzynarodowe, Wolters Kluwer, Warsaw 2011, p.541

36 R. Mead, T.G. Andrews, op. cit, p. 541-542

76 Agnieszka Żak

international network of entities subject to the headquarters, wherein a strong sense of

common identity and values is prevalent. On the other hand – particularly in a short time

– there is a hazard of a drop in motivation of local managers, control costs, or diffi culty

in the measurement of professional values between headquarter and branch employees.

International corporations which aim for the standardization of culture of their re-

spective branches have to account for both the degree and the pace of the convergence

process of their local work methods and values. Precise evaluation of these factors al-

lows corporations to 37:

• predict the degree of ease, with which their branches absorb the strategic changes

on the corporate level,

• distinguish key cultural variables, that may adversely aff ect the process of changes,

• exactly verify the need to delegate managers abroad, along with specifying the op-

timum number of such trips and their duration, trust and understanding level in-

crease in their branches, which will lead to a raise in motivation and commitment

of the personnel.

In 1997 Ralston et.al, in the article published in the “Journal of International Busi-

ness Studies”38 presented results of a test conducted among Chinese managers, who at

the same time were under by seemingly confl icting infl uences. On the one hand, they

adopted individualistic, western (capitalist) values. However on the other hand, they

clung to the collective, Confucian values related to their cultural heritage. Th at con-

fi rmed the thesis that contemporary company branches can experience convergence

and divergence at the same time, converging in terms of structure and technology, but

preserving cultural diff erences distinguishing them. Trying to explain this unique para-

dox, Ralston created the concept of crossvergence, according to which the sum of profes-

sional values is a result of confl uence of cultural forces. Crossvergence is treated not as

a temporary condition, wherein, as time passes, the divergence of values will be replaced

by convergence. Rather, it should be perceived as a unique system of values, created on

the basis of a synergic process of taking over a specifi c corporate ideology and local so-

cio–cultural infl uences39.

According to Ralston however, the traditional perception of factors impacting val-

ues should be changed.

In most international management textbooks one can fi nd a description of in-

fl uences on individual-level values formation/evolution similar to the one depicted in

Figure 1a, which as the traditional perspective. Th ese comprise four categories of mac-

ro-level infl uences: sociocultural, economic, political and technological. However, the

37 Ibidem, s . 54338 D.A. Ralston, D.H. Holt, R.H. Terpstra, Y. Kai – Cheng, Th e impact of national culture and economic

ideology on managerial works: a study of the United States, Russia, Japan and China, “Journal of International Business Studies” 1997, no. 28 (1), p. 177-207 [from:] R. Mead , T. G. Andrews, op. cit., p. 551

39 D.A Ralston, Th e crossvergence perspective: refl ections and projections, “Journal of International Business Studies”, no. 39, 2008, p. 27–40.


individual-level values research stream, which Ralston has pursued cross-culturally with

his colleagues, indicates that these macro-level infl uences may be logically clustered uti-

lizing a time orientation. Th at is, we can group them based on how long it takes a par-

ticular type of infl uence to have an impact on individual-level values. Further, the time

that it takes for an infl uence to have an impact on individual-level values appears to be

directly related to the time that it takes for the infl uence itself to change. Ralston thinks

that when we talk of sociocultural infl uences (societal values), we tend to measure the

time period for change in terms of generations and centuries. Conversely, when we talk

of economic infl uence and political infl uence, the time frame of change can be years

or decades, especially in emerging and transitioning economies. Technological change

can occur even more rapidly. Th ese last three infl uences – economic, political and tech-

nological – share a common time horizon that is considerably shorter than the time

Fig. 1. A description of the factors that infl uence values: a) traditional perspective

b) time-change clusters perspective.

Source: D.A Ralston Th e the crossvergence perspective: refl ections and projections, “Journal of In-

ternational Business Studies”, No. 39, 2008, p. 27–40

78 Agnieszka Żak

horizon for sociocultural change. Additionally, all three of these infl uences are closely

related to business activity in a society, whereas the sociocultural infl uences are more

closely related to a society’s core social values (see Figure 1b)40.

Th e Ralston’s framework is based on many aspects of Hofstede’s cultural analysis

model (such as individualism versus collectivism or masculinity versus femininity di-

mensions). Th e issue of fundamental importance is the analysis of national culture in

order to bring about more eff ective and effi cient integration between headquarters and

subsidiaries.

An example of a company, wherein such a system of values works perfectly is the

Chinese Haier, the largest manufacturer of household appliances in the world, whose

annual turnover exceeds 24 billion dollars. Employees of this company are divided into

more than 2000 – semi-autonomous teams (zi zhu jing ti). Th ese teams are rather small,

consisting of 10 to 30 people, manage themselves, are responsible for implementing as-

sumed goals, as well as profi ts gained (or losses suff ered). Members of each team are

remunerated for the result of the whole group, as well as their individual contribution

to its achieving. Th e managers encourage these teams to work as close as possible with

local markets and request opinions of both consumers and business partners. Th e head-

quarters, on the other hand, determines rules of collaboration between diff erent teams

and designates objectives41.

Conclusions

At present, management in a intercultural environment is a huge challenge for

managers, not only with regard to e.g. shaping relations between headquarters and the

branches, but also between the company and its stakeholders. Research results in the

crossvergence theory may have many applications in the broad area of intercultural

management, for example in research of workplace values, including their changes in

a given time period, ethics, or corporate social responsibility.

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Aniszewska G., Współczesne organizacje – w stronę różnorodności czy homogeniczności?,

MBA 4/2004.

Bednarski A., Pułapy i pułapki globalizacji, TONiK, Toruń 1998.

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40 Ibidem41 See F. Hutten – Czapski, J. Dmowski, T. Mrozowski, Ekspansja międzynarodowa jako innowacja,

Harvard Business Review Polska, grudzień 2013 – styczeń 2014, p. 78; J. Jullens, Jak nowi giganci

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Warsaw 1998.

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Organizacja przyszłości, red. F. Hesselbein, M. Goldsmith, R. Beckhard, Business Press,

Warsaw 1998

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AE Katowice 2003.

Procesy internacjonalizacji we współczesnej gospodarce światowej, red. T. Sporek, Prace Na-

ukowe AE Katowice, 2004.

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tional Business Studies”, no. 39, 2008.

Regionalizacja i globalizacja w gospodarce światowej, red. J. Rymarczyk, Prace Naukowe

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Szymański W., Globalizacja: wyzwania i zagrożenia, Difi n, Warsaw 2001.

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nvergence and reorientation, „Research in Organizational Behavior” Vol. 7, 1985.

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Zarządzanie międzynarodowe. Teoria i praktyka, red. K. Obłój, A. Wąsowska, PWE,

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80 Agnieszka Żak

Chapter 2

Functional Approach

FLEXIBILITY OF THE MANUFACTURING PLANT’S FUNCTIONING AS A MANIFESTATION

OF ITS STRATEGIC BUSINESS RELATIONS ON INTERNATIONAL MARKETS – CASE STUDY1

P . B N , P .D.T S B G ,P N , P .D.

P U T , P . A S , P .D.

T U G

Abstract

In this publication, it is assumed that business relations – created by the manufac-

turer based on international markets – largely support the growth of the implemen-

tation fl exibility. Th erefore, the primary aim of the presented work is an attempt to

present the business relations on the international markets created by the manu-

facturer as an attribute encouraging the growth of the implementation fl exibility.

Introduction

As rightly pointed out by2 M. Gorynia and K. Mroczek3, the feature of real eco-

nomic processes taking place in the modern world economy is intensifi cation of eco-

nomic cooperation between diff erent regions, countries, integration groupings, etc. in

the form of internationalisation of the company at the macroeconomic level, and in its

1 Th e article was prepared within the project fi nanced by the NCN granted pursuant to decision No DEC – 2013/11/B/HS4/00697.

2 Th e authors of this paper share this view.3 M. Gorynia, K. Mroczek, Koszty transakcyjne jako determinanta formy zagranicznej ekspansji

przedsiębiorstwa, „Ekonomista” nr 2013/2, p. 201.

more advanced form – the globalization of the company4. Liberalisation of the move-

ment of goods and services, as well as factors of manufacturing on an international scale

lead to a systematic increase of importance in the companies’ behaviour of diff erent

forms of international expansion5.

In the context of the above, it should be emphasised that the rapid development

of various forms of international companies and more and more sophisticated ways of

their running of international business activity contributes to the tightening of interna-

tional competition6, which becomes global7.

Th e development of companies based on external factors usually comes down to

establishment of cooperation with other economic operators, irrespective of the scale, in

which they run activity8. In relation to this, the companies often face dilemmas:

a) whether to operate only on the domestic market, or to expand into foreign ones?;

b) on which markets do we undertake the activity?;

c) what should be the form of entry into particular foreign markets? Especially the level

of economic activity, the willingness to invest, increase in manufacturing capacity of the

companies in the future clearly depends on the current state and forecasts of economic

development. Th e more open and liberalised economy of a given country, the greater

the dependence of the situation of companies from the external environment, including

the international one. Any forecasts of economic development require reference to the

context of the global economy9.

4 G. Bełz seems to confi rm the above saying that, in recent years, more and more cases of international expansion of Polish companies can be noticed. Cf.: G. Bełz, Sieci zarządcze w strategii wzrostu

przedsiębiorstwa, [in:] Zarządzanie strategiczne. Strategie sieci i przedsiębiorstw w sieci, red. R. Krupski, Prace Naukowe Wałbrzyskiej Wyższej Szkoły Zarządzania i Przedsiębiorczości T. 32, Wydawnictwo Wałbrzyskiej Wyższej Szkoły Zarządzania i Przedsiębiorczości w Wałbrzychu, Wałbrzych 2015, p. 31.

5 In spite of increasing globalisation, every company must and should create its own factors of success. Cf.: J. Penc, Zarządzanie w praktyce. Menedżerskie myślenie i działanie, Wydawnictwo Prawno-Ekonomiczne INFOR, Warszawa 1998, p. 21.

6 M. Gorynia formulates the concept of competitive position, which is defi ned as the result of the assessment of the company’s off er by the market. In accordance with: M. Gorynia, P. Trąpczyński, Determinanty

efektywności zagranicznych inwestycji bezpośrednich – przegląd wyników badań, „Ekonomista” nr 2014/5, p. 665. According to the authors, it is effi ciency is the result dimension of competitiveness, giving expression of an effi cient use of the resources in the process of competition. Gorynia formulates the concept of competitive position, which is defi ned as the result of the assessment of the company’s off er by the market. Th e proposed quantifi cation of the competitive position takes into account both fi nancial and operational dimensions of the eff ectiveness of the company, including, on the one hand, profi tability and the relative level of costs, and on the other hand, non-fi nancial variables, such as market share and the level of loyalty of purchasers.

7 M. Haff er, Zarządzanie przedsiębiorstwem międzynarodowym, [in:] Przedsiębiorstwo. Teoria i praktyka

zarządzania, red. B. Godziszewski, M. Haff er, M. J. Stankiewicz, S. Sudoł, PWE, Warszawa 2011, p. 397.8 B. Pomykalska, A. Pomykalski, Konkurencja i współpraca jako czynniki rozwoju przedsiębiorstwa, [in:]

Zarządzanie rozwojem organizacji, red. S. Lachiewicz, Wydawnictwo Politechniki Łódzkiej, Łódź 2007, p. 221.

9 M. Gorynia, T. Kowalski, Globalne i krajowe uwarunkowania funkcjonowania polskich przedsiębiorstw, „Ekonomista” nr 2008/1, p. 51.

84 Bogdan Nogalski, Przemysław Niewiadomski, Agnieszka Szpitter

According to G. Kołodko10, the success is an attribute of open economies, taking

advantage of broad access for their products to other parts of the global economy and

not afraid of the competition from there, but by facing it with proper management of

companies, and an appropriate macroeconomic policy. According to the author, the

competition is inseparably related to the confrontation with other manufacturers and

suppliers, recipients and consumers.

In the context of the above, in this paper, it was assumed that, as a result of a benefi t

of scales of the international commodity exchange (international trade), i.e. a decrease in

unit costs as a result of extending thanks to export of the manufacturing series, globalisa-

tion contributes to higher economic dynamics. Th erefore, the primary aim of this work is

an attempt to present the business relations on the international markets created by the

manufacturer as an attribute encouraging the growth of the implementation fl exibility.

Th e achievement of the main aim is possible through realisation of partial aims,

which, according to the authors, include:

• literature analysis and systematisation of assumptions and defi nitions – which are

key from the point of view of the conducted research – which is possible through

analysis of carefully selected theoretical achievements in the fi eld of economic sci-

ences (management sciences) and engineering sciences (manufacturing manage-

ment and engineering).

• research aimed at determination of links on the international markets important

for the manufacturer, and, thus, what is their importance in the context of the im-

plementation fl exibility.

• a case study of creating the implementation fl exibility by one of the manufacturing

companies operating in the agricultural machinery market.

Proceeding to the research, the authors considered appropriate to outline the

working hypothesis, namely business relations – created by the manufacturer based on

international markets – largely support the growth of the implementation fl exibility. In

other words, the greater the potential of the manufacturer to build a network of inter-

national relations, the higher is his/her level of implementation fl exibility, expressing

with matching the product.

Flexibility as the domain of the modern manufacturer

Increasing environmental dynamics and, thus, increasing competitive pressure,

according to Sz. Cyfert11, forces the organisations to fi t permanently their strate-

10 G. Kołodko, Dokąd zmierza świat. Ekonomia polityczna przyszłości, Prószyński i Spółka, Warszawa 2013, p. 100.11 Sz. Cyfert, Strategiczna karta wyników jako instrument zarządzania strategicznego, [in:] Nowoczesne

systemy informatyczne dla małych i średnich przedsiębiorstw, red. P. Adamczewski, J. Stefanowski, Wydawnictwo Wyższej Szkoły Bankowej, Poznań 2006, p. 63.

Flexibility of the Manufacturing Plant’s Functioning as a Manifestation... 85

gies12. Th is means that the sustainable development of the organisation requires the

simultaneous implementation of activities on two independent levels: fi rst, the ac-

tivities related to the external and internal matching key areas of the organisation’s

functioning, and secondly, activities related to the development and implementa-

tion of a system allowing determination of the level of implementation of strategic

activities.

In the context of the above, a change has become the key category of the manage-

ment of modern organizations13. According to J. Lichtarski14, changes concern not only

the forms of organisation of organised entities, but also management processes imple-

mented within them. Because the variability and unpredictability of the environment

are growing, and there is no indication that this trend will reverse15, the authors of the

paper fully share the view, according to which the factors determining the eff ectiveness

of making these changes, are solutions specifi cally related to the use of new manufac-

turing techniques, the use of new manufacturing technologies, and the development of

methods and techniques in the fi eld of organisation and management16.

Th erefore, it is impossible not to notice that the eff ective functioning in a chang-

ing environment requires from the company to design a suitable model of its structure,

including organisational and legal form, organisational structure, and the model of for-

mulation and supply of products to the selected markets. Especially the maximum sat-

isfaction of customer needs is the desire of every company, not only the manufacturing

one. Currently, it is the customer, who is the most important link in the activity strategy

of every company. Only this conduct allows maintaining regular purchasers and attract-

ing new ones. Th erefore, the recognition of the needs of future and potential custom-

ers, enriched with market research, should be the starting point to begin the process

of manufacturing of the products. On the basis of knowledge of the customers’ needs,

12 According to A. Szplit and M. Szplit, it is none other than R. Krupski, who was the one of those authorities, who knew that the classical methods of strategic management are less important, and in many sectors, they are not useful. In accordance with: A. Szplit, M. Szplit, Rafał Krupski – kielczanin, dolnoślązak

– w poszukiwaniu (nie)równowagi w zarządzaniu strategicznym, [in:] Zarządzanie strategiczne. Strategie

sieci i przedsiębiorstw w sieci, red. R. Krupski, Prace Naukowe Wałbrzyskiej Wyższej Szkoły Zarządzania i Przedsiębiorczości T. 32, Wydawnictwo Wałbrzyskiej Wyższej Szkoły Zarządzania i Przedsiębiorczości w Wałbrzychu, Wałbrzych 2015, p. 11. R. Krupski’s opinion was that, in regard to further growth of turbulence of environment, the situation of strategic management in organisations is unenviable.

13 Appropriate response to the changes in the environment is a key task of the company. Such a response must be timely and appropriate. More information: B. Nogalski i zespół, Kultura organizacyjna.

Duch organizacji, Ofi cyna Wydawnicza Ośrodka Postępu Organizacyjnego, Towarzystwo Naukowe Organizacji i Kierownictwa, Bydgoszcz 1998, p. 166

14 J. Lichtarski, O współczesnych orientacjach w teorii i praktyce zarządzania przedsiębiorstwami, [in:] Kierunki i dylematy rozwoju nauki o przedsiębiorstwie, red. J. Lichtarski, Wydawnictwo Uniwersytetu Ekonomicznego we Wrocławiu, Wrocław 2008, p. 51.

15 S. Trzcieliński, Przedsiębiorstwo zwinne, Wydawnictwo Politechniki Poznańskiej, Poznań 2011, p. 23.16 Z. Malara, Metody doskonalenia organizacji i zarządzania przedsiębiorstwem, Ośrodek Postępu

Organizacyjnego, Bydgoszcz 2000, p. 5.


competitors’ actions, sensitivity of consumers for marketing activities, the company de-

velops action plans. Th ese plans are used by the supply logistics, ensuring supply of

manufacturing resources and materials determining process of manufacturing of a given

product; the sphere of manufacturing, manufacturing planned products, and sales as-

sisted with marketing, which, with its actions, provides customers of these products.

Th e high instability of the environment and – what is worth noting – the increas-

ing importance of knowledge17 in achieving a competitive advantage are the conditions

that push the management towards, among others, the eff ective organisation fl exibility

management. What are the characteristics of the business relations of the manufacturer

on the international market and how much they imply are described in the further part

of in this publication.

At this point, it is worth mentioning that, in the literature on the subject, many or-

ganisation fl exibility’s defi nitions can be met. Th e wide interpretive analysis of proposals

presented by various authors was presented by R. Krupski18 and G. Osbert-Pociecha19

in search of resultant of various concepts of adopting organisations to diff erent condi-

tions in the environment.

Referring to recommendations for contemporary organisations determining sur-

vival and development, appearing from both theorists and practitioners, G. Osbert-

Pociecha20 sees the fl exibility as the responsiveness of organisations, dealing with the

imperative of the changes made in the conditions of growing environmental turbulence,

and increased dynamics of changes inside organisations. Colloquially (intuitively), the

fl exibility is understood as a property of the entity, which comes down to its sensitivity

to changes (under the infl uence of specifi c factors), or a particular ease and speed in re-

sponding to them, and, consequently, introducing the appropriate changes21. W. Golden

17 G. Kołodko emphasises that knowledge is a specifi c conglomerate, which can help overcome many diffi culties, especially it will not only appear to be a means of earning money in the future, but also an equivalent. In accordance with: G. Kołodko, Dokąd zmierza świat. Ekonomia polityczna

przyszłości, Prószyński i Spółka, Warszawa 2013, p. 316.18 R. Krupski, Elastyczność organizacji, Wydawnictwo Uniwersytetu Ekonomicznego we Wrocławiu,

Wrocław 2008, p. 15-17.19 G. Osbert – Pociecha, Elastyczność organizacji – atrybut pożądany a niezidentyfi kowany, „Organizacja

i Kierowanie” 2004 vol. 6 no 3-4., G. Osbert – Pociecha, Zdolność do zmian jako siła sprawcza

elastyczności organizacji, Wydawnictwo Uniwersytetu Ekonomicznego we Wrocławiu, Wrocław 2011, G. Osbert – Pociecha, Elastyczność organizacji – „tańczenie” w turbulentnym otoczeniu, Otwarty Uniwersytet Ekonomiczny, Wiedzainfo.pl

20 G. Osbert-Pociecha, Elastyczność organizacji – atrybut pożądany a niezidentyfi kowany, „Organizacja i Kierowanie” nr 2(116)2004, Komitet Nauk Organizacji i Zarządzania Polskiej Akademii Nauk, Szkoła Główna Handlowa w Warszawie, Warszawa 2004, p. 51.

21 G. Osbert-Pociecha, Koncepcyjne ramy elastyczności organizacji w świetle literatury przedmiotu i badań empirycznych, [in:] Wybrane obszary funkcjonalne instytucji, red. M. Przybyła, „Prace Naukowe Uniwersytetu Ekonomicznego we Wrocławiu” nr 24, Zarządzanie 6, Wydawnictwo Uniwersytetu Ekonomicznego we Wrocławiu, Wrocław 2008, p. 184.


and P. Powell22, defi ne the fl exibility, assigning the four dimensions to it, namely: 1)

time dimension, 2) range (scale) dimension, 3) purpose dimension, 4) dimension of

“centre of gravity” (the focus of attention).

Th e approach identifying the fl exibility with assigning specifi c dimensions is used by

R. Krupski23, assuming that the fl exibility of the organisation is described by the two di-

mensions of space-time: the rate of reaction (creation) and the degree of adaptation to the

environment. In the context of the above, the author enumerates the key fl exibility mech-

anisms, namely: a) the redundancy of resources, b) the diversifi cation of activities and/or

resources, c) monitoring, d) decision-making processes, e) mobility (i.e. the organization

in motion). In the literature, one can fi nd a subjective approach to the fl exibility24, which

assumes that the fl exibility of the organisation is determined by the individual fl exibility

of its participants and entities related to the organization, e.g. customers25.

In particular, the fl exibility refers to the organisation’s resources, i.e. the tangible

(property, fi nancial) and intangible (informational, relational) ones. Th ose resources are

the main tool of shaping the fl exibility of the organisation as a whole. In the context of

the cited defi nition, R. Krupski26 thinks that the fl exibility understood as a reaction to the

stimuli from the environment or from the company, is taken facing the resource potential

of the organisation (including, in particular, the possibility of access to foreign resources).

Th e original defi nition of the fl exibility, proposed by B. Nogalski and P. Niewia-

domski27, refers to the product, the effi cient and eff ective management of resources nec-

essary for its rapid implementation, which is the response to the challenges of chang-

ing demand, rising customer demands, which, in perspective, gives manufacturers the

opportunity to develop. At the same time, the product fl exibility of the manufacturing

plant is determined by the information transformed into knowledge enabling to notice

market opportunities off ered to the manufacturers as possible fast reconfi guration and

integration of the manufacturing process.

In conclusion, it is worth noting that it is impossible to provide a multiplicity of

ways of seeing and interpreting the concept of the fl exibility in the organisation in such

22 W. Golden, P. Powell, Towards a Defi nition of Flexibility. In search of the Holy Grail, Omega the International Journal of Management vol. 28 nr 4, 2000, p. 373.

23 http://rafalkrupski.pl/elastycznosc.html. Date of hit: 23-03-2015.24 G. Osbert-Pociecha, M. Moroz, J. M. Lichtarski, Elastyczność przedsiębiorstwa jaklo konfi guracja

elastyczności cząstkowych, „Gospodarka Narodowa” nr 4/2008, p. 6125 H.W. Volberda, Building the Flexibility Firm. How to Remain Competitive, Oxford University Press

Inc., New York 1998, p. 2.26 R. Krupski (red.), Zarządzanie w turbulentnym otoczeniu. Ku superelastycznej organizacji, PWE,

Warszawa 2005, p. 24.27 B. Nogalski, P. Niewiadomski, Th e strategic dimension of product fl exibility of a manufacturing plant-the concept

and its application, „Organizacja i Kierowanie” nr 1(154)2013, Komitet Nauk Organizacji i Zarządzania Polskiej Akademii Nauk, Szkoła Główna Handlowa w Warszawie, Warszawa 2013, p. 51-52.


a short development, especially that the authors’ intention was only presentation of

some ideas and approaches, which are key from the point of view of the further research.

Strategic relations of the manufacturing plant of the sector of agricultural machinery operating in Poland

Th e sector of agricultural machinery is an important element in the system of agri-

business. Its role is to supply with technical measures for the mechanisation of processes

related to food manufacturing and the manufacturing of certain raw materials for the tex-

tile, chemical and other industries, as well as biomass for energy purposes. Participants of

the sector of agricultural machinery are manufacturers of agricultural tractors, machinery,

tools, and equipment used in the manufacturing of plants, animals, storage and processing

of agricultural products and spare parts for these means. Traders involved in the distribu-

tion of agricultural equipment and appropriate spare parts, and purchasers, who are farm-

ers, as well as entrepreneurs providing mechanisation and transport services for farms. Th e

situation in this market has a signifi cant impact on the implementation of technological

progress in agriculture and entire agribusiness. Th is, in turn, depends on the economic

situation in agriculture, manufacturing capacities and technological level of the sector of

agricultural machinery, trade organisations, as well as the prices of mechanisation means

and their relations to the buying-in-prices of agricultural products.

A signifi cant feature of the sector of agricultural machinery is the existence of a very

large number of independent entities representing demand and supply. Th ey are highly

diverse in terms of size, technical, and economic level, and, therefore, reacting diff erently

to changes in market conditions. Demand is represented by a huge number of farms and

agricultural companies, as well as entities providing services for agriculture. Similarly, on

the supply side, there is a large group of entities, starting from small craft businesses man-

ufacturing small machinery and tools, and ending in large, specialised domestic and for-

eign ones, sometimes using monopolistic practices in relation to the purchasers.

Relations of the manufacturing company of the sector of agricultural machinery

with the market environment is shown in fi gure 1.

On the market of manufacturing means28, the basic entities determining its scale

and functioning are the manufacturing companies. Th e ones, which manufacture the

means of manufacturing, also purchase them as equipment and materials necessary in

their manufacturing processes29. Th erefore, they are involved in the transactions on this

28 Demand on the means of manufacturing market is technically determined. Th e need to purchase materials or the machine is due to the technically specifi ed needs of the manufacturing process, the technological cycle requiring the use of a particular tool or device, the need to replace worn parts, etc. Th e purchase cannot be cancelled if the manufacturing or performance of non-manufacturing tasks of an institutional purchaser, who is not the manufacturer, are not to be stopped.

29 T. Wojciechowski, Marketing na rynku środków produkcji, Polskie Wydawnictwo Ekonomiczne, Warszawa 2003, p. 39.


market as both purchasers and sellers. Even if they manufacture consumer goods30, they

are always purchasers of means of manufacturing needed to produce them and, at the

same time, act on the market of manufacturing means, but only as the purchasers. Its

market relations with the environment run at two clearly distinct levels – the market,

on which it supplies with the means of manufacturing necessary in its activities31, and

the market, on which it sells its products, made from these means of manufacturing and

with their help (machinery, equipment, tools).

International cooperation as a step towards the fl exible organisationTh e model of relations of international strategic cooperators of the manu-facturing companies subsequently links – preliminary assumptions

In modern economic sciences, the concept of the strategic cooperators model is

defi ned in terms of the ambiguous and not fully explained concept. As far as the precise

sciences the very concept of the model is clearly defi ned, in the management sciences

30 Consumer products are goods and services intended for the fi nal consumer for personal use or for the use in a household.

31 In the case of companies manufacturing agricultural machinery and their parts, the means of manufacturing are, among others: cast-steel or cast-iron castings, quality bars (rolled or pulled), sheets, of which prefabricates (parts) consisting the complete machine are manufactured.

Source: Own development

Figure 1. Relations of the manufacturing company of the sector of agricultural

machinery with the market environment


of management32, the models are described using a set of contractual and hypothetical

assumptions33.

In the context of the above, in this development, the authors assume that the essence

of the external strategic cooperators models is the focus on the right choice of partners,

with whom the manufacturer (integrator) creates the chain or network of activity. Choice

of network partners34 takes place on the basis of criteria adopted by its initiator35. Models

of the strategic cooperators relations of the manufacturing companies focus on activities

in the fi eld of diagnosis, analysis, and design of the company’s development on specifi c

factors of success. Th ey are very helpful and useful in the context of the formulation of the

starting points of the company and the essence of its development.

Th e model of international strategic partners of the manufacturing company pro-

posed by the authors is a set of relationships between entities having common interests,

i.e. implementations and sales of a new product, which is a market niche. In this model,

the manufacturer was distinguished as a leading company (integrator, leader), which

determines the choice of partners for the created network. Above all, partners in the

network are leading suppliers on a given market.

In the proposed model, it is the partner in a given market, who directs all marketing

activities and contacts with customers in the sales process. It is the partner, who has key

knowledge and resources, thanks to which he/she can create the image of the organisation.

32 According to the authors of the development, perhaps this is because the management sciences represent a wide research trend, not fully homogeneous in terms of methodology, containing elements of scientifi c cognition, in the historical order, with roots in neoclassical economic theory, as well as in concepts of other sciences. Th ere, A. Szplit asks, namely does the management keep up with an explanation of reality? In accordance with: A. Szplit, Paradygmaty zarządzania wobec teorii

ordo ładu gospodarczego, [in:] Zarzadzanie strategiczne Quo vadis?, red. R. Krupski, Prace Naukowe Wałbrzyskiej Wyższej Szkoły Zarządzania i Przedsiębiorczości T. 22, Wydawnictwo Wałbrzyskiej Wyższej Szkoły Zarządzania i Przedsiębiorczości w Wałbrzychu, Wałbrzych 2013, p. 85. According to the authors of this development, the answer is „yes,” which is refl ected in this publication, written as a result of observation of economic practice.

33 For example, R. Krupski indicates the existence of two general approaches to defi ning the model, including the business model, varied in terms of the criterion scope of the description of the organisation’s activity. In accordance with: Sz. Cyfert, Granice organizacji, Wydawnictwo Uniwersytetu Ekonomicznego w Poznaniu, Poznań 2013, p. 42.

34 Th e company’s network is defi ned as a system created voluntarily by many organisations in order to cooperate in strategic perspective. In accordance with: M. K. Wyrwicka, Endogenne przesłanki

organizacyjne rozwoju przedsiębiorstwa, Wydawnictwo Politechniki Poznańskiej, Poznań 2003, p. 67. Network structures are formed between single business entities as a result of deep outsourcing executed individually for particular trade contracts. Cf.: E. Pawłowski, Globalizacja i wirtualizacja biznesu

a struktura organizacyjna przedsiębiorstwa, [in:] Praktyka zarządzania nowoczesnym przedsiębiorstwem, red. M. Fertsch, S. Trzcieliński, Instytut Inżynierii Zarządzania, Politechnika Poznańska, Poznań 2003, p. 108.

35 As rightly pointed out by Sz. Cyfert, defi ning the key partners and pointing at the borders arrangement defi ning the level of activity in the value-creation chain, it is determined, which cooperators can be considered the key partners, which key resources are obtained from the partners, which key activities are and can be executed by the partners for the benefi t of the organisation. More information: Sz. Cyfert, Granice organizacji, Wydawnictwo Uniwersytetu Ekonomicznego w Poznaniu, Poznań 2013, p. 45.


Th e authors assume that it the commercial partner operating a given market is

a key entity, he/she has a dominant position in terms of competence, hence, it is his/her

responsibility to plan and execute all activities. It is he/she, who maintains the network

of relations with territorially scattered cooperators of a smaller area of activity.

Th e international cooperator are integral entities, the creators of their own plans

and strategies, the entities, which, within the network, implement the adopted internal

strategic aims.

Th e general model of strategic cooperators of the manufacturing companies is

shown on fi gure 2.

Source: Own development

Figure 2. General model of international business relations of strategic

cooperators of the manufacturing companies

Figure 2 shows the form of relation, in which the manufacturing plant (integrator)

presents an off er for a newly implemented product (solid line). Sometimes, however, the

integrator (initiator) of the new implementation is the companies supporting specifi c

international markets, on which a demand for a given product arises.

Research scope and subject

For the execution of this development, the case study, i.e. a special type of qualita-

tive research, was used. According to A. Wojcik-Karpacz36, the case studies, as a kind

of qualitative tests of organisational phenomena, are, although, less useful to determine

36 A. Wójcik-Karpacz, Współpraca międzynarodowa przedsiębiorstwa produkcyjnego z zagranicznym

partnerem gospodarczym – case research, Studia i Materiały. Miscellanea Oeconomica, Rok 13, Nr 1/2009, Wydział Zarządzania i Administracji Uniwersytetu Humanistyczno – Przyrodniczego Jana Kochanowskiego w Kielcach, Kielce 2009, p. 297.


cause-and-eff ect relationships. Nonetheless, they are useful in fi nding explanatory vari-

ables worth taking into account and suggesting mechanisms, thanks to which these

variables aff ect the result, or the formulation of research questions, which will be then

subject to further analyses due to their value. W. Czakon37 seems to confi rm the above,

noting that the case studies are used in the management sciences in order to recognise

more deeply the explored phenomena, not pretending to be representative.

Th erefore, the examined company should be consciously chosen on the basis of the

ability to obtain specifi c insight into its functioning, which is not given by other com-

panies. Otherwise, the obtained results will not be so interesting.

In the context of the above, implementing the aim presented in this development,

the qualitative research method allowing the observation of the variables and the prob-

lems that will be subject to further research, was used. For the analysis, one of the Polish

manufacturing companies, operating on the sector of agricultural machinery, was chosen.

Th e discussed company is a dynamically developing company, employing 51 em-

ployees (including 44 direct manufacturing workers), whose manufacturing process is

based on manufacturing of spare parts, components, and fi nished agricultural machines,

which are the market niches. Within the observations executed in cooperation with the

company owner, the chief technologist, and the manufacturing manager, the authors of

this paper obtained information, which is key from the point of view of the adopted

research aim.

Main problem

Within the long cooperation with the Granit PARTS Polska company, the manu-

facturer, referred to in this paper, received the enquiry concerning the possibility to imple-

ment dozens of articles, which were sprockets for spreaders of various kinds (Figure 3).

Figure 3. Sprockets – the product subject to the implementation

Source: www.granit-parts.pl/category/Technika-gnojowicy-i-ochrona-roślin/Rozrzutnik-ob-

ornika/Rolki-prowadzące-łańcuchów-GRANIT

37 W. Czakon, Sieci w zarządzaniu strategicznym, Ofi cyna Wydawnicza Wolters Kluwer business, Warszawa 2012, p. 210.


Th e main problem, which the manufacturer faced, was a relatively low demand for

particular sprockets, in the quantity from 30 to 100 pieces, depending on the model

of the machine. Th e implementation of each type of the sprocket required creation of

a special casting model, consisting the basis of obtaining the intermediate, which, on

the further stage of the manufacturing process, can undergo an appropriate post-fi nish-

ing in accordance with the specifi cation. In the context of the above, the manufacturer

had to decide whether and how to undertake the manufacturing, and whether he may,

due to inability to implement, reject the contract38. Th erefore, search for the solution,

which, at a given demand and the purchase price imposed by the contracting party,

would ensure high eff ectiveness of every implementation, started39.

As a result of benefi ts of the international commodity exchange (international

trade), i.e. a decrease in unit costs as a result of the extension thanks to export of a man-

ufacturing series, it was assumed that the international contacts built by the manufac-

turer will contribute to the higher effi ciency within the given implementation. Especial-

ly, as J. Karpacz notes40, increasing dynamism of the environment pushes the companies

towards achieving their strategic aims through cooperation with external partners. At

this point, it is worth noting that the companies more frequently enter into relations of

cooperation in an environment, which is highly uncertain and unstructured than they

do so in the one more clearly structured and predictable41.

In the context of the made decision, another questions appeared, namely: whether

to act only on the European market, whether expand the activity into markets outside

the EU, on which markets, in which countries undertake the activity, and which form

of entry into particular foreign markets should be?

38 According to the development’s authors, not undertaking the implementation of the indicated product would indicate a low fl exibility of the manufacturer.

39 At this point, it is worth emphasising in accordance with M. Romanowska that the need to solve the problem of increasing innovation, without which international competition is impossible, creates the need to create the innovation strategy, either based on their resources, or through fi nding suppliers necessary for innovation of resources in the environment. Th e high costs of creating unique resources require building resources by the diff erent entities jointly. Th e explosion of various forms of companies in the form of clusters, capital groups, and networks is the result of search for competitive advantages through the common use of resources and the creation of “group competitive advantage,” cf.: M. Romanowska, Pespektywy rozwoju analizy strategicznej, [w:] Zarzadzanie strategiczne Quo vadis? red. R. Krupski, Prace Naukowe Wałbrzyskiej Wyższej Szkoły Zarządzania i Przedsiębiorczości T. 22, Wydawnictwo Wałbrzyskiej Wyższej Szkoły Zarządzania i Przedsiębiorczości w Wałbrzychu, Wałbrzych 2013, p. 201.

40 J. Karpacz, Swoboda działania organizacji jako klasyczne i ponadczasowe zagadnienie stanowiące wyzwanie

badawcze dla zarządzania strategicznego, [w:] Zarzadzanie strategiczne Quo vadis?, red. R. Krupski, Prace Naukowe Wałbrzyskiej Wyższej Szkoły Zarządzania i Przedsiębiorczości T. 22, Wydawnictwo Wałbrzyskiej Wyższej Szkoły Zarządzania i Przedsiębiorczości w Wałbrzychu, Wałbrzych 2013, p. 105.

41 Cf., among others: J. Cygler, Kooperencja przedsiębiorstw. Czynniki sektorowe i korporacyjne, Ofi cyna Wydawnicza SGH, Warszawa 2009; W. Czakon, Sieci w zarządzaniu strategicznym, Ofi cyna Wydawnicza Wolters Kluwer business, Warszawa 2012.


In the further part of the paper, the arguments for the choice of such a solution

were presented.

Observations executed by the authors of the research showed that two methods

are most often used to manufacture any components of the transmission of power of

the machines. Th e fi rst of them is machining, in which the shape of the prefabricate

is achieved by cutting it from a clump. Th e second method is the casting of elements,

which then undergo post-fi nishing. Each of these methods has its own advantages and

disadvantages, and the choice of more economical method depends on the factors char-

acterising a given detail. Drive elements used in vehicles adapted to big loads, including

sprockets, can be an example of the application of the casting method as an alternative

to cutting from the clump.

For this type of solution, analysed components, i.e. the sprockets chosed from

the order, were chosen. So far, the sprockets were manufactured through the boring

a complete cylinder in the subsequent operations. Th is technology allows receiving ele-

ments of good quality, without hidden material defects. However, receiving a signifi cant

amount of waste in the form of swarves of the cut material per one element, and sig-

nifi cant wear and tear of knives and lathes’ equipment. A large amount of cut material

results directly from the size of the elements manufactured that way.

