mid-american

Journal of Business
VOLUME 13, NUMBER 2
FALL 1998

EDITORIAL
Reflect What We Teach 3
W. Rocky Newman

DEAN’S FORUM
Parterning Our Way into the 21st Century 4
Neil A. Palomba

Issues Influencing Use of Electronic Data Interchange Technology 7

Charles Watts, Patrick T. Hogan and Mark Treleven

Information Systems Satisfaction 15

Patricia A. Essex

Forecasting for the Small Retail Business 27

J. Holton Wilson and Robert Miller

Gender Differences in the Job Attitudes of Accountants 35

Jane E. Baird, Robert C. Zelin II and Dale E. Marxen

Influence Tactics as Signals of Fit and Precursors of Turnover 45

Rebecca A. Thacker

BOOK REVIEW
The Human Equations 55
Sandra A. King

Net Gain 58
Renee M. Wachter
 EDITORIAL
Reflect What We Teach: Practice What We Preach
I had the opportunity a few years ago
to make a presentation to the supplier
advisory board of a large Fortune 100
corporation. They invited me to join them
during the February meeting in Florida. It
was a great opportunity and I blew it big
time! While I had the top people from
W. Rocky Newman some very successful companies together
in one room, I could have explained the
Editor-in-Chief
latest views of academia on the strategic
directions of the field. I could have described
the latest pedagogical philosophies or
provided an overview of the latest research
thrusts. Instead, I presented a very tight
piece of research I was just completing. It
was a solid contribution that moved the
field forward. It was a blown opportunity.
An analogy would be if the person
who teaches Football Theory 101 could
somehow get Vince Lombardi, Paul
Brown, and Bill Walsh together for some
teaching tips. Instead of seeking the
philosophies, strategies, and principles that
made them great coaches, he only wants
to show them the new play he just drew
up—he’s blow an opportunity.
I think the Mid-American Journal of
Business can provide a similar opportu-
nity. We’ve historically focused on
publishing work with a scholarly interest
yet with a practitioner orientation to its
presentation. We have and will continue
to look at topics of particular interest in
our special issues and we’ve been noted
for our readability, practicality, original-
ity, and implications of our research
content (www.anbar.com). With a mixed
readership (academic and practitioner) we
also have the potential for a very useful
dialogue between business and academia.
The special issue on Crossing Functional
Lines (Spring 1998) included an Executive
Viewpoint by Thomas Stallkamp, President
of Chrysler Corporation. His viewpoint
confirmed the changing perspectives of
successful businesses that we academics
are just beginning to recognize. He
described a change from a functional
perspective to a cross-functional perspec-
tive. Looking outside the firm, he detects
Mid-American Journal of Business, Vol. 13, No. 2
movement from an isolationist perspective
to that of an extended enterprise with broad
views of the supply chain. His message
confirmed the articles in that issue.
Executive viewpoints such as the one
posed by Mr. Stallkamp facilitate a dialogue
between academics and practitioners. They
provide direction for our work in academia
as well as confirmation that the work we are
doing is relevant. To that end, we would like
to encourage suggestions for future Execu-
tive Viewpoints and submission of schol-
arly works consistent with their messages.
While still in the planning stages, the
next special issue will focus on Supply
Chain Management. The issue will build
on the extended enterprise concept and is
consistent with comments from several
recent Dean’s Forums. In the Fall 1996
issue, Dean Arndt of Central Michigan
University spoke of rapid change in the
ways of doing business. In the Spring
1997 issue, Dean Short from Miami
University looked at redefining the cus-
tomer and their needs. Dean Graf from
northern Illinois University stressed the
changing role of communication between
universities and businesses. In the spring
of 1998 issue, Dean Schmotter from
Western Michigan University called for
business schools to take a leading role in
higher education reform. In this current
issue, Dean Palomba of Ball State
University suggests partnering between
business schools in an attempt to better
meet the needs of students and employers.
These columns have been right on
target with the concepts of the extended
enterprise and supply chain management,
where seller looks beyond the immediate
customer to the customer’s customer and
the buyer works with both the supplier
and the supplier’s supplier. An extended
view of the customer, partnering, commu-
nication requirements across functions
and between partners in the supply chain,
all happening at unprecedented speed
should not only become part of what we
teach but should be mirrored in our
academic processes as well.
3
 DEAN’S FORUM
Partnering Our Way into the 21st Century
Neil a. Palomba
Dean, College of Business
Ball State University
4 Mid-American Journal of Business, Vol. 13, No. 2
The Mid-American Journal of
Business is in its thirteenth successful
year. This journal would not be possible
without the partnership of several Mid-
American Conference (MAC) schools.
Currently seven MAC business schools
support the Journal by providing staffing
and financial resources. In the future I
hope to see even more MAC business
schools (there are currently twelve)
support this Journal so that it can
achieve an even higher level of excel-
lence and visibility.
This successful partnering by seven
MAC business schools to build a very
respected applied academic journal can
set the example for more partnering
among MAC business schools (and
similar groups of business school) as we
enter the 21st century. We all know the
tremendous competitive pressures that are
engulfing higher education and that
business schools are probably facing even
more serious difficulties. What better way
to counter some of these pressures than
by partnering in new areas? In this
column I would like to briefly discuss
four areas for thought.
International Exchange Programs
MAC-type schools (such as Ball State
University) have a difficult time attract-
ing a sufficient number of students to run
a limited number of international ex-
change programs. Wouldn’t it be more
efficient if a number of MAC business
schools joined together to make all of
their exchange programs available to all
of the students on all campuses? An
informal partnership can be formed or, if
an appropriate consortium already exists,
perhaps some of the MAC schools can
support it.
Academic Assessment
For the past seven years AACSB
business schools have been working to
implement academic assessment pro-
grams. This is another area where MAC
schools can join forces. At first, ex-
changes can be based on sharing funda-
mental information and assessment
processes that work. Eventually assess-
ment results taken from a group of
similar business schools can be shared. In
doing so, the dialogue among faculty at
one business school (which is the most
important impact of a successful assess-
ment program) can become a dialogue
among the faculty of several similar
business schools.
Research
Some faculty already engage in joint
research with colleagues at their school,
and to some degree with colleagues at
other business schools. Coauthoring will
become even more important to business
disciplines in the 21st century. Thus,
business school groupings (such as the
MAC) can explore ways to encourage
research jointly performed by faculty
teaching at different business schools.
We may wish to emphasize interuni-
verstiy communication regarding research
topics, perhaps utilizing the Internet—
especially after the Internet incorporates
telecommunications at a higher quality
level than is currently available.
Teaching
The last reason I will discuss is the most
difficult to accomplish. With the increas-
ing pressures on MAC-type business
schools, we may find in one or two decades
that for some of our degree programs to
flourish (undergraduate or graduate)
Graf

some MAC schools will have to join
forces in offering options, majors, and/or
degree programs. Today we cannot do
this easily. But in a few years when the
Internet offers quality transmissions and
low-cost telecommunications available to
all, it may become realistic for two or
three similar business schools to join
forces to offer a degree program or two.
What is almost impossible today may
become quite commonplace in a few
years.
An example of a partial teaching
partnership currently exists among the
MAC. Ball State University and Miami
University (Ohio) have already cospon-
sored an undergraduate entrepreneurship
business plan competition, which was
extremely well-received by both corpora-
tions and business schools. This will be
an annual cosponsored event.
One last thought. Today partnering in
our disciplines usually refers to one
business school partnering with one or
more corporations. However, if groupings
of MAC-type business schools can achieve
even some of the above-mentioned
partnering activities, imagine the opportu-
nities that might develop for such partner
schools as they approach regional (and
perhaps national) businesses to partner in
distance education (credit or noncredit),
applied research, and other appropriate
endeavors. ■