Using an alternative casting technology, these elements can be manufactured as

prefabricates, which, after the removal of the relatively small technological excess mate-

rials, can have the same shape as in the case of boring them from the complete clump.

Th erefore, in agreement with the other people involved in the research, it was de-

cided to choose a solution according to the second variant.

Th e basis for the development of casting technology of a given detail is its shape,

i.e. size and degree of complexity and the material, of which it has to be made. In the

analysed case, the material will be grey cast-iron.

At fi rst, based on the delivered documentation, it was necessary to make a com-

puter 3D model of the particular types of sprockets, taking into account the necessary

technology excess materials and tilt. Th en, gatings and fuel systems ensuring a good cast

were chosen for them. Simulation of priming and solidifi cation was performed in the

MAGMA Soft software. Such documentation was used in the development of technol-

ogy of making casting mould, which consisted of particular casting models, core boxes,

and models of fuel system. A joining of particular parts of equipment with the use of

dowel pins, ensuring their correct assembly, was also designed.

Works were executed with the help of one of Poznań’s foundries42. Common ac-

tivities aimed at estimation of the costs of obtaining castings of particular sprockets for

42 Th e referred foundry was founded on September 12, 1989, on the basis of the Poznańska Fabryka Maszyn Żniwnych factory. Th e basic object of its activity is the manufacturing and sale of grey cast-iron and ductile iron castings made in sand moulds. Th e company also off ers technology consulting services and manufacturing of foundry equipment. Th e castings manufactured by the company are used in the following sectors: agriculture, industrial valves, machine building, automotive, casting accessories, and others.


further processing. In order to achieve the adopted aims, rapid prototyping methods

were used. In order to make transmission’s parts, the sand mould technology was cho-

sen. It can be divided into the following steps: a) the development of three-dimensional

casting technology using computer aid (image editors, computer simulations), b) the

development of virtual models and documentation of foundry equipment, c) making of

casting patterns (a match plate or a classic casting pattern), d) making castings on the

basis of the casting patterns, e) smelting of chosen foundry alloy f ) priming castings

– cooling and tripping castings – cleaning castings, cutting gatings and fuel systems.

Th e above actions were the basis of further analyses; namely, they allowed precise

determination of the cost of making the casting pattern, which in the perspective, will

greatly translate into profi tability of a given implementation.

Within executed actions, it was estimated that the cost of manufacturing of the

casting pattern for one type of the sprocket, depending on the type, is PLN 7,200.00

– PLN 9,000.00. In the perspective of further research, the average price, i.e. PLN

8,100.00 per pattern, was adopted.

Due to the complex prefabricate manufacturing process (the need to produce

a special pattern for the manufacturing of a cast-iron sprocket), in agreement with the

owner of the company and his management policy, it was assumed that the minimum

amount that the company should implement is 500 pieces.

Th e above is due to the belief that the purpose of the company is the profi t43. Th e

manufacturer makes decisions within a given manufacturing technology, given meas-

ures at his disposal, and market prices of manufacturing factors. Th e manufacturer is

guided by the principle of optimisation, i.e. the search for the best relationship between

manufacturing expenditures and its eff ects. Th erefore, it is essential to determine the

amount of implemented product in relation to its market price, so that the sales prof-

it, despite the signifi cant costs associated with the commencement of manufacturing

(casting pattern), is in line with the strategy adopted by the manufacturer.

Because of the conducted analysis, it was established that the manufacturing costs

of one piece of a given44, chosen for testing sprocket are PLN 23.79 in relation to its

sales price, i.e. PLN 47.73 (table 1).

43 Achieving the profi t from business activity is a basic condition of the development of the company. Th e profi t enables extension and improvement of the existing manufacturing; it is also an important source of funding of new ventures.

44 Within this publication, in order to discuss the methodology, calculations in relation to one, deliberately selected product were presented. Of course, in practical activities, the appropriate calculations were made in relation to each of the ordered sprockets.


Table 1. Manufacturing costs of a conveyor for an agricultural trailer’s sprocket

(without the costs of making of the casting pattern)

Cost \ Product name Conveyor sprocket 0203960660

RAW MATERIAL COST [PLN] 17.60

LABOUR COST [PLN]Rolling 2.00

3.00Pulling 1.00

OTHER COSTS [PLN]45 3.00

TOTAL COSTS [PLN] 23.79

SALE PRICE [PLN] 47.73

PROFIT [PLN] 23.94

Source: own development based on research45

Assuming the sale of 500 pieces, the manufacturer achieves the net income of PLN

23,865.00. Th e manufacture costs, excluding the costs of manufacturing the pattern, are

PLN 11,895.00, which gives the profi t of PLN 11,970.00, diminishing the profi t by the

amount of PLN 8,100.00 (the cost of manufacturing of the casting pattern). At the manu-

facturing of 500 pieces of the product, the manufacturer achieves the profi t in the amount of

PLN 3,870.00, which, per a single product, gives a small profi t in the amount of PLN 7.74.

Prima facie, the proposed solution is acceptable by the manufacturer. However, it is

possible if the manufacturer has a sales network, in which he will distribute the manu-

factured goods. Figure 4 shows the network organised by the surveyed company.

Below, in a tabular form, the results of implementation were illustrated, translating

them into particular partners, whom the manufacturer intends to service. Th e results

show that only taking into account each of them and selling 500 pieces of the sprocket,

the manufacturer may expect coverage, or, possibly, the relatively small profi t. In the an-

alysed case, the profi t fl uctuates at the level of PLN 3,870.00. However, due to the rig-

ours of publishing for text volume, in these analyses, possible losses arising from fall in

exchange rate, within which sales to a given country will be realised, were not included.

As shown in table 2, the manufacturer generates the smallest loss when he sells

only on the Polish market, i.e. PLN 5,706.00 (100 pieces of the product). Th e minimum

amount of the implemented product covering only the costs of implementation (with-

out changes in exchange rate and at a fi xed price sale of the sprocket, i.e. PLN 47.73)

amounts to 339 pieces. In the case of the sale of such quantities of the product, the

manufacturer generates the profi t of PLN 8,115.66, which covers the pattern manufac-

turing costs necessary for its implementation.

45 Calculated according to the formula: Labour costs x 100%.


Table 2. Results from the sale in the case of the implementation outside the network

Source: own development based on research

Figure 4. Sales network organised by the surveyed company – a model

of international relations of strategic cooperators

Source: Own development based on research

gg ppp

Conclusions

In this development, it was indicated that business relations created by the manu-

facturer based on international markets largely support the growth of the implementa-

tion fl exibility. In other words, the greater the potential of the manufacturer to build


a network of international relations, the higher is his/her level of implementation fl ex-

ibility, expressing with matching the product. It was confi rmed that, as a result of a ben-

efi t of scales of the international commodity exchange (international trade), i.e. a de-

crease in unit costs as a result of extending thanks to export of the manufacturing series,

globalisation contributes to higher economic dynamics. As the primary aim of this

work was an attempt to present the business relations on the international markets cre-

ated by the manufacturer as an attribute encouraging the growth of the implementation

fl exibility, in the authors’ opinion, this aim was achieved.

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AGILITY IN R&D PROJECT ON THE EXAMPLE OF ORGANIZATIONAL CREATIVITY SUPPORT DESIGN

P . J K , P .D. W U

P . C M. O , P .D. U E K

Abstract

Th e main goal of this paper is to explore the issue of R&D projects and to

identify the agile approach as well as the possibilities of its usage in IT project

development. Th e framework of IT-enabled organizational creativity sup-

port was proposed. It was designed according to the principles of agility and

Hevner et al. (2004) design science research. Th e study was based mainly on

a critical analysis of the subject literature and reports concerning the infor-

mation systems design. Th e results of this research can be used by ICT spe-

cialists and managers as they plan and develop IT projects.

Introduction

Th e position of each country in the world depends on the variety of factors. It is

stated that creativity and innovation are crucial elements. More and more they decide

on the competitive advantage of organizations and the whole societies (McLean, 2009;

Parjanen, 2012; Bratnicki, Olszak, Kisielnicki, 2014).

Th e innovation level of Polish economy falls not satisfactory. According to the

ranking of the Global Innovation Index (2013) our country was located at the 49 place

among 142 ranked countries (in 2012 at the 44 position). Similarly, according to the

Global Competitiveness Report 2013-2014 (Schwab, 2013), Poland was ranked at

42 place among 148 countries. It is worth noting that such countries like: Switzerland,

Sweden, the United Kingdom, the Netherlands and the United States reached the po-

sition of the leaders in creativity and innovation.

Seeking the answer how to improve the level of creativity and innovation, we claim

that R&D projects may be a stimulator of economic development (Maylor, 2003; Jin-

cao, Kleiner, 2005; Park, Kim, 2005; Kisielnicki, 2014). Particularly, in IT projects we

see a chance for creation of new products and services. Th e value of R&D for the quality

of life is highlighted in every strategic plan of every European country (Schwab, 2013)

and within EU policies. It is reported that such projects enable to develop unique theo-

ries and concepts as well as to increase corporate growth and national development.

Th e main purpose of this paper is to explore the issue of R&D projects and to

identify the agile manifesto as well as the possibilities of its usage in IT project develop-

ment. Th e framework of IT-enabled organizational creativity support was proposed. It

was designed according to the principles of agility and Hevner et al. (2004) design sci-

ence research. Th e study was based mainly on a critical analysis of the subject literature

and reports concerning the information systems design. Th e results of this research can

be used by ICT specialists and managers as they plan and develop IT projects.

Th e issue of R&D project

Organizations have realized that creativity and innovation are necessary if they

want to stay competitive in global market (McLean, 2009; Parjanen, 2012). Research

and technology development have become one of the essential driving forces for or-

ganization’s growth and the development of the whole society.

Many authors state that research and development is an ability to conduct diff erent

type of research and use created knowledge for product and technology development

(Candle, 2001; Binder, 2007; Jinaco, Kleiner, 2005; Kisielnicki, 2014b). Th erefore, pure

research and innovative activities together with rational use of costs and optimisation

of products is abbreviated as R&D. Th e activities that could be attributed to R&D in-

clude (Miskulskiene, 2014): basic/applied research; ability to maintain state-of-the-art

knowledge; technical forecasting ability; well-equipped laboratories; proprietary tech-

nical knowledge; innovative and creative environment; off ensive/ defensive R&D capa-

bility; ability to optimise cost with performance.

Some authors note that during the last century R&D management as an innovation

stimulator has passed the evolution of 5 generations, characterized by simultaneous progress

of handling R&D activities ( Jincao, Kleiner, 2005; Park, Kim, 2005). Th e complex attitude to

the eff ective management of R&D according to a wide variety of management targets turns

the R&D management process into multidimensional tasks. Miskulskiene (2014) highlights

that every new generation adds an extra managerial task to the list of manager duties. Th e

fi rst generation of R&D management was expressed by corporate lab creation. Th e second

generation emerged when R&D was incorporated into the entire business system. Th e third

generation is represented by R&D project management and portfolio management. Th e

fourth generation put suppliers and customers on the R&D management scene, while the

next generation consists of a network of innovation actors and stakeholders.

104 Jerzy Kisielnicki, Celina M. Olszak

Th e issue of R&D may be demonstrated in various project activities. According

to the Project Management Institute (2013) a project it is “a unique set of co-ordinat-

ed activities, with defi nite starting and fi nishing points, undertaken by an individual

or organization to meet specifi c objectives within defi ned schedule, cost and perfor-

mance parameters”. According to Kisielnicki (2014) R&D project is a system of activi-

ties characterized by the following triad: project scope, deadlines (time), and resourc-

es (human, capital, material, technological, information needed for the project). R&D

projects may be less or more complex. As an example of the second group, is fl ight to

Mars which was conducted in 2012 in order to take pictures of the Red Planet. Such

projects require cooperation of diff erent teams from various countries and high budget.

It is highlighted that R&D projects are characterized by complexity, high uncer-

tainty and high risk (Trocki, 2012; Maylor, 2003; Schelle, Ottmann, Pfeiff er, 2006).

Th erefore time scheduling and strict compliance, keeping proper budget distribution

or team mobilisation are the key points that should be carefully planned and followed

during project implementation. It is advocated that R&D project has a good chance of

achieving success, if it meets the following conditions:

• the project concerns the news (no one had realized such a project),

• we have a very clear goal that we want to achieve,

• researchers with the appropriate competences and skills are involved in the project,

• the project is consistent with the strategic approaches developed (for organization,

sector, region, state of the European Union, the world economy).

Th e achievement of such conditions is an ambitious challenge for all members in-

volved in the project. Th e staff , especially managers, or project managers should present

high and unique skills, particularly in the use of IT. It is highlighted that management

of competences, talent, knowledge and usage of diff erent information systems are cru-

cial in R&D project development (Kisielnicki, 2014b). If these conditions are not met,

it will be very diffi cult to achieve success in project implementation.

Robinson (1994) points out that a project’s failure or success is defi ned in relation

to a particular group with its own roles, goals, interests and expectations, which are as-

sessed in the context of an organization and its political and social environment.

Last years, IT projects have become an important group among R&D projects.

Th ey have certain characteristics that make them diff erent from other projects and in-

crease the chances of their failure (Flasiński, 2008; Wysocki, 2005, Kisielnicki, 2014a).

According to Peff ers, Gengler and Tuunanen (2003) such characteristics include:

(1) abstract constraints which generate unrealistic expectations and overambitious pro-

jects; (2) diffi culty of visualization which has been attributed to senior management

asking for over-ambitious or impossible functions, the IT project representation is not

understandable for all stakeholders and the late detection of problems; (3) excessive

perception of fl exibility which contributes to time and budget overrun and frequent re-

quests of changes by the users; (4) hidden complexity which involves diffi culties to be

estimated at the project’s outset and interface with the reliability and effi ciency of the

Agility in R&D Project on the Example of Organizational... 105

system; (5) uncertainty which causes diffi culty in specifying requirements and problems

in implementation of the specifi ed system; (6) the tendency to software failure which

is due to assumptions that are not thought of during the development process and the

diffi culty of anticipating the eff ects of small changes in software; (7) the goal to change

existing business processes which requires IT practitioners’ understanding of the busi-

ness and process concerned in the IT system and good process to automate and make

them quicker.

Also, the practical management of IT projects fi nds signifi cant diffi culties as fol-

lows: IT projects are often poorly defi ned, codes of practices are frequently ignored and

in some cases not many lessons are learned from past experience. IT projects contain

a grater degree of novelty than other engineering projects. IT projects related to prod-

uct innovation development are extremely complex, risky and expensive (Cormican,

O’Sulliven, 2004; Al-Ahmad et al., 2009).

Concluding, many IT projects fail during the implementation. Th is fact causes that

managers as well as designers still seek new, appropriate methods for management and

design of these projects.

Agility in R&D project

Th e analysis of the literature allows to state that diff erent approaches may be used

in project management and design. Th e most well known include (Wysocki, McGary

2005):

• traditional Project Management – TPM), the project is carried out according to

a specifi c plan;

• adaptive Project Framework – APF), the realization of the project is preceded by

an analysis and defi nition of the structures,

• extreme Project Management – XPM, called project management in extreme con-

ditions; the project is based on the principles of rapid response to the changes and

concerns the complex situations.

Th e projects can be grouped according to the various criteria:

1. Th e degree of detail:

• general – including only such aspects of projects that are common to a wide

group of projects. Th eir biggest advantage is the versatility, because they refer

to the topics that are relevant for most projects;

• specialist – they concern the specialized topics i.g., technical aspects and dif-

ferent advanced technologies. Th e disadvantage of this group of projects is fact

that refer to a small group of potential customers, but they off er a very detailed

study of specifi c topics;

• hybrid – usually arise from the above groups.

2. Focused on the management elements, especially on :


• soft elements- skills of persons involved in the project (staff , managers, cli-

ents), management styles of the persons responsible for the project, as well as,

organization’s culture and ethics,

• hard elements- strategies, formal methods, structures, formal presentation of

data models, information systems or formal procedures.

3. Philosophy and design processes:

• cascade model (waterfall),

• spiral model – a prototype (prototyping),

• iterative and incremental development,

• evolutionary model.

Th e practice shows that hybrid methods are very often applied in project management.

During last decades, most of IT projects were conducted according to the classi-

cal software development paradigm (Palmer, Felsing, 2002. Th e traditional way to de-

velop software methodologies follow the generic engineering paradigm of requirement,

design, build and maintain (Moniruzzaman, Hossain, 2013). Th ese methodologies are

called waterfall-based. Th ey are also known by many others names like plan-driven

(Boehm, Turner, 2004), documentation driven, heavyweight methodologies and big de-

sign upfront (Boehm, 2002).

Last generation of IT project development has evolved into agile and rapid ways

of obtained results (Elssamadsy, 2010; Dajda, 2008; Walczak, 2014). Th e agile meth-

odologies claim to insure that the fi nal product is developed with a high probability of

success, even in a constantly changing environment (Vlaander, Jansen, Brinkkemper,

Jasperes, 2011).

It is worth noting that the concept of agility is central to both the domain of stra-

tegic management theory where it is a major pillar in the so called dynamic approach

(DCA) and to systems engineering (Zimmer, Baars, Kemper, 2012; Cohn, 2005). Th e

DCA is a variant of the resource-based view (RBV) that focuses on the internal re-

sources and capabilities of a fi rm in order to explain diff erences in performance. While

the classical RBV discusses properties of resources that lead to a long-term competi-

tive advantage (Barney, 1991), the DCA concentrates on the ability to integrate, build,

reconfi gurate a given resource base of a fi rm (Teece, Pisano, Shuen, 1997). It is argued

that these capabilities are of central importance in the nowadays common turbulent

business environment (Olszak, 2014). In this context, agility becomes very relevant.

While the defi nitions for agility vary, their commonality is that they all stress the abil-

ity to quickly respond to unforeseen changes. Agility is the ability to sense and response

to business prospects in order to stay inventive and aggressive in an unstable and rap-

idly shifting business environment (Highsmith, 2002). Th e agile approach to develop-

ment is a about agility of the development process, development teams and their en-

vironment (Boehm, Turner, 2004). Th is approach incorporates shared ideals of various

stakeholders and a philosophy of regular providing the customers with product features

in short time-frames. Th is frequent and regular deliver is achieved by team based ap-


proach (Coram, Bohner, 2005). Agile teams consist of multi-skilled individuals. Th e de-

velopment teams also have a on-site customers with substantional domain knowledge

to help them better understand the requirements. Multiple short development cycles

also enable teams to accommodate request for change and provide the opportunity to

discover emerging requirements. Th e agile approach promotes micro-project planes to

help determine more accurate delivery commitments (Moniruzzaman, Hossain, 2013).

In the context of systems engineering agility means an interactive and incremental

(evolutionary) approach to software development which is performed in a highly col-

laborative manner by self-organizing teams within an eff ective governance framework

with just enough ceremony that produces high quality solutions in a cost eff ective and

timely manner which meets the changing needs of its stakeholders. Agile software de-

velopment was presented by Beck et al. (2001) in “Agile Manifesto”. According to this

“Agile Manifesto”: (1) individuals and interactions are over process and tools; (2) work-

ing software is over comprehensive documentation; (3) costumer collaboration is over

negation; (4) responding to change is over following a plan. Table 1 presents the main

diff erences between traditional and agile approach.

Table 1 Diff erences between traditional and agile approach in project development

Issues Traditional Approach Agile Approach

Development life cycle Linear, Life-cycle model (waterfall, spiral etc.) Iterative; The evolutionary-delivery model

Style of development Anticipatory Adaptive

Requirements Knowable early, largely stable; Clearly defi ned

and documented

Emergent, rapid change, unknown, discovered

during the project

Architecture Heavyweight architecture for current and future

requirements

YAGNI precept (You aren’t going to need it)

Management Process-centric; Command and control People-centric; Leadership and collaboration

Documentation Heavy/detailed

Explicit knowledge

Light (replaced by face to face communication);

Tacit knowledge

Goal Predictability and optimization Exploration or adaption

Change Tend to be change averse Embrace change

Team members Distributed teams of specialists; Plan-oriented,

adequate skills access to external knowledge

Agile, knowledgeable, collocated and collabora-

tive, Co-location of generalist senior technical staff

Team organizations Pre-structured teams Self-organizing teams

Client involvement Low involvement Client onsite and considered as a team member;

Active/proactive

Organization culture Command and control culture Leadership and Collaboration Culture

Software development

process

Universal approach and solution to provide pre-

dictability and high assurance

Flexible approach adopted with collective under-

standing of contextual needs to provide faster

development

Measure of success Conformance to plan Business value delivered

Source: (Moniruzzaman, Hossain, 2013).


Th ese previous values have been further defi ned by twelve principles (Beck, et al.,

2001):

• our highest priority is to satisfy the customer through early and continuous deliv-

ery of valuable software;

• welcome changing requirements, even late in the development. Agile processes

tackle change for the customer’s competitive advantage;

• deliver working software frequently, from a couple of weeks to a couple of months,

with a preference to the shorter timescale;

• business people and developers must work together daily throught the project.

• build projects around motivated individuals. Give them the environment and sup-

port they need, and trust them to get the job done;

• the most effi cient and eff ective method of conveying information to and within

a development team face-to-face conversion;

• working software is primary measure of progress;

• agile processes promote sustainable development. Th e sponsors, developers and us-

ers should be able to maintain a constant place indefi nitely;

• continuous attention to technical excellence and good design enhances agility.

• simplicity – the art of maximizing the amont of work not done- is essential;

• the best architectures, requirements and design emerge from self- organizing teams;

• at regular intervals, the team refl ects on how to become more eff ective, then tunes

and adjusts its behaviour accordingly.

Th e principles documented in the “Agile Manifesto” provide valuable conclusions that

can be applied to architecture and organizational design as well, particularly the general

openness for change, the breakdown of the large processes into small interactive steps

and a close interaction between user and developer (Zimmer, Baars, Kemper, 2012; Stare,

2013). Examples of agile practices are: pair programming, daily stand-up meetings, unit

testing and open work area. Approaches like Extreme Programming (Beck, 1999), the

Dynamic Systems Development Method (Stapleton, 1997), Scrum (Schwaber, Beedle,

2002), Adaptive Software Development (Highsmith, 2000), Crystal (Cocburn, 2002), Fu-

ture-Drive Development (Palmer, Felsing, 2002) follow various paths to achieve “agility”.

Each method focuses on specifi c values and there is no standard on how a method should

implement its agility, e.g., the principle of Scrum lies in the fact that small teams work-

ing cross functionally produce good results. Scrum is more revenue centric with attention

on improving revenue and quality of the software. Since being lightweight it can adapt to

changing requirements and releases the software in small release cycles called sprints.

Organizational creativity support design as an example of IT project based on agility approach

Our project concerns the issue of IT-enabled organizational creativity support. Th e

topic is new and relatively poor investigated. Last years, some research studies have been


conducted that concern computer supported creative problem solving. However, they

are fragmentary, scattered and do not refer to the essence of the organizational creativ-

ity (Kisielnicki, Olszak, 2014). In particular, they do not illustrate how to use ICT to

support organizational creativity, understood as a strategic process. So far, there is a lack

of comprehensive view on the issue of IT-enabled organizational creativity support. In

order to increase the organizational creativity, productivity and innovation, the authors

of this project consider that it is necessary to explore extensive research aimed at the

identifi cation of the existing ICT tools to support organizational creativity as well as at

developing new solutions and their adaptation for the needs of the organization.

Developing a methodology for IT-enabled organizational creativity support is

a complex research problem. It requires applying of advanced tools based on proven sci-

entifi c theories and methods that are characterized by their consistency, agility and that

allow for verifi cation and explanation of the results obtained.

Only a part of our research results was present in this paper. It concerns mainly a de-

sign of framework for organizational creativity support with the usage of Hevner et al.

(2006) methodology as well as with some practices of agile methodologies like Scrum.

Paradigms and rules proposed by Hevner et al. (2004) that are a widely accepted

method of planning and designing of scientifi c studies, refer mainly how to conduct,

evaluate and present design science research. Th e authors argued that “Information sys-

tems are implemented within an organization for the purpose of improving the eff ec-

tiveness and effi ciency of that organization. Capabilities of the information system and

characteristics of the organization, its work systems, its people, and its development and

implementation methodologies together determine the extent to which that purpose is

achieved”. Th ese scholars advocated that design has dichotomous nature. It may be both

a process (set of activities) and a product (artifact). Th e design process is a sequence of

expert activities that produces an innovative product. Th e design process is a sequence

of expert activities that produces an innovative product. It includes: (1) problem iden-

tifi cation and motivation, (2) design and development – create artifacts, (3) demonstra-

tion and use of the artifact to solve one or more instances of the problem, (4) evalua-

tion – how well the artifact supports a solution to the problem, (5) communication – to

researches and other relevant audience such as practicing professionals.

According to principles formulated by Hevner et al. (2004) a framework of organi-

sational creativity support (OCS) was elaborated (Olszak, Bartuś, 2015). It consists of six

stages that are strictly interconnected and are of interactive. Agile approach is manifested

in all stages. It is aimed at acquisition, integration, confi guration, reconfi guration informa-

tion resources in order to create new ideas. Th e stages in question include the following:

1. Strategy of development of organisational creativity and identifi cation of major

creative needs of organisations / problem-fi nding,

2. Acquiring knowledge resources.

3. Generating new ideas.

4. Evaluating and selecting an idea.


5. Communicating a new idea in an organisation and considering whether the idea

should be transformed into innovation; and

6. Evolving creative knowledge in an organisation, organization learning.

Elaboration of an organisational creativity strategy and matching such a strategy

with business objectives ought to be considered as one of the most important steps in

the whole model. Th is involves fi nding out which areas of enterprise’s functioning need

changes (or which changes should be necessary in the nearest time) that would infl u-

ence e.g. new products, new services or new managerial practices. Th ese changes may

stem from a necessity to improve organisation’s competitive advantage and relationships

with customers and suppliers, from willingness to become a leader in a particular sector

and from desire to enter specifi c alliances. Organisation should set its business objec-

tives and priorities to be able to translate them into the language of the organisational

creativity strategy in the best possible way. Th is implies some necessity to track and con-

sider general trends and tendencies observed on the market. Th is also involves analysing

closer and more remote environments and paying attention to activities undertaken by

competition. Designing any strategy of development in the context of organisational

creativity, it is necessary to analyse organisational culture, organisational climate, or-

ganisation’s styles of management and its approach to sharing knowledge, group work

and communication. To identify creative needs of any organisation, it is possible to ap-

ply various methods and techniques that, inter alia, include the following: interviews,

questionnaires, observations or documentation analyses. Creative needs ought to be

examined on the level of an individual, particular employee groups and the whole or-

ganisation along with its environment. It is really important to support problem fi nd-

ing although this phenomenon is relatively underestimated in the relevant literature.

Nevertheless, results of some empirical research conducted in other that creativity areas

provide certain tips to be used while designing the function in question. Some atten-

tion is paid to a possibility of decomposition, problem hierarchisation, creation of gen-

eralisations and elaboration of knowledge maps. Moreover, it is worth mentioning that

problems to be addresses by any organisation may be of diff erent nature. A part of such

problems are referred to as ‘presented’. Others are referred to as ‘discovered’. Th e for-

mer are defi ned and have solutions. Th e latter are ill defi ned and do not have clear-cut

solutions. Th e latter contribute to considerable scientifi c breakthroughs. Problems to be

solved by business partly include well-defi ned ones. However, there are also some prob-

lems that require new discoveries. IT may facilitate looking for solutions in both cases.

Acquisition of resources is one of the most diffi cult tasks to be undertaken in the

whole model. Th is results from several factors, predominantly including the following:

• considerable dispersion and diversity of information resources;

• no access to numerous information resources;

• poor quality of data in diff erent repositories (no data coherence, data repetitiveness).

Th is stage involves some ability to reach diversifi ed resources of information and

to absorb new resources of knowledge. When there is no knowledge of a given top-


ic, particular individuals must quickly assimilate relevant information and undertake

an attempt to acquire the information in question. Th is calls for exploration of both

internal and external resources. Th e former include, inter alia, paper fi les, documents

that describe the enterprise mission and strategy of development, selected sales related

documents, fi nancial documents, ERP systems, data bases, data warehouses, BI, CRM,

SCM, DSS and bases of cases. Organisational creativity more and more frequently re-

quires fi nding knowledge that originates from external resources. Such resources may

include bases of patents, company reports, government bases, library bases and Inter-

net resources including social media, blogs, comparison websites or communities of

practices. However, it is necessary to remember about imperfection of human memory

that is characterised by limited capability of storing diff erent information. IT enables

remembering huge amounts of diversifi ed information that gets compared with organi-

sational memory but also quick browsing, analysing and discovering new knowledge.

In this context, impressive capacities are off ered by expert systems artifi cial intelligence

tools (genetic algorithms or neural networks), BI tools, data mining and text mining,

Web mining, data mining, opinion mining or search engines. As a result of this stage

a repository should be developed to store up-to-date, reliable, complete and relevant in-

formation useful while looking for new ideas.

Th e generation of a new idea is associated with two activities. Th e former concerns

widely understood data exploration, the latter – data exploitation. Data exploration

enables organization to overcome the border of actual knowledge and its capabilities.

Th is may refer to new technical capabilities, market experiences and new relationships

with the environment. Also, the exploration is a conscious searching of new knowledge

sources, enriching of existing resources, adopting of new behavioural orientations and

acquiring of new competencies. Th is can be achieved through advanced data mining,

text mining, web mining, intelligent agents, ERGM, and search based application. Data

exploitation concerns using of existing knowledge bases. It is limited to actual resources

and refers to their detail analysis.

To understand importance of generating ideas, it is necessary to be aware of their

relationships with enterprises, industries or the whole environment. Ideas may contrib-

ute, inter alia, to going beyond traditional business functions and processes, expand-

ing the scope of activities undertaken by organisations, enriching its present functions,

transforming its supply chains into dynamic ecosystems or personalising management

of relationships with customers.

Th e process of generating new ideas should engage a broadly understood commu-

nity of organisation that includes decision makers, employees, customers, suppliers or

external experts and representatives of public institutions. Th eir diversifi ed knowledge,

competencies and experience may prove useful while generating original ideas that can-

not be created by employees acting on their own. Generating new ideas requires acces-

sibility to diversifi ed information resources. Th erefore, diff erent stakeholders of organi-

sation should be informed which resources they can use. While generating new ideas,


diff erent individuals, departments, units (managerial personnel, entrepreneurship incu-

bators or departments responsible for improvement recommendations) may turn out to

be helpful.

Generating new ideas may be supported by means of diff erent ICT tools. Group

work tools including virtual conferences, discussion forums, communities of practice

along with upload and manager fi les in a shared folder may turn out to be useful. Group

work tools show that creativity is not obtained in social isolation. Individuals and groups

continuously participate in creative and interactive processes. Employees create an idea,

present it to other members of their teams and learn from others in order to eventually

modify and enhance their primary ideas. Group work tools allow members of project

teams to communicate easily, thus overcoming barriers of time and geographical loca-

tion. People may work in networks and use joint resources (databases or software).

Data mining, artifi cial intelligence data visualisation techniques are a separate and

very important group of ICT tools from the idea generation point of view. Th ese tools

allow for exploring diff erent sources of data, discovering new knowledge and identify-

ing specifi c relationships and interdependencies. Th ey may point e.g., to diff erent trends

that are observed on the market, customer behaviours or customer purchase preferences.

On the other hand, data visualisation techniques enable perception and understand-

ing of all interdependencies that are observed in case of data. Th e stage of idea genera-

tion, as probably none of other stages, requires employees to be particularly motivated

to create new ideas and to share their knowledge and ideas. A signifi cant role is to be

played here by management that are supposed to support development of creative ideas.

Organisational culture, organisational climate and freedom to act are factors that de-

termine organisational creativity. A generated pool of new ideas at this stage requires

being stored. Databases, knowledge bases, case bases and event scenarios may be used

for this purpose.

Organisational creativity is an iterative process full of attempts and mistakes.

Hence, the process in question requires control, evaluation and selection of the best

ideas of the whole pool of the generated ones. It is diffi cult to suggest detailed criteria

to be taken into consideration by organisations. Th is is largely determined by organisa-

tional specifi cs. Novelty and usefulness of suggested ideas may be manifested in a dif-

ferent manner. Such features may be related with new functionalities of products, con-

tents, product aesthetics, user-friendliness or improvement of product safety. It is worth

identifying to what extent new suggestions match other activities and initiatives under-

taken organisation and what implications they may have in the context of enterprise

performance. Th is stage calls for identifi cation of limitations to be experienced while

generating new ideas, e.g., lack of competent persons or experts, insuffi cient access to

some resources of knowledge, inappropriate orientation of knowledge resources or lack

of suffi cient fi nancial means.

Communicating a new idea and deciding whether it should be transformed into in-

novation make up, in principle, the fi nal stage of the whole model. Such communication


should reach all potential departments involved (production, marketing, customer service,

etc.) and individuals who might be interested in its utilisation. IT is becoming a channel

to be used by new ideas and organisational creativity objectives while being distributed all

over the organisation aff ected. IT allows for easier rooting of creativity in organisational

culture. Culture is a set of behavioural patterns, expectations, ideas, values, attitudes and

behaviours of organisation members. IT may facilitate values, beliefs and standards be-

cause it allows for quick transmission of diff erent information in the group of people. An

important role is played here by intranets, information bulletins, newsletters or employee

forums. As it is known, having knowledge of some new ideas is insuffi cient and does not

lead to any innovation. What counts is having ability to use this knowledge creatively.

Such ability is a key to development of information and creation of competitive advan-

tage. Simultaneously, importance of velocity of organisations reallocating their resources

in locations and areas where they can get the highest value should be recognised here.

Th e last stage pays some attention to the fact that organisational creativity is not

a closed cycle but a continuous and dynamic process that should lead to development

of creative knowledge in any organisation. Th is completes generation of one idea but si-

multaneously attempts at integrating ideas that come from diff erent research domains.

It is hard not to notice that agility is particularly relevant for the proposed OCS

framework (for all stages) as an approach that is aiming through IT at recognizing and

Picture 1. Agility in design of organisational creativity support


Source: prepared by authors

understanding potential changes in the internal and external business environment in

order to create new products and services. Such requirement on the system build the

bridge to the concept of agility in the system engineering sense. Agility in design of

OCS is crucial because this framework refers to fuzzily defi ned domains, having un-

known requirements, with fuzzily defi ned measures of success, and are intended to sup-

port not precisely defi ned users, or their users behave in an unconventional way. Th e

model concerns tools and systems which – depending on the construction – are to:

(1) enhance user’s ability to perform creative tasks (the ability that the user possesses

already), (2) support users in domain knowledge acquisition, in order to free up their

creativity (that will then be IT-supported or not), (3) give users new experiences con-

cerning creative tasks, thus giving them new task-solving capabilities.

As has been mentioned, OCS framework was built according to selected principles

of Scrum. It was based on incremental units called interaction. Development time of

each interaction is small, fi xed and strictly adhered to. Agile software development of

short interactive cycles off ered an opportunity for rapid, visible and motivating software

process improvement. Th e model development refers to three important things: product

owner, master and developer. Th e product owner specifi es the various features of soft-

ware, the release data and priorities. It is a person who is responsible for creating and

prioritizing the product backlog, choosing what will be included in the next interaction/

Sprint and reviewing the system at the end of the Sprint. Th e master makes sure that

the team is functioning properly, productively and enables cooperation across all roles

and functionality. He/she knows and reinforces the product interaction and goals and

values and practices; conducts the meeting and iteration demonstration. Developer it is

a member of team that is committed to achieving a Sprint goal and has full authority to

do whatever it takes to achieve the goal. Th e size of team (working cross functionally)

oscillates about eight persons. Such size of team enabled eff ective knowledge sharing

and communication between members.

OCS development was associated with sprint planning meeting, sprint meeting

and sprint review meeting. Sprint planning meeting was between the customer and the

team. An artifact called the Product Backlog prepared by the product owner has a list of

features of the product including functionality and technical architecture. Sprint meet-

ing is a short (15-30 minutes) session initiated by master. Th e meeting reviews the work

that is done regarding development. Th e sprint review meeting held with the customer

to discuss the code developed over last sprint or release cycle.

It is worth noticing that the team can choose the amount of work, staff and how to

get the work done in our project. Th is ensures to give the team great fl exibility and gives

a productive work place. Th e team works on the backlog and resolves all the problems

mentioned in the backlog. Each team member answers the following questions: what

have you done since last Scrum?, what will you do between now and the next Scrum?;

what got in your way of doing work?.


Conclusions

Th e main conclusion from our study is that organizational creativity support re-

quires permanent development and adaptation to new challenges and expectations of

an organizations. Th erefore, the design of organizational creativity support framework

is a complex task. Th is design should be based on the mix of diff erent approaches and

methods. One of them is agile approach. Agile approach together with Hevner’s princi-

ples were the foundation to build IT-enabled organizational creativity support. Th e fi rst

experiments and simulations conducted with our framework allow to state that we have

chosen an appropriate way to design of organizational creativity support.

Acknowledgment

Th is paper has been supported by a grant: „Methodology for Computer Supported Organi-

zational Creativity” from National Science Centre in Poland, 2013/09B/HS4/00473.

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FUNCTIONAL AND PROCESS-BASED APPROACH TO THE ANALYSIS OF THE BUSINESS MODEL

OF THE ORGANIZATION

P . T C , P .D.U L

Abstract

Th e paper is concerning the concept of the business model of the organization.

Particular emphasis is put to discuss two approaches to designing such models

– the functional and process one. Paper presents the diff erences resulting from

the application of these approaches, which generally come down to the ques-

tion: whether the purpose of designing the business model is to seek practical

recommendations concerning expected actions taken by the company or the

purpose is to search for patterns of behavior. Th e paper is presenting the pro-

posed research model, which is going to be used is searching for answers to the

question: whether evolved the Polish business model. Th e fi nal part of the pa-

per is presenting the example of the proposed method of analysis and reason-

ing adopted for the planned research on the example of organizational strategy.

Two approaches to designing a business model

Each business model can be treated as a set of components and rules that defi nes

the essence of functioning of the enterprise. Such understanding of the business model

assumes that the company is guided by a certain structure of mechanisms, a confi gura-

tion of dependencies that specify a certain style of its functioning. Th is is refl ected in

the regulation of internal and external relations, the methods of organizing internal

social relations, decision making, planning operations and risk taking, the approach to

perform the duties, and the obligations towards the environment. Th e defi nitions of the

business model generally points the activities of the company related to the operation-

alization of the concept of vision of the entrepreneurs in order to best fi t the business

to market requirements, to obtaining adequate resources, to developing good relations

with stakeholders, and consequently, to making money1.

Analyzing variety of existing business model it is possible to divide it into two

general groups – presenting functional and process approach. In a functional approach

those who create business models focusing on defi ning the functions, as clusters of ac-

tion needed to achieve business goals. One of the most popular examples of such ap-

proach to design business models is the concept of business model canvas (Osterwalder

and other, 2009). Th e visualization of the model is shown on picture 1.

Picture 1. Th e Business Model Canvas

Source: Osterwalder A., Pigneur Y. Business Model Generation, John Wiley and Sons p. 44

In the model, the Customer Segments Building Block defi nes the diff erent groups of

people or organizations an enterprise aims to reach and serve. As authors claim, customer

groups represent separate segments if: their needs require and justify a distinct off er or

they are reached through diff erent Distribution Channels or they require diff erent types

of relationships or they have substantially diff erent profi tability or fi nally they are will-

ing to pay for diff erent aspects of the off er (Osterwalder and other, 2009: 18). Th e Value

Propositions Building Block describes the bundle of products and services that create

value for a specifi c Customer Segment. Th ose, according to authors, Th e Value Proposi-

1 More detailed discussion on the defi nitions of business model is included in: Czapla T. Malarski M., Methodological Assumptions for Creating a Model of Business, in print, Barcelona 2014

120 Tomasz Czapla

tion are the reason why customers turn to one company over another. It solves a customer

problem or satisfi es a customer need. Each Value Proposition consists of a selected bundle

of products and/or services that caters to the requirements of a specifi c Customer Seg-

ment. In this sense, the Value Proposition is an aggregation, or bundle, of benefi ts that

a company off ers customers (Osterwalder and other, 2009: 20). Th e Channels Building

Block describes how a company communicates with and reaches its Customer Segments

to deliver a Value Proposition. By authors channels serve several functions, including:

Raising awareness among customers about a company’s products and services; Helping

customers evaluate a company’s Value Proposition; Allowing customers to purchase spe-

cifi c products and services; Delivering a Value Proposition to customers and Providing

post-purchase customer support (Osterwalder and other, 2009: 24). Th e Customer Rela-

tionships Building Block describes the types of relationships a company establishes with

specifi c Customer Segments. In the Model, Customer relationships may be driven by the

following motivations: Customer acquisition and/or Customer retention and or Boosting

sales (upselling) (Osterwalder and other, 2009: 26). Th e Revenue Streams Building Block

represents the cash a company generates from each Customer Segment. As authors claim

a business model can involve two diff erent types of Revenue Streams: transaction rev-

enues resulting from one-time customer payments or recurring revenues resulting from

ongoing payments to either deliver a Value Proposition to customers or provide post-pur-

chase customer support (Osterwalder and other, 2009: 28). Th e Key Resources Building

Block describes the most important assets required to make a business model work. As

authors stressing every business model requires Key Resources. Th ese resources allow an

enterprise to create and off er a Value Proposition, reach markets, maintain relationships

with Customer Segments, and earn revenues. What is important key resources can be

physical, fi nancial, intellectual, or human and it can be owned or leased by the company or

acquired from key partners. (Osterwalder and other, 2009: 32). Th e Key Activities Build-

ing Block describes the most important things a company must do to make its business

model work. Like Key Resources, they are required to create and off er a Value Proposition,

reach markets, maintain Customer Relationships, and earn revenues. And like Key Re-

sources, Key Activities diff er depending on business model type (Osterwalder and other,

2009: 34). Th e Key Partnerships Building Block describes the network of suppliers and

partners that make the business model work. As authors’ points, company can distinguish

between four diff erent types of partnerships: Strategic alliances between non-competitors

or Coopetition: strategic partnerships between competitors or Joint ventures to develop

new businesses or fi nally Buyer-supplier relationships to assure reliable supplies (Oster-

walder and other, 2009: 36). Th e Cost Structure describes all costs incurred to operate

a business model. (Osterwalder and other, 2009: 38).

In analyzes regarding such designed business model emphasis is put on the formu-

lation of practical recommendations concerning expected actions taken by the company.

An alternative to such designed business model are those that relate to the logic of

operations. Such an approach can be called a process one. In contrast to the functional

Functional and Process-Based Approach to the Analysis of the Business Model... 121

approach in analyzes of the business model they are not searched practical recommen-

dations for specifi c actions, but patterns of behavior. Th e key to the exploration of these

patterns of behaviors can be creating and delivering value by the organization.

An example of such a designed business model can be developed by Mark

W. Johnson, Clayton M. Christensen, and Henning Kagermann in their Reinventing

Your Business Model ( Johnson and others, 2008: 59-67). Th e visualization of the mod-

el is shown on picture 2.

Picture 2. Th e four elements of Business Model

Source: Johnson M. W., Christensen C. M., Kagermann H. Reinventing Your Business Model,

Harvard Business Review, December 2008, p. 62

122 Tomasz Czapla

In such approach a business model, consists of four interlocking elements that, taken

together, create and deliver value. Th ose elements are: Customer value proposition (CVP)

understood as ability of the company to found a way to create value for customers—that

is, a way to help customers get an important job done. By “job” authors mean a funda-

mental problem in a given situation that needs a solution. Once the company under-

stands the job and all its dimensions, including the full process for how to get it done, the

company can design the off ering. In the logic adapted by authors the more important the

job is to the customer, the lower the level of customer satisfaction with current options

for getting the job done, and the better company solution is than existing alternatives at

getting the job done (and, of course, the lower the price), the greater the CVP ( Johnson

and others, 2008: 60). Th e profi t formula is the blueprint that defi nes how the company

creates value for itself while providing value to the customer. It consists of the following:

Revenue model: price x volume; Cost structure: direct costs, indirect costs, economies

of scale. Cost structure will be predominantly driven by the cost of the key resources re-

quired by the business model; Margin model: given the expected volume and cost struc-

ture, the contribution needed from each transaction to achieve desired profi ts and fi nally

Resource velocity: how fast we need to turn over inventory, fi xed assets, and other assets –

and, overall, how well company need to utilize resources – to support its expected volume

and achieve its anticipated profi ts ( Johnson and others, 2008: 60). Th e key resources un-

derstood as assets such as the people, technology, products, facilities, equipment, channels,

and brand required to deliver the value proposition to the targeted customer. According

to the authors the focus here is on the key elements that create value for the customer

and the company, and the way those elements interact ( Johnson and others, 2008: 61).

And last element is Key processes. As authors stay successful companies have operational

and managerial processes that allow them to deliver value in a way they can successfully

repeat and increase in scale. Th ese may include such recurrent tasks as training, develop-

ment, manufacturing, budgeting, planning, sales, and service. Key processes also include

a company’s rules, metrics, and norms ( Johnson and others, 2008: 61).

Proposal for a research of business model

In the light of twenty-fi ve years of systemic transformation, which has focused

Polish economy towards the principles of free competition an important research ques-

tion can be asked: whether evolved the Polish business model? Assuming the process

approach to designing business model as a research point of view for the planned re-

search, the above question can be formulated as: whether Polish companies have de-

veloped a specifi c model of business behavior. Adopted for the study research model2

is focused on mapping the internal characteristics of the functioning of businesses and

2 First approach to this research model was presented in: Czapla T. Malarski M., Methodological

Assumptions for Creating a Model of Business, in print, Barcelona 2014


covers four areas, which also constitute the planed areas of research. Th ose areas are: or-

ganizational culture, organizational strategy, the structure of the organization, and the

integration mechanisms understood as organizational processes.

In this approach organizational culture is a fundamental category from which de-

rives the characteristic modes of action of the company, arising out of approved by man-

agement assumptions, values, norms and principles. From the organizational culture

stems the basic ideological factor which is “driving” the whole of the organization; it

is an element of “spirituality” of the organization. In such means culture is a “soft” ele-

ments of the company that expresses the attitude to conducting business, includes be-

liefs associated with building relationships and shapes the specifi city of social behavior.

Organizational strategy includes ways to adopt and implement the directions of devel-

opment of the organization, ways of responding to new situations and threats, estima-

tion and risk reduction, capacity for renewal, reactivation or breakthrough changes. Th e

organizational structure relates to methods of distribution of tasks and responsibilities,

the building of organizational relationships, ways to build the information fl ow and

work processes. Th e last element of the model is the integration mechanisms – connect-

ing, building and maintaining internal balance both in social and managerial dimen-

sion. Th ese mechanisms – organizational processes – result from the need to merge the

individual components of the company by introducing a certain level of dynamic stabil-

ity. Th e visualization of the research model is shown on picture 3.

Source: prepared by the author.

Picture 3. Research model for Business Model Analysis

124 Tomasz Czapla

For such understood the business model, in the planned research, it has been adopt-

ed methodology of behavioral analysis, assuming that all the activities of the organiza-

tion can be analyzed from two points of view. Th e fi rst one is to look at the organization

from the perspective of the content of behaviors – that is, specifi c facts (events) that

took place in the organization. Th e second one is to look at the organization from the

perspective of the process – that is, the method (the pattern) how activities are taken.

Both approaches complement each other giving a solid foundation for reasoning about

patterns of behavior within a business model.

For the purposes of formulating proposals for the analysis of patterns of behavior,

possible is intersection of these two dimensions what allows to build a matrix of behav-

ior within a business model. Th e fi rst dimension of the matrix refers to the perspective of

the content of behaviors. As a measure for this dimension it can be used the credibility

of the information base. Any action organizations constituting the content of behavior

require basing them on solid, well-established cognitive data and information. Such ap-

proach avoids the (potentially troublesome) evaluation of the correctness of organizational

activities. Instead of evaluate whether the actions taken by the organization are good or bad

in this approach, we assess only whether decisions are based on reasonable assumptions,

off ered by the use of reliable information. Th e second dimension of the matrix refers to

perspective of the process. As a measure for this dimension it can be used the correctness of

process execution. For each of the three main components of the business model it is pos-

sible to determine individual principles of correctness of the process execution. Created on

these assumptions, design of matrix of behavior within a business model presents picture 4.

Picture 4. Matrix for analysis of behavior within a business model


Such a matrix will be constructed for each of the three main components of the

business model. Placing on the quarter weak starting position – means building of be-

havior based on unreliable and narrow in its scope information, and badly executed pro-


cess. Firms placing on the quarter beginning of the road – means building of behavior

on the basis of reliable and comprehensive information. Firms in this fi eld wanting to

act rationally should improve the process execution, allowing themselves to better use

of existing information. Firm placing on the quarter good starting position – means

building behavior on the basis of reliable and comprehensive information and properly

executed process, which gives a good starting point in building a business model clearly

shaped. Placing on the quarter road to nowhere – means building of behavior on the

basis of properly executed process, however using less reliable and narrow in its scope

information. Since the correctness of the process execution requires making decisions

based on reliable and most complete data, an attempt follow this path can only be the

road to nowhere. Th erefore, companies willing to behave rationally should not be in this

quarter. Distribution of the surveyed companies between the fi elds of the matrix will

allow to verify the thesis about the crea tion (or not) of clear pattern of business model.

Th e more deep way of analyzing the behavior within a business model can be il-

lustrated on the result concerning one of the elements constituting the business model

that is strategy3.

Analyzing the behavior of the researched companies in both dimensions led to the

conclusion that companies achieved much better results in the evaluation of the cred-

ibility of the information base than was the case in assessing the level of the correctness

of process execution. Th e results are presented picture 5.

Picture 5. Models of behavior of researched companies


3 Th e study included 79 Polish companies. Th e research was conducted using similar methodology to that described in the article. Detailed results are presented in: Czapla T. Dwa wymiary zarządzania

strategicznego, jako wyznaczniki strategicznych sytuacji przedsiębiorstw – prezentacja wyników badań in: Rozwój teorii i praktyki zarządzania strategicznego. Doświadczenia krajowe i międzynarodowe joint publication edited by: Jeżak J., wyd. PAM Center, Łódź 2003, pp. 297–308

126 Tomasz Czapla


It was possible to set, based on the results of the researched companies, the level of stand-

ard of the credibility of the information base and the correctness of the process execution.

Picture 6. Th e standard of the credibility of the information base

And the standard of the credibility of the information base

It was possible to appoint a matrix of strategic behavior and to determine the tra-

jectory of the development of companies in this matter. Th e results presenting picture 7.


Picture 7. Th e matrix of strategic behavior of researched companies


Conclusions

While the functional approach to the design and analysis of business models has

a great practical importance, since designed this way models allow for the formulation

of practical recommendations regarding action taken by the organization. Th is accept-

ance of process approach for the design and analysis of business models is more in line

with the cognitive nature of basic research. In addition, the adoption of two dimensions

of analysis: the credibility of the information base and the correctness of the process

execution, allows to construct multidimensional analysis model of behavior within the

business model and determine the degree of maturity of formation of this model.

Bibliography

Czapla T. Dwa wymiary zarządzania strategicznego, jako wyznaczniki strategicznych sy-

tuacji przedsiębiorstw – prezentacja wyników badań in: Rozwój teorii i praktyki za-

rządzania strategicznego. Doświadczenia krajowe i międzynarodowe joint publication

edited by: Jeżak J., wyd. PAM Center, Łódź 2003, pp. 297–308

Czapla T., Malarski M. Methodological Assumptions for Creating a Model of Business, pa-

per presented at the conference 14th EBES Conference, 23-25 October, in print,

Barcelona 2014

Johnson M. W., Christensen C. M,, Kagermann H. Reinventing Your Business Model,

Harvard Business Review, December 2008, pp. 59-67

Osterwalder A., Pigneur Y., Business Model Generation, John Wiley and Sons, 2009

128 Tomasz Czapla

THE INFLUENCE OF HUMAN CAPITAL ON SHAPING AGILITY

OF A KNOWLEDGE–BASED ORGANIZATION

H W -K , P .D. P U T

Abstract

Th e dominance of knowledge, as a principal resource which creates social and

economic reality, determines internal changes of fundamental resources of an

organization in relation to the changes of key areas in its environment.

Th e stimulating and motivating factor for eff ecting changes is a broadly

defi ned human capital, i.e. a knowledge society. Th e aim of the article is to

indicate the role of human capital in shaping agility of a knowledge-based

organization in the perspective of eff ective perception and response to op-

portunities and appropriate adaptation of internal potential to effi ciently

convert opportunities into market success. Th e elements subject to analysis

will include the features of human capital at the employee and company level

which infl uence the shaping process of the agility features of an organization

and the eff ective adaptation of an organization to the knowledge economy.

Introduction

Th e transformation of a traditional economy into the knowledge economy creates

numerous opportunities for an organization. Th eir conscious or unconscious applica-

tion causes an internal transformation of companies. A key concept of the knowledge

economy is the persistent and effi cient use of knowledge in the development of eco-

nomic processes [cf. World Bank, 2006].

Th e dominance of knowledge, as a principal resource creating social and economic

reality, determines the internal changes of fundamental resources of an organization in

relation to the changes of key areas in its environment.

Th e stimulating and motivating factor for eff ecting changes is a broadly defi ned hu-

man capital, i.e. a knowledge society. It has at its disposal information and knowledge, as

well as predispositions, abilities and skills to acquire new knowledge, disseminate it and use

it in economic processes. Human capital is the basic creator of the agility level of an organi-

zation, understood as the ability to take advantage of an opportunity in the environment.

Th e aim of the article is to indicate the role of human capital in shaping agility of

a knowledge-based organization in the perspective of eff ective perception and response

to opportunities and appropriate adaptation of internal potential to effi ciently convert

opportunities into market success. Th e analysis will cover conditions created by a com-

pany for shaping and adapting human capital in the range of the development of the

agility features of an organization and in the range of effi ciency to adapt to the dynam-

ics of the knowledge economy.

Human capital in the knowledge economy

Human capital is a unique resource of the knowledge economy. On the one hand, it

is the main creator and initiator of development, and on the other, the main recipient of

transformation which the ever-changing economy entails. People are treated as human

capital, understood as a resource of knowledge, skills, health and vital energy contained

in each individual and society as a whole, specifying the ability to work, adapt to change

and generate new solutions [Domański S.R., 1993].

Th e overview of source literature shows a particular importance of human capital

as the creator of the economy [e.g. Schultz, 1981; Becker 1976 and 1993]. Numerous

publications underline the signifi cance of human capital as the baseline resource of an

organization [e.g. Baron and Armstrong, 2008; Davenport and Prusak, 1998; Fitz-Enz,

2000] and the signifi cance of the key factor of the sustainable, competitive development

of companies through the ability to create knowledge in the ever-changing environ-

ment [Nonaka et al., 2011; Kianto et al., 2014].

Specifying the features of human capital in a knowledge-based organization, one must

refer to a broad view of the concept of human capital which should be analyzed in societal

and organization-related terms through the lens of features represented by an individual.

In terms of a society, human capital relates to the entire population and is consid-

ered in the following categories: an increase in knowledge through higher expenditure

on educating people at all educational levels and throughout their lifetime, develop-

ment of knowledge and skills in the context of work, health and vital energy of a society.

In terms of an organization, human capital includes intangible resources provided

by employees. Human capital is a combination of knowledge, skills, competences and

130 Hanna Włodarkiewicz-Klimek

other attributes embodied in individuals that are relevant to economic activity. [cf. Hu-

man Capital Investment, OECD 1998, p. 9].

In terms of an individual, human capital is an accumulation of all features that

a human being possesses and which may contribute to the functioning and develop-

ment of an organization. Th e said features also impact the shape and development of

a society. In such a dimension, human capital may be defi ned as a combination of the

following factors:

– features contributed by man: intelligence, energy, generally positive attitude, cred-

ibility, commitment,

– an employee’s ability to learn: receptive mind, imagination, creative skills, common

sense,

– an employee’s motivation to share information and knowledge: team spirit and tar-

get driven attitude [Fitz-enz, 2000].

A knowledge-based organization as an agile organization

A knowledge-based organization is an organization whose structure is subject to and

directed at creating added value on the basis of the eff ective application of knowledge

[Grudzewski, Hejduk, 2004]. Building a competitive edge based on knowledge becomes

a unique and effi cient action in the context of continual changes and economic globaliza-

tion [Kowalczyk, Nogalski, 2007]. Eff ective operation in the knowledge-based economy

and reaching the level of a knowledge-based organization forces people employed in it to

change their roles, competence models and the way of thinking [Mikuła, 2006].

Th is type of an organization unites in itself the elements of a lean and fl exible en-

terprise which features competent employees and operates on the basis of heterarchical

strutures, is smart and can create conditions for communication between its employees

and suppliers [Płoszajski, 2000]. A knowledge-based organization, with regard to the

specifi city of its internal resources and response to environmental factors, can be termed

as an agile organization, i.e. sensitive and capable of a quick identifi cation of oppor-

tunities and their implementation into its own growth and development [Kałkowska,

Klimek, 2012]. Th e following dimensions are used to defi ne an agile knowledge-based

organization:

– brightness – skill in the quick perception of market opportunities and threats com-

ing from the surroundings,

– fl exibility- skill in using the available resources consisting in widening the scope of

their application,

– intelligence – a company’s ability to understand situations and react appropriately

to them,

– shrewdness – skill in using knowledge to deal practically with new situations

[Trzcieliński, 2011].

Th e Infl uence of Human Capital on Shaping Agility... 131

Th e concept of agility in a knowledge-based organization has been presented by

means of a model. Th e basis of the model is made up by four essential organizational ar-

eas: strategy, organizational structure, human capital and ICT systems, which have been

identifi ed as the most sensitive and responsive to changes in the knowledge economy.

Evolution taking place in an organization is the result of a constantly realized process

of managing knowledge which comprises: knowledge localization, knowledge acqui-

sition, knowledge extension, sharing knowledge and its dissemination, application of

knowledge and knowledge retention. During the process, individual and organizational

knowledge is transformed and augmented, which causes an organization to embark

upon continuous learning. Th e active process of conscious management of knowledge

and an organization’s involvement in learning is identifi ed through the features of or-

ganizational agility expressed by brightness, fl exibility, intelligence and shrewdness. In

the context of the intensifi cation of agility features, there will be an evaluation of the

development of a knowledge-based company expressed by the level of the adaptation

of an organization (taking the opportunity) to the conditions of the knowledge-based

economy. Figure 1 shows the model of agility of a knowledge-based organization:

Source: Włodarkiewicz-Klimek H., Kałkowska J., Zwinność organizacji opartych na wiedzy,

Studia Ekonomiczne Regionu Łódzkiego, Wybrane Aspekty Zarządzania Współczesną

Organizacją nr 8/2012, Polskie Towarzystwo Ekonomiczne, Łódź 2012.

Figure 1. Model of agility of a knowledge-based organization


Human capital in shaping agility of knowledge-based organizations

Human capital is a key factor causing a knowledge-based organization to adapt to

the conditions of the knowledge economy. An employee’s individual potential strength-

ened by the process of managing knowledge in an organization is favourable for shap-

ing organizational agility. It is expressed through the effi cient perception and response

to opportunities and appropriate adaptation of the internal potential of an organization

to transform opportunities into market success. Th e effi ciency of the process relates on

the one hand to individual features of human capital and on the other to conditions cre-

ated by an organization in the range of human capital management.

By analyzing the role of human capital in shaping organizational agility in the per-

spective of noticing and responding to opportunities, the assessment will cover conditions

created by a company for the formation and adaptation of human capital in respect of the

development of organizational agility. Th e development of agility will be considered in the

context of effi cient adaptation to the dynamics of the knowledge-based economy.

Each feature of organizational agility showed characteristic conditions which

should be created by an organization at the level of human capital in order to shape

agility of a knowledge-based organization. Th e conditions are listed in table 1.

Table 1. Conditions that should be created by an organization at the level of human

capital in order to shape agility of a knowledge-based organization

Agility features Conditions created by an organization at the level of human capital

Brightness

fl exibility of forms and work organization which helps an organization to spot opportunities and quickly react

to threats,

personal policy of an organization evolving into the policy of human capital,

Flexibilityconditions for redundancy and development of employees’ and organizational knowledge to intensify the

fl exibility of resources,

Intelligence

specifi c concept plan of human capital development,

separate budget for training (other forms of education),

increased share of highly skilled employees,

competence management,

process and tools of recruitment/derecruitment focusing on the evaluation of employees’ knowledge, skills and

attitude,

implementation and development of the concept of knowledge management,

implementation and development of employee motivation and remuneration systems, which fosters an in-

crease in organizational intelligence,

pro-performance forms of employing and rewarding senior managers.

Shrewdness

organizational entrepreneurship,

skill in noticing and acquiring knowledge from external sources (experts, consultants, research centres, clients,

competitors, market),

adapting internal structures and relations to create appropriate conditions of employees’ welfare in an organization

Source: based on: Włodarkiewicz-Klimek H., Kapitał ludzki w kształtowaniu zwinności or-

ganizacji opartych na wiedzy, Prace Naukowe Uniwersytetu Ekonomicznego we Wrocławiu

nr 299 (Research papers of the University of Economics in Wrocław No. 299), Wrocław 2013.


Th e evaluation of the state and structure of human capital in companies in the context of agility of a knowledge-based organization

Th e evaluation of the state and structure of human capital was conducted on the

basis of research whose conceptual grounds were made up by conditions shown in table

1, which organizations should create at the level of human capital shaping organiza-

tional agility1.

During the research, an assumption was made in accordance with which the crea-

tion of development optimizing conditions by organizations impacts an increase in or-

ganizational agility in the way that an organization enhances its ability to notice oppor-

tunities in its environment and responds appropriately to threats. In this approach, the

optimization of human capital in companies will be understood as keeping up a devel-

opmental trend compatible with the developmental dynamics of human capital in the

knowledge-based economy. In connection with such an assumption, the analysis referred

to particular agility features. Th e research results are presented in tables 2,3,4 and 5.

Table 2. Research results in the scope of conditions created by organizations

to shape human capital brightness

Conditions defi ning brightnes Research results in a company

Flexibility of forms and work

organization

The dominant form of employment in the researched companies was an employment contract. In

the researched period, no change of the employment form was recorded. Task completion by teams

and fl exible working hours remained at a stable level. A low level and narrow range of personnel

outsourcing was also noted.

HR policy of an organization

A mixed model of HR policy dominates in the organization. It combines the attitude based on train-

ing staff and employing highly qualifi ed personnel. The research showed that over 70% of compa-

nies did not change their HR policy during the researched period.

Source: Elaboration based on research results obtained in the project “Adapting company

management systems to the conditions of a knowledge-based organization” – project fi nanced

by the Ministry of Science and Higher Education, identifi cation No. 75136

1 Th e research was conducted jointly with research on adapting human capital to the conditions of the knowledge-based economy carried out as part of the research project – “Adapting company management systems to the conditions of a knowledge-based organization” – project fi nanced by the Ministry of Science and Higher Education, identifi cation No. 75136



to shape human capital fl exibility

Conditions defi ning fl exibility Research results in a company

Conditions for knowledge

redundancy

Over 50% of the researched companies retained or slightly increased the level of expenditure on exter-

nal training programmes, which confi rms their openness to gaining knowledge.

In the area of a broadly understood knowledge management, over 50% of companies declare they

manage it and 39% declare they don’t. In organizations which declare to manage knowledge, the

awareness of employees taking part in knowledge management systems increases. Organizations

dynamically intensify the use of knowledge management tools both in the range of personal and group

knowledge development and IT support of the process of knowledge distribution and management.

Source: Elaboration based on research results obtained in the above-mentioned project.


to shape human capital intelligence

Conditions defi ning intelligence Research results in a company

Specifi ed concept and plan of

human capital development

Fixed specialist work positions responsible for taking managerial decisions dominate in the orga-

nizations. Such a solution is favourable for the development of competences and specialist skills

which are often limited to a narrow decision-making area.

Separate budget for training Over 50% of the researched fi rms hold a separate budget for training.

Increased share of highly-

qualifi ed staff

Highly-qualifi ed employees make up almost 50% of the total workforce. However, an increase in

the number of such employees was insignifi cant over the researched period. The development of

competences and skills focuses mainly on widening specialist knowledge.

Competence management

The number of companies managing employees’ competences is growing. Organizations focus

on the analysis of competences possessed in relation to demand, the evaluation of employees’

expectations and a broadly defi ned professional experience. The research results in this area confi rm

the intensifi cation of positive attitude of organizations towards their own development through

enhancing the competence level of their staff .

Recruitment process concen-

trating on the evaluation of

employees’ knowledge, skills

and attitude

The research shows that during the recruitment process the elements most highly valued by em-

ployers are: attitude, willingness to work and develop, professional experience and well-document-

ed specialist knowledge. The second group of the most frequently named competences is made up

by elements such as: completion of a degree programme, communication and interpersonal skills.

Introduction and develop-

ment of the concept of

knowledge management

The research confi rmed that organizations manage knowledge. The most intense dynamics can be

observed at the level of organizational process management. The most frequently listed tools for

managing knowledge in an organization included: electronic document management, customer

relations management, electronic work management.

Firms which declare the development of knowledge management tools focus their eff orts on improving

the effi ciency of the processes of document management, work management and customer relations.

Moreover, they deal with creating databases and improving the existing “best practice” programmes.


Conditions defi ning intelligence Research results in a company

Introduction and develop-

ment of employee motivation

and remuneration systems

The research points to a medium level of using the potential of motivation systems in companies.

The infl uence of motivation systems on the integration of employees’ individual aims with an orga-

nization’s aims is not signifi cant either. Such behavioural patterns do not contribute to raising the

levels of openness and adaptation of company management systems to the changing environment.

They also display the low effi ciency of the internal structure of motivation systems.

Over the researched period, the remuneration structure did not change. Over 80% is made up by

fi xed remuneration. The low level of movable remuneration contingent on work performance is a

factor which limits the dynamics of human capital development.

Pro-performance forms of

employing and remunerating

senior managers

A low and slowly-progressing level of pro-performance forms of employment and remuneration

was noted in the fi rms. Over 83% of the remuneration package is made up of regular remuneration

components irrespective of a company’s performance. The share of movable, employee-dedicated

remuneration components is also at a low level.

Source: Elaboration based on research results obtained from the above-mentioned project.


to shape human capital shrewdness

Conditions defi ning shrewdness Research results in a company

Entrepreneu-ship of an

organization

The research points to a low level of an organization’s activity towards fostering employees’ entrepre-

neurship. In most of the researched fi rms, employees’ innovative activity is not stimulated. There is

also a lack of clearly-defi ned motivational actions.

Ability to notice and obtain

knowledge from external

sources

Fewer than 50% of companies do not undertake any activity intended to stimulate innovativeness,

thus remain closed to surrounding opportunities.

In companies which declare themselves to motivate employees to introduce innovations, one can

observe a satisfactory increase in the number of pro-innovation activities. It proves that such compa-

nies notice the positive eff ects of management systems being open to innovativeness.

Adapting internal structures

and relations to create

appropriate conditions of

employees’ welfare in an

organization

The research showed a very low level of interest displayed by an organization in employees’ health

and mental balance. Such an attitude does not favour the eff ective use of the human resources

potential. It limits the developmental dynamics of employees and organizations. It lowers staff

performance.

Source: Elaboration based on research results obtained in the above-mentioned project

Analyzing the research results, we can formulate the following conclusions:

– As regards brightness, organizations moderately ensure the conditions for the de-

velopment of human capital in the context of agility. In companies, classical forms

and work organization prevail, which are characterized by a low level of fl exibility

and a mixed model of HR policy,

– As regards fl exibility, one can observe the development of conditions met by or-

ganizations in the range of human capital development. It is expressed through

securing funds for training and organizational knowledge management,

– As regards intelligence, one can point to a moderate development confi rmed by the

retention of specialist workplaces, rising competence level in an organization, posi-


tive attitude towards knowledge development and integration of employees with

company aims,

– As regards shrewdness, organizations are characterized by a low development lev-

el of conditions favourable for human capital functioning. Organizations do not

show entrepreneurship and innovativeness. Also, they do not see the importance of

taking care of employees’ welfare during work.

Th e presented analysis shows that when agility features are confi gured in the

perspective of human capital, organizations are characterized by an adequate level of

brightness, fl exibility and intelligence and by a low level of shrewdness. Companies

with such a confi guration of features should be considered as the ones which waste op-

portunities. Such a situation is caused by the ineffi ciency of the operations management

system (cf. Trzcieliński. 2012, p. 76).

Conclusions

An agile organization has the ability to achieve success in a competitive environ-

ment in which unpredictable changes creating market opportunities occur. Human

capital is a key resource which enables to capture, assess and take advantage of market

opportunities in an organization. Organizations which intend to make proper use of

opportunities aff orded by the ever-developing knowledge-based economy and block

potential threats should optimally create internal management systems, which will al-

low human capital to be developed and fully used. In Europe, investing in human capi-

tal development is given great importance and is seen as an essential factor concerning

the competitiveness of particular companies and the entire economy. Polish organiza-

tions are characterized by a high level of understanding the signifi cance and validity of

human capital in being adapted to conditions created by the economy. However, the re-

search shows that in the direct management process, organizations do not fully use the

potential of human capital, thus blocking the infl uence and importance of this resource

on shaping agility of a knowledge-based organization.

Bibliography

Baron A., Armstrong M., Human Capital Management: achieving added value through

people, Kogan Page, London 2008

Becker, G. S. Human Capital: A Th eoretical and Empirical Analysis with Special Reference

to Education (3rd Ed.), University of Chicago Press. Chicago 1993

Becker, G. S., Human Capital. National Bureau of Economic Research, New York 1976

Davenport, T. H. and Prusak, L., Working knowledge: How organizations manage what

they know, Harvard Business School Press, Boston 1998

Domański S.R., Kapitał ludzki i wzrost gospodarczy, PWN, Warszawa 1993


Fitz-Enz J., Th e ROI of Human Capital: Measuring the Economic Value of Employee Per-

formance, Amacom, American Management Association, 2000

Grudzewski W.M., Hejduk I.K., Zarządzanie wiedzą w przedsiębiorstwach, Difi n, War-

szawa 2004

Human Capital Investment, An International Comparison, Center for Educational

Research and Innovation, 1998

Kianto A., Ritala P.,Spender J.-C., Vanhala M., “Th e interaction of intellectual capital as-

sets and knowledge management practices in organizational value creation”, Journal of

Intellectual Capital, Vol. 15 Iss: 3, pp.362 – 375, 2014

Kowalczyk A., Nogalski B., Zarządzanie wiedzą, Koncepcje i narzędzia, Difi n,

Warszawa 2007

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and Knowledge Economy Index, www.worldbank.org/kam

Mikuła B., Organizacje oparte na wiedzy, Zeszyty Naukowe, Akademia Ekonomiczna

w Krakowie, Monografi e nr 173, Kraków 2006

Nonaka, I., Toyama, R., Peltokorpi, V., “Th e distributed and dynamic dimensions of Human

Capital” in Burton-Jones, A., Spender, J.-C., Th e Oxford Handbook of Human

Capital, Oxford University Press, Oxford 2011

Płoszajski P. Organizacja przyszłości wirtualny splot kontraktów [w] Przedsiębiorstwo

przyszłości, Grudzewski W. M., Hejduk I. K.. (red.), Wydawnictwo Difi n, War-

szawa 2000

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sity of California 1981

Trzcieliński S., Przedsiębiorstwo zwinne, Wydawnictwo Politechniki Poznańskiej,

Poznań 2011

Włodarkiewicz-Klimek H., “Th e Changes of Human Capital Structure in Condition of

Adaptation the Enterprises’ Management Systems to the Knowledge-Based Economy

Requirements” in Proceedings of 5th International Conference on Applied Human

Factors and Ergonomics, T. Ahram, W. Karwowski, T. Marek, [eds]., Kraków: Ja-

giellonian University, p. 2699 -2709, Kraków 2014

Włodarkiewicz-Klimek H., Kałkowska J., Zwinność organizacji opartych na wiedzy, Stu-

dia Ekonomiczne Regionu Łódzkiego, Wybrane Aspekty Zarządzania Współcze-

sną Organizacją nr 8/2012, Polskie Towarzystwo Ekonomiczne, Łódź 2012

World Bank, Korea as Knowledge Economy. Evolutionary Process ad Lessons Learned.

Overview, Washington 2006


IMAGE OF THE EMPLOYER IN THE CONCEPT OF PERSONNEL MARKETING1

P . R O , P .D.C U E

Abstract

Th e paper presents the discussion on the notion of personnel marketing. It

has been underlined that creating and establishing the image of an organiza-

tion as an employer is an important element of the concept of personnel mar-

keting. In the paper it has been indicated that a positive corporate image is an

important factor for choosing the place of work, enables attracting employees

with proper competences and intellectual potential as well as strengthens loy-

alty and commitment of already hired employees.

Introduction

Over the years, the attitude of employers towards employees in an organization un-

derwent changes many times. Th e evolution of management in the human sphere con-

sisted in transition from personnel administration to the process approach to perform-

ing key management functions. It is a result of changes in the operating conditions of

an organization, such as the fact that human capital and social capital have become the

main creators of goodwill, operations in a turbulent environment increases the impor-

tance of intangible assets, meaning of knowledge and information shapes a new com-

petence profi le of an employee and results in the talent defi ciency phenomenon. A con-

temporary organization is open to the environment, fl ow of information, and new ideas.

1 Th e publication was fi nanced from the funds granted to the Faculty of Management at Cracow University of Economics, within the framework of the subsidy for the maintenance of research potential.

In the conditions of progressing globalization and development of knowledge-

based economy, shaping the image of an organization as an attractive workplace should

be considered as an important factor of building its competitive position. A properly

shaped employer image enables a company to stand out positively among other mar-

ket players and strengthen its unique position in awareness of the environment entities.

A positive corporate image is an important element for choosing the workplace,

enables attracting employees with proper competences and intellectual potential, and

also helps to strengthen loyalty and commitment of the already hired employees. Cre-

ating the image of a good employer requires changing thinking about activities taken

in the personnel sphere.

Th e purpose of the paper is to present the place of creating employer image in the

concept of personnel marketing and indicate benefi ts resulting from having the image

of a good employer.

Discussion on the notion of personnel marketing

Currently, employee potential is not only a strategic resource, decisive for competi-

tive advantage of an organization; it becomes also the main source of value creation. Th is

approach is refl ected in the human capital management model. Th is concept emphasizes

subjective approach to employees as internal customers and partners, and combines the

achievement of fi nancial goals with care for the needs of all stakeholders. It is based on

the assumption that the condition of a long-term growth is building social capital – i.e.

relations with business partners, including with employees – which would be based on

trust and reciprocity [ Juchnowicz M.(ed.), 2014, p. 135]. Th is perspective shows visible

elements on which the concept of personnel marketing focuses – referring to the theo-

ries of marketing, psychology and sociology – i.e. subjective treatment of employees and

stakeholders or pursuing creation and maintenance of emotional bonds in particular with

an employee, namely obtaining loyalty of an employee. Th e specifi c character of person-

nel marketing is also treating an organization and its environment in market categories.

In the subject literature, authors present a variety of defi nitions of personnel mar-

keting. K. Schwan and K.G. Seipel were among the fi rst to defi ne personnel market-

ing, which, in their opinion, is a system of ways of conduct and behavior of a company

oriented on interests and expectations of prospective and hired employees [Schwan K.,

Seipel K.G., 1995, p. 7]. Th e authors emphasize the importance of internal and external

labor market and expressly pay attention that organizations should fulfi ll the needs and

expectations of hired and prospective employees, which strictly refers to the philoso-

phy of marketing. Th e notion of needs in the concept of personnel marketing is defi ned

in the categories of the so-called higher-level needs in Maslow’s pyramid of needs, i.e.

professional self-fulfi llment, respect and recognition and affi liation with the working

team. Employees emotionally bound with a company where they work are willing to use

140 Renata Oczkowska

their capabilities and creativity in the development of a unique fi nal product for buyers,

contributing thereby to achieving own and organizational goals.

According to J. Penc, personnel marketing can be understood as the whole of in-

ternal and external activities of a company related to managing social potential of an

organization, shaping its size and structure and improving by creating favorable condi-

tions for employee involvement in a company’s operations and lifting its market eff ec-

tiveness and acquiring relevant employees on the labor market [Penc J., 1997, p. 239].