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Journal of Business
Mid-American Journal of Business, Vol. 13, No. 2 5
Issues Influencing Use Of Electronic Data Interchange
Technology: An Empirical Study
Abstract
To compete effectively in today’s global marketplace,
a company must have a competitive supply chain. A
competitive supply chain requires an ability to communi-
cate rapidly and accurately. Electronic Data Interchange
(EDI) is one method that world class organizations have
successfully used to improve the communication of
orders and design changes. However, the growth in use of
EDI has been much slower than projected. This article
discusses the results of a survey to identify some of the
barriers to the use of EDI and some possible methods to
overcome those barriers. The results of this study show
that organizational resistance to change is lower for EDI
users than for nonusers. The results further indicate that
awareness of technical issues is higher for EDI users.
Suggestions regarding how to help overcome the barriers
to using high technology innovations such as EDI are
provided.
Introduction
Many companies have recognized that utilizing high
technology is an important element in maintaining and
improving upon their competitive position in both the
domestic and international marketplaces. As a result, the
demand for computer technology has experienced
tremendous growth in recent years. Increasingly, the most
competitive companies are those that employ the most
technology in their methods (Prabhaker, Goldhar, and Lei
1995).
One segment of business operations that has witnessed
major improvements through the application of computer
technology is the purchasing function and its supply
chain. Purchasing has witnessed the development of high-
tech solutions that integrate several phases of the supply
chain. In a recent survey addressing logistics priorities,
more than half the respondents mentioned supply chain
improvements that included more effective information
systems (Artman and Sabath 1995). One example of
information technology that is receiving substantial
interest in this area is Eelectronic Data Interchange (EDI).
Charles A. Watts, John Carroll University
Patrick T. Hogan, John Carroll University
Mark D. Treleven, John Carroll University
…more research is needed to
understand the factors that act as
barriers to the use of [emerging
information systems].
Strategist Michael Porter noted that because technol-
ogy is constantly changing, global competitiveness
requires the ability to innovate rapidly (Porter and
Van der Linde 1995). The adoption and diffusion of
innovations is a subject that has been widely studied
across a broad spectrum of disciplines including social
science, marketing, engineering and management. While
the literature on innovations and their adoption by
organizations is extensive, relatively few studies focus
on high technology, “new to the world” systems innova-
tions whose adoption and use necessitates organization-
wide changes (Rogers 1983). Given the speed with
which emerging information systems are enabling the
transformation of business organizations and the ways
in which they operate, more research is needed to under-
stand the factors that act as barriers to the use of these
technologies.
Previous publications have provided some guidelines
to increase the odds of success with EDI (Monczka and
Carter 1988). However, more empirical evidence is
needed to answer critical questions about the most
effective means of introducing EDI into organizations.
There have been studies on the barriers encountered in the
decision to use complex systems technology like EDI
(Walton and Lewis 1995; Sriran and Banerjee 1994;
Benjamin, de Long, and Morton 1990). However, none
of these studies have been able to show which barriers
prevent use. This study seeks to fill that void by gather-
ing data about the experiences of a sample of companies
in the Midwestern United States. This research was
undertaken to provide insight into what factors may act as
barriers to the use of EDI in organizations.
7
Watts, Hogan and Treleven
Electronic Data Interchange
Electronic data interchange (EDI) is the direct elec-
tronic transmission between two organizations, computer
to computer, of standard business forms, such as purchase
orders, advanced shipping notices, invoices and the like
(Chester 1986; LaLonde and Emmelhainz 1985). EDI is a
composite group of tangible and intangible elements,
consisting of hardware, software, procedures, and training
designed to bring integration to the supply chain linking
organizations. Because EDI is a truly cross-functional
systems application, its implementation infuses radical
change into the environment of an organization. This
innovation can be expensive in terms of both time and
money, thus it represents a major investment risk to the
organization that chooses to use this technology. How-
ever, the benefits of using EDI can be significant. It has
been shown to: 1) increase productivity by 75 percent
(Tobey 1996), 2) reduce purchase order cost from $109 to
less than $10 (Anonymous 1996), and 3) save companies
significant costs; such as Chrysler that saves about $220
million per year (Mukhopadhyay, Kekre, and Kalathur
1995). Despite benefits such as these, the adoption and
use of EDI is much lower than many practitioners and
academicians had predicted (Walton and Lewis 1995).
EDI was projected to be widely used by 1990, but
recent articles have shown that actual EDI usage is still
less than 50 percent. One recent survey on EDI showed
that only 40 percent (122/299) of their survey respondents
had adopted EDI (Sriram and Banerjee 1994). The motor
carrier industry, a key component of the supply chain, has
exhibited a similar rate of EDI usage (43% = 83/181)
(Crum, Premkumar, and Ramamurthy 1996). In purchas-
ing, EDI use is growing but less than 25 percent of
original equipment (OEM) or maintenance, repair, and
operating supplies (MRO) are actually sourced by
electronic methods (Murphy 1996). United States busi-
nesses surveyed averaged less than twelve EDI trading
partners, with the average number of transactions being
less than eight (MacLeod 1996). Why is the use of EDI
not growing more rapidly? What are the barriers that are
preventing firms from using EDI and can these barriers be
overcome? This research helps to determine the barriers
to the use of EDI and to provide some guidelines to help
managers overcome these barriers.
Research Objectives
Understanding which factors act as barriers to the use
of high-tech products is important. Through research into
this complex aspect of the organizational diffusion
process, managers may be able to reduce the uncertainty
inherent in high-tech adoption decisions, thereby reducing
the risk of implementation failure. Furthermore, to the
extent that these barriers can be assessed and overcome
within the organization, the probability of successful
implementation of the innovation will also improve. The
8 Mid-American Journal of Business, Vol. 13, No. 2
objectives of this research are: 1) to explore what factors
influence the use of EDI, 2) to empirically derive the
broad dimensions underlying these factors, and 3) to
correlate these dimensions with the actual use of EDI.
Conceptual Issues and Propositions
The four conceptual issues that we are examining in
this study have been addressed in the marketing, manage-
ment, and systems literature. Each of these conceptual
issues has been drawn from previous literature dealing
with high-tech innovations and are presented as proposi-
tions below.
Organizational Resistance to Change. A truly cross-
functional innovation such as EDI involves radical
change to the organization. This enterprise-wide expo-
sure invokes a high level of overall resistance to change
from within the organization (Artman and Sabath 1995).
A cross-functional innovation such as EDI will cause a
change in the structure and work processes of the whole
organization. Some organizations will resist innovation
because of the changes that must occur as result of its
use. This leads to the first proposition.
P1: Organizational Resistance to Change is a barrier
to the use of EDI.
Financial Hurdles. High-tech applications like EDI
are infrastructure investments which entail high initial
costs and provide benefits in the form of a future general
capability that is difficult to quantify, thereby creating
financial barriers to use (Farbey, Land, and Targett 1993;
Artman and Sabath 1995). Many organizations will not
use an innovation like EDI because the implementation
costs are high and it may take a long time to show
positive benefits. This leads to the second proposition.
P2: Financial Hurdles are a barrier to the use of EDI.
Technical Infrastructure. The complex, intangible
nature of high-tech innovations heightens the perceived
risk of the purchase decision (Zeithaml 1981). This is
particularly true in the case of EDI which is an integrative
technology encompassing document design, electronic
funds transfer, and database transactions among multiple
organizational trading partners. This composite mix of
technologies may place a strain upon the support re-
sources available within an individual organization.
Additionally, with respect to EDI, the technological
format is governed by a predetermined and institutionally
agreed upon set of rules known as standards. The use of
standards should imply the reduction of risk, uncertainty,
and entry barriers. However, in the case of EDI, the
standards remain contestable and are still subject to
reinterpretation (Marcella and Chan 1993; Gottardi and
Bolisani 1996). These technology issues could act as a
barrier to the use of EDI and lead to the third proposition.
P3: Technical Infrastructure is a barrier to the use of EDI.
 Watts, Hogan and Treleven

Opinion Leadership. Assistance and support from
knowledgeable personal sources that have previous
experience with EDI such as customers and user groups
help to overcome barriers to use (Zeithaml 1981).
Pressure from a customer may lead to the use of EDI.
Membership in a user group would provide a support
system that may help overcome the barriers to use. The
influence of external opinion leaders leads to the fourth
and final proposition.
P4: Opinion Leadership will help to overcome the
barriers to the use of EDI.
Theoretical Model
Figure 1 shows the proposed model and the relation-
ship between each proposition and the use of EDI. This
figure shows that the first three propositions (P1 through
P3) should be negatively related and that Opinion Leader-
ship (P4) should be positively related since it should help
overcome the barriers. This model does not imply cause
and effect, it only indicates whether the relationship is
positive or negative.
Figure 1
Theoretical Model
Organizational Proposition 1 Proposition 3
Resistance to
Technical
Infrastructure
Change
Use of EDI
individuals were unanimous in their acceptance of these
issues.
A survey questionnaire was mailed to each purchasing
manager of the sample group along with a cover letter
and stamped, self-addressed return envelope. In both the
cover letter and the survey instructions, all respondents
were promised anonymity, as well as a copy of survey
results. The instructions on the survey questionnaire
clearly defined EDI and presented twenty-five statements
relating to the use of EDI in their organizations. Organi-
zational characteristics such as the number of employees
or annual revenue were measured directly. All questions
regarding the four basic conceptual issues discussed
earlier were measured on a five-point Likert scale
(1=strongly disagree; 3=neutral; 5=strongly agree).
Of the 325 surveys distributed, seventy-three question-
naires were returned by the managers, representing a
response rate of 22.5 percent. However six respondents
returned questionnaires which were incomplete or
otherwise not usable. This reduced the effective number
of usable questionnaires received from respondents to
sixty-seven. Of these sixty-seven respondents, 59.7
percent (40) indicated they were using EDI and 40.3
percent (27) indicated they were not using EDI. The
composition of the sample respondents is displayed in
Table 1. As can be seen from Table 1, the respondents
came from a wide range of firms and industries. Close to
half of firms had 250-999 employees (44.5%) which
would make them medium-sized companies, but there
were also small and large firms in the sample.

Table 1
Financial Hurdles
+ Opinion Demographics of Respondents
Proposition 2 Proposition 4 Leadership
By Industry
Manufacturing 63.0%
Wholesale/Distributors 19.2
Service/Retail 5.5
Other 10.9
Methodology
This study is based on a mail survey to members of the By Number of Employees
National Association of Purchasing Managers in the Under 50 16.7%
50 - 99 6.9
Midwest (United States). The targeted respondents were
100 - 249 9.7
purchasing managers because they were the most appro- 250 - 499 27.8
priate informational sources due to their comprehensive 500 - 999 16.7
knowledge of their organization and its EDI usage. The 1000 - 1999 5.5
survey questionnaire was pretested to establish validity. 2000 - 4999 8.3
5000 or more 18.1
Individual items were combined into scales and the
reliability of the items was tested. To encourage a higher By Revenue
and more reliable response, the survey instrument was Under $50 million 38.7%
designed to be brief and free of specialized jargon. The $50 - $149 million 19.4
average survey completion time was estimated to be $150 - $249 million 6.4
approximately twenty minutes. The conceptual issues $250 - $499 million 6.4
$500 - $999 million 3.2
addressed in the questionnaire were reviewed by two
$1 - $2.5 billion 8.0
individuals in industry with strong professional back- $2.5 billion or more 16.1
grounds in third-party EDI services delivery. These