In the presented perspective, emphasis is put on a considerable importance of dou-

ble-track activities directed to employees hired in a company, and also to prospective

employees, candidates who fulfi ll the employer’s requirements. Th e author emphasizes

also that high commitment to work of the so far hired employees or acquisition of em-

ployees with relevant competences aff ect achieving the maximum work effi ciency and,

as a consequence, of the whole organization.

Personnel marketing as defi ned by L. Zbiegień – Maciąg, is a way of conduct to-

wards internal and external customers, preparation of favorable atmosphere or employ-

ee community, which is created by clearly identifi ed conditions of employment – work

and salary, method of motivating, managing and appraising people, planning career

of employees and possibilities of their development, access to information, creation of

conditions of self-reliance, responsibility, building consent [Zbiegień-Maciąg L., 1996,

p.16]. External customers are in this approach not only prospective employees, but also

customers, supplier’s cooperators and other groups with which the company cooperates

or which are interested in company operations. In this defi nition attention is paid to

a way of conduct towards employees of an organization by the principles of remunera-

tion, appraisal of development that aff ect their job satisfaction, identifi cation with the

place of employment or commitment.

A clear reference of personnel marketing to transaction marketing is visible in the

defi nition suggested by R. Kozielski, who defi nes personnel marketing as a process of

motivating and integrating employees in order to ensure effi cient implementation of

the strategy of a corporations as a whole and its particular functions, aiming at customer

satisfaction. A measure to so understood goal is an employee who is creatively grounded

and oriented on customers’ needs [Kozielski R., 2007].

Referring to the quoted defi nitions and features of transaction marketing in the

classic perspective, proposed by Ph. Kotler, it can be concluded that personnel market-

ing is characterized by:

• conscious orientation of activities of the company on the present and prospective

employees. Needs and expectations of the present and prospective employees are

the basis for any projects – philosophical aspect;

• systematic research on internal and external labor market, which enables identifi ca-

tion of strengths and weaknesses, opportunities and threats related to external and in-

ternal market and needs experienced by this market participants – information aspect;

Image of the Employer in the Concept of Personnel Marketing 141

• determination of market-oriented long-term goals and strategy of the company’s

operations – strategic aspect;

• planned shaping of the labor market (internal and external market) by compatible

with the objectives, harmonized set of tools, i.e. e.g. recruitment system, rewarding

system, appraisal system, development system-functional aspect;

• considering the principle of impact on homogeneous groups of the present and

prospective employees of the company – segmentation aspect;

• coordination of any market oriented actions, in particular labor market, within ac-

cordingly shaped organizational structure of a company – organizational aspect.

Personnel marketing should be examined in terms of system, because elements

forming this system should be consistent, interrelated and addressed to the achieve-

ment of objectives. Th e personnel marketing system is composed of two subsystems:

• internal personnel marketing and

• external personnel marketing.

Internal personnel marketing includes such elements as:

• internal communication between management and employees as well as between

particular employees,

• incentive system,

• training system,

• creating and establishing the image of an company as an employer (internal PR),

• internal recruitment and selection.

On the other hand, external personnel marketing applies to actions related to:

• external communication between a company and prospective employees and other

stakeholders,

• recruitment and

• creating and strengthening the image of a company as an employer.

A signifi cant element of the concept of personnel marketing is thus creating and

establishing the image of an organization as an employer.

Concept of the image of an organization as an employer

Interest in the issues of the image of an organization dates back to the early 1950s,

whereas the idea of building the image of an organization as an attractive employer was es-

tablished considerably later, because in the 1990s. Th e English scientist T. Ambler and the

practitioner involved in marketing S. Barrow, who in 1996 were the fi rst to defi ne the term

employer brand) [Amber T, Barrow S., 1996, pp. 185-206] are considered as its precursors.

According to them, employer brand is the sum of functional, economic and psychological

benefi ts associated and obtained as a result of employment at a given employer. Employer

branding consists in using marketing techniques to create climate and image of an organi-

zation, which is attractive for both presently employed and prospective employees.


According to the approach by A. Mayo, employer branding includes everything

what is communicated (intentionally or unintentionally ) to each present or future em-

ployee [Mayo A., 2001, p. 123]. In the opinion of M. Kozłowski, employer branding

covers actions undertaken by an organization, addressed to the present and prospective

employees, aimed to build its image as an attractive employer, as well as supporting its

strategic business goals. On the other hand, A. Mikulska understands employer brand-

ing as a strategy of creating in the minds of prospective employees desired associations

relating to a given company as a workplace. Th is approach considers one target group,

i.e. prospective employees.

To sum up, we may assume that creating the employer image includes actions un-

dertaken by the employer, addressed both to the present as well as prospective employ-

ees, and other stakeholders aiming at creating the image of an attractive employer, and

hence support of strategic goals of an organization, strengthening and improving the

competitive position and creating corporate value. Creating the employer image can be

identifi ed as a strategy of attracting, recruiting and retaining the most talented, valuable

employees in an organization.

Th ese actions aff ect largely employee attitudes in respect of the employer, they fa-

cilitate identifi cation with corporate goals, enable activating creativity and innovation

among the employed, are favorable for satisfaction with work, and, as a consequence,

create goodwill.

Th e presented discussion of the terms enables presenting the dependencies be-

tween the terms: intellectual capital management, personnel marketing and employer

image (Fig. 1)

Fig. 1. Personnel marketing and employer image

Source: [ Jędrzejczyk A., 2013]


Employer brand planned by the employer should be unique, which means the need

for the employer to stand out from other organizations when striving for talented employ-

ees and establishing in the addressees’ awareness the image of own unique position. Th e

image of an organization should be strictly linked to its identity, which is a set of attributes

distinctive for a given organization from other companies, especially close competitors. It is

also the way in which the company wants to present to selected environment groups, using

for this purpose symbols, means of communication and behaviors. Identity of an organiza-

tion is thus the basis, on the basis of which the organization builds its image, namely image

shaped in awareness of entities of the environment and internal environment. Th e image is

shaped in the awareness of the present employees and other stakeholders, determined by

their personal experience or information reaching to the environment. Positive image, and,

in consequence, good reputation become capital that materializes as value the investors are

willing to pay for shares in a company, clients are willing to maintain loyalty towards it, and

authorities and the local community are willing to foster and approve its actions.

Th e employer image is a category, which changes over time, under the eff ect of

many factors, fi rst of all, actions of an employer, but also actions undertaken by com-

petitors and changes in the environment of an organization, for instance in industry,

legal regulations or on the labor market. Th erefore, it is necessary to build and care for

maintenance of a positive image of an organization as an employer and examine con-

tinuously the way it is perceived.

We may speak about diff erent types of image of an organization as an employer,

depending on the included criterion (tab. 1).

Table 1. Types of image of an organization as an employer

Criteria Type of image

Location of stakeholders External – perception of an organization by recipients from the organizational environment

Internal – perception of an organization by internal recipients

Image evaluation Positive – perception of an organization as an attractive employer

Negative – perception of an organization as a non-attractive employer

Neutral – lack of opinion among the recipients

Power of impact of the image on

the labor market

Strong – expressly positive perception of an organization as an employer

Poor – hardly positive evaluation of an organization as an employer

General employer image Actual – actual perception of an organization by the recipients

Communicated – including information provided to recipients by the organization by means of

its communication system

Desired – consistent with vision communicated by the organization

Ideal – the best positioning of an organization in a given period

Source: prepared by the author

Process of creating organization image as an employer consists of several stages. In

general, this process can be split into two basic stages:

1. Shaping the image,


2. Establishing the created image.

Th e organization image may be built in several ways:

– building the organization image from scratch, in the event when earlier such ac-

tions were not conducted,

– continuation and establishing the previously shaped image,

– creating the image diff erent from so far created.

Preparation of one, universal model of employer image creation process is an ex-

tremely complex task, due to multidimensional and long-term character of this process

and the special character of an organization. When models analyzing in the literature,

we may indicate common points in the process of employer image creation [Baruk A.I.

2006, pp. 51-55; Bukowska U., 2013; Stoltz W., Wedel A., 2009, p. 89; Sponheuer B.,

2010, pp. 123-132; Petkovic M., 2007, p. 181]. In connection with these deliberations,

four phases of this process were distinguished:

I Diagnostic (analytical) phase – diagnosis of the present condition: analysis of iden-

tity, analysis of image and consistency. It is required to identity organization iden-

tity, assess the present image on the labor market and specify the desired image,

which will enable determining a possible image gap;

II Conceptual phase – designing the achievement of the desired condition, namely

determining the objective, defi ning target groups or selection of means of commu-

nication with the recipients;

III Implementation phase – transition from planning to implementing programs cre-

ating the image of an organization as an employer;

IV Control phase – applies to correct course of scheduled actions. Current monitoring

consists in analyzing and comparing constantly obtained eff ects in relation to the

intended objectives. Th is phase ends one cycle of creating image of an organization

as an employer and is the basis to start the next cycle. Th e process of creating the

image of an organization should be a continuous process, being sequences cycli-

cally repeating in time.

Benefi ts resulting from organizations having a consistent and positive image of the

employer include:

– growth in trust in an organization,

– better relations of an organization both with employees and with clients, business

partners and other stakeholders,

– greater loyalty, satisfaction and commitment of the present employees,

– larger interest of prospective candidates starting work in an organization,

– reduction in costs of recruitment and selection,

– reduction in operating costs,

– greater stability of operations on the market,

– more eff ective launching of new products to the market.

Benefi ts that result from the image of a good employer induce organizations to un-

dertaking activities in this direction. Th is concept gains importance, which is refl ected


in organizing numerous programs and contests to promote good employers. At this

point, the following initiatives should be listed: Best Employer, Employer of the Year or

Responsible Employer – HR Leader. Active participation of companies in these pro-

jects suggests that organizations see an important role of involving in the creation of

a positive image [Oczkowska R., 2014, pp. 661-665].

Proper attracting of employees, introduction, development of staff as well as provi-

sion of appropriate remuneration, shaping of proper communication or working con-

ditions. Th ese actions largely aff ect employee attitudes in respect of the employer, they

facilitate identifi cation with corporate goals, enable activating creativity and innovation

among the employed, are favorable for satisfaction with work, and, as a consequence,

create goodwill.

Conclusions

Positive image of an organization as an employer allows easier personnel policy.

Recognized companies attract easily the best candidates for work, as well as stabilize the

crew, as working in a reputable company gives additional motivation for raising quali-

fi cations, sense of satisfaction and recognition of the environment, namely better satis-

fi es the higher-level needs of: recognition and prestige. It is worth emphasizing that an

organization reaches benefi ts not only in the personnel sphere. Its brand and brand of

products and services off ered are strengthened. Th e positive image allows bold pricing

policy; the clients are willing to pay more for goods by a known and respected company,

decreasing costs of operation, suppliers, banks, distributors are willing to reduce prices

for reputable recipients, because cooperation with such companies is more stable and

improves their reputation, greater stability of operation and lower risk, during recession,

companies with the best reputation demand fl uctuations experience to a smaller extent,

owing to high loyalty of recipients and persisting trust. As a consequence, the positive

image of the employer leads to competitive advantage.

Bibliography

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1996.

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Warsaw 2006.

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stów i Menadżerów, SGH, Warsaw 2013, no. 4(30).

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nomistów i Menedżerów, SGH, Warsaw, 2013, no. 4 (30).


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kurentów, Personel 2007, no. 6.

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ston 2001.

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drian, J. W. Wiktor, PWE, Warsaw 2014.

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Difi n, Warsaw 2006.

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renzen bei der Arbeitgeberwahl, Rainer Hampp Verlag, München und Mering, 2007.

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1996.


RELATIONSHIP OF RESPONSIBILITY IN ECONOMY

H Ł , P .D. C U E

Abstract

Th e confi guration of the relationship of responsibility in the economy and its

performance are infl uenced by a number of factors, especially the level of de-

velopment of democracy and, associated with this, rules for determining the

legal norms. In the process of building responsibility relationship particular

attention should be paid to the degree of harmony of internal and external

accountability, unambiguous defi nition of the extent, the basis, the instance

and the manner of responsibility, as well as separation of links of responsibil-

ity (especially the subject and the instance of responsibility, as well as the en-

tity whose well-being in this relationship is taken into account).

Introduction

Appropriate shaping of the relationship of responsibility in economy can be con-

sidered as an important factor in the effi ciency of the economic system. Th erefore, the

purpose of this discussion is to point out the principles of shaping relationship of re-

sponsibility in economics. It is assumed that the primary role of economics is to contin-

uously improve material conditions of human development, and responsibility can be

understood as a relationship between elements such as: a subject, an object, an instance,

a basis, a way of responsibility and the subject, whose welfare is taken into account.

Th e essence of responsibility

Th e interpretation of the concept of responsibility can be divided into two groups:

• process – understanding of responsibility as a kind of relationship

• attribute – understanding of responsibility a characteristic (behavior, attitude).

Th e presented division is also compatible with the four basic contexts specifi ed by

R. Ingarden, in which the notion of responsibility is sometimes used, and which can be

regarded as the diff erent ways of understanding the concept, and therefore the meaning

that is attributed to it. According to the concept of R. Ingarden someone1:

• bears responsibility

• takes responsibility

• is held responsible

• acts responsibly

Th e latter of the responsibility meanings mentioned by R. Ingarden refers to action

attributes, attitudes and behaviors assessed as being responsible, in other words, to the

defi nition of a responsible person and a responsible action.

Whereas between the fi rst three meanings occurs a kind of dependence: fi rst,

someone assumes the responsibility and therefore agrees to fulfi ll an obligation, to any

action or behavior for which one bears responsibility and can be held liable (the third of

the mentioned meanings of the analyzed concept).

Th e occurrence of the fi rst two forms of responsibility is dependent on the subject

which responsibility concerns (because it depends on the subject whether it accepts the

responsibility and bears the responsibility). It is assumed, therefore, that the subject can

not be forced to take on responsibility – these acts take place in conditions of freedom.

Fulfi lling the obligation and the behavior of an entity may become the subject of

evaluation. Depending on what this assessment will be, they could be met with sanctions

or released from the responsibility (which is usually particularly pronounced when the

instance of responsibility is independent from a particular subject as an external body).

Th e analysis of the concept of responsibility indicates the existence of a process,

a relationship between such basic components (links) of the process, as the subject of re-

sponsibility (who is responsible), the object of responsibility (for what it is responsible),

the instance of responsibility (to whom is responsible). More in-depth consideration of

this relationship allows specifying its further links, namely, the basis of responsibility,

the manner of its settlement (responsibility method), and the entity whose welfare is

taken into account, and which Anna Jedynak describes as the victim2.

1 R. Ingarden, Książeczka o człowieku, Wyd. Literackie, Kraków 1972, p. 782 A. Jedynak, Odpowiedzialność w globalnej wiosce, WN Semper, Warszawa 2008, p. 25–43

150 Halina Łyszczarz

Th e relationship of responsibility3

Responsibility in this sense is understood as a relationship in which someone is ac-

countable to somebody for something in some way and on some basis and because of

someone else’s good4. It can therefore be assumed that responsibility is a relationship

between the following links (members / elements)5:

• the subject of responsibility (who is responsible)

• Th e object of responsibility (for what)

• the instance of responsibility (to whom)

• the entity whose welfare is taken into account (because of whose good)

• the basis of responsibility (on what basis)

• the method responsibility (how).

A description of this relationship and its links may consider the following aspects:

• extent (limitations, boundaries) of responsibility

• overlapping of the links of responsibility relationship – links confi guration (eg. when

the instance of responsibility is also an entity whose welfare is taken into account)

• number of instances of responsibility

• degree of precision of the responsibility relationship description (eg. is it always

clearly defi ned to whom the entity is accountable, on what basis and how)

• degree of detail and unambiguous description of the standards taken into account

in assessing the behavior of the subject of responsibility.

Th e subject of responsibility is the one who bears responsibility, and therefore is

liable for something (that is, for the object of responsibility). Opinions on who may be

a subject of responsibility are divided, especially when it comes to moral responsibil-

ity. And so, as far as legal liability applies to both individuals and organizations (insti-

tutions), it happens that moral accountability of organizations (and hence companies,

states) is questionable if it is assumed that only people can be held liable morally6.

Th e object of responsibility could be described as some desirable states that a subject

is required to meet, and achieving them requires certain behaviors and attitudes. Certain

responsibilities assigned to the subject can be the object. Th ere is a problem here if only

the impact of these behaviors should be assessed or the behaviors themselves, if certain

behaviors can be positively evaluated if they did not bring the desired eff ects.

3 Responsibility defi ned as a relationship falls within the defi nitions given in Słownik Języka Polskiego

(Polish Language Dictionary), where the responsibility is interpreted as: - Moral or legal obligation to answer for one’s own or someone else’s actions, and - Taking on the responsibilities of care of someone or something. (sjp.pwn.pl/szukaj/odpowiedzialność.html (14.01.2014)4 Based on: A. Jedynak, Odpowiedzialność w globalnej wiosce, WN Semper, Warszawa 2008, p. 125 ditto6 M. Friedman, Th e Social Responsibility of Business is to Increase Its Profi ts, „New York Times.

Magazine”, September 13, 1970, p. 211

Relationship of Responsibility in Economy 151

Th e object of responsibility can relate to past, present and future.

Th erefore, there are two types of responsibility7

• negative responsibility and

• positive responsibility.

Negative responsibility occurs when the subject does not fulfi ll the obligations, and

the ex-post assessment of the impact of its activities is negative. However, in the case

of a positive assessment of past actions and their consequences responsibility does not

exist – for you can not be held accountable (in the sense of a sanction) for the positive

eff ects of the actions (achieving the desired standards of meeting the obligations).

Positive responsibility occurs when it concerns the future, an ex ante situation,

where the subject has yet to take action oriented towards achieving the good.

Assessing the impact of behaviour is simplifi ed by an unambiguous determina-

tion of the object of responsibility, for example establishing norms for the instance of

responsibility.

Th e instance of responsibility may be either:

• external to the subject – generally refers to legal responsibility (in this case we can

talk about the external accountability) and

• internal – when the subject of responsibility is also the instance (self-responsibility,

inner accountability), and usually it is moral responsibility8. It is also possible that

in a given situation there is more than one instance of responsibility, for example

internal and external accountability or more than one external instance. Such a sit-

uation may be characterized by diversity of basis for liability and lead to diff erent

assessments of behavior and attitudes of the subject and, consequently, to confl icts.

Th e basis of liability may be diff erent in case of external accountability and diff er-

ent for inner accountability. As a rule, the basis for external responsibility are the ac-

cepted norms: moral, customary or otherwise, sanctioned by tradition or issued for the

purposes of the particular situation9. If a new situation appears not directly regulated,

norms with a greater degree of generality should be applied10.

Th e basis of inner accountability may be standards adopted by the entity, which

may be generally applicable standards with which a subject identifi es, but also individu-

al standards that the subject imposes on itself, but not necessarily expect others to con-

form to them (eg. not everyone is expected to act heroically, and on the assumption that

7 Jonas H., Zasada odpowiedzialności. Zasada dla cywilizacji technologicznej, Platan, Kraków 1996, p. 398 Conscience can be considered a such internal instance, defi ned as the awareness of moral values

and how those values relate to actions, behaviors, attitudes of the person; Source: H. Skorowski, Sumienie, w: B. Szlachta [red.], Słownik społeczny, WAM, 2004, p. 1385

9 A. Jedynak, op. cit., p. 2510 Ibidem


the liability concerns what have been entrusted to us11, including abilities, not everyone

is expected to act in a specifi c way that requires those capabilities).

Th e subject takes and bears responsibility and is also held responsible because of

someone’s good which in the event of failure to fulfi ll the obligation (responsibility) is

violated and the harmed party becomes a victim. Victims may be individuals, groups,

institutions, states. A victim is a point of reference for the assessment of the subject’s re-

sponsibility. Th erefore, there is the question of the relationship between the subject, the

instance and the victim due to the diff erent possible confi gurations of these links, and

some of them may be questionable (especially if they concern legal liability):

• the victim is at the same time an instance that holds responsible

• the subject is also an instance of responsibility

• the victim is a subject of responsibility, but in that particular situation, the number

of both victims and subject and instances of responsibility may vary and the degree

of precision of defi ning the scope of their activities may vary. For example, a subject

of responsibility for the health of an individual, education or providing a livelihood

may be the individual themselves but also the appropriate state institutions and the

state as a whole12.

Manner of responsibility includes establishing perpetration, its eff ects, sometimes

the motives and possibly other circumstances and on this basis either granting dis-

charge or determining the sanctions, which is in accordance with the principles of jus-

tice, a compensation for the victim or for the benefi t of society.

Th e primary condition for any liability is that the subject takes it on in the condi-

tions of freedom. But does the fulfi llment of an obligation imposed (forced) by an in-

stance of liability (imposing liability or assessing behaviors), which obligation requires

behaviors or attitudes that are not compatible with the subject’s value system (con-

science) or the value system of society (social norms) release from this responsibility?

In view of the assumption that taking responsibility is associated with free choice

(by the subject accepting the accountability) is it acceptable to excuse war criminals for

their actions seen as fulfi lling duties or executing orders?

If we accept the defi nition of responsibility as a moral or legal obligation to answer

for one’s own or someone else’s actions it may turn out that from the legal point of view

the subject should not be punished, despite the fact that from the moral point of view it

is on the contrary or the subject is punished (legal obligation) despite the fact that ac-

cording to the moral criterion the behavior is evaluated positively. Th is situation testifi es

to the huge importance of the compliance of legal norms with moral norms, so that the

statutory law is in accordance with moral norms accepted in society.

11 G. Szulczewski, Wolność – odpowiedzialność. Rozerwany łańcuch w dobie turbokapitalizmu, w: J. Osiński [red.]: Wolność i odpowiedzialność. Wymiar ekonomiczny, społeczny i polityczny, SGH, Warszawa, 2009, p. 22

12 A. Jedynak, op. cit., p. 36-37


Responsibility in economics

Th e term economics is used for the science of management, economic life and also

the management itself. Th e goal of economics can be described as continuous and reli-

able creation of material conditions enabling individual and social organism to devel-

op13. Th is understanding of economics suggests that it is the means for carrying out the

overarching goal of human development. As A. Zwoliński stated “destruction of this

order leads to technocracy and degradation of man”14.

Th e main area of responsibility is therefore improving material conditions of peo-

ple and society in general. It is assumed that the main purpose of the state as an institu-

tion is to raise the living standards of citizens15, so it can be assumed that the state, but

also its citizens and their groups, organizations, including businesses, are the subjects of

responsibility in economics. Depending on the socio-economic system in a particular

country, the scope of this responsibility may vary.

And so in the case of a free market economy greater responsibility of individu-

als for the material conditions of life is assumed than in the case of the so-called social

market economy or a welfare state in which the responsibilities of the State are greatly

increased. Greater responsibility of individuals results from an increased extent of their

liberty. Th e more freedom the greater the chance of action, and therefore greater re-

sponsibility. Th is principle indicates strict control of freedom and responsibility, and

suggests that shifting away from a free economy reduces the extent of freedom of indi-

viduals for the state and at the same time increases the responsibility of that state.

Due to the fact that subjects of responsibility in an economy are individuals, groups

(organizations) and the State it is not always easy to determine the instance of respon-

sibility, especially in democratic systems, which are built on the principle that power

belongs to the citizens and that they should be considered as the fundamental instance

of holding responsible, not only in the case of internal accountability, but what may

seem paradoxical, also the external accountability. Th e latter is implemented by various

institutions appointed by the state, and therefore by the citizens in democratic systems.

An important issue regarding to economics is the basis of liability, so the identifi -

cation of norms according to which behaviors and attitudes of subjects of responsibility

are assessed, and a signifi cance can be you assigned to:

• mutual proportions of moral norms and formalized legal norms, as well as

• compliance of legal norms with moral norms.

13 A. Zwoliński, Etyka życia gospodarczego, w: B. Szlachta [red.], Słownik społeczny, WAM, Warszawa 2004, p. 285

14 ditto15 M. Porter, Th e competitive advantage of nations, N. York, 1990


Th e defi nition of responsibility includes legal and moral aspects of answering for

one’s own or someone else’s actions16. Th us also in deliberations on responsibility in

economy it is reasonable to draw attention to the importance of these aspects of re-

sponsibility. Th ere are two extreme approaches to ethics in economics: either it refers

to ethics or is formed without regard to moral principles. In the latter case, the goal of

human activity (perceived as homo economicus) is enrichment, which takes precedence

over “being moral,” and this creates the possibility of imposing obligations and rights

incompatible with the moral requirements professed by a person and by society17.

Th e situation of decreasing importance of ethical standards in the functioning and

evaluation of the economic life entails the increasing importance of formalized legal

norms. Acting by ethical standards means the presence of the internal control units in-

volved in economic life, while the legal standards mean control by external institutions18.

Lack of internal control is off set by a more extensive regulation and legal control,

which can lead to over-controlling. Ethical standards put limits to freedom, the lack of

such standards or not abiding by them increases freedom but it can lead to the absence

of responsibility for one’s own decisions and actions19.

Th is may mean that the negative consequences of these actions may be suff ered

by someone else, which may indicate the presence of a pathology in the economic life.

Eff orts focused on the further liberalization of economic activities ,also on a global

scale, across borders, allow to carry out these activities practically without any control,

making it easy to both undertake and hide actions considered not only unethical, but

also illegal, and this in turn means avoidance of responsibility.

Th is type of situation forces the intensifi cation of external control, and expanding

the appropriate regulations and external supervisory institutions (external instances of

accountability). Th is trend could be exacerbated due to the fact that the formulation of

legal norms does not usually keep pace with changes in economic life.

In this context, it can be concluded that these subjects of economic life that mini-

mize the importance of ethical standards in its activities are responsible for the develop-

ment of regulations and institutions of external control.

16 Responsibility is defi ned as a moral or legal obligation to answer for one’s own or someone else’s actions and take responsibility to take care of someone or something. (sjp.pwn.pl/szukaj/odpowiedzialność.html (14.01.2014)

17 Th is type of situation is typical for totalitarian and dictatorial regimes, operating according to the values incompatible with the values of the general public, but can also occur at company level. Examples of situations may be misleading advertising, planned aging of a product, unequal treatment of employees, or disproportion between the declared and implemented activities in the area of corporate social responsibility, and the actual assessment of the situation in this respect (CSR “for show”).

18 For these types of control Grzegorz Szuladziński uses the term intra- and outside steering, source: G. Szuladziński, op. cit., p. 20

19 As stated by G. Szuladziński, giving the example of the fi nancial crisis of 2008–09: “freedom without broadly understood responsibility can lead to disaster”; source: ditto, p. 21


Th is analysis points to the importance of maintaining proper proportions of ethical

and legal standards in the economic life.

As already mentioned elsewhere20, we can distinguish a number of often interdepend-

ent factors aff ecting the diff erent responsibility relations in economy in diff erent coun-

tries. Th ese include:

• the role of the country in globalization processes (leading or peripheral)

• the level of development of democracy

• the level of independence and effi ciency of judicial institutions,

• the level of transparency in governance and ownership relations,

• the relationship between institutions (pluralism or corporatism),

• the extent of state regulation of relations between various stakeholders,

• participation in regional and international groupings and the role played in them

• aposteriorism or apriorism of legal rules,

• the level of of business taxation,

• the nature of the economic system (free market or social market economy).

While such factors as the leading role of a particular state in globalization pro-

cesses, corporatism, the social market economy or the high level of business taxation

primarily aff ect the shape of the relationship of responsibility (particularly in increas-

ing the role of the state as the subject of economic responsibility), then such factors as

the high level of development of democracy, aposteriorism of the law, a high level of

independence and effi ciency of judicial institutions, a high degree of transparency of

governance and ownership relationships, primarily cause positive assessment of the re-

lationship of responsibility in the economy (and consequently the effi ciency of the eco-

nomic system) made by the following basic criteria:

• the degree of harmony of internal and external responsibility (which indicates the

conformity of legal norms with moral norms)

• unambiguous defi nition of the extent, basis, instances and manner of responsibility

• separation of links of responsibility (especially the subject, instances and the victim).

Conclusions

Th e observations above allow to conclude that appropriate formation of relation-

ship of responsibility in the economy can be considered as an important factor in the ef-

fi ciency of the economic system. Th e basic elements of this relationship are: the subject,

the object, the instance, the basis, the manner of responsibility, and the entity whose

welfare is taken into account.

20 Łyszczarz H., Analysis of the Public Expectations for Corporate Social Responsibility in Poland, [w:] Teczke J., Terblanche N., [red.], Management Science in Transition Period in South Africa and Poland, Cracow, Stellenbosch, 2013 p. 343 – 355


Among a number of factors aff ecting the confi guration of the relationship of re-

sponsibility in the economy, the role of the level of development of democracy and as-

sociated rules for determining the legal norms should be emphasized.

In the process of building relationships of responsibility one should pay particu-

lar attention to the degree of harmony of internal and external accountability (which

indicates the conformity of legal and moral norms), an unambiguous defi nition of the

extent, the basis, the instance and the manner of responsibility and also the separation

of links of responsibility (especially the subject, instances and the victim).

Bibliography

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mes. Magazine”, September 13, 1970

Ingarden R., Książeczka o człowieku, Wyd. Literackie, Kraków 1972,

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ków 1996

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land, [w:] Teczke J., Terblanche N., [red.], Management Science in Transition Period

in South Africa and Poland, Cracow, Stellenbosch, 2013 p. 343–355

Porter M., Th e competitive advantage of nations, N. York, 1990

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Szulczewski G., Wolność – odpowiedzialność. Rozerwany łańcuch w dobie turbokapitali-

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i polityczny, SGH, Warszawa, 2009

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zacji, Difi n, Warszawa, 2004

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Warszawa 2004

sjp.pwn.pl/szukaj/odpowiedzialność.html (14.01.2014)


FROM SALARY TO TOTAL REWARDS – THE EVOLUTION OF COMPENSATION

P S , M.S .C U E

Abstract

Th e article briefl y presents the history of payment for work. It points main

changes in management approach in time and the refl ection of those chang-

es in pay systems. Th e most dynamic period is XX century. Th e author also

presents Total Rewards idea as most recent step in the mentioned evolution.

However, Total Reword does not end the development of payment systems.

Th e author predicts that the next step will be the focus on imperfection of hu-

man perception and building salary system which consider bias of our judge-

ment. Th is approach may be called behavioral compensation.

Article

Work is part of peoples’ life for thousands of years. Despite its long history still

many researchers defi ne work diff erently. Th ere is however one common part which can

be found in most of those defi nitions. H. Król gathered defi nition of work and based

on it created his own: „work is purposeful and meaningful activity of human who wants

to create certain goods”. Using this defi nition we can date work as far as 2 million years

back. Th at was the time when Homo Habilis lived. “Homo Habilis” means a man who

use his hands. Th e species was named so, as created own tools1. Creating tools was cer-

tainly a work. With time people master the art of craftsmanship and started barter

trade. 5000 BC in Mesopotamia, one could have met carpenters, blacksmiths, bricklay-

1 Byam M.; Dzieje Ludzkości, Polska Ofi cyna Wydawnicza BGW, Warszawa 1994, p. 3

ers, teachers and merchants2. Th e work was divided and paid for. Firstly with pieces of

iron or silver3. In diff erent parts of word diff erent money was used.

In XVIII BC. One of the fi rsts minimal wage rules were applied. Th ey were found

in the Code of Hammurabi. „During the summer months when the days are long and

work quite hard, Th e Code stipulates a payment of six GERAHS of money per day. For

the rest of the six months, the laborer must be paid fi ve GERAHS per day. Th us, wages

and rates that are fi xed by Th e Code refl ect the diff ering productivity of diff erent jobs.”4

Information about minimal wage and payment methods can be also found in dif-

ferent religions. „Now to the one who works, wages are not credited as a gift but as an

obligation”5 or „the worker is worthy of his wages”6. Th e Old Testament put even more

emphasis on the subject of paying salary: „ It is murder to deprive someone of his living

or to cheat an employee of his wages”7. Th e Holy Bible also recommends to pay for work

immediately: „Pay them their wages each day before sunset, because they are poor and

are counting on it. Otherwise they may cry to the Lord against you, and you will

be guilty of sin.”8 Th e same rule was also repeated in Th e Book of Leviticus: „Do not

hold back the wages of a hired worker overnight”9.

Th e regulations concerning payment can be found also in Quran, for example:

„And if you wish to have your children nursed by a substitute, there is no blame upon

you as long as you give payment according to what is acceptable”10. In general Quran

emphasis the importance of work and economic activity11.

Buddhism also give guides about salary and money. “ Buddha said that there is

nothing wrong with making money and looking after one’s family, but we must know

how to make a living in a way that does not cause harm to others or ourselves.”12

2 Copeland M.A.; Concerning the Origin of Money Economy; Th e American Journal of Economics and Sociology; Vol. 33 No.1; 1974

3 Ferguson N; Potęga Pieniądza – Finansowa Historia Świata; Wydawnictwo Literackie; 2010; p. 294 Nagarajan K.V.; Th e Code of Hammurabi: An Economic Interpretation; International Journal of

Business and Social Science; Vol. 2 No. 8; May 2011; p.1155 Th e Bible, St. Paul’s Letter to the Romans 4:4; https://www.biblegateway.com/passage/?search=Romans%20

4:4, accessed 12.04.20156 Th e Bible, 1 Timothy 5:18, https://www.biblegateway.com/passage/?search=1+Timothy+5%3A18

&version=ESV7 Th e Bible, Sirach 34:22, https://www.biblegateway.com/passage/?search=Sirach+34%3A22&versio

n=GNT8 Th e Bible, Deuteronomy 24:14-15; https://www.biblegateway.com/passage/?search=Deuterono

my+24:14-15, accessed 12.04.20159 Th e Bible, Leviticus 19:13, https://www.biblegateway.com/passage/?search=Leviticus+19:1310 Quran; Surat Al-Baqarah (2:233); http://quran.com/2/233, accessed 12.04.201511 Darwish A. Y.; Islamic work ethic – A moderator between organizational commitment and job;

satisfaction in a cross-cultural context; Personnel Review; 2001; Vol. 30 Iss: 2; p. 15312 Wisdom Library; http://www.wisdomlib.org/defi nition/samma-ajiva/index.html; accessed 12.04.2015

160 Piotr Sedlak

With time, our civilization developed further. New inventions were introduced and

quality of life improved steadily. However, when it comes to salary, for most of the time

it was regarded by employers as the cost only. In XVIII century the Industrial Revolu-

tion increases demand for work. Th e result was not so good for employees as one could

thought. It was common for people to work 13 hours a day, also child labour was used13.

Also opinion of employers about payment was far diff erent that the one nowadays. For

example Majet, an industrialist of that time said “Th e worker should never get rich, he

must earn enough to eat and have clothing but never more. Wealth make people lazy”14.

Fortunately this approach was changing. One of the fi rst who decided to run his

business in other way was Robert Owen. He improved working conditions of employ-

ees15 and introduced meal at work16. Th is last thing can be regarded as non-fi nancial sal-

ary. Other reformer was Ch. Babbage who, in 1832 was trying to encourage employers

to use gain-sharing in rewarding workers17.

A kind of milestone in history of the compensation is the work of F.W. Taylor

(often called the father of scientifi c management), who postulated bonus system which

depends on work effi ciency. He believed that effi cient worker should be paid more, and

that such system will encourage people to work better.

Also H. Gantt created own bonus and introduced it in 190118. In this time it was

visible for managers that wage and performance is connected in two ways. Th ere has

to be high performance to create profi t which can be spend on higher wages and that

higher wages build higher performance. Th e example may be the publication of H. Em-

erson “Effi ciency as a Basis for Operation and Wages. In detail development of bonus

system at classical school of management is presented by J. Czekaj19.

Although, for the representative of the classical approach to management, the sal-

ary was rather instrument of achieving high performance, they lay the groundwork for

further development. Despite being focused on work effi ciency they also saw social

function of the salary. For example H. Ford once told “No question is more important

13 Stoner J.A.F, Wankel C.; Kierowanie; Polskie Wydawnictwo Ekonomiczne; Warszawa 1996; p. 4614 Kuliszer J.; Powszechna historia gospodarcza średniowiecza i czasów nowożytnych, tom II; Książka

i Wiedza, Warszawa 1969; p. 19015 Ecyclopedia Britanica, Encyklopedia Britannica; http://www.britannica.com/EBchecked/topic/436254/

Robert-Owen#toc5433; access 17.05.201516 Griffi n R.W.; Podstawy Zarządzania Organizacjami; PWN Warszawa; 2004; str. 4117 Martyniak Z.; Prekursorzy Nauki Organizacji i Zarządzania; Polskie Wydawnictwo Ekonomiczne;

str. 15-1918 Chartered Management Institute, Henry Laurence Gantt Th e Gantt Chart Th inker, p.1, https://

www.managers.org.uk/~/media/Campus%20Resources/Henry%20Laurence%20Gantt%20-%20Th e%20Gantt%20Chart.ashx, access 05.05.2015

19 Czekaj J., Rozwój systemów Premiowania w klasycznej szkole zarządzania” in Mikula B. Historia i Perspektywy Nauk o Zarządzaniu, Kraków 2012, p. 33-43

From Salary to Total Rewards – Th e Evolution of Compensation 161

than that of wages – most of the people of the country live on wages. Th e scale of their

living – the rate of their wages – determines the prosperity of the country”20.

With time, behavioral approach to management emerge21. Th e needs of employees

become in the interest of managers. As they become aware of diff erent needs it was the

fi rst step to consciously introduce new types of work rewards, which may help to ful-

fi ll those needs. In order not to mention again famous needs theory the author would

like to point on one which seems to be underestimated. Th e classifi cation of needs cre-

ated by H. Murray22 which was published before the pyramid of needs developed by

A. Maslow. H. Murray distinguished 24 human needs. Between them are: Achieve-

ment, Exhibition, Recognition, Acquisition, Construction, Autonomy, Aggression,

Blame Avoidance, Dominance, Affi liation, Nurturance, Cognizance23.

It was not the end of the changes, the evolution was still visible. After WWII quantita-

tive approach in management developed. It was, and still is visible in approach to salary sys-

tems. Expenses on salaries nowadays are (and if not, than should be) treated as investment,

which results in certain profi t generated by the organizations. New indicators are also used.

For example managers can use HC ROI (Human Capital Return on Investment) trying

to count how much each additional euro or dollar spend on salary increase total revenue of

organizations. Th is indicator is for example used by PwC in Saratoga research24.

Th e next period and approach in management science is called “system approach”

to management. It also have its refl ection on remuneration policy. Th e pay systems or

motivation systems are present in the companies. Both terms involves the fact that sev-

eral factors, at one time, are deciding on the result. In other words, the pay system may

consist of base pay, benefi ts bonus and several time of short or long term incentives. Th e

motivation will be infl uenced by all those elements together. Th ose elements also infl u-

ence motivational strength of each other. What is interesting not always in positive way.

Total Rewards

Total Rewards (TR) is the example of holistic approach to work related returns.

For the fi rst time in the HR strategy it was used in 1990, but it become popular in

200025. World at Work describe Total Rewards as all the tools that employer can use in

20 Lane R, Ford H, Crowther S., Th e story of Henry Ford; retrieved through books.google, https://

books.google.pl/books?isbn=1312930004 access 05.201521 Stabryła A. (red); Podstawy Organizacji i Zarządzania. Podejścia i koncepcje badawcze;

Wydawnictwo UEK; Kraków 2012; str. 1822 Murray H., Explorations in Personality, 1938r23 Cheery K.; Murray’s Th eory of Psychogenic Needs; http://psychology.about.com/od/

theoriesofpersonality/a/psychogenic.htm; accessed 12.04.2015;24 Th e research HC Saratoga is done by PwC (former PricewaterhouseCoopers) http://www.pwc.pl/

pl/zarzadzanie-kapitalem-ludzkim/saratoga-benchmarking.jhtml; accessed 15.04.2015.25 Giancola F.; Total Rewards; When words get in the way; WorkSpan Magazine; 8/09; p. 54

162 Piotr Sedlak

order to attract, motivate, engage and retain employees26. World at Work society distin-

guished six elements of Total Rewards.

Th ose are:

• „Compensation: Pay provided by an employer to its employees for services ren-

dered (i.e., time, eff ort, skill). Th is includes both fi xed and variable pay tied to per-

formance levels.

• Benefi ts: Programs an employer uses to supplement the cash compensation em-

ployees receive. Th ese health, income protection, savings and retirement programs

provide security for employees and their families.

• Work-Life Eff ectiveness: A specifi c set of organizational practices, policies and

programs, plus a philosophy that actively supports eff orts to help employees achieve

success at both work and home.

• Recognition: Either formal or informal programs that acknowledge or give spe-

cial attention to employee actions, eff orts, behavior or performance and support

business strategy by reinforcing behaviors (e.g., extraordinary accomplishments)

that contribute to organizational success.

• Performance management: Th e alignment of organizational, team and individual

eff orts toward the achievement of business goals and organizational success. Per-

formance management includes establishing expectations, skill demonstration, as-

sessment, feedback and continuous improvement.

• Talent development: Provides the opportunity and tools for employees to advance

their skills and competencies in both their short- and long-term careers“27.

Similar model, also complex model is developed by Milkovich T., Newman M,

Gerhart B.28 Which is presented in the Table below.

World at Work distinguished over 100 diff erent types of reward they are29. Most of

them fi t model of Milkovich and others. It can be said that both of presented ideas are

examples of holistic approach.

Total Rewards tries to show the value of work elements, which were earlier omit-

ted. It seems to be the next step of the HR approach. Why it become popular now? As

always managers seek for effi ciency of resources. Firstly, in the time of F.W. Taylor they

concentrated on work organization, then employees’ needs were spotted. After one way

of improving effi ciency was exploited, managers look for another to focus on. We live

in the time, when milliseconds decide on winning in sport competition and one cent

may decide on choosing supplier of logistics services. In the opinion of the author this

is why total rewards came to live. To run a company nowadays require to be as effi cient

26 World at Work27 World at Work; http://www.worldatwork.org/aboutus/html/aboutus-whatis.jsp; accessed 13.04.201528 Milkovich T., Newman M, Gerhart B.; Compensation; Issue no. 10; Singapore 2011; p.1029 World at Work; Total Rewards Inventory; http://www.worldatwork.org/waw/adimLink?id=28330;

accessed 05.2015


as possible. Open market resulted in tough competition each organization have to deal

with. Using Total Rewards is one of the ways to gain competitive advantage. Th e author

believes also that there is another reason. Increasing expectations. Today’s reality off er

us almost unlimited choice unlimited amount of goods and services. Th e advertisement

try to convince us to look for something better all the time. A the same time the em-

ployees become much more mobile, people do not work in one place for their whole

lifetime anymore. We change our job looking for better returns. Managers know that

and have to adapt company strategy to present environment. Presenting full scope of

rewards from work increases chance to attract potential employees and to retain those

already working in the company.

Th e future of compensation

In Author’s opinion, the next step will be concentration on psychological bias that

infl uence rewards perception. Recently Economic Psychology is becoming more and

more popular. Paying for work and decisions about employment and work engagement

are decisions where both science of psychology and economy can explain some aspects.

Th ose are decisions under uncertainty when employee is not sure of the outcome. On

the one hand he tries to choose what is best for him, on the other hand he is prone to

use heuristics and his preferences are not compliant with perfect economical rationality.

Th e Author believes that it is time for behavioral compensation. Th e approach

when reward package will be constructed, having in mind imperfection of human per-

Table 1: Total Returns Model

Source: based on Milkovich T., Newman M, Gerhart B.; Compensation; Issue no. 10; Singa-

pore 2011; p.10

164 Piotr Sedlak

ception and decision making. Th e goal will be to remind employees how much value

they receive from work and provide them with information that can help in rational

evaluation of job returns.

Conclusions

Approach to compensation and salary system has changed radically in last 100 years.

From treating employees’ pay as cost which supposed be minimalized we reach the mo-

ment when managers look at remuneration as investment. What is more, the return of

investment is being considered. Th e salary system is now a tool to help organization to

achieve its goals. Nowadays, number of rewards than can be used to pay employee is also

enormous. In Author’s opinion the next step will be optimization of reward package to

adapt it to human perception. Peoples’ perception is imperfect, we are not able to judge

and evaluate our reward package 100% rationally. Th at is why communication of return

value is needed and also adaptation to perception bias.

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166 Piotr Sedlak

LEADERSHIP IN THE CONTEXT OF CULTURAL DIVERSITY

M M , P .D.C U E

Abstract

Contemporary companies identify and knowingly adapt the organizational

culture to their needs; the organizational culture is of fundamental impor-

tance for the organization’s success. Th e adopted cultural profi le shapes vari-

ous kinds of relations in a company; moreover, it has impact on the leader-

ship model adopted in a company. In today’s organizations cultural diversity

is something unavoidable; moreover, it has become an important issue and

challenge for many organizations. Th e fi rst part of the paper raises the prob-

lem of leadership in culturally diverse companies. Th e purpose of the second

part of the paper is to present the organizational culture as a factor supporting

entry, development and functioning of a company on international markets.

Th is part presents fi ndings of the research that shows changes in the fi eld of

organizational culture after organizations enter international markets.

Paradigms of leadership from the perspective of changes in the management practice

Nowadays, we come across an opinion that well managed companies have a clear

organizational culture, which aff ects organizational success and shaping of its competi-

tive position in the environment. Th e cultural approach has resulted in visible changes

and re-determination of features that guarantee success of an organization, whereas

when assessing organizational culture the measurement covered common features, and

the analysis covered the whole organization. Th e present companies are able to identify

the prevailing organizational culture. Th e adopted cultural profi le shapes various kinds

of relations in a company and has a huge impact, among others, on leadership in an or-

ganization. Th e companies of the 21st century strictly adapt their models of leadership

to an organization and people working there, and leadership itself is a great challenge

for the management. In management a particular role is played by the management

process (stimulating, motivating), namely causing a specifi c type of behaviour of people,

consistent with the will of the person who manages them. Observations and research of

many contemporary organizations allow concluding that effi cient management is sig-

nifi cantly aff ected by environmental factors, mainly cultural factors. Cultural diversity is

something unavoidable; moreover, it has become an important issue and challenge for

many organizations where its constant growth is noticeable.

Leadership in an organization is not tangible: it is a social perception that is creat-

ed in a given historical and cultural context. Th e idea of developing leadership skills was

discussed as early as in antiquity. Alexander the Great was described as a great leader,

having appropriate leadership characteristics and skills developed with the help of Ar-

istotle. Although research and interest in practice and development of leadership skills

have been present for a very long time, attention is paid to the fact that though leader-

ship is the most widely researched, it keeps on being the most poorly understood issue,

and its notion remains indefi nable and enigmatic (G.C. Avery, 2009).

Th e subject literature does not present one commonly recognized defi nition of

leadership either, to the contrary, many defi nitions are inconsistent. Research on the

theory of leadership is hindered by lasting changes, growing diversity and increasing

role of knowledge in an organization. Th e simplest way to show the idea and concept of

leadership is to present four paradigms of leadership (tab. 1). Th anks to them, various

theories and research have been combined within one area that shows best the com-

plexity of leadership.

Table 1. Paradigms of leadership

Paradigms of leadership Classic Transactional Visionary Organic

The most important

period

From antiquity to 1970s From 1970s to mid-

1980s

From mid-1980s to 2000 After 2000

Basis of leadership Domination through

respect and (or) power,

serving issuing com-

mands and controlling

Impact exerted on group

members in personal

contacts and consider-

ing their opinions and

feelings. Creation of

relevant environment

for management

Emotions, leader in-

spires group members

Common interpreta-

tion of environment in

a group. Leaders may

emerge from among a

group, instead of being

formally appointed

168 Malgorzata Machaczka

Paradigms of leadership Classic Transactional Visionary Organic

Source of commitment

of group members

Fear against the leader

or respect to them, pur-

suit of achieving prize or

avoiding penalty

Negotiated prizes, con-

tracts and expectations

Common vision, leader’s

charisma, individual-

ized approach to group

members

Support values and

processes common for

a particular, desire of

self-determination

Vision Leader’s vision is not

necessary as to ensure

submission of members

of an organization

Vision is not necessary

and may never be

defi ned

Vision is the most im-

portant, group members

may bring own contribu-

tion to the leader’s vision

Vision emerges in a

group and is an im-

portant element of the

organizational culture

Source: G.C. Avery, Przywództwo w organizacji, Polskie Wydawnictwo Ekonomiczne, War-

saw 2009, p.38.

Th e classic paradigm is the oldest paradigm dating back to antiquity. It is based

mainly on the theories of great people and necessary leadership features. In the para-

digm attention is focused on a dominant individual or an outstanding group of people.

Th is person or a group aff ects others, leading to the performance of necessary tasks, on

the other hand employees accept commands and do not question them, mainly due to

respect for leader or for fear of consequences of non-performance of a command. At

the same time, they are not responsible for results for which mainly leaders are account-

able. Th e classic leader shows authoritarian style (command-control style), being a style

of full subordination. Th e classic leadership proves the best in a stable or bureaucratic

environment, rather than in dynamic situations where an employee is required to have

knowledge and full commitment. Diversity in the classic leadership is usually ignored

because it is the leader’s opinion that really counts.

In the transactional paradigm the leader perceives group members as individuals;

whether commitment of employees is higher. With such an attitude it focuses attention

on employee motivation, develops their skills, relating also to their individual needs.

Transactional leaders run a dialogue with their subordinates and conclude agreements

with them. Th ey care for interests of their subordinates, taking care of positive relations

both with individuals and the whole team. Th e skills they possess have a basic impact

on leadership eff ectiveness, the same applies to knowledge and competencies employ-

ees acknowledge as signifi cant. Transactional leaders know the art of negotiations and

persuading, they are considered by their subordinates as “the right people in the right

places”, especially with regard to the present situation of an organization. Th e process

of infl uencing people, having basic importance in the transactional paradigm, requires

the use of both positive and negative tools, however, the most frequently used style of

leadership and style which is aimed in the paradigm is the consultation style. Th e leader

is responsible for tasks and results, whereas employees are responsible only in limited

scope. Th e transactional paradigm proves the best in a situations with low level of com-

plexity. An organization or a group deals with diversity where subordinates express their

opinions during consultations, however the leader always has the fi nal say.

Leadership in the Context of Cultural Diversity 169

Th e visionary paradigm is a paradigm considered as the best at a time when an

organization needs to make big changes. Th e leader’s charisma and vision is a factor

motivating to changes and an element stimulating subordinates to increase their com-

mitment and eff ort. Th e employees play the key role by in the implementation of the

leader’s ideas and vision and success of the vision depends on their skill of work organi-

zation, however, the leader is always accountable for work results. Th e visionary should

combine views of the team members in a common vision, however, there is a risk of

too strong focusing on a given vision that may result in reduction in the possibilities

and abilities to change. Th e visionary leadership proves the best in variable, unpredict-

able and stable conditions. Diversity occurring in an organization is considered as an

element thanks to which it can be easier to satisfy needs of customers and employees

in diff erent parts of the world, and as an element which will facilitate introduction of

changes in an organization.

In the organic paradigm leaders are not the most important because the organic

leadership is based on the processes of common interpretation. Th is paradigm includes

both organizations of leaders and organizations without leaders (G.C. Avery, 2009).

Leadership results from relations that are developed in a group, common vision and

fundamental values that are present in the organizational culture. All group members

have critical importance, rather than a specifi c leader. Organic organizations are open

to changes, based on the sense of responsibility, and thus in this kind of organizations

everyone is accountable for performance of specifi c tasks. Employees have knowledge

and competencies, thanks to which they have great power, but this power is most often

divided (50/50) between all employees. Organic leadership is very eff ective in a com-

plex, variable and dynamic environment. Th e present cultural diversity is a source of

knowledge and a condition of success for the organization.

Not only do the described paradigms show changes and diff erent approaches to

leadership, they also indicate the possibility and need for development of further ap-

proaches. Th is need is aroused by, fi rst of all, the changing environment and still increas-

ing diversity, not only this arising from cultural diff erences occurring in organizations

but arising also for other reasons.

Diversity management

In the contemporary world, cultural diversity becomes the main element of the

functioning of any organization. Organizational culture is a factor that is not defi ned

easily and clearly, but now, especially with regard to conditions of the functioning of

organizations, is of fundamental importance for a company’s success. Companies func-

tioning in the 21st century under the global economy are facing the problem of con-

tinuous changes and continuous adjustment of their organizational and management

system to markets on which they operate. Th ese changes are multi-dimensional, and

one of signifi cant factors of change is the organizational culture. Cultural diversity en-


countered during their functioning creates a new context for the development of a com-

pany. Diversity is a multi-dimensional notion that may refer to occurring similarities

and occurring diff erences between people, working in one organization.

Basic dimensions of diversity include the following factors: personality, sex, race,

nationality, age, religion and spirituality, system of values, as well as effi ciency and in-

effi ciency. Apart from basic dimensions, secondary dimensions can be distinguished

that are equally important, and that are, to a greater extent, susceptible to changes. Th e

secondary dimensions include socio-economic status, education, parental status, geo-

graphic environment (Fig. 1).

Source: S. Waszczuk, Postawy wobec różnorodności – uwarunkowania, próba typologii, imp-

likacje, [in:] Kulturowe uwarunkowania zarządzania kapitałem ludzkim, M.Juchnowicz (ed.),

Wolters Kluwer, Cracow 2009, p. 76.

Figure 1. Multi-dimensional notion of diversity

Paying attention to a growing commonness of cultural diversity, especially relating

to the functioning of an organization on the global market, it is important to asses this

phenomenon from the perspective of the management process.


Th e subject literature related to the problem of diversity in organizations contains

statements that properly used and managed diversity becomes one of the fundamental

factors ensuring that a company achieves competitive position and further develop-

ment. It is believed that diversifi ed human resources enable achieving competitive ad-

vantage through (K.A. Canas, H. Sondak, 2008):

1. Reduction in costs resulting from large rotation of employees, absence and dis-

crimination.

2. Acquisition of talents.

3. Encouragement of economic growth, thanks to seeking and entering into new market

segments, creativity and fl exibility of adjusting to the globalization’s requirements.

Cultural diversity brings highest benefi ts when it is managed eff ectively at each

level of an organization and when its advantages and defects are taken into considera-

tion. Attitudes towards diversity depend on the type of organization, the perceived im-

pact of diversity on an organization and diversity management strategy (tab. 2).

Table 2. Cultural diversity management strategies

Organization type

Perceived impact of diversity on an organization

Diversity management strategy

Probable eff ects of the applied strategy

Insular No impact: cultural diversity does

not have a noticeable impact on an

organization

Ignoring diff erences: Ignoring

impact of cultural diversity on an

organization

Problems: problems will appear,

but they will be attributed to

culture

Ethnocentric Adverse impact: cultural diver-

sity is the cause of organization’s

problems

Minimizing diff erences: minimiz-

ing sources and impact of cultural

diversity on an organization

Some problems and few benefi ts:

problems will be reduced with

growth in diversity, whereas the

possibility of its using will be

ignored or eliminated, problems

will be attributed to culture

Synergetic Possible adverse and positive im-

pact: diversity brings both benefi ts

and losses

Diff erence management: training

members of an organization in rec-

ognizing diff erences and using them

in gaining competitive advantage

Some problems and many benefi ts:

benefi ts will be recognized and

implemented, problems will appear

and will have to be dealt with

Source: S. Waszczuk, Postawy wobec różnorodności – uwarunkowania, próba typologii, implikacje,

[in:] Kulturowe uwarunkowania zarządzania kapitałem ludzkim, M.Juchnowicz (ed.), Wolters

Kluwer, Cracow 2009, p. 81.

Th e organization’s approach to diversity may be diverse and result, consequently, in

a specifi c capacity of the organizational system to integrate with particular aspects of diver-

sity and resulting changes (M. Juchnowicz, 2009). It is important to remember that these

changes generate in consequence the need for creating specifi c behaviours, which can posi-

tively or adversely aff ect the functioning of the system. Th ey can support or limit it , and it

depends with all confi dence on a specifi c case and conditions of the functioning of a given

organization. Organizations can be thus indiff erent to diversity, they can may be conserva-

tive or, fi nally, they can may be selective in respect of diversity or integrating (tab. 3).


Table 3. Typology of behaviours of an organization in respect of diversity

Organization’s approach towards diversity

Organization’s orientation Typical behaviour of the system

Ambivalent Neutral

“diversity is not determinant

for the development of an

organization”

– failure to notice the issue of diversity,

– needs and expectations do not aff ect behaviour of an organization,

– diversity is not identifi ed as a variable determining the dimen-

sion of organizational management.

Conservative Reserved

“diversity creates barriers and

restrictions for the develop-

ment of an organization”

– diversity is regarded as a factor destabilizing the system,

– technocratic attitudes are dominant,

– concentration on goals, rather than relations.

Selective Accepting

“diversity is the stimulus for

necessary changes and organi-

zational development”

– diversity as a factor aff ecting the organizational space

– importance of relations in the integration of groups,

– the activity of an organization in respect of the identifi cation

and selective absorption of diversity for increasing the quality of

adjustment of an organization to the encountered challenges.

Consolidating Integrating

“diversity is a source and deter-

minant of changes and devel-

opment of an organization”

– diversity as one of the key factors of success,

– reconfi guration of the system of values for implementation of

diversity,

– diversity as a fi xed element of the organizational culture.


Eff ective diversity management combined with strictly adjusted organizational and

management system and organizational culture should bring many positive benefi ts for

an organization. Among the mentioned benefi ts, special attention is paid to a wider ac-

cess to human resources, and thus to more knowledge, experience, growth in creativity

and innovation in a company. For companies that build their potential through continu-

ous changes this aspect is very important, especially with regard to customers and build-

ing positive corporate image. Diversity in a company leads also to cultural diff usion, and

thus to contribution of other signifi cant values, standards and rules. Th e need for cultural

adaptation creates necessary premises for improving operations of a company and results

in growing eff ectiveness and motivation among employees. Cultural diversity in organiza-

tions should always be treated as a source of potential successes in management.

Negative approach to diversity in a company may in turn lead to diffi culties in

agreeing on meanings as a result of errors in communication, lack of agreement, compe-

tition between employees, as well as to confl ict situations. Such situations lead in turn to

growth in uncertainty, which is caused by increased complexity and ambiguity of social

situations, which, in consequence, leads to increased fl uctuation of employees.

Organizations that represent positive approach to diversity management increase

among employees the awareness of diversity, and thanks to this approach create posi-

tive image of a company and gain competitive advantage in the environment. Th ey cre-

ate convenient conditions for developing and building a desired organizational culture,

which gives the employed a specifi ed level of safety and stabilization, and for the or-

ganization itself they create potential for development.


Organizational culture in culturally diverse companies

Organizational management consists in purposeful shaping of resource fl ow ac-

cording to strategic, structural and cultural rules. Cultural adaptation creates necessary

premises for improving operations of a company, where organizational culture connects

with other subsystems via members of an organizational. Th e organizational culture in-

volves the practiced values, adopted cultural standards and patterns (behaviour patterns)

functioning in a given organization. All these factors give to an organization identity,

exceptionality, uniqueness and distinguish it in the environment. Creating, developing

and maintaining adequate organizational culture is one of the most important tasks of

the management. Th e organizational culture includes behavioural, emotional and intel-

lectual elements of functioning of members of an organization and refl ects pursuit of

people to the full integration. It results in obtaining structural stability and patterns of

values, rituals and behaviours that bind a group in a coherent whole (G.C. Avery, 2009).

Th e organizational culture and its eff ect on the functioning of a company have

a tremendous importance, especially in the case where companies change the area of its

operations. At that time, various cooperation networks are created, and their cause are

diversity and dispersion of competencies in a company in the areas such as technology,

production, marketing or people. Consequently, a company encounters also cultural di-

versity and the need and necessity for cultural adaptation and change arise.

To fi nd an answer to the question which of the mentioned elements of the organi-

zational culture remained in a company, a question was asked, specifying fi ve most char-

acteristic elements. Th rough the question an attempt was made to determine whether

after expanding its operations and entering to foreign markets changes arose in a com-

pany related to organizational culture. Below is presented the detailed schedule of an-

swers to the above question (tab. 4).

Table 4. Elements of the organizational culture that remained in a company

Fully defi ned Partially defi ned Undefi ned

N % N % N %

Values 42 84 6 12 3 4

Standards 34 68 16 32 0 0

Symbols 13 26 15 30 22 44

Traditions 23 46 12 24 15 30

Rules of conduct 38 76 12 24 0 0

Source: M. Machaczka, Przywództwo w kontekście różnorodności kulturowej, [in:] Zarządzanie

zasobami ludzkimi w przedsiębiorstwach rozwijających działalność międzynarodową, report of

unpublished statute research, topic head: professor A. Pocztowski, Human Capital Manage-

ment Department, Cracow University of Economics, Cracow 2013, p. 128.


As it seems from the distribution of the answers, among the surveyed companies

the highest number have most strongly embedded and fully defi ned in the corporate

culture values (84% of the surveyed, only 4% pointed out to values as undefi ned) and

rules of conduct (76% of the respondents). Th en, the surveyed companies indicated

standards (68% fully defi ned, 32% partially defi ned) and traditions (46% of the surveyed

indicated as fully defi ned, and 30% as undefi ned at all). From among the elements that

are not defi ned and not visible in a company the respondents pointed out to symbols

(44% of the surveyed indicated them as undefi ned and 30% as partially defi ned).

In the question about in which of the mentioned areas the impact of the organiza-

tional culture in a company was the most visible, an attempt was made to fi nd an answer

to the question to what extent the adopted cultural profi le aff ects increasing integra-

tion among employees, and thus results in increasing the stability in the functioning of

a company, development and success on new markets. Below is presented the detailed

schedule of the answers to this question (tab. 5).

Table 5. Th e area where the impact of the organizational culture in a company

is the most visible

Strong impact Average impact Poor impact

N % N % N %

Coordination and integration of all actions taken on various

markets26 52 13 26 8 16

Developing international operations 25 50 16 32 6 12

Corporate image 37 74 8 16 5 10

Building relationships with customers, business partners 44 88 6 12 0 0

Employee identifi cation with a company 31 62 19 38 0 0

Interpersonal relationships 27 54 13 26 10 20

Ethical conduct 28 56 21 42 1 2

Organizational eff ectiveness 27 54 22 44 1 2

Source: M. Machaczka, Przywództwo w kontekście różnorodności kulturowej, [in:] Zarządzanie

zasobami ludzkimi w przedsiębiorstwach rozwijających działalność międzynarodową, report of

unpublished statute research, topic head: professor A. Pocztowski, Human Capital Manage-

ment Department, Cracow University of Economics, Cracow 2013, p. 129.

Th e distribution of the answers in the prevailing number of the surveyed com-

panies indicated that the organizational culture facilitates building relationships with

customers and business partners (88% of the surveyed indicated strong impact), then

improving corporate image (74%) and increasing identifi cation of employees with

a company, thanks to an expressly defi ned profi le of the organizational culture (62% of

the surveyed). Other indicated areas of strong impact of the organizational culture in-


cluded, for instance growth in ethical conduct in an organization (56%) and improving

interpersonal relations and improving organizational eff ectiveness (54%). However, it

was pointed out (by 20% of all of the surveyed) that the organizational culture does not

aff ect shaping interpersonal relations in an organization. Analysing further answers, it

seems that the organizational culture assists also coordination and integration of all ac-

tions taken on various markets (52% pointed to strong impact, 26% to average, 16% to

poor impact) and developing international operations of a company (50% of all of the

surveyed pointed to strong impact, 32% to average, and 12% to poor impact).

Conclusions

To obtain and strengthen their competitive position, companies are forced to func-

tion in a diverse social and cultural environment. Th e organizational culture is, un-

doubtedly, a recognizable element in management practice that has strong impact on

the functioning and organisational success of a company.

From the conducted surveys it can be concluded that it exerts the strongest im-

pact on shaping specifi c values, standards and rules of conduct in a company, which re-

main permanently in an organization. Most of the surveyed companies indicated that

the organizational culture facilitates building relationships with customers and business

partners, it also supports coordination and integration of all actions taken on various

markets and developing international operations of a company. Among the mentioned

further areas of the impact of the organizational culture, the companies indicated also

improving employee communication in a company and growth in ethical conduct of

people in an organization and increasing identifi cation of employees with a compa-

ny. An important factor emphasized by the surveyed companies was the fact that the

adopted and identifi ed cultural profi le aff ected increase in eff ectiveness of an organiza-

tion and improving corporate image, as a result of which the company had an increased

chance for achievement of designated goals and for success.

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ters Kluwer, Cracow 2009, p. 82.

Kutschker M., Schmid S., Internationales Management, Oldenbourg, Munchen 2011.

Report on the unpublished statutory research, Human resource management in companies develo-

ping international activities, Cracow University of Economics, Cracow 2013.

Schein E.H., Organizational Culture and Leadership, Jossey-Bass Pub., San Francisco,

1985.

Smircich L., Concepts of Culture and Organizational Analysis, Administrative Science

Quartely 28, 1983.


Chapter 3

Network Approach

RESOURCE STRATEGIES OF COMPANIES DURING THE CRISIS

P . M R , P .D.P . A S , P .D.W S E

Abstract

Th e article presents resource management models and tries to answer a ques-

tion which resource strategies are applied by the largest Polish companies

and whether these strategies were modifi ed in the period of macroeconomic

crisis. Th e research showed high competences of Polish companies with re-

gard to resource management, and proved that the macroeconomic crisis had

a positive impact on further improvement in resource management skills.

Introduction

Th e economic crisis of the recent years has revived in the scientifi c discussions the

issues of crisis in a company, restructuring and eff ective crisis prevention tools. Most of-

ten found approach to analyzing crisis phenomena is an exogenic perspective, typical of

the positioning school and planning school, namely research on the impact of changes

in the environment on potential of a company. A new insight at these issues deviates

from the application of resource-based approach that perceives environment mainly

from the inside, through the prism of resources and managers’ opportunities for action.

Th e purpose of the article is to fi nd the answer to the question which resource

strategies are applied by the largest Polish companies and whether these strategies were

modifi ed in the period of macroeconomic crisis. Th e article makes use of fi ndings of the

empirical research conducted in the period 2012-2014 on the group of companies from

the “List of 2000” under the research project NCN 2011/03/13/HSR/04922 entitled

“Determinants of the Polish companies’ resistance to the macroeconomic crisis”. Under

this project, CATI research was conducted on a representative sample of 2000 largest

Polish companies and case studies were developed concerning six groups of companies

from this list. Th e article presents an attempt to analyze the dimensions of resource

strategies and diagnose resource strategy models used by the surveyed companies.

Resource strategy models

Th e literature related to economics and management most often analyzes and as-

sesses resources of a company from the point of view of the level of their competitiveness,

namely the impact on competitive position of a company. G.Hamel and C.K. Prahalad

were defi ning in this manner resource excellence of a company – as the ability of resources

to ensure a sustainable competitive advantage of a company 1. Th ey formulated the prin-

ciples of rational resource management permitting start-up of resource lever: focusing

resources around goals, resource accumulation, resource supplementing and recovery. All

these principles are intended to ensure completeness of resources, their high quality and

strict adjustment to the strategy being implemented. Th e so understood resource manage-

ment system incorporates restrictions in their use in the case of changed nature of goals.

Th e concept of core competences shows that the process of building competitive advan-

tages is long lasting. For many years, the companies gather resources, learn how to use

them, improve their skills to obtain distinguishing capacity with regard to quality, costs,

service complexity. What matters is the ability to renew own advantages, maintain a large

distance to competitors and eff ective defense against copying skills. An element that is

more important than maintenance of the present competitive position is investing today

in these competitive advantages that will count in the future. Potential and resources of

a company must be large enough to fulfi ll requirements of the today’s and future compe-

tition. Th e life cycle of core competences is longer than the life cycle of technology and

product and therefore is a good basis for building a future business competitiveness.

In the main crisis management stream, a slightly diff erent role is attributed to re-

sources, this is only about building sustainable competitive advantage in relation to other

competitors, but about the capacity of resources to increase business resistance to crisis

and to survive in extremely unfavorable external conditions. Searching for the possibil-

ity of optimizing resource management to increase business resistance to crisis situations

may be associated with two actions. First, the approach to manage business develop-

ment can be changed. R. Krupski, for many years, used in the research departure from

analyzing the development strategy in the categories of markets and products, typical of

the planning and positioning school towards planning strategy in resource categories2.

He confi rmed in the research on Polish companies the fact of resigning from creating

1 G. Hamel i C.K. Prahalad, Przewaga konkurencyjna jutra, Business Press, Warszawa 2000, pp. 136 and following.

2 Elastyczność organizacji, ed. R. Krupski, Wyd. UE we Wrocławiu, Wrocław 2008.

182 Maria Romanowska, Agnieszka Sopińska

a long-term development strategy for managers’ focus on using occasions where they

start with owned resources and adjust to them actions stimulated by emergence of ex-

traordinary occasions. Th is resource situation was defi ned by G. Hamel and C. K. Prahal-

ad as “excessive ease” and contrasted it with the situation termed as “exertion”, in which

the ambitious company based on insuffi cient resources achieves the goals assumed by

launching the so-called “resource lever” 3. Notwithstanding the economic aspect of main-

taining excessive resources, in strategic terms, this approach may be an eff ective solution

of the case of using resources for optimization of development strategy, in particular in

the period of crisis. In the period of crisis, excessive resources are a kind of securing the

continuity of organizational duration – sale of resources in the critical moment may be

the last resort for companies threatened with fi nancial liquidity loss.

Th e second way of using resources to fi ght the crisis is a pressure not on increasing

resources, but on their better use. In crisis situations the most important are size and qual-

ity of resources and their fl exibility. Volume and quality of resources have a great force of

counteracting crises, are an important “anchor” permitting survival of the crisis and put

in a privileged situation large international corporations that, for a few dozen years, have

been accumulating capital and gathering experience. For young and developing compa-

nies there is an opportunity to catch up with leaders by a diff erent way of obtaining and

using resources. Th e source of resources available for all participants are external resourc-

es, in the possession of others economy participants – competitors, suppliers and buyers.

Competitive advantage may be created inside particular links of the business value chain

and, with their coordination based on internal resources, may also be obtained from other

links of the economic path, namely through access to external resources.

In crisis management, equally great signifi cance, as size and quality of resources,

is attributed to resource fl exibility. Th e directive of increasing resource fl exibility may

be understood as increasing participation in business resources of most universal cat-

egories, namely fi nancial and intangible categories, especially knowledge resources 4.

Another possibility of increasing resource fl exibility is given by a change in proportions

between own resources and external resources, to which the company has access or by

contracts with holders of necessary resources, or by buy out of participation in other

company. A large share of external resources in the resource portfolio results in low

cost of the change in resource profi le and ease in adjustment to the changes. Th e cost

of elimination of external resources results from the legal form of their management. If

access to resources involves contract of lending, lease, licenses, franchise, common use,

then removal of resources is possible after the contract expiry or termination. Higher

cost of resource liquidation involves access to resources obtained through a merger with

another company or its takeover as well as with establishment of a joint venture. How-

3 G.Hamel and C.K. Prahalad, Przewaga konkurencyjna jutra, …op.cit. , pp. 120 and following .4 A. Sopińska, Wiedza jako strategiczny zasób przedsiębiorstwa. Analiza i pomiar kapitału

intelektualnego przedsiębiorstw, Ofi cyna Wydawnicza SGH, Wyd. II, Warsaw 2010.

Resource Strategies of Companies during the Crisis 183

ever, owing to the fact that external resources are not strongly integrated with the busi-

ness organism, their removal is faster and generates smaller costs than elimination of

one’s own resources strongly integrated with the company.

Figure 1 presents four business resource strategy models. Depending on whether

in the company own or external resources prevail and depending on the level of resource

management skills, four types of corresponding behaviors of companies can be distin-

guished; they can be called resource strategy models.

Figure 1. Model business resource strategies

Source: M. Romanowska, Dostosowanie strategii przedsiębiorstwa do jego zasobów [in] Zarządzanie

strategiczne. Ujęcie zasobowe, ed. Rafał Krupski, WSZZiP w Wałbrzychu, Wałbrzych 2006.

Two bottom models describe the traditional manner of managing a company that

based its activities on own resources. Companies that rely on own resources vary in the

model by the resource management skill.

“Th e rich amateur” is a company that has own resources but is unable to manage

them, as a result of which unprotected and improperly managed resources with time

cease to be valuable, unique and erode. What is worse, they supply in an uncontrolled

way competitors or companies from neighboring links of the economic path without

proper compensation for their owner. Th is type of company bears all costs of mainte-

nance and increase in resources, but, towards deteriorating business competitive posi-


tion, this is not compensated by growing sales and profi ts. It will inevitably lead to crisis

and liquidation of a company or its acquisition. An example of this type situation may

be many Polish companies at the beginning of the transition period. For instance, in-

dustrial companies were maintaining not only full line of production machines, in spite

of the fact that they could buy cheaper necessary elements on the market, but also an

extensive social base, land, unnecessary buildings, and, at the same time, they were wast-

ing capital for purchase of e.g. shares in companies, they did not protect their brands,

employees and other valuable resources. As a result, they went bankrupt and were re-

placed on the market by companies created by former employees or subcontractors who

took over business resources.

“Th e lord of treasures” is a company that has valuable and strategic resources, and,

as a result of their competent management, transforms them into core competences.

Unique and valuable competences are the basis for development of strategy and compe-

tition. Th e key to the success is correct structure of resources, protection, fl exibility and

ability to multiplication, rather than sizes of resources. “Th e lord of treasures” imple-

ments most often the strategy of quality leader, which is permitted by extended research

and development facilities, unique technologies, valuable brands, human resources that

are well paid, motivated and developed. To use resources, these companies often execute

the strategy of industry diversifi cation or vertical integration. When they have capi-

tal, they increase their empire by buying other companies and their valuable resources.

Unique resources sold in the form of licenses are for these companies a source of im-

portant revenues and profi ts. Many great concerns from new technologies have chosen

and been implementing this strategy successfully. Th is class of companies includes e.g.

global pharmaceutical and computer companies, large banks and insurance companies.

A typical “lord of treasures” is Microsoft that derives profi ts from their licensed prod-

ucts generated using its own resources, mainly intellectual capital.

Two top strategy models in Figure 1 are companies that do not have own strategic

resources, that live on the operation of resources lent them by other economy participants.

“Th e errand” is a type of company that does not have strategic resources and does

not have resource management skill but compensates these shortages by the willingness

to cooperate with companies that have resources or skills of their organizing and “hook

up” to various kinds of alliances and team projects. Owing to a poor competitive and

tender position, this type of companies approve pursuing even hardly profi table tasks

and fi ll out niches that are too low or non-traction for partners. Th ey are accepted by

other network participants, owing to their submissiveness, fl exibility and low require-

ments. Th is strategy may not lead to market success and fi nancial successes but ensures

survival to the companies that did not have a chance and opportunities to gather valu-

able resources or learn management of someone else’s resources. An example of such

a strategy are companies operating in the franchise networks, minor subcontractors

or section distributors of large companies – typical minnows serving “the lords of the

treasures”, “the business architects” or preying upon “rich amateurs”.


“Th e business architect “ is a company without own large strategic resources, but,

with a highly developed skill to use and manage someone else’s resources. Th is type of

company can benefi t from resources both of competitors and, fi rst of all, resources of

their suppliers and buyers. Entering into alliances with competitors, especially tech-

nological, they can quickly and cheaply prepare and commercialize new solutions. By

means of commercial alliances by common marketing and distribution, they take over

prestige and reputation from the ally. In the case of alliances, the process of learning

from better partners is important for creation of future quality advantages. In the case

of international alliances, fl ow of knowledge from foreign partners to national partners

permits a faster reduction in the gap technological and increase in product competitive-

ness. A joint execution of one of phases of the chain value increases the scale of action

and creates the cost advantage of both alliance participants. For “the business architect”

an important source of competitive advantages is the access to resources of their cus-

tomers. Th rough establishing a durable cooperation in the form of contracts for com-

mon entering to new markets, common promoting brands, long-term supply contracts

have been creating any bases of company operations for many years. A priceless resource

they use thanks to cooperation with brand buyers is their reputation on the market. Th e

fact of cooperation with such buyers provides basis for building own reputation and

brand. Suppliers are an important source of acquisition of missing resources for “the

business architect”. Having high skills of negotiating contracts and creating business

connections, such a company may conduct cooperation with suppliers to obtain the cost

advantage or qualitative advantage over competitors who manage worse their suppliers.