Mid-American Journal of Business, Vol. 13, No. 2 9

Watts, Hogan and Treleven
Results
In addition to descriptive techniques, additional data
analysis performed included factor analysis of responses
to the survey items, followed by logistic regression of the
factor scores. Instrument validity may be defined as
answering the question: Are we measuring what we think
we are measuring? This question is addressed in two
manners in this study. The reliability and construct
validity of the survey instrument are both evaluated.
Reliability
Reliability is the degree to which a test consistently
measures its subject. Stated in another way, reliability is
the accuracy, or precision, of a measuring instrument
(Kerlinger 1986). Since only one administration of the
questionnaire is feasible, internal consistency methods are
appropriate for evaluating reliability in survey research.
The internal consistency method employed for this study
is a generalization of the rationale-equivalence method,
Cronbach’s Alpha (Cronbach 1951). Reliability coeffi-
cients of 0.80 have been suggested as a rule of thumb
gauge for reliable measures in confirmatory research
(Straub 1989). However, for exploratory research such as
the present study, the issue becomes the determination of
a minimum level of acceptability. When questionnaires
are developed for a new area, a researcher usually has to
settle for a lower reliability, at least initially (Gay and
Diehl 1992). Reliability coefficients of 0.60 are consid-
ered adequate in these situations.
The internal consistency of each independent variable
scale in the present study was determined by computing
Cronbach’s Alpha. For each independent variable scale,
the item pool and the Cronbach’s Alpha are displayed in
Table 2
Calculated Reliabilities of Independent Variable Scales
in the Survey Instrument (N=56)
Independent
Variable Scale Item Pool
Organizational Lack of top management commitment to EDI
Resistance to Change Employees were greatly resistant to the use of EDI
Lack of organizational support for the use of EDI
Financial Hurdles EDI necessitates a thorough cost/benefit analysis
Required too much time for EDI to show positive net results
Initial start-up costs of EDI are high
Technical Infrastructure Lack of integrated databases in organization was an obstacle
Standards for data transmission mandated by EDI are confusing
EDI requires complex technology
Opinion Leadership Join EDI user groups to reduce resistance
Major customer providing turnkey solution would reduce resistance
Long term outlook on EDI would help staff see long term benefits
10 Mid-American Journal of Business, Vol. 13, No. 2
Table 2. As detailed below, three of the scales were found
to have Cronbach’s Alpha values exceeding 0.60. As
noted earlier, exploratory research often results in lower
reliability (Gay and Diehl 1992), and these internal
consistency values above 0.60 are considered adequate
for the present study. However, an analysis of the data
shows that the independent variable Opinion Leadership
lacks homogeneity among the items. The survey in the
present study is exploratory in nature, and attempted to
measure a broad spectrum of the independent variables,
while maintaining parsimony in the instrument. The
variable Opinion Leadership appears complex in nature,
and may consist of several sub-constructs. However, it is
not the aim of the present study to develop a specialized
scale for measuring these individual sub-constructs related
to such a complex independent variable. Instead, the
instrument utilized in this survey aims to capture a compos-
ite value for each independent variable in order to perform
the correlative study with the dependent variable. In view
of this goal, a low value on one scale is not considered
detrimental to the purposes of the present study.
Construct Validity
The construct validity of a measure is established by
showing that it is an appropriate operational definition of
the construct it purports to measure (American Psycho-
logical Association 1974). If constructs are shown to be
valid, this would eliminate one potential source of
systematic variance. Since constructs are unobservable, it
is difficult to identify good examples of construct validity
in the literature (Straub 1989). Construct validity may
require a series of empirical studies utilizing different
data collection methods. One alternative approach to
assessing the construct
validity of an instrument
without different data
collection methods, is to
use a quantitative method
such as principal compo-
nents factor analysis
Cronbach’s (Nunnally 1967). Factor
Alpha
analysis seeks to identify
0.80 underlying, unobservable
factors common to two or
more variables, and is
0.76
performed to assess the
construct validity of this
study.
0.63 Factor Analysis Results
In an effort to gain
more understanding about
0.58 the four conceptual issues
associated with EDI usage
examined in this study, as
mentioned earlier,
 Watts, Hogan and Treleven

subjects were asked twenty-five different questions
relating to their organization’s experiences with EDI. To
validate that the survey instrument measured these four
conceptual issues, an image factor analysis of all twenty-
five variables by all sixty-seven subjects’ responses was
performed. Items with low reliability were eliminated
because they could distort the formation of conceptually
legitimate factors (Churchill 1979). Then principal
components factor analysis with varimax rotation was
employed to identify the latent dimensions present in the
purchasing managers’ views of barriers to EDI usage. This
analysis resulted in four independent, interpretable factors
accounting for 63 percent of the variance. These results
are displayed in Table 3.
These results indicate that the analysis produces a
clean factor structure with items loading on the appropri-
ate factors. The measures of the four conceptual issues
demonstrate excellent validity. The four factors in Table 3
correspond to the four conceptual issues that were described
earlier in our model shown in Figure 1. The factor scores
for each of the four factors were retained to be used as
predictor variables in the logistic regression that follows.
Logistic Regression Results
Factor scores for the sixty-seven respondents were
generated on each of the four components and were
utilized as independent variables in logistic regression
with EDI usage as the dependent variable. Logistic
regression was used because the dependent variable is
dichotomous (either the firm used EDI or they did not)
and qualitative, rather than continuous and quantitative.
This study utilizes a multivariate regression model that
considers all factors simultaneously and is not likely to
overstate the significance of any factor.
The results of the multivariate analysis are shown in
Table 4. The first column lists the estimated coefficient
and the second column gives the estimated chi-square
statistics. Logistic regression directly estimates the
probability of an event occurring, in this case the prob-
ability of an organization using EDI. In logistic regres-
sion, the relationship between the independent variables
and the probability is nonlinear, and the estimates will
always lie between 0 and 1. Coefficients are interpreted as
the impact of a one percent change in the independent
variables on the logarithm of the probability that an
organization will use EDI.
Only one of the four propositions presented above are
fully supported by the findings. This analysis confirms
the significant negative relationship of Organizational
Resistance to Change with EDI usage (p < .01). Addition-
ally, the findings indicate a significant positive relationship
of Technical Infrastructure and EDI use (p < .05) instead of
the negative relationship proposed. Finally, the findings
do not indicate a significant relationship with EDI usage
for either Financial Hurdles or Opinion Leadership.
Discussion of Results
Findings: Overall Model
The overall model includes four conceptual variables
as well as an intercept variable. The logistic regression

Table 3
Results of Factor Analysis

Factor Percent Cum.

Loading Eigenvalue Variance Variance
Factor 1: Organizational Resistance to Change 3.434 26.4 26.4
Employees were greatly resistant to the use of EDI 0.821
There was lack of top management commitment to EDI 0.820
There was lack of organizational support for the use of EDI 0.752

Factor 2: Financial Hurdles 2.077 16.0 42.4

EDI necessitated a thorough cost/benefit analysis 0.812
Required too much time for EDI to show positive net results 0.799
Initial start-up costs of EDI are high 0.655

Factor 3: Technical Infrastructure 1.519 11.7 54.1

EDI requires complex technology 0.808
Lack of integrated databases in organization was an obstacle 0.699
Standards for data transmission mandated by EDI are confusing 0.541

Factor 4: Opinion leadership 1.205 9.3 63.3

Joining EDI user groups reduces resistance 0.824
Major customer providing turnkey solution reduces resistance 0.750
Long-term outlook on EDI helps staff see long-term benefits 0.638

Mid-American Journal of Business, Vol. 13, No. 2 11

Watts, Hogan and Treleven
Table 4
Logistic Regression Results
Variable Coefficient Chi-Square
Factor Score for Organizational
Resistance to Change -0.95*
Factor Score for Financial Hurdles 0.06
Factor Score for Technical Infrastructure 0.73**
Factor Score for Opinion Leadership -0.01
Intercept -0.53
Model
n = 67 Model Chi-Square = 14.65*, df = 4, p < .0055
% Correct Predictions = 83.1
* statistically significant at .01 level
** statistically significant at .05 level
model is statistically significant at p < .01. The calculated
chi-square statistic with four degrees of freedom is 14.65,
which exceeds the critical value of 13.28 required for a
99 percent significance level. Thus, there is only a 1
percent probability that the model chi-square statistic
occurred because of sampling error. When all possible
pairs of observations with different usage outcomes are
compared, the model assigns the observation where the
decision to use EDI was positive 83 percent of the time.
This means that when the model predicted that a survey
respondent would have used EDI, its prediction was
correct in 83 percent of the cases.
Findings: Propositions
Organizational Resistance to Change. The first
proposition suggests that Organizational Resistance to
Change is a barrier to the use of EDI, the results from the
logistic regression support this proposition. The estimated
coefficient for this factor score is negative and significant
(at the .01 level). This means that in companies that are
utilizing EDI there is less resistance to change than in
companies that are not using EDI. Therefore, Organiza-
tional Resistance to Change is a barrier to using EDI.
These findings are consistent with those of earlier
research (Gottardi and Bolisani 1996).
Financial Hurdles. The second proposition suggests
that Financial Hurdles are barriers to the use of EDI.
The estimated coefficient for this factor score is positive
and not significant. These results do not support our
expectations, suggesting that Financial Hurdles exist to
the same extent in companies that use EDI as well as
those that do not, and are contrary to the results of
studies cited earlier in this paper. This result implies
that while EDI start-up costs may be high and it is
difficult to show positive benefits immediately, these
12 Mid-American Journal of Business, Vol. 13, No. 2
Financial Hurdles themselves do not prevent the use
EDI. This could indicate that some firms used EDI
regardless of the Financial Hurdles (e.g., they must use
EDI to survive in their market regardless of the cost). At
any rate, our study indicates that Financial Hurdles are
not a barrier to the use of EDI.
7.94
Technical Infrastructure. The third proposition
0.05 suggests Technical Infrastructure is a barrier to the use of
5.22 EDI. However, the estimated coefficient for this factor
score is positive and significant (at the .05 level). These
0.01 results are contrary to our proposition. In fact, these
3.34 results indicate that firms that are using EDI consider
technical infrastructure issues to be important whereas
firms that are not using EDI consider these issues to be of
lesser importance. These issues regarding technical
complexity appear to serve as a catalyst prompting the
use of EDI. One explanation may be that organizations
using EDI are prepared for technical complexity and
welcome its challenge. This finding is consistent with a
profile developed of early adopters of high-tech products
(Rogers 1983). Another explanation of the higher scores
by EDI users may be related to their increased experience
with the technical issues that were encountered during the
implementation which nonusers have not experienced.
This result, combined with Organizational Resistance to
Change, suggests the value of initiatives by several
industry and standards organizations to develop clear and
coherent standards for EDI, especially for later adopters.
Based on the results of this study, Technical Infrastruc-
ture concerns support the use of EDI.
Opinion Leadership. The last proposition suggests
that Opinion Leadership will help overcome the barriers
to using EDI. The estimated coefficient for this factor
score is negative and not significant. These results do
not support our proposition that the support of personal
contacts assists in overcoming barriers to the use of
EDI. These results are also different from the results of
some earlier studies that suggested a customer’s influ-
ence can cause a firm to implement EDI (Emmelhainz
1990). These findings may imply that some suppliers
will not utilize EDI even if it causes them to lose a
customer. The supplier may decide that the cost of doing
business with a particular customer (i.e., purchase of
EDI) is not worth the derived benefit (i.e., keeping that
customer’s business). Therefore, the results of this study
provide no evidence that opinion leadership helps to
overcome the barriers to the use of EDI.
Revised Model
Figure 2 shows how the model was revised after the
statistical analysis. Two factors were found to be related
(Organizational Resistance to Change and Technical
Infrastructure) and two were found to not be related
(Financial Hurdles and Opinion Leadership). Technical
Infrastructure was shown to be positively related rather
than negatively related.

Figure 2
Revised Model
Organizational
Resistance to
Proposition 1 Proposition 3 Technical
Change
+ Infrastructure
p < 0.05
p < 0.01
Use of EDI
Opinion
Financial Hurdles
Proposition 4 Leadership
Proposition 2
Signifigantly Related Not Related
Conclusions
As competition continues to intensify, firms must
explore every alternative for improving their products,
reducing their costs and increasing their corporate profits.
The development of a competitive supply chain is a
critical component of a winning strategy. A competitive
supply chain must have a rapid and accurate method to
communicate order and design changes. EDI is one
method that has been used successfully by some world
class organizations, but the growth in its use has been
much slower than projected. Our article has tested four
propositions to identify the barriers to the use of EDI and
some possible methods to overcome those barriers.
The results of this study show that we were only
partly right in our prediction of what were significant
barriers to the use of EDI (see Figure 2). We had
predicted that three factors may act as barriers to the use
of a high-tech innovation like EDI, and that one factor
may act to overcome these barriers. Of the three
proposed barriers—Organizational Resistance to
Change, Financial Hurdles, and Technical Infrastruc-
ture—the only factor that was significantly proven to be
a barrier was Organizational Resistance to Change. The
only other proposed barrier that was significant, Techni-
cal Infrastructure, was actually shown to support EDI
usage. Additionally, the impact of Opinion Leadership,
proposed to be supportive of EDI usage, was shown to
be not significant.
This study shows that resistance to change at the
organizational level is a barrier to the use of EDI. This
effect is quite strong statistically, and may be due to
the fact that EDI represents such a radical change to
the supply chain. The use of such a radical innovation
can be quite threatening at multiple levels of the
organization: from staff employees to top manage-
ment. The decision to use a technology-driven innova-
tion like EDI represents a disturbing discontinuity to
established patterns. Thus the staff is understandably
reluctant to undertake its implementation. However, no
Watts, Hogan and Treleven
matter how reluctant an organization is to take advan-
tage of a new innovation it still may have to utilize the
innovation to survive.
Although Financial Hurdles may be important issues,
it was shown that they do not act significantly to prevent
the use of EDI. This result implies that although the use
of EDI may be costly, it does not act as a barrier to use.
Furthermore, the study suggests that Technical
Infrastructure problems have a positive relationship to
the use of EDI. In fact, our results show that awareness
of the technical issues is higher for EDI users than for
nonusers. As the innovation EDI becomes available,
innovative organizations have anticipated its arrival and
are aware of its capabilities as well as its difficulties.
Despite its technical complexities, innovative firms are
anxious to use the new technology.
It may be that in many situations the use of an
innovation like EDI is a strategic imperative regardless
of cost or technical problems. The company’s purchas-
ing strategy or vision may be the most important factor
in whether new innovations are used to improve the
purchasing capabilities of the organization. However, in
this study we did not capture data relevant to strategic
information. Future research might inquire into possible
relationships between purchasing strategy and the use of
high technology innovations such as EDI.
Implications for Managers
Based on the results shown earlier there are three clear
suggestions to help managers overcome resistance to the
use of high technology. First, it is critical to obtain
commitment from top management before buying high
technology. The results of our study shows that when top
management is not committed to the new technology
there is no reason to try to force it on an organization.
Therefore, it is critical for managers to get top manage-
ment commitment before trying to use a new high
technology innovation. Second, organizational support is
vital to the effective use of high technology. Some of the
respondents of the survey complained about the unwill-
ingness of their data processing departments to implement
the necessary changes to make their current inventory and
control systems compatible with EDI. Managers should
use cross-functional teams to analyze the use of a high
technology innovation. Having all parts of the organiza-
tion involved in the analysis of new technology should
help gain the necessary organizational support for its
usage. Third, one possible way to overcome this reluc-
tance to use EDI may be to publicize the outcomes of
other firms’ experiences with the innovation. Many of the
resisting participants indicated that they were waiting on
the outcomes of other firms before committing to use EDI
themselves. Managers should publicize the success of
competitors or of similar sized firms to promote the use
of high technology innovations like EDI. ■
Mid-American Journal of Business, Vol. 13, No. 2 13
Watts, Hogan and Treleven
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About the Authors
Charles A. Watts, DBA, CPIM, is an Associate Professor of
Operations Management at John Carroll University. He
received his DBA from Indiana University. He currently serves
on the board of Midwest Decision Sciences Institute and the
steering committee for the Small Manufacturing SIG of APICS
and is a Past President of its Toledo Chapter. He has published
research in Management Science, Production and Inventory
Management, Journal of Purchasing and Materials Manage-
ment, International Journal of Operations and Production
Management, and International Journal of Production Re-
search. His research interests are supplier development,
purchasing/materials management, supply chain management,
and scheduling in service and manufacturing organizations.
Patrick T. Hogan is an Assistant Professor of Management
Information Systems at John Carroll University. Hogan
completed his Ph.D. at the University of Texas at Arlington
with a concentration in information systems. He is a CPA who
has previously served in staff and senior positions with Price
Waterhouse and Co. and KPMG Peat Marwick. He has over ten
years of experience in the use of information technology in the
financial services industry.
Mark D. Treleven is currently an Associate Professor if
Operations Management at John Carroll University. Subsequent
to earning his Ph.D. in operations management at the University
of North Carolina at Chapel Hill he served on the faculties at
the University of Minnesota and the College of William and
Mary. He has recently served the Midwest Decision Sciences
Institute as Program Chair and President. He is also certified at
the Fellow Level by APICS. Treleven has published research in
the areas of quality management, dual-resource-constrained
systems, purchasing, and part and process commonality in
Decision Sciences, Journal of Operations Management, IIE
Transactions, Journal of Purchasing and Materials Manage-
ment, and William and Mary Business Review.
Information Systems Satisfaction:
Investigating Attitudes during Development
Patricia A. Essex, Bowling Green State University
Abstract
Previous studies have examined the satisfaction of
users with information services, but most measured
attitudes after use of the system had begun. The focus
in this paper is upon the design and test of an instru-
ment suitable for the systems development stage. The
traditional “user satisfaction” construct is examined
in two parts; user satisfaction with the process and
user satisfaction with the product.
The research instrument was administered in an
experimental environment that simulated a work
situation. Participants were asked not only to do their
“normal” tasks but also to cooperate in a systems
development project. Some were placed into time-
constrained situations; others were not.
Results indicate that the user satisfaction construct
can be evaluated during development and should be
separated from product satisfaction. Further, attitudes
toward the process and about the product are corre-
lated positively but they are not perfect substitutes.
The experimental situation yielded some evidence that
requiring people to participate on development teams
without compensatory release time or other incentives
is likely to make them feel negative about the process.
Although this negativity is not fully transferred to
attitudes toward the product, it does exist and needs
to be managed effectively.
KEYWORDS AND PHRASES: Information System
Success, User Satisfaction, Attitude Measurement,
User Participation
Introduction
The ultimate measure of information system (IS)
success is the system's contribution to the economic
well-being of the organization but direct contributions
are rarely observable. Therefore, IS researchers have
had to rely upon surrogate measures and have done so
I would like to acknowledge the generous support of Michigan State University for this research project.
Measures of IS success are
typically obtained after implemen-
tation, but user satisfaction could
begin to form earlier than that.
with varying degrees of success. One very compre-
hensive survey described the use of the following
items as common measures of IS success: system
technical quality, information quality, use of the
system, user satisfaction, impact of the system on the
individual, and impact of the system on the organiza-
tion (DeLone and McLean 1992). The most common
surrogate has been user satisfaction (US) probably
because it has a high degree of face validity, at least
one well-tested instrument exists, and the alternatives
are very poor. Unfortunately, US measures often have
two problems--one related to timing and another to
focus--that this paper seeks to address.
Measures of IS success are typically obtained after
implementation, but user satisfaction could begin to
form earlier than that. As the system is developed,
those persons who can specify user requirements are
likely to acquire opinions about its eventual desirabil-
ity. Furthermore, development participants are often
the most computer literate of those personnel who
may use the new system. Their early attitudes toward
the developing product are likely to be expressed to
their colleagues. If these opinions carry much weight
with future users, the system may be predisposed to
success or failure before it is even put into operation.
Measurements of system success that occur after
implementation rarely provide management with
information in time to remedy a problem. If a satis-
faction measure can be gathered earlier, managers
may have opportunities for positive influence before
much harm is done.
15
Essex
…of interest are situations where
the user was satisfied with the
process but dissatisfied with the
end product (and vice versa).
A second concern with US is that instruments often
mix items about the user's attitude toward the product and
process of development (Bailey and Person 1983; Miller
and Doyle 1987; Raymond 1987). Doing so is problem-
atic because attitudes toward the process might not be the
same in strength or direction as attitudes toward the
product. Adding the attitude scores to create one scale
therefore could alter the research results. In addition,
employing items that assess user product satisfaction to
create a scale for predicting use of that very product
slants the results as one might expect—use of a product
occurs more frequently when one likes the product. Also
of interest are situations where the user was satisfied with
the process but dissatisfied with the end product (and vice
versa). While a few researchers have recognized that
process and product may be different factors (Doll,
Raghunathan, Lim, and Gupta 1995), the examination of
US during development is rare and limited in scope (Tan
1994). The focus of this paper, thus, is on the develop-
ment of an instrument that can measure user satisfaction,
separated into process and product components, during
the development process.
In their choice of “user”, prior researchers have
varied widely—from executives and managers at all
levels to sales personnel, clerks, and students. In this
paper, student employees provided a preliminary
assessment of the practicality of measuring attitudes
during development. The students were hired for a non-
class-related work experience, put to work on a “func-
tional” task, and then interrupted for a systems devel-
opment task—much like some real organizational
scenarios. While these participants were not to be the
eventual users of the developing system, they were
responsible for and capable of providing a user’s point
of view to the development team. Further, they ac-
quired enough knowledge of the system to influence
potential future users. Following the style of recent
researchers, non-systems personnel asked to supply the
user viewpoint to a development team are called
“clients” (Pitt, Watson, and Kavan 1995; Tan 1994).
Such clients may or may not be the eventual users of
the system.
By studying the timing of and relationship between
process and product attitudes, managers might be better
able to forecast the successful implementation of a
design before it is complete. For example, client
complaints about the amount of time sacrificed for
system development tasks might be reduced with
16 Mid-American Journal of Business, Vol. 13, No. 2
temporary help; or client beliefs that the developer is
not paying suitable attention to ideas offered by the
client might be addressed with opportunities for the
client to sign off on design decisions. Thus, if the
systems designer or manager suspects that implementa-
tion success will be injured by a negative client
attitude, the prediction should be timely enough to
allow for positively viewed changes in the design
process.
Literature
Definition of User Satisfaction
No single definition of user satisfaction has emerged
from the literature. Bailey and Pearson (1983), devel-
opers of a frequently used survey instrument, defined
US as the sum of a user’s positive and negative reac-
tions to their set of thirty-nine factors covering a wide
range of system-related concerns. In a more qualita-
tive manner, US was defined recently as the “recipient
response to the use of the output of an information
system” (Delone and McLean 1992, 68) and was
restricted to satisfaction feelings formed after actual
experience with a specific system. Even when re-
searchers have recognized that measures of satisfaction
with the development and use processes should be
examined separately, the data has been collected post-
implementation (Saarinen 1996; Taylor and Todd
1995). However, attitude-behavior research (Ajzen
1991; Fishbein and Ajzen 1975; Kim and Hunter 1993)
suggests that system usage is not necessary to the
emergence of US. People do form beliefs about the
consequences of future actions, such as the use of an
information system. These beliefs can influence
attitudes regarding related items in that environment,
such as the systems process and the product under
development. Such attitudes, in turn, are likely to have
an impact upon the client’s intention to use the prod-
uct. There is no reason to presume that attitude forma-
tion will be delayed until the system is implemented.
As observed by Pitt, Watson, and Kavan (1995, 176),
the IS department “can be a very powerful shaper of
expectations during systems development.”
In this paper, therefore, US has been partitioned. User
satisfaction with the process, US-Process, is defined as a
client’s attitude about development activities. User
satisfaction with the product, US-Product, is the client’s
attitude regarding the output of development.
The US-Process and US-Product Relationship
Some system failures are believed to be due to the
poor relationship between systems personnel and
clients (Cronon and Means 1984). Cushing (1990)
proposed that systems success is in an inverse relation-
ship with friction between the analyst and the user. If
 Essex