Th e most perfect type of “business architect” strategy is a strategy of network corpora-

tion creation and management. It enables managing a large business organization al-

most solely on the basis of their skills of integration of various entities and management

of complex economic projects.

From the analysis of model resource strategies it seems that a source of perma-

nent business success is the ability of resource management, rather than having large

resources. Companies that manage well their resources transform own resources into

well-protected core competences with a profi le well adapted to the external situation

and business strategy. It is possible to succeed without resources (“business architect”),

but it is not possible to succeed without resource management skill, even if these re-

sources are abundant (“rich amateur”). Th e combination of these two advantages – own

resources and competent resource management skill, gives safety of action and high

level of competitiveness, at the same time.

Resource strategies of the largest Polish companies in the period of crisis in the light of empirical research

Characteristics of resource management in large Polish companies presented in

the article was created based on research implemented under a broader research pro-


ject concerning resources conditions of business resistance to crisis. Th e research sample

included 149 largest Polish companies, randomly selected from the “List of 2000 “of

the journal “Rzeczpospolita” published in 2012. Th e research was conducted using the

method of standardized questionnaire interviews CATI in cooperation with an external

company. Additionally, qualitative research was conducted in six groups of companies

the results of which was prepared in the form of case descriptions.

Th e purpose of the research was to identify two dimensions of the strategy applied

for identifi cation of resource strategy models presented in Figure 1 -resource manage-

ment skill and ownership of resources, and hence identifi cation which from among the

presented resource strategy models were most often used by the largest Polish com-

panies in the period of crisis. Th e description of the fi rst resource strategy dimension

– resource management skill-included fi ve parameters: type of resources forming the

resource potential, horizon of planning resources, scope of using them, scope of making

resources available and scope of protecting resources. Th e description of the second di-

mension – ownership of resources-included two parameters: main sources of acquiring

resources and dominant form of ownership.

Resource management skill

Th e fi rst parameter describing the level of key resource management skill was the

type of resources forming the resource potential of a given company. Th e research was

restricted to key resources, i.e. most signifi cant from the point of view of operations of

a given company. Key resources were divided into 14 categories, some of which were

tangible and some intangible. On the basis of the conducted research, it may be con-

cluded that the largest Polish companies build their resource potential, fi rst of all, on the

basis of resources characterized by a high level of fl exibility and universality in terms of

the possibility of their application and use. Th is condition is met by intangible resources

and funds, which were considered as key resources by the surveyed managers. Most of

the examined companies pointed out as key fi ve resource categories: employee knowl-

edge and skills, effi cient management system, reputation and image of the company,

relations with business partners, and funds. Average assessment of the importance of

these resources on the scale 1-5 was more than 4. Identifi ed in the surveyed companies

categories of key resources constitute the basis for forming intellectual capital and fi -

nancial capital of companies. On the other hand, the respondents recognized tangible

resources as least signifi cant, in particular: research infrastructure, means of transport,

access to raw materials, machines and devices, buildings and structures, and geographi-

cal location of operations.

Th e second parameter for identifi cation of resource management excellence level

was the horizon of planning resources. From the research CATI it results that the larg-

est Polish companies approach the issue of planning their resource potential in a very

intentional and responsible way . Only 4 percent of the respondents admitted that in

their company the way of developing resource potential was not planned consciously. It


is worth pointing out that most of the surveyed companies has been applying a long-

term horizon of planning resources (75.2 percent). Only 20.8 percent of the companies

plan their resources in a shorter horizon, of which 17.4 percent in the annual horizon

and 3.4 percent in the several-month horizon,

Th e same survey indicates that the scope of utilization of resources was incomplete

in the largest Polish companies. Only 32.2 percent of the surveyed admitted full use of

their key resources, while two thirds of the surveyed (65.1 percent) claimed that there

were still reserves in using part of key resources. However, this situation should not be

assessed negatively, since it resulted from a conscious conduct consisting in building

some reserves necessary to use emerging occasions in the environment rather than from

the need to reduce actions as a result of a very bad economic situation. Th e rationality

of such a conduct may be proved by the fact that companies that have some reserves in

the use of its resources were characterized by a higher, as compared to others, resistance

to the macroeconomic crisis (the surveys quoted in the article enabled demonstrating

a statistically signifi cant relation between the presence of some reserves in the use of

resources and the level of resistance to the crisis).

Another parameter that measures resource management excellence was the scope of

sharing resources. On the basis of the conducted research, it may be concluded that the

largest Polish companies manifest an exceptional “reluctance” of making their key resourc-

es available. More than 70 percent of the respondents answered to the question whether

they were sharing their key resources, “defi nitely not” or “rather not”. Only 18.1 percent of

all of the surveyed companies was sharing their resources. Additionally, it may be said that

the largest Polish companies, if they choose to make available their resources, they make

it, fi rst of all, against payment, by selecting one of resource sales forms (ordinary sales con-

tract, sales of patents, sales of licenses or sales in the form of franchise). Diff erent forms of

sales resources were pointed out by as much as 58.6 percent of the respondents, whereas

unpaid availability of key resources was indicated only by 27.6 percent of the respond-

ents, lease -13.8 percent Th e main recipients of made available key resources are fi rst of

all consignee (36.2 percent of indications) and other contractors (27.7 percent of indica-

tions). Th e largest Polish companies are not rather interested in sharing their key resources

with competitors from the industry (only 17 percent of indications), as well as suppliers

(19.1 percent of indications). A great aversion to sharing resources may be partially ex-

plained with their high self-evaluation by companies. As much as 62.5 percent of the sur-

veyed evaluated the level of their key resources as higher in relation to other companies

from the industry, and only 3.4 percent as lower in relation to other companies from the

industry. For 34.2 percent of the surveyed, the level of key resources of their companies is

at a comparable level in relation to other companies from the industry.

Th e last parameter examined under the diagnosis of resource management excel-

lence was the scope of protecting resources. On the basis of the obtained results, it may

be stated that the largest Polish companies are aware of the necessity to protect their


key resources. Only 3.4 percent of the respondents admitted that in their companies

none of key resources were protected and subsequent 10.7 percent admitted that pro-

tection covered only few resources. Th e scope of protecting resources in the surveyed

entities was broad, since it included: all key resources (27.5 percent) or their majority

(58.4 percent).

Presented above description of particular parameters makes it possible to formu-

late a conclusion that the largest Polish companies showed in the period of crisis a rela-

tively high level of their key resource management excellence. Th is is proven by:

• building resource potential based on resources indicating the largest of fl exibility

and universality in terms of application and use;

• planning resources consciously in the long run;

• having a certain reserve, with regard to use of their key resources, enabling re-

sponding quickly to occasions emerging in the environment;

• attaching large attention to protection of own resources;

• partially justifi ed aversion to making own resources available, arising from their

high evaluation as compared to competitors.

Ownership of resources

Th e second dimension that describes the resource management strategy is owner-

ship of resources. For the description of this dimension, identifi cation of two parameters

was used: sources of acquiring resources and prevailing ownership form of resources.

Based on the conducted survey, it may be said that the largest Polish companies

acquire resources to an equal extent from internal and external sources. Th e use of both

sources to an equal extent was pointed out by 50.3 percent of the companies, whereas

acquisition of resources only from internal sources was pointed out by 33.5 percent of

the respondents, and acquisition of resources only from environment was pointed out

only by 16.1 percent.

Th e identifi cation of the second parameter – prevailing form of ownership of key

resources, permits a better specifi cation which resource management strategy is most

often used by the largest Polish companies. From the research it can be concluded that

companies clearly prefer having key resources, rather than access to resources. Th e sur-

veyed entities try, at any price, to have full rights to dispose of key resources. As much as

86.6 percent of the respondents pointed to “legal ownership of a company”, as prevail-

ing in their companies form of ownership of key resources. From among the remain-

ing examined entities, most often mentioned form of ownership of key resources were:

lease. Defi nitely least common form of ownership of key resources in the examined

companies constituted: franchise and free use of resources. Opting for having key re-

sources with simultaneous attitude of companies to their parallel acquisition both from

interior and from the environment permits an assumption that the examined compa-

nies use interchangeably both strategies: “business architect” and “ lord of treasures”.


To sum up, the conducted quantitative research on a sample of 149 largest Polish

companies enabled stating that these enterprises are characterized by a high level of re-

source management excellence and tendency to having resources, both created inside and

coming from the outside. From the quantitative research CATI it resulted that the per-

cent of entities that changed the resource management method as a result of the crisis was

small. Only 39.1 percent of respondents admitted that in their companies throughout the

last few years the way of key resource management was changed. Lack of changes may

be explained partially by the opinion of the respondents that economic crisis is not the

main determinant of resource management. Only 43.5 percent of the surveyed regard-

ed the level of crisis intensity as a factor with the greatest impact on resource manage-

ment in their companies. According to the respondents, defi nitely more important im-

pact on the resource management method was exerted by such factors as: trade conditions

(76 percent of indications), type of implemented strategy (63 percent) as well as level of

innovation (47.1 percent).

Referring to resource strategy models presented in Figure 1, it can be concluded

that the largest Polish companies situationally choose resource management strategy “

“the lord of treasures” or “the business architect”.

Quality research consisting in a detailed analysis of the documentation and con-

ducted interviews with members of management of six group of companies selected in-

tentionally from among the companies from the “List of 2000 “of the journal “Rzeczpo-

spolita” permit a more detailed description of resource strategies of companies as well as

presentation of changes in resource management in the period of macroeconomic crisis.

On the basis of qualitative research it can be concluded that most analyzed group

of companies skillfully managed their key resources. Depending on the form of owner-

ship of a given category of resources, groups of companies applied alternatively one of

two strategies: the strategy “business architect” or the strategy “lord of treasures”. Addi-

tionally, a detailed analysis of behaviors of particular groups of companies enabled no-

ticing a certain general relation between the type of used resource management strategy

and the category of resources considered as key. Th e strategy of “business architect” was

applied, above all, in relation to intangible resources and funds, while in relation to in-

tangible resources, the strategy “lord of treasures” was applied more often.

More detailed information on scale and nature of changes in resource management

as a result of the crisis was provided by quality research. Table 1 presents a list of actions

undertaken by the analyzed groups of companies in the sphere of resource management

as a result of the crisis.


Table 1. Actions of companies in the sphere of resource management taken

as a result of the crisis

Name of the group of companies Actions undertaken

Marvipol • Limited acquisition of some categories of resources, fi rst of all new land.

• Reduction in the costs of acquisition of resources as a result of renegotiations of contracts with subcon-

tractors – design offi ces and general contractors – and by seeking cheaper subcontractors.

• Reduction in some resources for greater use of business partners’ resources: the number of the employed

and tangible fi xed assets.

• Increase in eff ectiveness of use of possessed resources – by e.g. extension of services provided by car

washes and car showrooms.

Budimex • Improvement in the structure of held human resources.

• Development of relationships with new categories of buyers.

• Closer relationships with the previous suppliers and support in the form of loan.

• Limited acquisition of some categories of resources, fi rst of all new land.

• Reduction in the costs of acquisition of resources as a result of renegotiations of contracts with subcon-

tractors and by seeking cheaper subcontractors.

• Increased eff ectiveness of use of possessed resources by seeking their new applications and extension of

the services provided.

• Purchase of new technologies necessary for the conduct of extended operations.

Ciech • Reduction in possessed resources as a result of restricted diversifi cation and sale of some subsidiaries.

• Focus on development of resources necessary in the sodium segment (technology, infrastructure, access

to raw materials).

• Reduction in the costs of acquisition of resources by applying consolidated purchases.

• Increase in power independence and self-suffi ciency.

• Increase in eff ectiveness of use of possessed resources.

Redan • Optimization of own distribution network.

• Reduction in the costs of acquisition of resources.

• Increase in the use of partners’ external resources.

Orbis • Adjustment of the resource profi le to a new development strategy and narrowed scope of activities.

• Restriction in tangible assets.

• Increase in the use of partners’ external resources.

• Reduction in employment ( voluntary redundancy plan).

Impexmetal • Adjustment of the resource profi le to a new business model (production of highly processed metal products).

• Restriction in ineff ective tangible assets.

• Development of new technologies.

• Increase in eff ectiveness of resources use.

• Reduction in employment.

Source: A. Sopińska, Impact of the crisis on resources management, /in/ JMFS “Journal of Man-

agement and Financial Sciences”, Volume VII, Issue 18 (December 2014), Warsaw School of

Economics, Collegium of Management and Finance, Warszawa 2014, p. 30.

Presented in Table 1 actions in the sphere of resource management can be grouped in

several categories. Th e fi rst of them is formed by actions consisting in broadly understood

rationalization and growth in eff ectiveness of the possessed resource potential in particu-

lar resource categories. Th e second – actions aimed at reduction in the resource acquisition

costs. Subsequent groups are actions consisting in development of resources characterized


by a great fl exibility (intangible resources and funds), creation of an universal core of re-

sources regardless of industries of activities, limitation in unnecessary resources (particu-

larly tangible resources) and growth in the use of partners‘ external resources.

Quality research made it possible to observe whether and to which extent resource

management strategies changed in the surveyed groups of companies. In the case of

three groups of companies (Orbis, Redan, Marvipol), the crisis caused a clear shift of

the gravity center in the implemented resource management strategy from the strategy

of „ „the lord of treasures“ towards the strategy of „the business architect“. Th is change

was caused by, fi rst of all, the fact that these groups of companies use to a greater ex-

tent resources of their business partners and elimination of a large part of own assets.

An absolutely diff erent change in fund management resources can be noted in the Im-

pexmetal Group of Companies. Th is group departed from the strategy of „the business

architect“ for the strategy of „ „the lord of treasures“. Other two groups of companies

(Budimex and Ciech) have not changed their resource management strategy signifi -

cantly because of the crisis. Budimex keeps on applying simultaneously, depending on

the type of resources, two strategies: the strategy of „ lord of treasures“ and the strategy

of „business architect“. On the contrary, the dominant resource management strategy

in the Ciech group is still the strategy of „lord of treasures“. Despite various extent and

depth of changes in most groups of companies, changes in the area of resources may be

assessed as eff ective. Even if initial actions were chaotic to some extent (Redan), they

were adjusted in a correct manner quite rapidly. As a result, taken activities in the area

of resources made it possible to some group of companies to: avoid bankruptcy (Ciech,

Redan), strengthen fi nancial position (Orbis, Impexmetal) and even improve competi-

tiveness (Marvipol, Budimex, Impexmetal, Orbis). And so, not only did actions under-

taken by the Marvipol Group of Companies enable it to survive recession in the con-

struction sector; they even enabled it to improve their previous position on the Warsaw

market. Th e Budimex Group of Companies, which signifi cantly extended the scope of

the implemented projects, dealt with the situation in a similar way. On the other hand,

Impexmetal, from a manufacturer of metals became a manufacturer of more processed

and more profi table metal products. Also a competitive position of hotel chain GK Or-

bis got strengthened on the Polish market.

Conclusions

Empirical tests presented in the article of the largest Polish companies have given

a quite clear answer to the question: which resource strategies are used by the largest

Polish companies and were these strategies modifi ed in the period of macroeconomic

crisis. In general, it can be stated that Polish companies have a large resource manage-

ment skills. Correctly, as key, they treat resources with high fl exibility and the ability

to create competitive advantages, they knowingly plan resources in the long run, main-

tain rational reserves of their key resources, pay great attention to the protection of its


resources. Testing the tendency of companies to use external resources did not give an

unambiguous answer. From the research it can be concluded that companies expressly

prefer having key resources, rather than access to resources, but where it is profi table

they enter into contractual linkages with other business entities and are able to act ef-

fectively in the network using their relational competences and fi nancial resources.

Two resource strategies most often chosen by great companies: strategies “the lord

of treasures” and strategy “business architect”. Th e research showed that the impact of

crisis on the change in the resource management method was moderate and largely de-

pendent on the previously adopted resource strategy. Modifi cations of the resource man-

agement method in the period of crisis consisted in, fi rst of all, further growth in the

share of intangible resources in the resource structure , extending horizon for planning

key resources, growing scope of using key resources by companies and growing share of

acquisition of resources from the environment. A consequence of this latter tendency

(greater focus on the use of partners’ external resources) was a growing importance of re-

source management strategy, termed as “business architect”. It may be said that the crisis

did not induce the analyzed companies to radical change in resource strategies, but be-

came the stimulus for further improvement in key resource management.

Bibliography

Elastyczność organizacji, ed. R. Krupski, Wyd. UE we Wrocławiu, Wrocław 2008.

Hamel G., Prahalad C.K., Przewaga konkurencyjna jutra, Business Press, Warsaw 2000.

Report on implementation of the research project NCN 2011/03/13/HSR/04922 en-

titled “Determinants of resistance of the Polish enterprises to the macroeconomic crisis”,

project manager: M. Romanowska, main contractors: A. Sopińska, P. Wachowiak,

Warsaw 2015.

Romanowska M., Dostosowanie strategii przedsiębiorstwa do jego zasobów [in:] Zarzą-

dzanie strategiczne. Ujęcie zasobowe, ed. Rafał Krupski, WSZZiP w Wałbrzychu,

Wałbrzych 2006.

Sopińska A., Impact of the crisis on resources management, /in/ JMFS “Journal of Mana-

gement and Financial Sciences”, Volume VII, Issue 18 (December 2014), Warsaw

School of Economics, Collegium of Management and Finance, Warsaw 2014.

Sopińska A., Wiedza jako strategiczny zasób przedsiębiorstwa. Analiza i pomiar kapitału

intelektualnego przedsiębiorstw, Ofi cyna Wydawnicza SGH, Wyd. II, Warsaw 2010.


GOOD PRACTICE IN PROJECT MANAGEMENT – RESEARCH RESULTS

P . M T , P .D.M J , P .D.

W S E

Introduction

Th e collapse of the post-war political and economic system restored freedom to the

nations of Poland and Georgia, created new possibilities but also new development chal-

lenges. In order to meet them, it is necessary to implement a number of complex and ex-

pensive projects in all fi elds: in politics, economy, administration, science, education, culture,

defense etc. Projects are the primary instrument of development. Projects are implemented

on the international, national, regional, sectoral and institutional level; they include various

fi elds of human activity, various cultures, involve various organizations, combine special-

ists from various professional specializations and with various professional experience and

in life and thus projects also serve an important integrating, economic and social function.

Th e signifi cance of projects in the contemporary world is constantly growing and

it is a permanent tendency. Th is results both from the need as well as from potential

benefits. Th e need for an increasingly wider application of projects has its source in glo-

balization, in technological, economic and social progress generating complex and vari-

ous problems the solution of which requires the application of a project approach. Ac-

cording to opinions from international management personnel researched many times,

the signifi cance of project management for organizations managed by them is assessed

as very high and high in 46.7%, high in 36.7%, moderate in 16.6%, small and without

signifi cance in 0% 1.

Th e high signifi cance of projects for organizations and related substantial benefi ts

is accompanied by exceptional risk. Numerous projects end with success but many of

them end in failure. As is shown by research, complete success, namely the assumed re-

1 According to Strascheg Institute 2012

sult with the required quality, achieved on time and within the budget – applies only to

39%, incomplete success – to 43% and failure – to 18% of projects2

In order to eff ectively implement projects, it is necessary to apply professional

knowledge in project management in all phases and stages – initiating and defi ning

projects, planning and organizing their execution, project implementation, control and

coordination as well as closing projects – as well as in all its cross-cutting themes.

Good practice in project management

Professional knowledge in project management has numerous sources. Th ey in-

clude, among others, standards, methodologies and concepts of project management

developed and popularized by global associations of project managers or consulting

companies and academic centers. An organization implementing specifi ed solutions in

project management “learns” to use methods of action which proved eff ective in various

situations in the past. Th e observation of economic practice shows that this is an eff ec-

tive method to improve an organization’s activities; instead of searching for the best so-

lutions on one’s own, one may use the experience of other participants of economic life.

Subsequent experience increases knowledge in a given fi eld.

Methods of action generated on the basis of generalized solutions and practical

experience are defi ned as good practice. Good practice are practically eff ective solutions,

based on existing concepts, consistent with strategic objectives, recognized values and

standards, maintaining value in the long perspective. Th eir usefulness results both from

their practical verifi cation as well as from higher fl exibility as compared to other, more

formalized, methods of action.

Th e development of an organization based on the application of good practice fos-

ters the implementation of the philosophy of continuous improvement. For this reason,

it is advisable to examine good practice to prepare recommendations for their applica-

tion. Th e results of such research are very important both in practice and in theory. Th ey

make it possible to defi ne the factors for success and failures of projects and use this

knowledge to increase the eff ectiveness of project management.

Good practice is commonly used in project management and are present in two forms:

• comprehensive practice in the form of; benchmark schemes for the course of pro-

jects, models of project maturity and framework lists of competences,

• fragmentary benchmark practice in project management.

Comprehensive benchmark practice is described in the vast literature on the sub-

ject and as the result of our previous research.3 Th e results of research on fragmentary

good practice in project management are presented below.

2 Chaos Manifesto, Th e Standish Group 20123 Zarzadzanie wiedzą w projektach. Metodyki, modele kompetencji i modele dojrzałości, collective work

edited by M. Trocki, Ofi cyna Wydawnicza SGH, Warsaw 2011, Metodyki zarządzania projektami,

collective work, Wydawnictwo Bizarre, Warsaw 2011

196 Mateusz Juchniewicz, Michał Trocki

Particular signifi cance characterizes the so-called best current practice, namely

benchmark solutions verifi ed in various environments, with regard to various stake-

holders. Th e most important project management methodologies were reviewed and

analyzed in order to determine the set of such practices, namely: PMBoK Project Man-

agement Body of Knowledge, PRINCE2 Projects in Controlled Environments and PCM

Project Cycle Management as well as models of project maturity: PMMM Th e Kerzner

Project Management Maturity Model, CMMI Capability Maturity Model Integration and

OPM3 Organizational Project Management Maturity Model.

Good practice included in the set was assigned to the following eight areas in pro-

ject management: management of scope, time, costs, human resources, communication,

risk, supply, project integrity. Th e set of best current practice in project management

presented below has a universal value because it was based on project experience gath-

ered and verifi ed in the transnational and transtrade scale (Tables Nos 1-8).

Table No 1: List of best current practice for project scope management

Practice

The requirements of project stakeholders (open and hidden) are documented in the form of a stakeholder analysis

The scope of the project (time, budget, objectives) is defi ned and approved

The tolerances for project product parameters are determined and documented

The project team as well as the client regularly monitor the requirements for project products

The list of documents which will be drawn up during the project’s implementation has been drawn up

The requirements of stakeholders that are beyond the project’s scope are documented and accepted

Any restrictions for the project are defi ned and documented (time, budget, human resources, materials etc.)

The structure of tasks (WBS) or products (PBS) is created and accepted by the project team

Changes to the project’s base schedule are introduced according to the defi ned process of implementing and controlling changes to

the project’s plan

The project team and key stakeholders are informed about changes introduced to the base schedule


Table No 2: List of best current practice for project time management

Practice

The list of activities to be performed is drawn up on the basis of WBS or PBS

For each partial activity or product, its demand for resources is defi ned

For each partial activity or product, its duration (time of execution) is defi ned

The diagram of consequences for activities or products is drawn up on the basis of the list of activities to be performed

The list of activities to be performed in the project and the estimated use of resources are used to generate the project’s base schedule

The schedules are adjusted to the organization’s capacities with regard to resources and people

The progress of works in the project is compared with the schedule

The project’s schedule is updated on the basis of regular reports from the progress of works.

Good Practice in Project Management – Research Results 197

Practice

Milestones in the project have been defi ned

Charts of the use of resources are created for the project


Table No 3: List of best current practice for project cost management

Practice

Persons responsible for monitoring the implementation of the project’s budget are appointed for each project

For each partial activity or product, its cost is defi ned

Financial procedures and processes in the project are defi ned, documented and followed

The project’s budget is defi ned on the basis of demand for each partial activity or product

Financial provisions for the packages of tasks or products are defi ned

Actual costs are monitored and compared with planned costs

The project’s budget and the budget for the packages of tasks is updated

The project’s budget is drawn up for each project according to an established, uniform pattern

Any factors that may aff ect the value of the project’s budget are monitored

The process of the project’s fi nancial settlement is defi ned


Table No 4: List of best current practice for project human resources management

Practice

The documentation for each role in the project team has been drawn up – requirements, competences, accountability and necessary

resources

The team members are selected for previously described positions on the basis of the actual demand

The number of people involved in the execution of the task is suitable to its size and complexity

There is a clear, public remuneration system for the project team’s members

The project manager is appointed for each project – a person responsible for the project’s implementation before the management

and the client

There is an organizational unit responsible for human resources management as part of the project portfolio – its task is to ensure a

uniform load for employees in projects

The team manager is responsible for the shape of the project team

The organization has a training system in project management, available for members of project teams

Periodical assessments, progress assessments, awards and penalties are subject to documented procedures

The project manager plays a primary role in relation to line/functional managers



Table No 5: List of best current practice for project communication

Practice

The stakeholders were analyzed – diagnosis, determination of open/hidden objectives, strengths and weaknesses, the strength and

direction of impact

The following is defi ned for each stakeholder: what information will be necessary to them, how often and in what form

The basic channels for information exchange as part of the project team are defi ned

The person (group) responsible for communication with the project environment – spokesperson the project, is defi ned

The principles of conducting team meetings are defi ned – time, place, form, type of documentation drawn up as part of the meeting

The reporting procedures for the progress of works are determined

The principles of communication between the manager and other members of the project team are clearly defi ned – form, time,

place, method of communication

The stakeholders are regularly informed about the progress of works

The project manager has information which requirements of stakeholders are key for them, which are less important and which

they would be willing to give up

Each project team member is familiar with the project’s stakeholders


Table No 6: List of best current practice for project risk management

Theme

The project team analyzes risk in the project

The risk is identifi ed and assessed before the project commences

Risks are divided into appropriate categories depending on the source of occurrence

Two parameters are defi ned for each risk – likelihood and potential impact on the project’s parameters

The project team analyzes sensitivity for each risk

Risk in the project are divided into categories related to the date of their occurrence

The project has provisions for risk management – at least time-related and fi nancial

The risk management strategy is defi ned for each risk

Risks are continuously monitored – known risks are tracked and data about them is constantly updated

Changes in the project’s environment are analyzed in terms of the recognition of new risks


Table No 7: List of best current practice for project supply management

Practice

The document specifying the project’s demand for resources (or particular project stages) has been drawn up – products, raw mate-

rials, information, services etc.

There are patterns of documentation necessary when concluding agreements with suppliers

Logistic themes (deadlines, size of deliveries etc.) are included in the schedules

A unit responsible for agreement management is appointed for each project

“Make-or-buy” decisions are made for key resources in the design before the project commences


Practice

Supply management processes are established and documented

Each project team member is familiar with the list of sources for the acquisition of any resources for the project

Key suppliers are incorporated into the project as support or as team members

The demand for resources is continuously monitored – information from the monitoring is used when updating the terms of deliveries

A special unit or person conducts current quality controls of supplies and compliance with the requirements


Table No 8: List of best current practice for project integrity management

Practice

The offi cial requirements and expectations of the project’s stakeholders are clearly defi ned

The project management plan is drawn up – it is a document specifying the mode of implementing, controlling, closing and moni-

toring the project

There is a formal project closing process (its course, form, fi nal products are defi ned)

There is a uniform method for drawing up project plans

The criteria for measuring progress in the project are defi ned

The project card, permitting the manager to involve the organization’s resources, is used as the offi cial document starting the project

The company has a defi ned change management process which is used to coordinate the reporting and introduction of changes

regarding costs, deadlines, quality and employment

Periodical forecasts for the project are drawn up (taking into account its previous course) that enable the monitoring of changes

introduced into the project as well as updating plans

The principles of comparison of achieved results with the assumed results are defi ned (deadline, form, persons responsible)

After the project ends, project experience is reviewed. The experience is used in subsequent projects and is used to improve project

management methods in the company


Th e set of best current practice obtained in this manner was examined from the

point of view of their application in Polish organizations and projects.

Characteristics of the research sample and the research method

Th e research was conducted in the form of a survey among project managers and

participants employed in organizations conducting their activities in Poland. 400 surveys

were distributed and 383 of them were correctly fi lled out. Th e selection of the sample was

intentional, fi rst of all due to the lack of the possibility to select a random sample. Th e re-

spondents were constantly in direct contact with the person conducting the research, due

to the complexity of the tool and the need to explain particular expressions.

Th e research was executed according to the following scheme:

• analysis of project management methodologies and models of project maturity

• selection of best current practice for research


• verifi cation of research survey – consultations with practitioners of project management

• organization of meetings with representatives of surveyed organizations

• presentation of themes covered by the research to the meeting’s participants

• participants fi ll out the survey

• collecting results

• statistical analysis

• formulating conclusions

Th e research sample was characterized by diversity in terms of types of implement-

ed projects (Table No 9).

Table No 9: Share of particular types of projects in the examined sample

Types of projects Quantity Share in %

IT 95 24.80

Marketing 20 5.22

Sales 23 6.01

Development of new products and services 35 9.14

Social 16 4.18

Organizational 23 6.01

Scientifi c-research 17 4.44

Education 13 3.39

Industrial / production 29 7.57

Building 63 16.45

Infrastructure 23 6.01

Other 26 6.79


Th e diversity also related to the dominating type of the organization’s activities cov-

ered by the research. Projects implemented in fi elds in which there were less than ten

respondents were excluded in order to ensure a high credibility of research results. Th ese

projects were added to the group of other projects. Th e structure of organizations covered

by the research according to their dominating activities is presented below (Table No 10).

Table No 10: Dominating activities of organizations covered by the research

Code Dominating activities Number of projects Share in %

1 Central administration 20 5.2

2 Capacity building 37 9.7

3 Infrastructure building 31 8.1

4 Consulting 13 3.4

5 Finance and banking 35 9.1


Code Dominating activities Number of projects Share in %

6 IT – software 29 7.6

7 IT – hardware 11 2.9

8 Media 11 2.9

9 General sales and retail 11 2.9

10 Health care 11 2.9

11 Power engineering 13 3.4

12 Mass production 30 7.8

13 Unique production 14 3.7

14 Telecommunications services 37 9.7

15 Other – collective 80 20.9

Total 383 100.0


Th e research survey included eight areas in project management as part of ten best

current practices were mentioned determined during preliminary research on the ba-

sis of the analysis of recognized methodologies in project management. Th ese practices

were attributed values by the respondents determining their intensity of application ac-

cording to the following scale: 0 – do not know, 1 – never, 2 – sometimes (for approx.

25% of projects), 3 – usually (for approx. 50% of projects), 4 – often – (for approx. 75%

of projects) and 5 – always – (for each project).

Discussion of research results

Th e obtained results provide an image of practices applied in particular areas of

project management in organizations in Poland (Figure No 1). Th e total assessment of

the intensity of the application of best current practice in the examined organizations

is 2.68, namely between “sometimes” and “usually”. Th is level indicates the low level of

knowledge and skills in project management. Th e examined organizations most often

use best current practice in project cost management (3.04), project scope management

(2.89) and management of project course in time (2.83), namely in areas meeting the

basic requirements and restrictions, the so-called “iron triangle of project management”

Th is is understandable because practice from these areas have been developed for a long

time and applied as long as possible and have rich supporting instruments.

Th e use of best current practice from project communication management

(2.76), integrity management (2.64), supply management (2.63) and personnel man-

agement (2.62) has been determined at the average level indicating their occasional

application. Th e intensity of using best current practice from risk management has

been assessed at the lowest level (2.09). Project risk management is a new theme re-

quiring professional knowledge that has not yet been absorbed to a suffi cient extent




Figure No 1: Intensity of using good practice in project management in particular

areas of project management

Figure No 2: Most often used best current practice in project management


Figure No 3: Least frequent used best current practice in project management


by the participants of projects. Th e awareness of the signifi cance of this theme for

project management is poor also among the management personnel in organizations

implementing projects. Th e research results in the fi eld of risk management indicate

the fact that the lack of skills in this respect may be one of the reasons for failures

in projects.


Signifi cant research results relate to the assessment of using particular best current

practice. Figure No 2 presents the ten most often used practices in projects implement-

ed in organizations operating in Poland.

Th e set of the most often used best current practice in project management indi-

cates the fact that Polish organizations are characterized by elementary skills in project

management, necessary to implement projects. However, this does not ensure the suc-

cess of a given project to a suffi cient extent.

Figure No 3 presents the ten least frequent practices applied in projects imple-

mented in organizations operating in Poland.

Th e results presented above demonstrate the fact that four among ten of the least

frequently used practices apply to risk management. Th is is confi rmed by previous ob-

servations on the low level of skills in this fi eld in Polish organizations implementing

projects. A similar conclusion applies to practices related to people management in

projects.

Conclusions

Very high signifi cance of projects in all spheres of human activity, related excep-

tional outlays and risks result in the need for their professional management. Th ere

are numerous methods to ensure such project management and the most important of

them include the use of best current practice. It is important to constantly collect, ana-

lyze and verify them, both from the point of view of practice and theory. Th e research

results of best current practice in project management have been presented in this arti-

cle. Th ey are of universal value because they are based on universal – transnational and

transsectoral – generalized experience. Th e knowledge of best current practice is a pre-

requisite but not a condition suffi cient for professional project management. It is im-

portant to use these practices. Th e research on the use of best current practice in projects

implemented in organizations operating in Poland was the subject matter of additional

research. It indicated a signifi cant defi cit of professional knowledge related to project

management in Polish organizations. Th is is the confi rmation of the results of previous

research of project maturity in these organizations4 Th e analysis of the degree of use of

particular best current practice makes it possible to identify the most important defi cits

of professional project knowledge in the examined organizations. Th is is not only of

cognitive but also of practical signifi cance because various actions improving the level

of project maturity may be taken. Th e research results may also be used by educational

institutions to plan the programs of training courses in project management.

4 Juchniewicz M., Dojrzałość projektowa organizacji, Wydawnictwo Bizarre, Warsaw 2009


Bibliography

A Guide to the Project Management Body of Knowledge (PMBoK Guide), Project Mana-

gement Institute, 2013

Bogan, C.E. and English, M.J., Benchmarking for Best Practices: Winning Th rough Inno-

vative Adaptation, McGraw-Hill, New York 1994

Charvat J., Project Management Methodologies, J. Wiley, Hoboken 2003

Capability Maturity Model Integration CMMI for Development, Software Engineering

Institute 2006

Juchniewicz M., Dojrzałość projektowa organizacji, Wydawnictwo Bizarre, Warsaw 2009

Juchniewicz M., Metelski W., Trójkąt ograniczeń projektowych. Wyniki badań, Ofi cyna

Wydawnicza SGH, Warsaw 2015

Kerzner H., Strategic Planning for Project Management Using a Project Management Ma-

turity Model, J. Wiley and Sons 2001

Managing Successful Projects with PRINCE2, OCG Offi ce of Government Commerce, 2009

Meredith J. R., Mantel S. J., Project Management – A Managerial Approach, John Wiley

and Sons, New York 2003

Nowoczesne zarządzanie projektami, collective work edited by M. Trocki, PWE, Warsaw

2012

Metodyki zarządzania projektami, collective work, Bizarre, Warsaw 2011

Organizational Project Management Maturity Model OPM3, Project Management In-

stitute,

Project Cycle Management PCM Guidelines, European Commission 2004

Zarzadzanie wiedzą w projektach. Metodyki, modele kompetencji i modele dojrzałości, col-

lective work edited by M. Trocki, Ofi cyna Wydawnicza SGH, Warsaw 2011


BUSINESS NETWORKING – THE ESSENCE, RATIONALE, PRACTICES

P . P J , P .D.M J , P .D.

J U

Abstract

Th e present paper includes results of literature and empirical studies related to

explaining business networking as one of the forms of organization develop-

ment and to understanding empirical practices in this fi eld which are now pre-

sent in Poland. Th e text presents, inter alia, rationale for applying business net-

working, qualities of business networking in three dimensions (social, economic

and structural), currently existing forms of support of business networking.

Introduction

Th e purpose of the present paper is to explain business networking as one of the

forms of organization development and to understand empirical practices in this fi eld

which are now present in Poland.

Firstly, the authors illustrate the role of trust and relation in management assuming

that business networking is based above all on these two categories.

Further part of the paper presents methodology of empirical studies. Next, verifi -

cation of presented research hypotheses lies in the centre of the subsequent part of the

text which embraces issues connected with:

• identifi cation of premises for using business networking,

• identifi cation of qualities of business networking in three dimensions (social, eco-

nomic, structural),

• identifi cation of currently existing forms of support of business networking.

Trust in management

Trust in organization management has become the subject of numerous scientifi c

studies and publications accompanying them. Skandrani, Triki and Baratli (2011) note

that in a situation of researchers’ great interest in the issue of confi dence the literature

of the subject is characterized by high level of heterogeneousness and ambiguity in trust

conceptualization, determinant and manifestation.

Scientifi c studies of trust have a long tradition. G. Svensson (2001) identifi es the

following major stages of these studies:

• in 1950’s and 1960’s discovery of many meanings of trust in personal relationships

(researchers: Erikson, Deutsch, Rotter, Tedeschi),

• in the following decades carrying out studies on development of the concept of

trust (researchers: Gabarro, Corazzini, Williamson, Barber, Dwyer and Lagace,

Grayson and Ambler, Gwinner, Mayer, Morgan and Hunt, Moorman, Young).

However despite full continuity of scientifi c programmes dedicated to the concept

of trust it cannot be said that clarifi cation of its role and phenomenon is fully satisfactory.

In the studies of trust its role in various contacts is an important theme, e.g. commercial

exchange, marketing, supplier-buyer and partner relationships. As Tyler and Stanley (2007)

rightly point, all kinds of interactions and relationships create inherent risk and uncertainty

which trust helps to manage. Th e signifi cance of the role of trust results, inter alia, from

the fact that in many situations it cannot be substituted fully by other control mechanisms.