the systems development process is viewed favorably, user involvement, awareness of user needs, and user
chances are high that the client will form a positive power. Flexibility and competence are also of potential
attitude about the forthcoming system. However, while interest; but the experimental context, as described in the
US-process is expected to influence the client’s next section, did not provide a good opportunity for
impressions of the product, the two attitudes are based judging them. Definitions of the US-Process factors
on very different things and are unlikely to be perfect appear in Table 1.
substitutes. Development of the US-Process instrument started by
assembling from these prior works a set of items (three
items for each of the five factors) and formulating them in
Design Of The Instrument a consistent style. To validate the instrument, a number of
In order to evaluate US-Process separately from US- procedures were used. First, the items were numbered
Product and during the development stage, new or revised randomly, and each was placed on an index card. Twenty-
survey instruments are necessary. US Process must be
assessed earlier and perhaps more frequently than in the
past. This section describes procedures by which such
Table 1
new survey instruments can be designed, and the follow- US-Process Factors
ing section describes an experiment that provides a
preliminary evaluation of the surveys developed.
Factor Definition
Communication Measures the users' feelings about how
US-Process Items
Quality successfully the developer listens or talks to
Five factors related to US-Process: communication them.
quality, needs awareness, flexibility, power, and compe-
tence; were originally identified by Kaiser and Srinivasan Compatibility Measures how well the users feel they work
with the developers.
(1982), and several were investigated further by research-
ers such as Gregson (1990) and Cronan and Means User Involvement Measures whether the users' level of
(1984). The factors, compatibility (Bailey and Pearson involvement matches the level desired.
1983; Gregson 1990) and user involvement (Cronan and Needs Awareness Measures whether the users feel that their
Means 1984; Doll and Torkzadeh 1989) were also own needs are being considered by the
reported to be important to successful interaction. Of developers of the system.
these, the ones deemed most useful in the development Power Measures whether the users feel they have
environment were communication quality, compatibility, power to sway the development process or
to influence the product.

Table 2
US-Process Construct Validation

Target Category Actual Category

Communication Compatibility Involvement User Needs Power Total Target %

Communication
(1, 5, 9)a 71b 3 2 2 0 78 91.0
Compatibility
(3, 12, 15) 1 76 1 0 0 78 97.4
Involvement
(4, 8, 11) 0 3 67 1 7 78 85.9
Needs Awareness
(7, 10, 14) 1 2 0 75 0 78 96.2
Power
(2, 6, 13) 0 0 7 2 69 78 88.5

Total Item Placements: 390 Total Target Placements: 358 Overall Placement Ratio: 91.8 %

a
These numbers identify the US-Process items as noted in the appendix.
b
Cell entries refer to the number of items placed in that category by the judges. Each cell on the upper-left to lower-right diagonal is a target cell;
placement numbers in these cells could be as high as 78 (3 items in the category times the 26 judges). Entries in off-diagonal cells are
misclassifications, based on the theoretical target.

Mid-American Journal of Business, Vol. 13, No. 2 17

Essex
four students in a graduate-level systems class were asked
to serve as judges of content. They were each given a set
of item cards and told to sort the cards into piles accord-
ing to similarity of topic. No categories were suggested to
these judges, nor were they given numbers of categories
or cards per category. Analysis indicated that the judges
tended to place particular items together as expected
although the grouping may have been given a name
different from the anticipated factor name. Three items
were often misplaced so they were reworded to be more
indicative of the intended constructs.
A second pretest involved a new set of judges,
thirty-five undergraduate accounting information
systems students from another university. In this
pretest, the judges were asked to sort the revised set
into five pre-named groups. Results showed that four
items (but none of the three new ones) were debatable.
These four were revised, and the original twenty-four
judges performed a third sort using the procedures
from the second pretest. No unclassifiable items
remained, and misclassifications seemed random.
Construct validity was judged by examining the
number of items that were placed by the judges in the
expected categories. Table 2 shows the final pretest
results. All categories indicate factor placement ratios
above 85 percent, and the overall placement ratio was
91.8 percent. Cohen's Kappa (Cohen 1960) was
calculated for each possible pair of judges. The
average coefficient of agreement was 0.83; a coeffi-
cient above 0.65 is generally considered acceptable
(Moore and Benbasat 1991). Thus, the fifteen items
from the last pretest (listed in the appendix) were
used to measure US-Process.
US-Product Items
Attitudes toward the adoption of information
technology innovations can been assessed with an
existing scale developed by Moore and Benbasat
(1991), which measures perceptions about using the
product rather than features of the product. The scale
has been subjected to rigorous validation procedures
(Moore and Benbasat 1991; Taylor and Todd 1995). It
was designed to be adapted easily to specific informa-
tion technology projects and to either current or future
users. A short form of the scale has been associated
with factor reliability scores (Chronbach's Alpha)
ranging from .71 to .90.
Eight factors from this scale explained the adoption
of information technology innovations: voluntariness,
image, relative advantage, system compatibility, ease
of use, result demonstrability, trialability, and visibil-
ity. In order to shorten the survey, only factors with
more than two items on the Moore and Benbasat short
form version were used, eliminating visibility,
trialability, and voluntariness. Result demonstrability
was also omitted because judging it presumes fairly
18 Mid-American Journal of Business, Vol. 13, No. 2
deep knowledge of the proposed system; experimental
participants were unlikely to have such knowledge.
Table 3 describes the factors that were used in this
study; specific items used for the US-Product instru-
ment are listed in the appendix.
Table 3
US-Product Factors
Factor Definition
Relative Advantage Perceived incremental usefulness of the
new IS over methods used previously.
System Compatibility Perceived degree to which use of the IS
requires changes to the user's job.
Image Perceived degree to which the IS enhances
its user's status
Ease of Use Perceived degree to which the IS is simple
to learn and use.
Summary Measures of US-Process and US-Product
Summary (one-item) measures have been reported to
be more reliable with respect to test-retest results than
some of the detailed scales of user satisfaction that
have been previously used (Galletta and Lederer 1989)
although these results have been questioned (Hawk and
Raju 1991). The survey instrument included an overall
evaluation item for US-Process and another for US-
Product so the relationship of summary variables to the
other constructs could be examined.
Experimental Design
To provide a preliminary evaluation of the early
measurement of US-Process and its impact upon US-
Product, the surveys were administered in a between-
subjects experimental setting. While an experiment
using students as participants has obvious weaknesses–
a potentially unrealistic setting and quirky behavior
among the most obvious–it also has advantages over a
field study. There is much stronger control over those
variables that are not of interest to this study but that
affect the IS-development process. In particular,
potential effects of pre-existing attitudes related to
prior experiences between user and developer person-
nel could be minimized. The key is to have a task that
is natural for students to be performing and that diverts
attention from the research agenda.
For this experiment, the researcher portrayed a hired
representative of a fictional firm, called The Materials
Workshop (TMW). TMW's stated function was to
develop and test educational materials, and students were
recruited to field test these new materials. Two distinct
groups of people were involved in the experiment.
Participants were exposed to the experimental manipula-

tions, and confederates acted as developers. A total of
sixteen group sessions were held in the evenings over the
course of four weeks. Each participant attended one three-
hour working session outside of class time; the work was
supervised by the researcher (who was not a teacher of
any of the participants.) In order to maintain as realistic a
setting as possible, participants were not told the primary
purpose of their involvement until the debriefing, which
occurred after all experimental sessions were completed.
Participants and Their Task
Ninety-six upper-level university students majoring
in accounting served as paid participants. They were
hired to test a business simulation involving the manual
accounting system and related paperwork for a small
company. 1 This task was considered by the participants
to be their main task. Later when they were asked to be
involved in a systems development project, the partici-
pants felt interrupted just as in the business environ-
ment. A new simulation was created for this part of the
experiment so that all would be equally inexperienced
with the design and, thus, avoid a potential threat to
validity that can arise from systematic biases linked to
the use of mixed groups (Hufnagel and Conca 1994).
The simulation was seeded with several errors so that the
task would not seem artificial. Errors in the simulation
found by the participants were noted on a special form.
During the session, participants interacted only with the
supervisor and their pre-assigned confederate.
The first part of each session was spent entirely on
the simulation-testing task with the supervisor helping
as needed. After half an hour, participants were told
that TMW also was creating a computerized system for
use by introductory accounting students and that a team
of developers from TMW’s “Systems Lab” was on the
premises that evening. The participants were asked to
contribute their knowledge to the system design. In
order to minimize implicitly perceived (but
unmeasurable) benefits related to this new product,
participants also were told that it would not be avail-
able nor suitable for their own use in advanced ac-
counting classes. Their involvement was to meet with a
developer, to discuss their own experiences with
computers and introductory accounting at the univer-
sity, to examine documents related to the new system,
and to make recommendations regarding specified
design elements. Thus, participants emulated real-
world clients asked to contribute specific knowledge to
a project where the end product will be (1) used on a
regular basis by someone else or (2) used only on a
voluntary basis by themselves. Such situations com-
monly occur with persons, such as accountants, whose
data are used by other systems, organizations whose
repeat relationship with clients has a very long or non-
repetitive cycle, and businesses with relatively rapid
employee turnover.
Essex
Confederates and Their Task
Confederates posed as system developers working for
TMW. Seven confederates were recruited from graduate-
level systems classes. An additional confederate was
recruited from the faculty at another university. This
latter confederate was present at all sessions and en-
hanced the credibility of TMW by presenting to the
participants a more mature, unknown person who seemed
to be in charge of the systems effort. Most of the confed-
erates had at least some business experience and were
well equipped to conduct their activities in a professional
manner. All confederates attended an orientation meeting
for training and were compensated at a flat rate for each
session worked. System documentation was provided to the
confederates, and they were instructed to use it as appropri-
ate to support their role. Further, they were cautioned to be
as consistent as possible in their activities with participants.
In addition to the orientation meeting, a pilot session was
held to give the confederates practice in their role and to
work out the logistics of the experimental procedures.
During the course of each session, confederates met
twice with each participant on a one-to-one basis. Devia-
tions from the interview outlines were taken only as
necessary to preserve an aura of authenticity. Meetings
were held in private rooms and lasted approximately ten
minutes each. Participants worked on the accounting
simulation task during the rest of the time.
Participants were assigned randomly to confederates.
Analysis of the results indicates that participants did not
differ significantly across confederates on any of the
demographic characteristics, such as age, gender, class
standing, work experience, accounting or computer training.
Inducing Variability in Attitudes
Assessment of the survey instruments and examination
of how US-Process and US-Product might be related
would be difficult if all the participants were satisfied at
approximately the same level. Therefore, variability in
attitudes was deemed to be a necessary experimental
ingredient and was accomplished by making some
students much less happy about being involved in the
systems development work than others.
One component of systems satisfaction that has been
studied extensively is involvement. For years, IS students
have been told that if the user is not involved in develop-
ment, the system will not be successful (with the often-
implied corollary that if the user is involved, its chances
of success are improved.) When data-processing person-
nel and their clients were surveyed on twenty-five
systems issues (Cronan and Means 1984), they agreed on
only four. One was the belief that the more the user is
involved, the more acceptable users would find the
system. However, studies in this genre have yielded
mixed results, and various reasons have been explored
(Cavaye 1995; Cushing 1990; DeLone and McLean 1992;
Doll, et al. 1995; Rees 1993).
Mid-American Journal of Business, Vol. 13, No. 2 19
Essex