Laeequddin and Sardana (2010) affi rm that building partner’s trust is the heart

of risk management in supply chain. Th e study of the subject is accompanied also by

defi nitional dilemmas. Th e more signifi cant defi nitions indicate that (Akrout H., 2015;

Skandrani, Triki and Baratli, 2011; Tyler and Stanley, 2007):

• trust is a cognitive or aff ective belief held by one party that its partner will not ex-

ploit their vulnerability: perceived trustworthiness,

• trust is a behaviour or behavioural intention of a party to act in a way that inclines it

towards risk, uncertainty or increases its vulnerability to another: trusting behaviour,

• trust is a willingness to rely on a partner in whom one has confi dence,

• trust is then a belief of regular, honest, and cooperative behaviour based on shared

values and norms.

As it can be seen, defi nitions of trust assume that its key role is management of

risk, uncertainty and vulnerability associated with exchange. Th us, reliability, honesty,

predictability, mutuality, benevolence and forbearance from opportunism are among

components of trust understood this way.

In the course of scientifi c studies it has also been established that trust can have

diff erent variations. Hence, e.g. Svenson (2001) analyses trust depending on the atti-

tudes of two actors of the relation (e.g. the seller and buyer). Depending on the attitudes

they assume, which have the character of trust or lack of trust, he receives four diff erent

situations called: mutual trust, downstream trust, upstream trust, distrust.

208 Piotr Jedynak, Monika Jedynak

While Skandrani, Triki and Baratli (2011) identify four types of trust:

Th e calculative-based trust. Trust expresses a sense of calculation, a sort of rational

optimization.

• the predictive-based trust. Trust, in this case, relates to a judgement in hindsight. It

assumes initial interactions occurring with a partner.

• the identifi cation-based trust. Th is form of trust stands for the highest trust level

and is reached only when the partners develop common values and shared feelings

or interdependence.

• the intentionality-based trust. Trust constitutes a psychological characteristic mo-

tivated by emotional aspects.

Akrout (2015) also applies sources of trust in its classifi cation. Th erefore he sin-

gles out the following types of trust: trust based on calculation (calculative trust), trust

based on cognition (cognitive trust) and trust based on aff ect (aff ective trust). As it can

be noted, this proposal partially coincides with the previous one.

Atkinson and Butcher (2003) in turn, taking into account the context criterion, iden-

tify personal trust (between humans) and impersonal trust (e.g. between organizations).

Th e presented typologies of trust refl ect its complexity. Th ere are, however, comple-

mentary relationships between them as they allow clarifying the concept of trust better.

Eff orts to assess the value of trust in business relationships are one of the more im-

portant research trends dealing with trust. Th e studies so far undertaken allow creating

impressive list of positive after-eff ects of trust (Skandrani, Triki and Baratli, 2011; Tyler

and Stanley, 2007):

• trust can be the source of competitive advantage,

• trust reduces transaction costs,

• trust limits uncertainty and opportunism,

• trust creates fl exibility,

• trust binds relationships and builds commitment,

• trust improves communication,

• trust is deemed central to the process of problem resolution,

• trust is found to transform disagreements to functional confl icts and to result in

productivity benefi ts,

• trust enables risk taking and facilities cooperation and mutual adaptation.

Th e studies also show signifi cant role of trust in various situations and manage-

ment concepts, e.g.:

• in supply chain management, where partners’ mutual dependency is strong, not

only creating trust is proposed but also manifesting its signifi cance (Skandrani,

Triki and Baratli, 2011)

• in management processes on fi nance markets, due to the specifi cs of services pro-

vided as well as quality requirements of clients (Tyler, Stanley, 2007),

• on e-business markets where clients fear sellers’ anonymity and technological risk

(Srinivasan, 2004).

Business Networking – the Essence, Rationale, Practices 209

Th ere are a number of attempts at conceptualization of trust. One of them refers to

the typology of the phenomenon and dynamics of changes occurring in particular types

of trust (see Picture 1). As it can be seen, calculative trust is although at the beginning

of relation between partners, but its signifi cance is negligible. Next, cognitive trust arises

with increasing signifi cance. However, it is the aff ective trust that grows the most and

it makes its appearance the latest.

Source: adapted from (Akrout, 2015)

Picture 1. Trust transformation

Business networking as activity based on relationships and trust

Business networking is an ambiguous term. In general sense it is the art of organi-

zation management based on creating and using relationships. Th ese relationships are

the core of networking. It is not an exaggeration to observe that for networking rela-

tionships have ontological signifi cance. Interest in networking involves understanding

the essence of business relationships and their infl uence on relative success and perfor-

mance of organizations (Silversides, 2001). Th e process of building relationships and

using personal contacts as a kind of network endeavour should lead to benefi ts under-

stood as achievement of objectives shared by participants in the network. Relationship

can be defi ned as an interdependent process of continuous interaction and exchange

between at least two actors in a business network context (Holmlund, Tornroos, 1997).

Relationships can be characterized with the use of certain typical qualities pre-

sented in Picture 2.


Mutuality is defi ned by such variables as: degree of mutuality, symmetricality, pow-

er-dependence structure and resource dependence. Relationships also prefer long-term

character of co-operation based on continuous approach which relies, inter alia, on re-

ciprocal creation and development of strengths of organization. What is more, relation-

ships have process nature which results from many interactions taking place between

organizations which have the nature of exchange and reciprocal adaptation. Th ey are

also strongly determined by the existing economic and social context.

In the relationship structure three fundamental dimensions can be identifi ed:

• structural (links, ties, connections, institutional bonds),

• economic (investments, economic bonds),

• social (commitment, trust, atmosphere, attraction, social bonds).

As the studies show, adequate management through relationships may generate

high level of mutual trust (Silversides, 2001). Nevertheless, researchers note that as in-

sofar as such after-eff ects of relationships like mutual interdependence are nearly cer-

tain, trust is optional (Shaw 1997).

Table 1 presents selected defi nitions illustrating the nature of networking.

Table 1. Selected defi nitions of business networking

Defi nition Source

Foundation of networking activities in business is fostering relationships based on trust in order

to provide reciprocal support Networking biznesowy …, 2014

The purpose of business networking is continuous development of contact list which in the

future will be the basis for winning new clients and growth of own business Nowoczesne …, 2014

Networking is a process of exchange of information, resources, reciprocal support and opportuni-

ties carried out thanks to the network of reciprocal contacts Networking, 2015

Networking is gaining or broadening the sphere of contacts and referrals Business Networking, 2013

Picture 2. Main qualities of relationships

Source: adapted from (Holmlund, Tornroos, 1997)


Defi nition Source

Networking is the art of establishing and maintaining valuable relationships which at the same

time is one of the basic tools for succeeding in today’s business Idea networkingu, 2015

Business networking is the art of achieving business objectives thanks to expanding and foster-

ing relationships with others Networking: 5 kroków, 2015

Source: prepared by the authors on the basis of quoted sources

Analysis of descriptions of business networking presented in Table 1 allows con-

ceptualising its essence as follows:

• networking is an activity oriented on achieving objectives of organization and thus

it can be assumed that the mentioned objectives determine the scope and method

of applying networking.

• networking is based on trust and relationships established with other organizations.

• relationships with other organizations involve not only establishing them but

above all maintaining and improving them.

• networking is an expansionary activity, i.e. one which assumes continuous growth

and development of existing relationships and building new ones.

• networking is of procedural nature; is a dynamic activity.

Model and methodology of research

Th e carried out literature studies resulted in forming a model of empirical studies

including 3 research hypotheses (Picture 3).

Picture 3. Framework model of empirical studies

Source: prepared by the authors


Th e following hypotheses have been formulated:

• hypothesis 1 (H1). When it comes to rationale for using business networking po-

tential benefi ts typical for trust and relationships are dominating.

• hypothesis 2 (H2). Business networking is characterized by all dimensions typical

for relationships, i.e. structural, economic and social.

• hypothesis 3 (H3). Business networking, in structural dimension, is characterized

by using numerous and diversifi ed forms of support.

In empirical studies, mostly method of exemplifi cation has been used which in-

volved presenting practical examples supporting formulated research hypotheses as well

as analysis of experts’ statements who deal with business networking. Empirical prac-

tices of business networking present currently in Poland have become the subjected of

the research.

Research results

Rationale for using business networking

Having analysed statements of experts dealing business networking rationale for

organizations’ using it has been identifi ed. Th eir overview is included in Table 2.

Table 2. Rationale for using business networking

Rationale Source

Business networking, due to its interactive character, satisfi es human needs to have environment

both in personal and professional sphere.Networking, 2014

Business networking is one of the least costly and simultaneously one of the most effi cient and

pleasant ways of developing business.Networking: 5 kroków, 2015

Business networking allows minimizing knowledge defi cit. It provides both open knowledge

and, what is more important, allows obtaining hidden knowledge.Networking – niech …, 2015

Business networking is characterized by applicability on every level of hierarchy, especially on

strategic one where business networking is helpful due to complexity of tasks. Networking – niech …, 2015

Business networking is an alternative and cheaper form of promotion as well as landing and

maintaining clients. Nowoczesne…, 2014

Business networking is an effi cient way to strengthen market position and to generate savings in

times of crisis and drop of economic activity. Networking biznesowy…, 2014

Business networking is an effi cient way to develop business and increase income as referral is of

great importance when it comes to winning orders. Korzyści…, 2015

Business networking increases credibility and recognisability of organization on the market. Korzyści…, 2015

Owing to business networking many entrepreneurs obtained an idea for business, partner and

sources of fi nancing business activity. Networking – sposób …, 2014

Business networking, thanks to direct contacts, reduces problems related to insuffi ciency or

excess of information.Networking biznesowy, 2014

Business networking has positive impact on lifetime of business contacts and reciprocal loyalty. Networking – dobra …, 2015



As it can be noticed, the character of identifi ed rationale for using business network-

ing is very diverse. Th e premises highlight benefi ts of networking which are economic

and effi cient as well as create added value for stakeholders. Business networking also has

a wide range of applications (e.g. marketing, career management, dealing with crisis).

Dimensions of business networking

Analysis of business networking dimensions will be based on typology of dimen-

sions of trust including social, economic and structural dimensions.

Social dimension of business networking

Analysis of using networking in social context allowed identifying variables in-

cluded in Table 3.

Table 3. Specifi cation of social dimension of business networking

Specifi cation Source

Business networking is based on classical behaviours of human as a social being which involve

natural process of developing network of contacts already from birth.Networking – niech …, 2015

Business networking uses and supports growth of social capital. Using social capital lowers

transactional costs. Trust reduces the need to verify information, norms allow anticipating be-

haviours of others, bonds give access to knowledge.

Networking: 5 kroków, 2015

In order to prevent erosion of trust only professional organizations can be recommended. Networking: 5 kroków, 2015

Business networking draws on behaviours of many people who prefer personal contact. Networking …, 2014;

Networking – niech …, 2015

People have diff erent competencies in terms of establishing new contacts. Only 10% fi nd it easy.

The others need to shape necessary skills. Networking…, 2014

Business networking fosters getting to know people better. In such case, economic successes

related to it may be secondary.Networking – sposób…, 2014

Men and women prefer diff erent styles and priorities in business networking. Research shows

that co-existence of these diff erences is the source of synergy eff ect.Różnice płci, 2014


It should be noted that social dimension of networking clarifi es ontology of this

phenomenon. However, people’s natural need to establish contacts requires support in

the form of professional rules and code of conduct.

Economic dimension of business networking

Economic dimension of business networking refers to such categories as costs and

benefi ts connected with using it. In this dimension, usually the aim is to quantify eff ects

of business networking. Table 4 includes identifi ed specifi cations of economic dimension.


Table 4. Specifi cation of economic dimension of business networking

Specifi cation Source

Business networking is an activity oriented at achieving goals of organization. Using social capi-

tal lowers demand for other forms of capital (transitiveness of social capital). Networking: 5 kroków, 2015

Business networking is based on individual potential of having contacts and on multiplier eff ect

generated as a result of exchange of contacts. Networking…, 2014

Effi ciency of professional service providers in terms of business networking is measured, inter

alia, with their capability to initiate business contacts.

Korzyści…, 2015

Networking – niech…, 2015

In many areas (e.g. marketing, PR) business networking is a cheaper activity than traditional

tools as it is based on personal engagement of employees.Networking – niech…, 2015

Business networking increases clients’ loyalty and thus lowers costs on maintaining them by the

organization.Nowoczesne…, 2014

Business networking allows to signifi cantly lower costs of recruitment of new employees. Networking biznesowy…, 2014

Business networking refers to the percentage of organizations which in their decision making

process take referrals into accounts. Korzyści…, 2015

Professional services in terms of business networking are oftentimes paid and include benefi ts

from using it. Networking – sposób…, 2014


Th erefore, in economic dimension of business networking quantitative aspects are

emphasized. In such understanding, business networking should, among others, be sub-

ject to evaluation in terms of its potential for development of organization and effi -

ciency of using it.

Structural dimension of business networking

Structural dimension concerns ways of initiating and organizing business net-

working. Picture 4 illustrates phase model of business networking.

Picture 4. Phase model of business networking



In the model presented on Picture 4 it had been assumed that in the process of ini-

tiation, preparation and application of business networking professional service provid-

ers take an active part in this respect.

At the initiation stage promotion of business networking, availability of profes-

sional services in this area and level of interest of organization management in applying

this type of activity determine if an organization starts the preparation phase.

In the preparation phase fi rm basis for future networking activities are formed.

Professional service providers create and give access to opportunities for business meet-

ings at which organizations’ representatives establish fi rst contacts.

Next, the process moves to the application phase. At this stage organizations may

still use help of service providers. What is more, at some point fi rst evaluations of effi -

ciency of networking are carried out.

Forms of support of business networking

Studies carried out by the authors brought about identifi cation of numerous and

diversifi ed forms of support of development of business networking. Th ey have been

included in Table 5.

Table 5. Forms of support of business networking

Form Example Key activities

Professional data banks Bank Danych o Inżynierach – Promoting networking in terms of career management

– Organization of conferences and conventions

Internet portals – Rynekpracy.pl

– PBlink.co.uk

– Firmainfo.pl

– Promoting the idea of networking

– Organization of meetings

Sector associations Inklamed – Assistance in creating network of connections of sector participants

Professional organizations of

business recommendations

Business Network

International

– Creating formal framework and codes of good practices of networking


– Development of membership formula along with verifi cation

– Supporting making contacts

– Organization of trainings, workshops and conferences

Trade fairs Międzynarodowe Targi

Paliwowe

– Organization of meetings and business talks

Business associations – Lady Business Club

– TEAM

– Brytyjsko Polska Izba

Handlowa

– Organization of business meetings

– Developing and giving access to professional networking tools

– Organization of trainings

– Keeping data base of business contacts

Consulting companies Credit Consulting – Running consulting projects in terms of networking

– Transforming ideas to undertakings

Radio stations Polish Radio London – Organization of business meetings


Projects supporting

entrepreneurship

PWP Katowice – Organization of business meetings



Form Example Key activities

Business magazines Law Business Quality – Promoting the idea of networking


– Promoting networking groups

Technology parks Białostocki Park Naukowo-

Technologiczny


– Organization of trainings and workshops


As it can be seed, the forms of support of business networking present in practice

are characterized by diff erent scope of activity and diff erent level of professionalization.

Th e most comprehensive support is typical for professional organizations for business

recommendations among which Business Network International stands out – organi-

zation was founded in 1985 by Ph.D. Ivan Misner and now it has branches in 55 coun-

tries all over the world. Moreover, wide scope of activity is also typical for business as-

sociations.

In the course of the studies it was also found that organization of business meet-

ings is the most popular activity fostering business networking.

Discussion and interpretation of study results

Th e present paper attempts to verify three research hypotheses. Th e applied re-

search methodology based on analysis of experts’ statements and on exemplifi cation

method has such limitations that it does not fully conclusive fi ndings for the entire phe-

nomenon in question. However, by way of inductive reasoning it is possible to attempt

to both provide more detail and generalize conclusions in further studies.

Th anks to the carried out research hypothesis H1 has been proven which con-

cerned convergence of rationale for using business networking with benefi ts from trust

and relationships. Experts’ statements indicated that the basic premises result from the

value of recommendation as well as from positive infl uence of established relationships

and relatively higher trust in met business partners exerted on quality, effi ciency and

complexity of transaction. Th e paper also highlights the types of advantage resulting

from using business networking in relation to other forms of activity, e.g. sustainabil-

ity of relationship, mutual loyalty, reduction of insecurity and risk (e.g. knowledge and

information defi cit). Th us, it can be assumed that if in the sphere of rationale for using

business networking there are assumptions adequate for trust and relationships, then in

the sphere of after-eff ects results of these categories can be found.

In the course of carried out studies, attempt was made to refl ect three dimensions of

business networking proper for relationships what is related to verifi cation of hypothesis

H2. In the social dimension business networking is characterized inter alia by relying on

human’s drive towards relationships with the environment, using and developing social

capital, using the fact that people strive towards personal contact, awareness of diversity of


people’s competencies for making new contacts, diverse preferences and styles of conduct

due to sex. Th e qualities of business networking in economic dimension are, among oth-

ers, orientation toward organization’s goals, relying on individual and multiplier potential

for generating new contacts, relatively high effi ciency, payable services in this area. Struc-

tural dimension of networking accepts forms and activities for the benefi t of its initiation,

preparation and application. Th e research showed that at the present stage of develop-

ment professional support of business networking provided by various organizations has

signifi cant importance. Hence, in the light of the research, hypothesis H2 has been proven

another asset of which is the fact that in the studies on business networking it is possible

to use cognitive grids based on dimensions adequate to relationships.

Finally, thanks to the research forms of support of organization activities in the area

of business networking have been identifi ed. In total 11 such forms have been singled

out which vary in their scope and degree of professionalization. Among them there are:

professional data banks, Internet portals, sector associations, professional organizations

for business referrals, trade fairs, entrepreneurs’ associations, consulting companies, radio

stations, projects supporting entrepreneurship, business magazines and technology parks.

Such fi nding allowed proving hypothesis H3. Diversity of the discussed forms suggests

that organizations interested in business networking may combine them which may lead

to complementary eff ects. It was also found that business meetings are the essence of

business networking which are the best opportunity to initiate practices in this respect.

Th e research carried out by the authors allowed also to specify future, potentially

very interesting directions of research, such as:

• building business networking models including micro– meso– and macro-eco-

nomic perspective,

• identifi cation of stimulus and barriers for using business networking,

• designing measurement tools for effi ciency of business networking,

• study of directions and forms of development of professional services in the area of

business networking.

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THE CONCEPT OF OUTSOURCING ORGANIZATION AS AN ALTERNATIVE

TO MODELLING A CONTEMPORARY COMPANY

K M , P .D.C U E

Abstract

Modelling an organization with regard to the generally understood operat-

ing conditions of the system is one of the basic challenges in the perspective

of development alternatives. Th e ability of conceptual creation of the vision

of an organizational system enabling achieving appropriate operating effi -

ciency with regard to recognized challenges is a basic competency for con-

temporary organizations, including in particular companies. Not only does

this ability confi rm skills of the management staff for basic laws currently

governing the market in which the management staff has to operate, but is

also a confi rmation of the skills of managing a specifi c organizational system

with regard to its possibilities of adaptation and evolution.

Growing complexity of factors that codify the possibilities of generally under-

stood organizational development forces revision of the approach to manage-

ment, including particularly to the mere modelling of organizational system.

On the one hand, we are facing a challenge of creating general visions of organ-

izational models which are able to cope with contemporary conditions char-

acterized by the phenomena of discontinuity and discontinuation processes in

the environment, with simultaneous intensifi cation of competition conditions.

On the other hand, emphasis on achieving a relatively high level of competi-

tiveness of the system ensuring the possibilities of survival and development

indicates the need for development of a model, which constitute a practical

structural solution for the system, rather than are only useful, however, gen-

eral way of understanding of its construction and relations governing it. Th us,

we can observe a phenomenon of disappearing convenient boundaries between

the mere adopted concept of organization and the model developed for it or,

fi nally, the developed solution of organizational structure. It is diffi cult to as-

sess negatively the indicated phenomenon, owing to the fact that its base lies in

the still growing demand on the part of an organization, including in particular

companies, for theoretical concepts with practical applications.

Specifi c models of organization become, as a consequence, the basis to create spe-

cifi c structural solutions that are continuously a necessary element of an organiza-

tion, determining its capacity to act effi ciently. A properly selected organizational

structure ensures achieving the desired degree of confi guration and protects an

organization against disintegration. However, it must be a form that will enable

achieving necessary fl exibility, internal freedom as well as creativity of actions.

Evolution of space for modelling organizational solutions

Th e fi rst concepts of an organization in the contemporary times were based on the

papers by H. Fayol and M. Weber. Th e main challenge faced by the organizations at the

beginning of the industrial revolution was an effi cient manufacturing of goods and servic-

es for the purposes of more and more diverse society. M. Weber proposed in 1947 several

typical features which became known as the classic attributes of bureaucracy (the divi-

sion of work based on specialization of functions, well-determined hierarchy of authority,

regulations containing rights and obligations of people, impersonality, system of proce-

dures concerning situational features of work, promotion and selection based on technical

competency) (W. Bennis, 1983). Th ese features were of major signifi cance to achieve the

intended goal by organizations whose main pursuit was to manufacture identical goods

eff ectively, reliably and uninterruptedly. In fact, until 1960s, it was assumed that Weber’s

hierarchy or bureaucracy was an ideal form of organization because it guaranteed manu-

facturing of products and provision of services in a maximally eff ective manner.

Th is situational underwent a signifi cant change at the turn of the 20th and 21st

century. Over this period, instant changes were taking place in organizations, caused

by even mass introduction of new information and IT technologies, opening markets,

giving more and more importance to knowledge. In the period of these social and eco-

nomic changes stimulated by the information era, companies began to seek solutions

allowing them to adapt better to new conditions.

In consequence, the mere fact of impact of internal and external factors on the possi-

bilities of survival and development of the contemporary organization in the environment

proved the main problem. An important challenge for companies as well as researchers

looking for proper solutions became a problem of discovering proper interrelations be-

tween the potential of a company, external conditions, possibilities to survive on the mar-

ket, then improvement in a competitive position, possibilities and directions of further

changes and, as a consequence, ensuring appropriate organizational development.

222 Krzysztof Machaczka

Th is impulse was with all confi dence a need, rather than a will on the part of com-

panies (tab. 1). Th e most important transformational processes and concepts used in the

sphere of management by companies focused on the development in the era of knowl-

edge include, among others: internal entrepreneurship allowing generating mainly proper

fl exibility and innovation of an organization, focus on generated values having basic im-

portance for building identity of an organization as well as shaping its competitiveness,

integration of organizational structures with the executed strategies, manifesting itself in

the confi guration of structures facilitating integration, fl ow of information or, fi nally, re-

duction in operating costs and transformation of organizational culture, which becomes

an important area of management aff ecting the functioning of an organization as a whole,

consist in emphasizing the importance of “personality” of an organization.

Table 1. Main areas of challenges in the sphere of managing a contemporary

organization

Main contemporary concepts and internal processes in the fi eld of management Pro-development benefi ts for the organizational system

Internal entrepreneurship – fl exibility of operations,

– innovation of the internal system,

Focus on values – ability to identify the identity and uniqueness of an organization,

– ability to generate competitiveness of the system,

Integration structural solutions – integration of the system structure with the executed strategy,

– potential of the system reconfi guration,

– organizational adaptation,

– information effi ciency of the system,

– reduction in operating costs,

Organizational culture – ability to codify an organization,

– potential of holism.


Th e dependencies indicated here are currently probably the most important chal-

lenge for managing a contemporary organization at the normative and strategic level. It

is also an expression of contemporary thinking about the business of the 21st century

constructed on logic summed up in the saying: “my challenge is to survive, I can survive

only thanks to change; a change will allow me creative adaptation which, in consequence, gen-

erates development potential, development is the basis of survival” (Fig. 1)

Th ese factors have become the starting point of new competing conditions of com-

panies, which force them to deep changes, both in the fi eld of strategy and organiza-

tional structure. For the last decades, the mechanistic structures have been clearly in-

ferior to new organizational forms. Th e environment of contemporary organizations is

formed by unstable and unexpectedly emerging force fi elds. As a result of them, bureau-

cracy faces problems it is unable to solve (K. Machaczka, 2014).

Th e Concept of Outsourcing Organization as an Alternative to Modelling... 223

Th us, an organization itself is not a challenge for the contemporary management prac-

tice and science, but organizational multidimensionality and its need to achieve a suitable

degree of internal and external integration not causing fossilization, excessive formalization,

growth in management sphere, namely everything which actually kills activity of an organi-

zation itself and its members. Contemporary organizations, regardless of their size, must

show the features of enterprising, creative, fl exible and variable systems. Th ese features allow

them to maintain proper profi tability and effi cacy in the achievement of subsequent goals.

Changes in today’s organizations cannot thus come down to local changes in its

interior and constant development and promotion of the holistic approach in manage-

ment of the system and its internal structure are necessary. In the reality outlined in this

way we can put the following questions:

1. How to shape business development in the conditions of uncertainty, danger, tur-

bulences, the lack of stability and the need for change?

2. How to guarantee stable growth and development in such conditions that, due to

their character, make it diffi cult?

3. Which models of organizational development should be adopted to be able to en-

sure the possibilities of survival in a way optimal in the given conditions?

4. Finally, how to pursue presently development of an organization in a planned way?

Th e need to generate in organizational systems the abilities of reconfi guration of the

system and creative adaptation by creation and implementation of proper model solutions in

relation to intensively evolving exo- and endogenous conditions is certainly one of the fac-

tors critical for their capacity to realise the vision of the future and survive. In other words,

Figure 1. Force fi eld of the multi-dimensional pro-development thinking

in an organization.



it is the guarantee of the execution of strategy of an organization as well as adequate level of

competitiveness to generate potential for the presence of the negative entropy phenomenon.

Genesis and development of the concept of outsourcing organization

Th e emergence of the concept of outsourcing organization and its model and method

of outsourcing is one of many responses to specifi c conditions and changes that take place

in the environment of companies. Th e concept of this organization marked out one of al-

ternatives for the system development that appeared in management. Th e aforementioned

changes which were initiated in the 20th century and have been present until today are

however specifi c changes. Although the awareness of changes themselves dates back to the

beginning of the development of human civilization, in the last decades they signifi cantly

changed their character. Among the most visible external trends having impact on con-

temporary companies the following may be indicated (D. Faulkner, C. Bowman, 1996):

• globalization of customers’ tastes and target markets,

• technological progress along with globalization of technology development,

• consolidation processes, benefi ts of scale and scope of operations as foundations for

shaping conditions for competition,

• growing economic, social and political interference,

• growing interference in the sphere of safety in the world,

• pressures on increase in responsibility towards the environment.

Today’s changes can be defi ned therefore as “turbulences” or “great discontinuities”.

Th ey have caused the need for increase in speed, operational fl exibility, increased the prob-

lem of restricted resources of the organization, solving the so-called multi-dimensional

problems or, fi nally, the need to focus a company’s attention on the so-called core compe-

tencies, rather than evenly on all its areas of operations. Companies were, in a way ,indepen-

dently forced to raise their level in the fi eld of internal innovation, the need for real-time

multi-plane action, fi nally, globalization of their activities (M.Kłos, 2009). Th erefore, they

were forced to search for new models of their organizations. Th is searching took place in

a kind of knowledge vacuum, it did not take place without the support of science. At this

point the basis became the system concept of an organization in its contemporary dimen-

sion with the model of network organization or evolving further towards e.g. outsourcing

organizations. It should be also noted that foundations of the model of outsourcing organi-

zation itself lie much deeper even in the theory of economy. Attention may be paid to such

important concepts changing economic and market relations of the contemporary world as

the theory of agency, contractual theory and transaction cost theory ( J. Machaczka, 2014).

It should be remembered that it is impossible to apply simplifi cations in relation to

the use of the outsourcing model in comparison to the transaction cost theory. It is im-

portant that every time a decision of a company in the area of using this formation should

be made in a manner that is individual, independent, takes into account specifi c condi-

tions of a given company (M.Kłos, 2009). We can thus state that following the transaction


cost theory we cannot confi rm rightness of the application of outsourcing in each case. In

practice, it is about a situation when it is reasonable to use the analyzed model to functions

other than basic functions. In the case of the so-called strategic areas, it is reasonable to

leave it in resources of a company. Th e above dependencies of using outsourcing models

are preferably explained by the resource theory in organizational management which was

presented, among others, by G.Hamel, C K. Prahalad in their book entitled “Tomorrow’s

Competitive Advantage”, which describes the method of “core competencies” in managing

a contemporary organization. Th is method clearly shows the importance of certain re-

sources and values which are, on one hand, typical of every organization, and, on the other

hand, crucial for the possibility of its survival on the market, capacity to compete and de-

velop. Th is value is created exactly by special features, resources and skills of a company

and thereby determines competitive advantage of a given entity.

Factors aff ecting directly the competitive position of a company and thus its success

or failure are, fi rst of all, resources and competencies acknowledged as the so-called criti-

cal success factors and their degree of control by a company. Critical success factors (CSF)

are factors all the companies of the analyzed industry must pay particular attention to, to

be able to specify precisely resources and skills related to the performed transformation

processes determining market success of products, and hence to ensure relevant fi nancial

performance. In particular, CSF ensure appropriate execution of deliveries to maintain

adequate costs of production and product quality, maintain strong and comprehensive

distribution relations to prevent competitive companies from using these relations and,

fi nally, maintain relevant image of the product and the company as a result of advertis-

ing and promotion that ensures customer’s faithfulness. Th erefore, it appears justifi ed that

outsourcing solutions cannot be used exactly to areas that build the potential of these CSF.

One of the solutions enabling meeting the conditions outlined above became an

outsourcing organization. Reconfi guring the English word outsourcing we can say that

this is an organization “outside resources using”. Th ese resources are used for the imple-

mentation of processes implemented normally inside a traditional organization. When

making thus attempts to systematize this concept, J. Niemczyk can be quoted, saying

that outsourcing is the possibility of using independent, external entities as providers of

specifi ed goods and services contrary to the traditional approach, based on the need to

develop these areas of operations inside a given system (K.Perechuda, 2000).

Looking from another dimension to the defi nition of outsourcing we can say that

this is a project that consists in separation from the organizational structure of the par-

ent company of functions performed by it and transfer of these functions to other eco-

nomic entities for implementation. Th e Polish-language equivalent for the term „out-

sourcing” may be thus the term „wyodrębnienie (separation)” (M.Trocki, 2001). Th is

defi nition emphasizes the function performed by this type of organization, which takes

place in a unique network system formed by related organizations. An outsourced or-

ganization is looking for outsourcing organizations that will accept the order to per-

form specifi c, monolithic function and will pursue it better and cheaper than it has been


pursued so far in the structure of the company that outsources this function. Th e es-

sence of outsourcing is thus transferring for implementation of tasks, functions or even

entire processes to external company (or companies) that specialize in the provision of

specifi c services or products. Th is is a specifi c face of business built based on coopera-

tion and partnership with the persisting and implemented system of strict control. As

a result, the development of this organizational structure has caused presently a creation

of a powerful branch of the economy, with professional tools, specialized software, ex-

tensive infrastructure and verifi ed and eff ective methods, which is based exactly on the

provision of specifi c solutions, services or products to other entities. It takes place in the

conditions of high specialization of the provision of outsourcing services and possibili-

ties of signifi cant reduction in the costs of their provision.

However, when talking about this form of organization it is diffi cult to indicate

specifi c breakthrough dates of its development, or even more diffi cult, of its creation. It

turns out that outsourcing has been accompanying a man for a long time. At this point

words spoken by Henry Ford in 1923 are very meaningful: „If there is something we

are not able to do more effi ciently, cheaply and better than our competitors sense, there

is no point doing it; we should employ to perform this work someone who will do it

better than us”. Peculiar forms of outsourcing can be found much earlier. For example,

European countries’ rules were entrusting to orders educational structures in the me-

dieval times. Another example, from the middle of the 18th century: the company of

Alexander Hays that was providing services in logistics and data archiving. Certainly,

outsourcing was used also by Napoleon who was ordering to private companies func-

tions logistic for his armies, as e.g. delivery of ammunitions to battle fi elds or supply

and care over injured soldiers during a battle (W. M.Grudzewski, I. K. Hejduk, 2004).

Th e development of modern outsourcing used as a model for a certain group of

companies operating on the market took place in the second half of the 20th century.

Among others, it resulted from emergence of the need for outsourcing in the reality of

functioning of an organization and it was caused by the need to reduce growing costs

and look for new solutions in modelling business. After all, in the 1960s and 1970s, the

„make or buy” concept was developing, aimed fi rst of all at cost reduction. At some point,

make-or-buy decisions stopped being restricted only to goods and started applying also

to services in the space of business organizations or specifi c tasks performed by them,

which, in turn, naturally led to the development of outsourcing behaviours.

Th e term “outsourcing” was introduced to the practice of business management

in the 1980s in the automotive industry. One of the fi rst companies was the concern

General Motors. Its logistic model was benefi ting from the system of external sup-

ply in parts, which was termed as outsourcing model. In the 1990s it was possible to

start observing common introduction of outsourcing as a method of strategic shap-

ing of business model. From among precursors thanks to whom a new era in business

management began, consisting in the use of external resources, the IT company EDS

Rossa Perota is listed; it suggested to the concern Frito – Lay IT system management


( J. P. Lendzion, A. Stankiewicz – Mróz, 2005). Also the corporations Eastman Kodak

can be mentioned: it signed long-term contracts concerning IT and maintenance of in-

formation systems with IBM, Businessland and DEC.

Practical possibilities of the implementation of the model of organization outsourcing in business solutions of companies

When analysing the cases of applying outsourcing, the following important ques-

tions appear: question about the premises of its application and relation between prem-

ises and the area of its application in a company. Such research was conducted by the

American Management Association in 1997 (tab.2) (M.Kłos, 2009). It clearly demon-

strated that though it seems justifi ed to apply outsourcing as a method that might bring

multi-dimensional benefi ts, depending on the area where we use this method, cost re-

duction is still the main criterion of its application.

Th e commonness and diversity of use of the outsourcing method showed also that

a considerable part of world companies do not have appropriate resources and funds to

pursue all the tasks on their own at the top level. Of course, this is not a particular surprise

because, when quoting here for instance research by T. Peters and R. Waterman from the

turn of the 1970s and 1980s and the concept created by them – “8 features of perfectly

managed companies”, they proved in a manner indisputable for many that organizations

that the so-called excellent companies are companies that shape their excellence from the

perspective of a specifi c area, rather than excellence in each aspect of organization. Th ere-

fore, from this period companies focus commonly their attention on developing skills

they owe to their competitive advantage on the market, whereas functions that are not of

crucial importance for a company, after a prior analysis of business processes inside the

organization, were being evolutionarily slowly transferred to external companies.

Table 2. Main motives of outsourcing in particular areas of company operations

Areas of company operations Main motif of outsourcing functions

Accounting and fi nance Reduction in costs

Management and administration Reduction in costs

Human resources Shortened time of operations

IT systems Reduction in costs

Marketing functions Lifting quality

Transport and distribution Reduction in costs

Generation Reduction in costs

Source: E.R. Greenburg, C.Canzoneri, Outsourcing. Th e AMA Survey, AMA Research, New York,

quot.: M.F. Strategic Outsourcing. A Structured Approach to outsourcing Decisions and Initiatives,

American Management Association, New York 1999, pp. 300-3007, quot: M. Kłos, Outsourcing

w polskich przedsiębiorstwach, CeDeWu.Pl Wydawnictwa Fachowe, Warsaw 2009, p. 37.


Introduction of outsourcing in an organization is a complex action and takes place in

the process system. Th anks to that we can outline a general process of outsourcing , which

determines its course, regardless of the type. Th is process can be divided into three phases:

initial analysis, research and detailed studies as well as implementation (Fig. 2).

• phase of initial analysis – consists in analysis and evaluation of strategic conditions

of outsourcing and assessment, on this basis, whether specifi c activities can be out-

sourced.

• phase of research and detailed studies – consists in a detailed analysis of outsourc-

ing conditions. During this phase, solutions are developed, aimed at the imple-

mentation of outsourcing.

• implementation phase – in this phase designed and approved solutions come into

eff ect.

Further stages of the implementation of an outsourcing organization are associ-

ated, among others, with organizational, legal, cooperation, ethical and control areas.

Example of further stages may be as follows (W. M. Grudzewski, I. K. Hejduk, 2004):

• stage I – diagnosing the condition of structures to be transferred to an outsourcing

company, proposing the process streamlining concept.

• stage II – signing an agreement in the form of initial or target agreement, depend-

ing on the degree of complexity of any entrusted tasks, describing the terms of

cooperation and defi ning the pilot period (usually 3 to 6 months) and the target

period (usually 3 to 10 years).

• stage III – preparing and specifying necessary systems and implementing tasks in

the pilot period, and ordering and reorganizing structures and developing coopera-

tion procedures.

• stage IV – analysing the course and conditions of the previous cooperation, ap-

proving the pilot period and possibly introducing amendments to the agreement.

• stage V – implementing the provisions of the agreement in the target period and

the outsourcing company taking over the entire entrusted tasks.

Th e basic characteristics of outsourcing organization include:

• role of centre as the main organization that defi nes the principles of cooperation

with other parts of the network,

• acknowledgment of all organizations as independent units,

• contractual relation between the centre and partners,

• submission of partners to the rules determined by the centre.

As we can note, outsourcing is a complex notion whose structure consists of two

dimensions. Th e fi rst dimension comes down to the form of a project whereby a specifi c

area is transferred to an external entity. Outsourced functions include: IT, trainings and

professional development, supply chain, personnel management, fi nance and account-

ing, and CRM – customer relationship management (Fig. 3).


Figure 2. General diagram of outsourcing.

Source: M. Trocki, Outsourcing – metoda restrukturyzacji działalności gospodarczej, Polskie

Wydawnictwo Ekonomiczne, Warsaw 2001, p. 73.


Th e second dimension is related to the form of a long-term cooperation on the terms

of partnership and trust with an external organization. For this reason, outsourcing should

be treated with all confi dence, among others, as a unique process leading to the creation of

specifi c type of organization. Th e division of the outsourcing process into phases enables

introducing mechanisms permitting prompt elimination of initiatives and projects that

do not promise any hope for success. At this point it should be remembered that actual

benefi ts resulting from the application of outsourcing can be verifi ed no sooner than after

beginning of its implementation and with awareness that its actual results may be quite

diff erent than assumed. Decisions on inhibition or elimination of an outsourcing project

may be made during decisions made after the execution of particular phases: initial deci-

sion and fi nal decision on outsourcing. Th is is especially important when a company runs

many outsourcing projects. It makes it possible to save time and costs. Th us changes in the

way of functioning of the organization should be introduced in stages.

Th us the development of the outsourcing model resulted from specifi c needs and

conditions of the organizations at the end of the 20th century. Th e basis became treat-

Figure 3. Sample areas of the application of outsourcing in companies.

Source: J. P. Lendzion, A. Stankiewicz – Mróz, Wprowadzenie do organizacji i zarządzania,

Ofi cyna Ekonomiczna, Cracow 2005, p. 206.


ing the interior of a company as a unique market on which, as a result of contracts,

transactions are concluded that determine specifi c costs. Th erefore, in order to reduce

these costs it proved justifi ed to transfer them from the inside of the organization out-

side, and at this point it should be remembered that transferred areas were universal

areas. All strategic functions where characteristic resources and knowledge are required

should remain in the interior of an organization and under its full impact and control.

Th erefore, outsourcing cannot be treated as a tool of restructuring, which comes down

only to reduction in costs generated inside an organization and increase in its eff ective-

ness. Objectives pursued thanks to outsourcing are multi-dimensional (Fig.4.).

Outsourcing as an organizational form has a very measurable strategic meaning

for an organization including organizational, market and employee aspects, which af-

fects possibilities of increasing the level of operational eff ectiveness of an organization

in many areas. It happens thanks to the fact that outsourcing enables a company to fo-

cus on its key operations and limit dispersion of resources, knowledge and its attention

on functions that are only necessary for implementation, rather than critical in build-

ing specifi ed competitive advantages and development potential. Th is in turn provides

increased strategic freedom of the parent company‘s activities, i.e. selection of business

partners and conditions of interaction with them while performing business activities.

As a result, the parent company may increase effi ciency and eff ectiveness of its activities

and adjust it fl exibly to the changing conditions and requirements of the environment.

Figure 4. General outsourcing objectives.

Source: J. P. Lendzion, A. Stankiewicz – Mróz, Wprowadzenie do organizacji i zarządzania,

Ofi cyna Ekonomiczna, Cracow 2005, p. 202.


Talking about the model of outsourcing organization it should be remembered that

as any idea of management, it is not a medication for every disease and without possible

side eff ects. Th e set of potential benefi ts and hazards can be focused, as M. Kłos, around

four areas: strategic, fi nancial, organizational and technological. A detailed set of potential

benefi ts defects of outsourcing is presented in the table below (tab. 3).

Table 3. Potential benefi ts and hazards of outsourcing

Areas Benefi ts Threats

Strategic – focusing on core competencies,

– improving fl exibility in accordance with rapidly

changing environment,

– accelerating business transformation (benefi ts of

reengineering, restructuring),

– adjusting the internal auxiliary functions to greater,

stronger competition,

– reducing risk, arising from market changes, com-

petition, industrial consolidation, regulation in the

environment, fi nancial and technological conditions

concerning additional processes.

– opposition for other management concepts, present-

ing a lower level of resources/sources,

– limited profi tability, if relations fail,

– high exit barriers,

– hazard for safety and confi dentiality of data,

– lack of suffi cient knowledge of location and service

providers,

– uncertainty of legal regulations.

Financial – change in the structure of fi xed and variable costs,

structure is to be based on effi ciency,

– achieving transparency of costs,

– protection of capital by avoiding investments in

auxiliary activities,

– growth in income by moving capital to key processes,

generating profi t, which were not economically

profi table,

– generating cash fl ows by providing fi xed assets and

intangible assets,

– stimuli (motivation) for service providers by reduc-

tion in costs with simultaneous improvement in

quality, productivity and safety by converting cost

centre of the internal customer into a centre of ben-

efi ts of the supplier,

– positive market response to cutting costs actively

and improving ROI by capital release.

– disclosure of fi nancial capability of a company,

– additional, unforeseen transaction costs (initiative of

outsourcing, planning, remuneration, errors, etc.),

– higher costs of services of the supplier than the

assumed,

– higher costs of change management than the as-

sumed (diffi cult to anticipate),

– exceeded budget for outsourcing.

Organizational

(people

– processes)

– reorientation of internal quality resources on more

valuable resources – imitation patterns,

– obtaining access to world quality of expert’s studies

from business, industrial, technical areas, not avail-

able inside an organization,

– involving staff in reduction in costs,

– replacing internal processes where control and li-

ability are missing with world quality processes, at a

more mature level,

– introducing the process discipline through standard-

ization,

– focus on ROI and benefi ts of business processes,

– rotation of positions.

– loss of internal expert’s studies,

– loss of control over outsourced activity (on so far

made decisions),

– dependence from suppliers,

– dismissing some employees or employing other – in

consequence, deteriorating atmosphere at work,

– disclosure of lack of the supplier’s involvement,

– lack of the supplier’s motivation to correct their

errors,

– limiting internal processes and supplier manage-

ment tools


Areas Benefi ts Threats

Technological – introducing the most recent technologies without

expenditures on investments and risk of progress curve,

– achieving economic scale through suppliers interfer-

ing into the costs of infrastructure of an increasing

number of customers.

– possibility of fraud of the supplier as to modernity of

the applied technology,

– risk of technical interruptions.

Source: M. Kłos, Outsourcing w polskich przedsiębiorstwach, CeDeWu.Pl Wydawnictwa Fa-

chowe, Warsaw 2009, pp. 45-49.

Conclusions

In the conclusion of the discussion, it can be said that thanks to the application of

outsourcing model a company gains the possibility of achieving a new quality of action. It

manifests itself in generation of the possibility to access a new widely understood know–

how related to model and process solutions in the space of the business being run that

would probably be impossible to achieve with own eff orts or whose achievement would

involve excessive costs. Furthermore, when executing particular objectives of outsourcing

we can see a fi eld for specifi c feedbacks and possibilities of increasing the phenomenon of

synergy. Achieving strategic goals creates the possibility of a better achievement of mar-

ket goals, e.g. improvement in the competitive position of the parent company, increase in

the scale of its activities or diversifi cation of activities. It may then result in improvement

in achieving economic goals, e.g. increase in revenue, reduction in costs, improvement in

economic results and limitation in economic risk associated with run business activities.

As a result of outsourcing, the parent company’s organizational structure “gets lean” and

thus organizational structures and procedures get simplifi ed (organizational goals have

increased transparency). As a result, costs of functioning of a company decrease and ef-

fectiveness of its activities increases. By means of outsourcing it is also possible to achieve

motivational goals, clear presentation how improvement in an organization’s performance

aff ects measurable benefi ts for its employees. Furthermore, outsourcing provides objec-

tivization of economic performance, since it propagates economic thinking and operation

and is favourable for the development of internal entrepreneurship. Th is in turn creates

absolutely a stronger motivation to work (M. Trocki, 2001).

Other, previously not indicated, icons of the application of organization outsourc-

ing included e.g. NIKE Inc., manufacturer of footwear, clothes and sports accessories

where the entire production process has been subcontracted. NIKE has retained only

research and development and marketing. Results and development potential obtained

by NIKE have showed clearly that the application of such a concept in the conditions

of the company was right and, most importantly, ensured survival and, as a consequence,

new development opportunities. Th e example of NIKE clearly shows that the founda-

tion of this type of organization is the possibility of obtaining appropriate fl exibility on

the part of behaviours and activities of an organization in the external dimension and,


on the other hand, the possibility of retaining appropriate control over the whole system

provided that, of course, an organization is able to properly manage the whole process

of outsourcing and, at the same time, eliminate related hazards.

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cza Placet, Warsaw 2000, p. 116.


STRATEGIC HUMAN RESOURCE MANAGEMENT IN CAPITAL GROUPS

P . . C Z P . W U E

Abstract

Th is study presents the issue of strategic human resource management in cap-

ital groups. Following the introduction to the abovementioned issue, which

was prepared based on the relevant literature, the processes of building, im-

plementing and popularising personnel strategies in the capital groups in

which empirical research had been carried out were analysed and assessed.

Th e problems occurring in those processes were also analysed. Methods of

solving such problems were proposed. Results of the empirical research con-

ducted in June 2014 in IMPEL S.A. Capital Group in Wrocław were pre-

sented as an illustration of the discussed issues. Th ey indicate personnel,

cultural, organisational, procedural and fi nancial problems in the process of

developing, implementing and executing the personnel strategy in that or-

ganisation.

Th e basis for preparing this study is the empirical research and literature review

conducted as part of the research project titled Human resource management in capital

groups, funded with a grant received from the National Science Centre under decision

number DEC-2012/05/B/HS4/02348, by an inter-faculty team composed of research-

ers of the Wrocław University of Economics and led by the author of this study.

238

Introduction

Th e concept of strategic human resource management in capital groups fi ts in the

stream of strategic management development in enterprises and their groups (capital

groups). It can be perceived as one of the phases of human resource management de-

velopment, which results from a change in strategic thinking and a change in the at-

titude to developing (building), implementing and applying strategies in enterprises

and capital groups. It can be also treated as an important stage in the development of

the personnel function in enterprises and their groups. Th is study assumes the follow-

ing defi nition of enterprise group: it is a collection of economic entities each of which

has its own legal capacity, which was established for the purpose of achieving common

economic goals through connections between such entities [Nogalski, Ronkowski 2004,

p. 11]. Th e author of this study understands this term as synonymous to the notion of

the capital group. Th erefore, both terms will be used interchangeably in the further dis-

cussion. It is worth noting that the focus on strategy is integrated in the defi nition of

human resource management (HRM), which was formulated by M. Armstrong, who

described it as a strategic, consistent and comprehensive look at problems involved in

people’s management and development within enterprise structures, and each aspect of

the process constitutes a signifi cant component of managing an organisation as a whole

[Armstrong, 2000, p. 9]. Th e notion of strategic human resource management in the

theory and practice of management emerged in the early 1980s. It was defi ned as a pro-

cess through which the organisation uses its human resources for fulfi lling its mission

and achieving its strategic goals [Fombrun, Tichy, Devanna, 1984]. It is worth empha-

sising here that entrepreneurs’ attitude to human resources gained in signifi cance in the

1990s, which was refl ected in implementing the personnel function in the enterprise.

In the relevant literature, it is even referred to as a chameleon function [Hope – Hailey,

Graton, McGovern, Stiles, Truss: 1997, p. 5]. What is also pointed to is the feedback

between the organisational culture and the enterprise’s general strategy and personnel

strategy, which constituted grounds for another reorientation in the area of the per-

sonnel function and the birth of the strategic human resource management (SHRM)

approach [Dutch: 2013, p. 9]. Numerous publications dedicated to SHRM, based on

empirical research, prove that the implementation of the concept can lead to the or-

ganisation’s effi ciency and competitiveness growth [Huselid, Jackson, Schuler 1997,

pp. 171–187; Collins and Clark: 2003, pp. 740–751; Purcell, Hutchinson: 2007, pp.

3–20]. Th us, the rank of the personnel function increases to the role of strategic partner-

ship. In the 1990s, the “hard dimension” of strategic human resource management was

“strengthened” with the so-called soft management elements (factors), among which

the leading position is held by organisational culture. Contemporary organisations op-

erate in a strongly turbulent environment. Numerous changes occur also in their inter-

nal environment. Th ose introduced in the area of organisation and management should

be supported by transformation of organisational culture, a new style, diff erent man-

238 Czesław Zając

239

agement paradigms, and approaches to identifying and solving complex social (person-

nel and cultural) and organisational problems occurring both in “single” enterprises and

their groups other than the current ones [Cameron, Quinn, 2003, p. 19]. Organisational

culture, more and more frequently treated as the core of the changing interior of or-

ganisations, must be subject to transformations along with changes in their strategies

and structures. It is also defi ned as a method with which the organisation solves its es-

sential problems and resolves its dilemmas [Trompenaars, Champden – Turner 2002,

p. 19] and as a distinguishing feature of its identity. It also needs to be emphasised that

organisational culture constitutes an internal binder of the entire architectural layout of

organisational systems of capital groups, allowing the synergy eff ect, which results from

collaboration of the enterprises that form it [Handy 1996, p. 116].

Strategic human resource management in capital groups should be discussed com-

prehensively in the context of the whole enterprise group management process. Th is

is because it constitutes a system which can be attributed the following characteris-

tics: teleological (purposeful) nature, subjectivity, internal structure, functionality, and

a specifi ed set of personnel instruments [Stabryła 2005, p. 19]. Strategic human re-

source management in capital groups, as is demonstrated by their operating practice

and the majority of models determining the method of managing this type of business

organisations, applied by the dominant (parent) company, should be selective with the

prospect of a holding macrostructure [Kreft, 2004, p. 98]. Such management integrates

subsidiaries around the goals specifi ed in the general strategy and the personnel strat-

egy of the group, and the dominant company exercises strategic control over pursuing

the goals.

Strategic human resource management uses various tools, the most signifi cant of

which is the personnel strategy. In the enterprise group, it is developed for the group as

a whole, its individual business domains and functional areas. Developing the personnel

strategy of the capital group is, like in a “single” enterprise, a diagnostic and prognostic

process, similar to building the global (general) strategy in terms of methodology and

organisation. All generally known strategic management methods, i.a. strategic analysis

methods, SWOT analysis, critical success factor analysis, or scenario planning can be

applied in the process.

One of the crucial conditions of success (a success factor) in the phase of building

and implementing the personnel strategy of the enterprise group is to ensure strate-

gic integration in all areas of its human resource management. Th is means continuous

interaction between the general strategy and the personnel strategy. Th e latter should

result from the global strategy and support it in pursuing the essential intentions and

strategic goals of the group. It is worth emphasising that the most important factors

that have the strongest impact on developing and implementing personnel strategies

in capital groups include the type (kind) of the capital group (strategic, operational or

fi nancial?) and the degree of autonomy in pursuing business activities by subsidiaries.

In the management practice, the integration of the personnel strategy with the general

Strategic human resource management in capital groups 239

240

strategy and other functional strategies faces numerous barriers. Th ey arise from the

following causes:

– the diversity of strategic processes, levels and styles, which generates a high number

of complex personnel, cultural and organisational problems related to standardisa-

tion of personnel strategies of all entities forming the capital group, in particular in

a multicultural organisational environment of capital groups;

– the evolutionary nature of developing the global strategy, which facilitates making

irrational decisions in the phase of building the personnel strategy;

– the “unwritten” form of the general strategy of the enterprise, which hampers un-

ambiguous identifi cation of those of its components to which the personnel strat-

egy should refer directly;

– the qualitative nature of human resource management rules, global strategies

translate into “hard indicators” of the enterprise operation assessment, and person-

nel strategies include many qualitative components, e.g. motivation, engagement,

formation of proper interpersonal relations, or observance of the desired cultural

values and standards [Armstrong 2000, pp. 64-66].

Personnel strategies of capital groups, like any other properly prepared plan, should

be consistent with the general strategy of the group; synthetic due to the internal diver-

sity of the group, and at the same time clear; fl exible, enabling changes and adjustments,

also in their implementation phase, realistic (practicable), comprehensive, comprising

all important human resource management areas; coherent; oriented towards the future

and development of the group as a whole and the economic entities that form it; based

on knowledge, experience and innovativeness of their creators. Only then can they fulfi l

the role of the most important tool for human resource management in complex, multi-

level business organisations, such as capital groups.

Various types of personnel strategies can be encountered in the operating prac-

tice of national and international capital groups: quantitative and qualitative, off ensive,

defensive, personnel fi tness, internal competition, cultural harmony, etc. Development,

implementation and assessment of a given personnel strategy of the capital group is

a diffi cult and complex process. Th ey pose a multitude of problems, dilemmas and chal-

lenges to decision-makers of strategic enterprise groups [Zając 2012, pp. 96–97]. Solv-

ing them eff ectively can be considered one of the crucial success factors of strategic hu-

man resource management in capital groups.

Strategic human resource management in capital groups in light of empirical research

“Strategic human resource management” was one of the research modules in the

capital group / enterprise covered by the empirical research programme. Th e programme

is being executed as part of the research project titled Human resource management in

capital groups, funded with a grant received from the National Science Centre under

240 Czesław Zając

241

decision number DEC-2012/05/B/HS4/02348, by an inter-faculty team composed of

researchers of the Wrocław University of Economics and led by the author of this study.

Th e research was more extensive, it comprised qualitative research and quantitative

research. Th e qualitative research covered the issues of human resource management in

an enterprise group in the strategic and operating dimensions as well as organisational

culture and the intraorganisational communication system. It was carried out with the

focus group interview and free-form interview. Th e interviews were carried out with

managers representing the examined capital groups. Th ey included i.a. President of the

Management Board of the group, HR Director of the key business unit within the capi-

tal group, HR Manager in the Wrocław-based subsidiary of the international capital

group.

Th e quantitative research on the process of developing the personnel strategy, its

thematic scope and its relationships with the global strategy of the examined entities

was conducted in 101 capital groups located in Poland. Th e majority of the enterprises

in the research sample were companies belonging to Polish capital groups (73%), 17%

were companies owned by international capital groups with the parent company abroad,

and 10% – companies from international capital groups with the parent company in

Poland. Most entities represented operational capital groups (84%), 15% – strategic,

and 1% - fi nancial. Th e most frequently referred to ones were 4 enterprises in the group

(15%), while the average number of companies in the group was 8.4.

Th e data obtained in the questionnaire survey process were provided comprehen-

sively by 101 capital groups, subjected to percentage analysis and basic inductive statis-

tics tools – the statistical test (chi-square) and correlation coeffi cient (contingency coef-

fi cient). Th e variables subjected to the statistical analysis were measured on the nominal

scale of measurement. Th e statistical analysis was carried out with the signifi cance level

=0.05. Th e strength of relationships between the variables, in turn, was assessed with

the use of the contingency coeffi cient, the value of which is normalised within the range

[0-1] – the closer the coeffi cient value to unity, the stronger the relationship between

the examined variables.

What follows from the conducted research is that 92% of the analysed capital

groups have a global strategy, whereas 41% of them build a personnel strategy. In

order to check the relationship between the existence of the business strategy and

development of the personnel strategy, the chi-square independence test was car-

ried out. Th e ² (1.101)=0.034, p=0.853 test revealed that there was no relationship

between the strategies. Hence the fact that the existence of the business strategy in

capital groups does not determine development of the personnel strategy there. Th e

statistical analysis did not show relationships between developing the business strat-

egy and the personnel strategy. With an additional comparison to the percentage

analysis, it can be concluded that the analysed capital groups do not treat human re-

sources strategically. Even if the groups have the personnel strategy, its relationships

with the global strategy are quite loose. During the empirical research, it was decided


242

to check also the form assumed by the personnel strategy in capital groups. In order

to identify the relationship between the existence of the personnel strategy and its

form of a formalised document, the chi-square independence test was also used. Th e

² (1,101)=39.833, p=0.000 test. In this case, the statistical signifi cance p is lower

than 0.05, and therefore it needs to be assumed that there is a relationship between

the variables. Th e contingency coeffi cient value is C=0.532, which means that the cor-

relation is moderately strong.

It also needs to be emphasised that the results of the research prove that the range

of the personnel strategy covers all companies in a given group in merely ca. 1/3 of the

capital groups which have the personnel strategy in place. In other cases (85% of the

examined business entities), the personnel strategy is developed only for the purpose of

individual enterprises run by subsidiaries or several entities in the group. In such cases,

where the personnel strategy is developed for the purpose of all entities in the capital

group, it is devised:

– in 37% by the HR unit employees of the parent company;

– in 34% by a team composed of selected HR unit employees of the parent company

and HR unit employees of daughter companies;

– in 22% by Members of the Management Board of the parent company;

– in 7% by a team of selected Members of the Management Board of the parent

company and Management Boards of daughter companies.

Th e respondents specifi ed the basic assumptions of the pursued personnel strat-

egy. 24% of the respondents indicated reliance of the strategy on the “soft” human

resource management, which was additionally specifi ed in the questionnaire by point-

ing to characteristics such as investment in the human capital, expanded social activ-

ity, preference for long-term employment, etc. Basing the strategy on “hard” human

resource management principles, which was additionally specifi ed by means of char-

acteristics such as reduction of employment costs, minimisation of outlays for train-

ing, preference for short-term employment, etc., was declared in merely 3% of the

cases. Th e solution proving the mixed model, based both on “soft” and “hard” human

resource management rules, was selected in 73% of the indications [Bąk-Grabowska,

2015, pp. 24–32].

An illustration of the quantitative research, the results of which were presented

synthetically above, is three case studies regarding development, popularisation and re-

porting the personnel strategy and the problems which occurred in practice in all cru-

cial phases of strategic management of human resources in the examined business or-

ganisations. Th ey concern Impel S.A., Bombardier Transportation Polska sp. z o.o., and

Gigaset.

In two out of three enterprises covered by empirical research, which belong to the

abovementioned capital groups, i.e. in Impel Cleaning (Business Unit no. 1 in Impel

S.A. Capital Group) and in Bombardier Transporatation Polska sp. z o.o., owned by

Bombardier Capital Group, formalised personnel strategies are existent and applied.

242 Czesław Zając

243

1. Building, implementing, popularising and assessing the personnel strategy in the analysed capital groups

Th e procedure (process) called “Human Resource Management” is specifi ed at the

level of the entire Impel Group in the Quality Management System. It translates into an-

nual goals and objectives. Th e eff ect of such a decomposition is i.a. the annual training plan

used in the subsidiaries operating within Impel Cleaning. Specifi cation of the provisions of

that procedure in the form of substantive descriptions of the key HR goals and objectives,

including the strategic ones, is made by the HR Director located, to date, in the structures

of Business Unit no. 1. Th e personnel strategy in the form of a strategic plan in the area of

human resource management (a formalised document) is prepared there and its implemen-

tation at the Business Unit level is planned, which – according to the senior management’s

predictions – should facilitate communication with middle managers and line managers.

Th e goals and objectives of the personnel strategy of IMPEL Group and Business

Unit no. 1, which was covered by the empirical research, are identical to the goals and

objectives specifi ed in their business strategy and strongly support it. Th ey are presented

in Tab. 2.1.

Tab. 1. Th e major goals and objectives included in the personnel strategy in IM-

PEL Capital Group

The major goals and objectives included in the personnel strategy in

IMPEL Group / IMPEL Cleaning

Implementation level

Achieved In progress Intended

Increasing motivation and competences of the ma-nagement from direct supervision to the President (all persons who have contact with customers)

X

Strengthening the employer’s image X

Developing competences of employees with respect to selling and supplying numerous products X

Forming the image of a friendly employer permanently X

Source: own work based on the results of empirical research

Active participation of the HR Manager (HR Director) and Training Manager,

OHS Representative, Recruitment Specialist, and HR & Payroll Specialist was ob-

served in the development of this strategy by the Personnel Strategy Development

Team. At the Capital Group level, external consultants – representatives of DEKRA

Polska – also took part in preparing provisions of the strategic procedure “Human Re-

source Management” by fulfi lling the role of moderators of strategic sessions run by in-

ternal Quality Management Specialists.


244

A contract was concluded with two external companies specialising in preparation

of analyses of the strategic situation in the sociocultural sphere for the purpose of build-

ing the personnel strategy in IMPEL Group. Th e result of this work was a diagnosis of

the state of organisational culture and human capital of the enterprises constituting this

capital group, carried out with the use of the well-known SWOT method, which is com-

monly used in strategic management. It needs to be emphasised, however, that the analy-

sis of organisational culture and social potential of the economic entities operating within

IMPEL ended at the stage of identifying sociocultural strengths and weaknesses due to

lack of further interest in these issues on the part of the Group’s Management Board.

Th e discussed personnel strategy (strategic human resource management proce-

dure) was implemented in the examined capital group through:

– meetings of the management at its various organisational levels;

– training;

– “cascading” manager engagement in the process;

– quality audits oriented towards achievement of goals and objectives in the Group’s

personnel sphere, in accordance with the provisions of the Quality Manual.

Additionally, in connection with the personnel strategy prepared for Impel Clean-

ing, two-person internal audits are planned to be launched in this business unit for the

purpose of implementing this strategy.

Th e discussed strategic HRM procedure was popularised in IMPEL’s organisa-

tional structure through:

– management briefi ngs and meetings of the Management Board and Group’s man-

agers;

– annual reviews of the management’s achievements;

– the management gala;

– various corporate media used for intraorganisational communication, i.a. the in-

tranet, audiobooks, information packages for a given job (the sales representative

package, the team leader package), posters, information boards, leafl ets.

Achievement of the goals and objectives specifi ed in IMPEL’s personnel strategy

is assessed through the employee satisfaction survey carried out by Contact Centre un-

der supervision of the HR Department of Business Unit no. 1. Th e results of the Survey

are fi rst received by the Management Board of the Group, and after discussing them,

they are forwarded to lower management levels. Moreover, for the purpose of such as-

sessment, formalised actions and indicators are used, including: survey of the climate of

cooperation with Support Divisions conducted by the Business Division, survey of per-

sonnel operation usefulness in the Group, and assessment of the annual training plan

implementation degree.

Th ere is a personnel strategy in Bombardier Group in the form of a formal docu-

ment, encoded and sent to HR Departments of individual business units (subsidiaries).

It is formulated, like all other partial (functional) strategies, for three-year periods. In

Bombardier Transportation Polska sp. z o.o., in turn, there is no formalised personnel

244 Czesław Zając

245

strategy in operation. Only assumptions, goals and objectives in the personnel sphere

are formulated there to refl ect the provisions of the formal personnel strategy of the

whole Group, and they are pursued at the “local” subsidiary level.

According to the respondents, the most signifi cant goals specifi ed in the personnel

strategy of Bombardier Group is acquiring optimal human resources by attracting and

maintaining talents in the organisation. Th is goal fi ts in (corresponds with) one of the

key strategic business goals, that is expanding strongly over non-European markets and

remaining on the markets by the Group, which is possible i.a. by supplying highly pro-

fessional business projects in a timely manner. Th is requires human capital with appro-

priate potential of knowledge and skills, capable of generating effi cient business solu-

tions. Such a correlation of strategic personnel and business goals proves a high degree

of strategic integration in the examined capital group.

Neither the HR Manager nor any other managers of the analysed Enterprise took

part in building the personnel strategy of Bombardier Group. It is one of the manifes-

tations of strong centralisation of the personnel function in the organisational structure

of that capital group. Th e said strategy was developed in the European Headquarters

of Bombardier in Berlin. As a rule, external consultants do not participate in the works

on strategy building in that capital group. Exceptionally, they provided consultancy to

strategic decision-makers of Bombardier about an effi cient method of changing the or-

ganisational structure of the enterprise run by Bombardier Transportation Polska.

Th e personnel strategy of Bombardier is implemented and popularised during re-

gional business meetings. Electronic mail and videoconference are also used for this

purpose. Information with this respect is communicated top-down. Th e achievement of

the goals and objectives specifi ed in the personnel strategy of the Group is assessed at

meetings of the management of Regional Business Units of Bombardier Group, during

which Regional HR Directors present the performance of the tasks with which they

were entrusted to the entire Regional Management.

In Gigaset, at the level of the Group and the analysed subsidiary, no formal per-

sonnel strategy was identifi ed, yet it is planned to prepare and implement a strategic

plan in the sphere of human resource management for the period of 5 years. Accord-

ing to the respondent, the most important goal to be achieved in the planned person-

nel strategy was to ensure a proper quantity and quality of managers and specialists,

adequately to the operating needs of the enterprises run by the subsidiaries operating

within Gigaset. It was assumed there that business goals should be directly supported

by the goals and objectives specifi ed in the personnel strategy, which needs to be evalu-

ated positively from the viewpoint of methodology and pragmatism of developing the

personnel strategy treated as one of the crucial functional strategies implemented and

executed in business organisations.

In the works on developing the plan, participation of the HR Manager and other

crucial representatives of the Company’s management is assumed. Yet engagement of

external advisers (consultants) is not planned.


246

Th e information about the intended method of implementing the prepared per-

sonnel strategy, popularising it in the Group’s organisational structures, and assessing

the pursuit of the goals and objectives included in the strategy was not obtained in the

course of the conducted research.

2. Problems accompanying development, implementation and popularisation of personnel strategies in the capital groups subject to the research

Eff ectiveness of strategic human resource management in capital groups depends

on numerous factors. Such management, discussed in the context of the entire stra-

tegic management process in the enterprise group, should be considered comprehen-

sively [(16)Armstrong 2007, pp. 49–50; Gableta 2004, p. 167]. Such management is

abundant with many diverse problems. Th ey should be solved such that the strategy

enables achievement of the expected positive eff ects ensured by strategic integration in

the structural dimension as a good strategic plan and in the executive dimension as an

eff ective tool for the group’s human resource management, which is used at its highest

management level. Strategic problems result from “location”, an internally complex and

conceptually and executively diffi cult strategic process of human resource management

in the space defi ned by the specifi city of a multi-entity organisational structure, such as

the enterprise group. In any architectural structure of the capital group, which is a de-

rivative of its organisational and structural model, such management is a process of the

dominant entity aff ecting the behaviours of its subsidiaries and crucial competences of

such entities in the social, organisational and fi nancial space. It integrates the entities

around the goals defi ned in the general strategy and the business strategy. As part of

strategic management of capital group’s human resources, the dominant company, as

a regulatory and dispositional centre, exercises a strategic control over its subsidiaries

with respect to compliance of their operations with the assumptions of the personnel

strategy and the degree to which the goals and objectives included in the strategy are

achieved. Th e scope of such a strategic control depends on the scope of power held by

the dominant company and the organisational status of the subsidiaries. In terms of

organisation, the dominant position of the parent company should be manifested stra-

tegically in its management focusing on the issues that are most essential to the whole

group and on the crucial problems of their own company. Th is postulate is refl ected

in the phenomenon of separating strategic and decision-making centres within head-

quarters of such corporate holdings, which in turn comprise strategic human resource

management centres. Th is phenomenon has been noticeable in the operating practice

of large international holdings in recent years.

Strategic human resource management in capital groups faces multiplicity of prob-

lems, the nature of which can be organisational, methodological, personnel, cultural and

fi nancial. One of the goals assumed by the authors of the presented research was to ana-

246 Czesław Zając

247

lyse and assess the manifestations and nature of this kind of problems occurring in the

processes of formulating and implementing personnel strategies in the capital groups

covered by the empirical exploration. From among the capital groups enumerated at the

beginning of the presentation of this part of the results of the research, it was possible to

identify problems falling into the abovementioned classes only in IMPEL S.A. Capital

Group in Wrocław. Th ey are presented in Table 1.

Among the problems occurring in the processes of building as well as implement-

ing and executing the personnel strategy in IMPEL S.A., problems located in virtually

all essential areas of their occurrence in this type of processes (problem groups, classes)

were identifi ed. Th e results of the research demonstrate that what is dealt with there

is both personnel and cultural as well as organisational and procedural, and fi nancial

problems. From the viewpoint of eff ectiveness of actions for developing an effi cient

personnel strategy and its proper implementation and execution, social problems, and

in particular a relatively low level of consciousness of the representatives of the senior

management of the Group as regards the rank of cultural components and the so-called

soft HRM in managing such a complex organisation, were found crucial by the inter-

viewed representative of the analysed capital group. Th is is probably the direct cause of

“weak” motivational and communicative actions oriented towards reinforcing manager

and employee engagement in the works on the personnel strategy and the cause of de-

termining a too low “strategic budget”. Th e funds specifi ed in the budget, in the opinion

of its administrator and at the same time the “owner” of the strategic plan in the person-

nel area of the Group, constitute a real obstacle, which hampers proper achievement of

the goals and objectives included in the plan.

Tab. 2 Problems accompanying the development, implementation and execution of

the personnel strategy in IMPEL S.A.

Nature(problem area)

Development of the personnel strategy

Implementation and execution of the personnel strategy

Personnel (HR) Low motivation of managers to take part

in the works on developing the personnel

strategy

Resistance to change – an eff ect of

implementing a new project

Cultural Secondary signifi cance of the so-called

soft HRM and organisational culture at-

tributed by Members of the Management

Board of the Group

No motivation for additional engage-

ment, rewards granted only for perfect

observance of the key values recognised

by IMPEL Group

Organisational Excessively expanded hierarchy of power

which hampers approval of the pursued

objectives or obtainment of consent for

their fulfi lment as part of the strategic

analysis

Relatively poor communication for the

purpose of popularising the new strategy

among the staff of the entities forming

IMPEL Group


248

Nature(problem area)

Development of the personnel strategy

Implementation and execution of the personnel strategy

Procedural No developed standards for intraorganisational cooperation for the purpose of preparing the personnel strategy

No formal procedure for im-plementing a new personnel strategy – no model of conduct in the Group with this respect

Financial Relatively too low funds (“short blanket”)

Too low budget hampering proper achievement of all stra-tegic goals

Other, what? Primacy of operational actions over development-oriented actions – excessive burdening of HR Specialists with current works


Solving the indicated problems properly as early as at the stage of formulating the

personnel strategy exerts a considerable impact on the effi ciency of the entire strategic

human resource management in capital groups. It requires knowledge, experience, ma-

turity and intuition from strategic decision-makers employed in the parent company

when they fulfi l the roles of: architects, supervisors and coordinators of the personnel

strategy of the entire capital group. Th e managerial competences held prove the corpo-

rate strategists’ capability to manage key competences of the whole enterprise group ef-

fi ciently. As shown by the results of the empirical research, IMPEL S.A. capital group

faced problems in virtually all areas of its operation, i.e. social (personnel and cultural),

organisational (procedural) and fi nancial ones. It is symptomatic that the interviewed

representative of the Group found mentality of the senior management the essential

problem from the viewpoint of its impact on the effi ciency of strategic management of

the Group’s human resources. Th e problem is manifested i.a. in the low rank attributed

by Members of the Management Board of the Group to the issues of soft HRM and

organisational culture components. Th is results in “weak” motivation and a low level

of internal communication for popularising the personnel strategy among the Group’s

employees and managers, and allocation of insuffi cient funds for its implementation.

Simultaneously, this became an impulse for commencing work on preparing a diffi cult

and complex project of cultural transformation in the examined organisation.

As was emphasised in the fi rst part of this study, it is people, as the only of all re-

sources, that determine the degree of activity and engagement in the company’s opera-

tions and, what follows, its general condition. Hence, they are of priority importance

in implementing the organisation’s strategy. Unfortunately, the presented results of the

248 Czesław Zając

249

empirical research do not confi rm such an approach. Th is is because they prove that

people are not treated as the strategic resource of the organisation.

With reference to the literature in strategic management, it was concluded that the

strategy of the capital group should be developed for:

– the capital group as a whole (the global strategy),

– individual areas of its business activity (business strategies),

– individual functional areas (functional strategies – including the personnel strat-

egy).

After analysing the relevant literature and comparing it to the results of the em-

pirical research, the emerging thought is that the solutions applied in capital groups are

not optimal since:

– in the majority of the examined cases, the capital groups had no personnel strate-

gies,

– there are one-sided, reactive, connections between the general strategy and the per-

sonnel strategy.

Th e “optimal” solution is understood as continuous interaction between the gen-

eral strategy and the personnel strategy, which forms bidirectional connections between

these strategies. Th is means that the personnel strategy should not be secondary with

respect to the general strategy and that all issues regarding human resources should be

taken into account before choosing the global strategy. Th e indicated approach “forces”

the organisation to give human resources priority and to treat them as such in the long

term. It opposes to passive adaptation of the organisation to the changeable environ-

ment. “Betting on” the human potential ensures success. Being aware that they are the

most signifi cant resource, people off er fl exibility in exchange, at the same time ensuring

survival, development and pursuit of economic goals to the organisation.

Moreover, as follows from the conducted research, employees of HR Departments

of subsidiaries in the capital groups subject to the research are not strategic partners in

business and participate in developing the personnel strategy, if the group has one in

place, in merely ca. 1/3 of the cases. As a consequence, individual HR Managers or Di-

rectors of the companies receive only guidelines regarding operations of the manage-

ment to be performed in a given unit and funds (budget) that can be used for fulfi lling

objectives in the area of managing other groups of employees. When confronting the

mentioned actions with the relevant literature, it is worth pointing to the fact that fa-

miliarising the personnel with the goals, aspirations and strategy of the group is postu-

lated. Th is is supposed to make employees realise that they participate in pursuing ma-

jor challenges without restricting their role to mere “pawns in the game”.

In the traditional one-instance enterprise, it is its management, understood as the

Management Board, Supervisory Board and line management, that has the right and

obligation to develop the personnel strategy and the general strategy. Th e HR Manager

should provide support and consultancy to the management in this process. Th is trend

is worth transferring onto the ground of capital groups and allow the people responsible


250

for implementing the process of human resource management in the subsidiaries of the

group to make strategic decisions for the whole group.

Th e solution proposed to the examined capital groups, which might give human

resources priority is the presented interactive approach to building the personnel strat-

egy. Th is approach assumes that the organisational potential of the enterprise is one of

the most important factors determining strategic choices. It can be acknowledged that

the interactive approach points to human capital as the source of competitive advan-

tage, which determines the group’s success. Hence, human resources are treated as the

foundation of the future strategy and their analysis is carried out as early as at the stage

of strategic analysis. It is also taken into accoun t at successive stages of formulating and

pursuing the general strategy.

Conclusion

Th e group’s personnel strategy should be synthetic due to diversity that is char-

acteristic of multi-instance organisations, understandable and clear. It must focus on

the group’s priorities, maintaining fl exibility, that is capability of quick adaptation to

changes. It should be formulated as a result of continuous analysis of the holding’s situ-

ation and in the direction pursued by the capital group. Formulation of the personnel

strategy should become an integral part of formulating the general strategy in the ana-

lysed capital groups. Th is is because in this case the personnel strategy will determine

the direction to be followed by the organisation when treating people as the crucial suc-

cess factor on the one hand, and support implementation of the strategies of individual

groups on the other hand. Th is will ensure also active participation of the groups’ man-

agement in making strategic HR decisions. In the capital groups covered by the em-

pirical research, the position of HR Directors should be strengthened and they should

be treated as equal partners in the discussion on the group and should engage in devel-

oping both strategies: personnel and general one. Th e above suggestions, which allow

for the priority and strategic signifi cance of employees of the examined capital groups,

might contribute, as it seems, to their quicker development.

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Project carried out under statutory research of

International Management Department,

Cracow University of Economics.

Management Science during Destabilization Global Perspective

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