One plausible explanation for mixed research results
is that the alignment of desired and actual involvement
is more important than the perceived level of involve-
ment (Doll and Torkzadeh 1989). User clients consid-
ering becoming involved in a development project may
wish to be involved more, involved less, or may be
satisfied with their level of involvement. Clients have
various reasons for not wishing to participate in
development efforts, including beliefs about the
proposed system, concerns about the fairness of being
assigned to the task, and, especially in today’s
downsized workplace, time pressures. The question that
arises for managers is whether requiring reluctant workers
to join or prohibiting eager workers from joining a
development team will induce unhappiness with the end
product. In most work environments, clients—regardless
of their happiness about involvement—are expected to be
objective about the forthcoming product.
In order to create differing attitudes, participants were
subjected to varying levels of time pressure such that they
were not equally happy to participate in the systems
activity. After the request for their help, but before they
were channeled into the development effort, participants
were asked how much time they were interested in spend-
ing on development. (Thirty minutes had been requested
of them.) Participants tended to be willing to spend either
more or less than ten minutes; few responded with times in
the area of ten minutes. Participants were deemed to be
“saturated” with development activity if they expressed a
desire to cut development time to less than ten minutes.
These participants were expected to be much less satisfied
with the process of systems development than their more
complacent companions. (Participants could also volunteer
to spend more than thirty minutes on the systems task, but
only three participants expressed such a desire.)
At the end of each three-hour session, participants were
given both the US-Process and the US-Product surveys.
Note that no actual product yet existed. Thus, the attitude
toward the process is being measured just at the end of
interaction activity, but the attitude toward the product is a
projection.
Analysis
The US-Process Scale
An analysis of variance was conducted on the US-
Process scale to determine whether any of the items had
been affected systematically by the assignment of
particular confederates. Items eight and eleven were
found to be related to assigned confederate and, accord-
ingly, were eliminated from further analysis.
The responses to the remaining US-Process items were
subjected to confirmatory factor analysis in order to
assess the scale's validity and reliability. Confirmatory
factor analysis was used instead of exploratory factor
analysis because of the extensive pretesting of this
instrument. Since theoretical constructs supported by
prior literature had been the basis for the US-Process
items, this information was used to make the scale itself
more grounded in theory rather than being driven entirely
by statistics.
During the factor analysis, both the internal consis-
tency and the parallelism of the scale were assessed. If a
factor is internally consistent, similar correlations among
its items will be exhibited. Parallelism of a scale implies
that same-factor items will have similar relationships to
items outside their factor. The parallelism tests indicated
that the three items composing the Power factor were not
parallel, and they were dropped from the US-Process scale.

Table 4
US-Process: Intercorrelation and Loading Matrix

ITEMa 1 3 4 5 9 12 15 7 10 14
1 0.54 0.42 0.46 0.48 0.45 0.42 0.18 0.18 0.49
3 0.60 0.48 0.52 0.54 0.51 0.48 0.20 0.20 0.55
4 0.33 0.47 0.41 0.42 0.40 0.37 0.16 0.16 0.43
5 0.45 0.51 0.38 0.46 0.43 0.41 0.17 0.17 0.47
9 0.46 0.58 0.48 0.37 0.45 0.42 0.18 0.18 0.49
12 0.39 0.52 0.57 0.54 0.33 0.40 0.17 0.17 0.46
15 0.53 0.40 0.27 0.43 0.56 0.31 0.16 0.16 0.43
7 0.41 0.36 0.27 0.18 0.47 0.16 0.40 0.12 0.33
10 0.20 0.09 0.13 0.30 0.20 0.26 0.29 0.05 0.33
14 0.31 0.19 0.20 0.22 0.34 0.22 0.48 0.38 0.38
F/Lb C 0.69 0.79 0.61 0.67 0.69 0.65 0.61 0.47 0.31 0.42
N 0.56 0.39 0.37 0.42 0.61 0.39 0.72 0.35 0.35 0.96

a
Observed correlations are shown in the lower triangle, and predicted correlations are shown in the upper triangle.
b
Factor loadings assume a two-factor model. The two factors are Compatibility (C) and Needs Awareness (N).

20 Mid-American Journal of Business, Vol. 13, No. 2

 Essex

The Communication and Compatibility factors were so The US-Product Scale

highly correlated (r=1.16 after correcting for measure-
ment error) that they were deemed to be the same con-
struct, which is hereafter called Compatibility. Item 4
also was placed into this factor. It was the only item
remaining from the Involvement factor and highly
correlated with Compatibility. The internal consistency
and the parallelism of the two factors remaining after
these changes, Compatibility and Needs Awareness, were
satisfactory although not perfect. Discriminant validity of
Items 1, 12, and 14 was low. Further, in this experimental
setting, Item 15 loaded more highly on Needs Awareness
than on Compatibility. Since elimination of these items
would violate the a priori construct definitions and would
not significantly affect the results, the items were kept in
the final scale. Table 4 presents the intercorrelation and
factor-loading matrix for the ten items in the resultant
US-Process scale. The observed inter-item correlations
are presented in the lower triangle, and predicted inter-
item correlations are shown in the upper triangle. Factor
loadings are given in the bottom panel.
An examination of the factor-to-factor relationships
indicated that the factors were highly correlated and, thus,
could be summed to create a scale for measuring US-
Process. Overall reliability, measured with the Spearman
Brown coefficient alpha, for the ten-item scale taken as a
single-item construct is 0.85.
The preliminary analysis of variance on the US-Product
instrument indicated that assigned confederate did not affect
any of the fifteen items (p ≤ .05). Factor analysis procedures
used on the US-Product data were similar to those reported
above for the analysis of US-Process. Item 4 was dropped from
the scale because it caused many parallelism problems. This
item was also dropped from the original long scale although
recommended for the short one (Moore and Benbasat 1991).
Factor-to-factor correlations suggested that the concepts
of Relative Advantage and System Compatibility were
highly related. Again, this result echoes prior research where
a 0.99 correlation between the first two factors on the long
form was reported (Moore and Benbasat 1991). The results
here showed a correlation (corrected for measurement error)
of 0.97 between the two factors on the shorter, revised
instrument. Accordingly, these two factors were combined
and hereafter are called Relative Advantage.
The intercorrelation and factor-loading matrix for US-
Product's three factors is presented in Table 5. Inspection of
the factor-to-factor correlations determined that the remain-
ing factors could be summed to create a single US-Product
scale. The coefficient alpha for the fourteen-item scale,
taken as one factor, is 0.88.
Descriptive statistics with respect to US-Process, US-
Product, their respective factors, and the summary measures
are presented in Table 6.

Table 5
US-Product: Intercorrelation And Loading Matrix

ITEMa

1 2 5 6 9 10 13 15 3 7 11 8 12 14
1 0.49 0.53 0.64 0.54 0.59 0.51 0.55 0.32 0.28 0.29 0.23 0.24 0.17
2 0.49 0.43 0.53 0.44 0.49 0.42 0.45 0.26 0.23 0.24 0.19 0.20 0.14
5 0.45 0.50 0.57 0.48 0.52 0.45 0.49 0.28 0.25 0.25 0.20 0.21 0.15
6 0.70 0.45 0.54 0.58 0.64 0.55 0.59 0.34 0.30 0.31 0.24 0.26 0.18
9 0.56 0.50 0.47 0.51 0.54 0.46 0.50 0.29 0.25 0.26 0.20 0.22 0.16
10 0.46 0.52 0.60 0.72 0.51 0.50 0.55 0.31 0.28 0.29 0.22 0.24 0.17
13 0.55 0.44 0.52 0.53 0.38 0.51 0.47 0.27 0.24 0.25 0.19 0.21 0.15
15 0.64 0.36 0.39 0.65 0.61 0.51 0.43 0.29 0.26 0.27 0.21 0.22 0.16
3 0.38 0.19 0.36 0.25 0.33 0.20 0.18 0.34 0.57 0.59 0.20 0.22 0.16
7 0.39 0.30 0.48 0.36 0.36 0.39 0.21 0.40 0.58 0.52 0.18 0.19 0.14
11 0.24 0.13 0.26 0.11 0.21 0.22 0.10 0.25 0.60 0.52 0.19 0.20 0.14
8 0.13 0.07 0.32 0.21 0.11 0.33 0.25 0.20 0.15 0.28 0.12 0.68 0.48
12 0.18 0.16 0.33 0.19 0.08 0.29 0.38 0.08 0.13 0.25 0.17 0.70 0.52
14 0.20 -0.02 0.16 0.33 0.13 0.20 0.18 0.29 0.22 0.20 0.11 0.47 0.52

R 0.77 0.63 0.68 0.83 0.70 0.77 0.66 0.71 0.39 0.50 0.26 0.28 0.29 0.26
I 0.45 0.28 0.48 0.32 0.40 0.35 0.22 0.44 0.81 0.71 0.73 0.25 0.24 0.24
E 0.23 0.09 0.36 0.32 0.14 0.36 0.36 0.25 0.22 0.32 0.18 0.80 0.86 0.61

a
Observed correlations are shown in the lower triangle, and predicted correlations are shown in the upper triangle. Numbers in the lower three
rows are factor loadings assuming a three-factor model. The three factors are Relative Advantage (R), Image (I), and Ease of Use (E).

Mid-American Journal of Business, Vol. 13, No. 2 21

Essex

Observations and Needs Awareness) and the two overall US-Process

US-Process and US-Product were expected to be
correlated but not perfectly. As shown in Table 7, the
obtained correlation between these two constructs is 0.52,
which supports that expectation. Thus, attitudes related to
the development process do form during development,
and they do have a considerable impact upon attitudes
towards the forthcoming product.
Also shown in the table are the correlations among
the alternative measures of US-Process and US-Product
and among their factors. These US-Process measures
include the two individual factor scores (Compatibility
measures (an averaged score and a one-item summary
score.) The components of US-Process and US-Product
show interesting correlations. One US-Process compo-
nent, Compatibility, is positively related to all the US-
Product components, most particularly Relative
Advantage and Ease of Use. However, the second US-
Product component, Image, is more associated with
Needs Awareness than with any other US-Process
measure. These relationships suggest that if the client
feels he or she can work well with the developer, the
desired features of the product will be attained.

Table 6
Descriptive Statistics for Experimental Measures

Observed Range
Variable Minimum Maximum Median Mean Standard Deviation
US-Process:
Average US-Processa -0.87 2.84 1.80 1.70 0.69
Summary US-Processb -1.37 3.00 2.00 1.68 0.97
Compatibilityc -0.87 3.00 1.91 1.76 0.76
Needs Awareness -1.33 3.00 1.75 1.57 0.82

US-Product:
Average US-Product -1.01 2.95 1.15 1.01 0.83
Summary US-Product -1.87 3.00 1.50 1.48 0.91
Relative Advantage -1.64 3.00 1.53 1.36 0.99
Image -3.00 2.88 0.00 -0.14 1.36
Ease of Use -2.08 3.00 1.40 1.25 1.03

(See appendix for coding information.)

a
Average US-Product is the unweighted average of the fourteen items left in the scale after factor analysis, and Average US-Process is the
unweighted average of the ten items left in the scale after factor analysis.
b
Summary US-Product and Summary US-Process are each measured by a one-item overall assessment.
c
Factor scores are the unweighted averages of the scores on each item included in the factor. That is:
Relative Advantage = Average of US-Product Items 1, 2, 5, 6, 9, 10, 13, 15
Image = Average of US-Product Items 3, 7, 11
Ease of Use = Average of US-Product Items 8, 12, 14
Compatibility = Average of US-Process Items 1, 3, 4, 5, 9, 12, 15
Needs Awareness = Average of US-Process Items 7, 10, 14

Table 7
Cross Correlations For US-Process And US-Product

US-Product
Relative Average Summary
US-Process Advantage Image Ease of Use US-Product US-Product

Compatibility 0.42*** 0.24** 0.48*** 0.49*** 0.36***

Needs Awareness 0.26*** 0.41*** 0.27*** 0.39*** 0.19*
Average US-Process 0.42*** 0.33*** 0.47*** 0.52*** 0.35***
Summary US-Process 0.28*** 0.22** 0.44*** 0.38*** 0.34***

Correlations are significant at the following levels: *** Significant at a probability of .01 or less
** Significant at a probability of .05 or less
* Significant at a probability of .10 or less

22 Mid-American Journal of Business, Vol. 13, No. 2

 Essex

Table 8 presents correlations of the Summary US-
Process judgment with the other potential US-Process
measures. Because Summary US-Process was an
overall assessment of the participant's interaction
experience, interpretation is difficult. Average US-
Process and Summary US-Process were strongly
correlated (r=0.74) but obviously did not measure
exactly the same constructs. Of the two identified
factors, Summary US-Process relates more to the factor
of Compatibility (r=0.74) and less to Needs Awareness
(r=0.47). These relationships may be driven by the
experimental environment. The participants may have
found confederate compatibility to be more noticeable
than confederate's awareness of their task-related
needs.
Table 9 presents a parallel analysis of the US-Product
measures. The Average US-Product and Summary US-
Product scores were strongly correlated (r=0.71); but, as
with US-Process, they did not appear to be measuring
exactly the same underlying constructs. The factor of
Relative Advantage (inclusive of System Compatibility)
was more highly related to Summary US-Product than
were either Image or Ease of Use. Since the experimental
system was at a very preliminary stage, confederates may
have been able to present its general advantages quickly.
Increasing awareness of the ease of use or image enhance-
ment features may have been more difficult at such an
early stage.
As shown by Tables 8 and 9, summary ratings relate to
the components in the same direction as do the average
ratings, but with less strength. One-item summary ratings
might incorporate more random error, or a variable
related to overall impressions may be missing from the
multi-item scales. In any case, the movement of the
summary measures in parallel with the average measures
provides more evidence of the validity of the scales.
Table 10 presents statistics related to the participant’s
desire to be involved in the systems development activity.

Table 8
Correlations Among US-Process Measures

US-Process Factors
Compatibility Needs Awareness Average US-Process Summary US-Process
Average US-Process 0.95 0.74 1.00
Summary US-Process 0.74 0.47 0.74 1.00

Table 9
Correlations Among US-Product Measures

US-Product Factors
Relative Advantage Image Ease of Use Average US-Product Summary US-Product
Average US-Product 0.90 0.70 0.56 1.00
Summary US-Product 0.68 0.40 0.43 0.71 1.00

Table 10
Attitude Scores By Saturation Level

All Low Saturation High Saturation t-statistic

(n=96) (n=52) (n=44) (94 d/f) pr.
Compatibility 1.75*** 1.99*** 1.47*** 2.44 0.01***
Needs Awareness 1.57*** 1.63*** 1.50*** 0.56 0.29
Average US-Process 1.26*** 1.43*** 1.07*** 2.19 0.02**
Summary US-Process 1.68*** 1.80*** 1.55*** 1.02 0.16
Relative Advantage 1.36*** 1.44*** 1.26*** 0.65 0.26
Image -0.14 -0.18 -0.09 -0.57 0.29
Ease of Use 1.25*** 1.48*** 0.97*** 2.50 0.01***
Average US-Product 1.01*** 1.10*** 0.90*** 1.11 0.14
Summary US-Process 1.48*** 1.62*** 1.30*** 1.48 0.07*

* Significant at the .10 level or less.

** Significant at the .05 level or less.
*** Significant at the .01 level or less.

Mid-American Journal of Business, Vol. 13, No. 2 23

Essex
Data related to those participants who wanted to decrease
their systems development participation to less than ten
minutes is presented in the “high saturation” column, and
the other participants are placed in the “low saturation”
column. Note that Average US-Process scores drop 25
percent when low saturation participants are compared to
high saturation participants. This difference is statistically
significant (p= 0.02). Most of the difference is related to a
general feeling of less compatibility with the developers
when participants were unhappy.
One concern is whether clients who are less happy
about being involved in a development effort can still be
objective about the product. Table 10 also presents some
preliminary statistics related to this issue. While the more
saturated participants did report an 18 percent lower
Average US-Product score than that of the others, the
difference is not significant. Inspection of the component
scores suggests that saturation level influenced partici-
pants’ estimates of Ease of Use. A reasonable explana-
tion for this result is that a common factor, e.g.,
computer avoidance, may be driving the responses for
both saturation and ease of use. Clients who dislike
using computers may avoid any computer activity, be it
application development or use. Some evidence
gathered with the current study suggests this explana-
tion. Included on the exit questionnaire were a number
of manipulation checks. One of these stated, “In
general, I really enjoy working on system development
projects.” The item was intended to gauge whether the
participant perceived unexpected (dis)pleasure in the
development task. The mean response of the low-
saturation group was 1.34 while the mean response for
the high-saturation group was only 0.89, a difference
marginally significant (p=0.08). However, since the
item dealt with system projects rather than computer
usage and since it was administered after the experi-
mental session, firm conclusions about a possible
computer avoidance impact upon attitudes cannot be
made. Further, recent research suggests that the
computer-related background of users has little impact
upon IS satisfaction (Ang 1997).
Conclusion
The primary contribution of this study is the demon-
stration that user satisfaction with a systems project
can start building before implementation and can be
measured at a very early stage. This result adds to the
growing body of data related to information satisfac-
tion instruments. Measurement of attitudes in the
development environment, rather than in the usage
stage of the systems life cycle, is less likely to con-
found actual development attitudes with later attitudi-
nal changes that can come with use of the system. To
be useful in natural systems environments, however,
early measurement must be accomplished in some way,
24 Mid-American Journal of Business, Vol. 13, No. 2
perhaps by informal conversations with clients or by
more formal satisfaction instruments. Some procedures
helpful in the development and validation of new or
revised instruments were discussed.
Even in the fairly contrived experimental environ-
ment, this study has shown that user satisfaction with
the process of development is correlated strongly, but
not perfectly, with the user’s expected satisfaction with
the end product. Thus, researchers should continue the
recent trend of examining the two attitudes separately.
In addition, these scale-derived definitions of user
satisfaction were shown to be more related to one
another than the one-item measures that have been
recommended by some researchers. This result sug-
gests that investigators of user satisfaction should use a
scale that contains more than a single summary item.
Two of the process components, developer’s com-
patibility and awareness of user needs, related to the
product components in different ways. Participants
who felt more compatible with their designers seemed
more likely to feel that the product would be easy to
use and that it would yield a relative advantage to its
users. This notion of compatibility had less impact
upon the projected image of the system user. Image
was more associated with the participant’s assessment
of the developer’s awareness of user needs. This result
may be attributed, in part, to the age of participants
(mean age of 21), and the natural focus of that age
group upon personal definition. The participants’
assessments of the product under development were
more related to the feeling that it would provide
relative advantage than that it would enhance their
image or be easy to use. Developers of new systems
might note that relative-advantage aspects seem to be
introduced more quickly than ease-of-use considerations.
While a study of the impact of saturation upon
attitudes was not central to this project, the results
suggest that saturation could be an important variable.
Participants who expressed a desire for less involve-
ment were significantly less satisfied with respect to
the process than those who were not saturated with
participation expectations. Most of the resulting
frustration seemed to be released upon the compatibil-
ity ratings assigned by these participants. Importantly,
more saturated participants, while less happy with the
process of development, were not significantly differ-
ent from less saturated participants in their assessments
of the product being developed. Thus, managers who
place reluctant people on development teams may find
these people complaining about the process while still
being relatively objective toward the end product.
Future Directions
While documenting considerable change, this study did
not prove that attitudes about the development process
can influence the participant’s feelings about the product

under development. However, the impact of process
attitude may have been moderated by the shortness of the
experimental situation. Furthermore, while the student
participants did report that the experimental context was
realistic, these results must be considered preliminary
because of concerns for external validity. One future
direction for extending this research would be a longitudi-
nal study to test the instruments in a natural setting, with
mature clients, and under constraints other than time.
The questions of whether there is a substantial cost
(either direct or indirect) to forcing workers into design
efforts they would rather avoid has not been studied
adequately. If there is such a cost, it is one that is
likely to be avoidable through the use of incentives if a
manager knows that the cost potentially exists. Related
ressearch could be very valuable in improving systems
development efforts. ■
Note
1. The format, procedures, and content of the simu-
lation were, with permission, comparable to the
Systems Understanding Aid (Arens and Ward
1995). A new setting for the simulation was written
by the researcher and the scope of the simula-
tion was limited to the revenue cycle.
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research in management information systems. The
Journal of Information Systems 4:38-59.
DeLone, W. and E. McLean. 1992. Information systems
success: The quest for the dependent variable. Informa-
tion Systems Research 3:60-95.
Doll, W. and G. Torkzadeh. 1989. A discrepancy model of
end-user computing involvement. Management Science
35:1151-1171.
Doll, W., T. Raghunathan, J. Lim, and Y. Gupta. 1995. A confirma-
tory factor analysis of the user information satisfaction
instrument. Information Systems Research 6:177-188.
Essex
Fishbein, M. and I. Ajzen. 1975. Belief, attitude, intention,
and behavior: an introduction to theory and research.
Reading, MA: Addison-Wesley.
Galletta, D. and A. Lederer. 1989. Some cautions on the
measurement of user information satisfaction. Decision
Sciences 20:419-437.
Gregson, T. 1990. Communication satisfaction: A path analytic
study of accountants affiliated with CPA firms. Behavioral
Research in Accounting 2:32-49.
Hawk, S. and N. Raju. 1991. Test-retest reliability of user
information satisfaction: A comment on Galletta and
Lederer's paper. Decision Sciences 22:1165-1170.
Hufnagel, E. and C. Conca. 1994. User response data: The potential
for errors and biases. Information Systems Research 5:48-73.
Kaiser, K. and A. Srinivasan. 1982. User-analyst differences:
An empirical investigation of attitudes related to systems
development. Academy of Management Journal 25:630-646.
Kim, M. and J. Hunter. 1993. Relationships among attitudes,
behavioral intentions, and behavior: A meta analysis of past
research, part 2. Communication Research 20:331-364.
Miller, J. and B. Doyle. 1987. Measuring effectiveness of
computer based information systems in the financial services
sector. MIS Quarterly 11:107-124.
Moore, C. and I. Benbasat. 1991. Development of an instrument to
measure the perceptions of adopting an information technology
innovation. Information Systems Research 2:192-222.
Pitt, L., R. Watson, and C. Kavan. 1995. Service quality: a
measure of information systems effectiveness. MIS Quar-
terly 19:173-185.
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About the Author
Patricia A. Essex is an Assistant Professor in the Department
of Accounting and MIS in the College of Business Administration
at Bowling Green State University. She was awarded her Ph.D.
in accounting from Michigan State University and is a CPA.
Her articles have been published in Advances in Accounting
Information Systems, Ohio CPA Journal, and Journal of
Management Information Systems. Current research interests
involve the behavioral aspects of information systems, events-
based accounting information systems, and electronic commerce.
Mid-American Journal of Business, Vol. 13, No. 2 25
Essex

Appendix
Data Collection Items

Each item was accompanied by a seven-point anchored scale.

Coding assigned the scale a range of -3.0 (Disagree) to +3.0 (Agree).
Some items were reverse-coded so higher scores indicate more positive opinions.

US-Process Items
1. The Systems Lab employee was a good listener.
2. I had very little authority with respect to decisions about the
Systems Lab project.
3. I found it difficult to work with the Systems Lab staff on the
Systems Lab project.
4. Working on the Systems Lab project was fun.
9. The initiation of communications by the Systems Lab
employee to me had a purpose.
10. The Systems Lab employee seems to be aware of problems
that users might have with the system.
11. The Systems Lab employee seemed to want me to work on the
Systems Lab project more than I felt was necessary.

5. Communications from the Systems Lab employee were clear 12. The Systems Lab employee was not very compatible with
(easy to understand, little jargon, etc. ...) me.

6. As a typical student user, I should have had more power to direct 13. I felt that I was allowed to make changes in the design of the
the development of the Systems Lab product. Systems Lab product.

7. The needs of people like me are being considered by the Systems 14. The Systems Lab employee anticipated my need for informa-
Lab. tion about the Systems Lab project.

8. The Systems Lab employee should have let me participate in the 15. The Systems Lab employee's work habits seemed to fit well
Systems Lab project more than he/she did. with my own.

IS-Attitude Items

1. Using the product will enable me to accomplish learning
tasks more quickly.
2. Using the product will be compatible with many aspects of
my accounting study.
3. People at my school who use this product will have more
prestige than those who do not.
4. My interaction with this product will be clear and under-
standable.
5. Using the systems product will improve the quality of work
that I do.
6. I think that using a product such as this fits well with the
way that I like to work.
7. People at my school who use products such as this have a
high profile.
8. I believe that it will be easy to get the systems product to
do what I want it to do.
9. Using the systems product will make it easier to learn
accounting material and methods.
10. Using the systems product will fit into my learning style.
11. Using this systems product will be a status symbol at this
school.
12. Overall, I believe that the systems product will be easy to
use.
13. Using the systems product will increase my productivity.
14. Learning to utilize the systems product will be easy for me.
15. Using the systems product will give me greater control over
my learning activity.

Summary Items
1. Overall, how would you rate the quality of the interactions that 2. What is your overall opinion of the eventual success of the
took place between you and the Systems Lab employee with Systems Lab project to which you were assigned?
whom you worked?
(Marked on a seven-point scale, anchored by “Very Successful”
(Marked on a seven-point scale, anchored by “Excellent,” and “Very Unsuccessful.”)
“Average,” and “Poor.”)

26 Mid-American Journal of Business, Vol. 13, No. 2

Forecasting for the Small Retail Business:
Operational Recommendations
Abstract
Often small business owners/managers feel they have
inadequate time for formal forecasting and/or that they
lack the expertise to do so. Since forecasting is an
important decision-aiding tool, managers in small retail
establishments can benefit by implementing a simple
forecasting process. Doing so will enable them to better
anticipate the firms future level of sales and lead to more
successful operations. We suggest the use of relatively
simple quantitative methods that have proven to work
well in a wide variety of situations. Exponential smooth-
ing, basic regression methods, and time series decomposi-
tion can be employed with relative ease in the context of
a small retail business. Inexpensive computers and
forecasting software make it possible for small retailers to
utilize these forecasting methods in a cost effective and
timely fashion.
Introduction
Many small retail business owners and/or managers
become involved in the forecasting process directly and
yet many have little background related to forecasting.
There are people who believe that small businesses do not
need a formal forecasting process. However, because of
the unstable environment faced by many small retailers,
accurate forecasting may be especially critical for their
success (Peterson 1996). This article provides a basis
upon which a small retailer can develop a forecasting
process and select appropriate forecast methods.
A forecast is an attempt to predict future events based
in part on past experience, typically taking into consider-
ation factors that are both internal and external to the
retail firm. Some of the internal factors affecting future
sales include additions and deletions of merchandise
lines, changes in promotion and credit policies, changes
in operating hours, the opening of new facilities and the
enlargement or reduction of existing facilities. External
factors affecting the sales forecast include the following
changes: the size of the target market population, dispos-
able income, the age distribution of the population, the
J. Holton Wilson, Central Michigan University
Robert H. Miller, Central Michigan University
Forecasting is especially impor-
tant to a small retailer because the
forecast impacts on financial and
personnel planning…
mobility of customers, the number and size of competi-
tors, the overall health of the economy, and the life-styles
of consumers, among others.
Forecasting is especially important to a small retailer
because the forecast impacts financial and personnel
planning, both of which are important considerations for
business success. Effective forecasting can be helpful in
setting sales objectives, planning inventory, setting
prices, establishing financial needs, anticipating person-
nel requirements, and determining an advertising budget.
Most importantly, good forecasts help reduce uncertainty.
A Forecasting Process for a Small Retail
Business
Any forecast process begins with a need to make
decisions that depend on the future level of business
activity, such as sales. While small retailers often make
forecasts based on intuition, a formal process and the use
of some relatively simple data analysis can improve
forecast accuracy (Wilson and Allison-Koerber 1992).
Many alternative ways of organizing a forecast process
could be presented ( Lawless 1997). One approach is
described below.
Step 1: Specify Objectives
The objectives for a forecast should be stated clearly.
One should be specific about why the forecast is needed
and the purpose for which the forecast will be used. For
example, if decisions will be the same regardless of the
forecast, then any effort devoted to preparing the forecast
is wasted.
Once overall objectives are clear, one must decide
exactly what to forecast. For example, it is not sufficient to
Wilson and Miller

say that a sales forecast is needed. Should it be a forecasting process. It is surprising how often this turns
forecast of sales revenue or unit sales? Is an annual out to be far from correct. Data may be available in a
forecast or a quarterly, monthly, or weekly forecast technical sense yet not readily available to use as the
needed? The objectives also dictate the time interval that basis upon which a forecast can be developed. For
is appropriate in preparing the forecast. For inventory example, while working with a new car dealership, we
control, short time periods are often necessary, whereas found that historical sales data beyond a couple of years
an annual forecast may be sufficient for the preparation of were stored in boxes in an attic. A staff member spent a
an estimated profit-and-loss statement for the coming portion of several weeks searching the boxes for the
year. needed data and compiling it into usable form. Another
problem arises when data are readily available but not
Step 2: Clarify Time Dimensions expressed in the right unit of measurement (e.g. in sales
There are two types of time dimensions to consider. dollars rather than units sold) or in the desired time
First, one must establish the number of periods the forecast dimension (monthly, quarterly, etc.). It is not uncommon
should cover. For annual forecasts this might be from one to find that daily, weekly, monthly, or quarterly data are
to five years or more, although forecasts beyond a few discarded while only annual data are retained.
years are likely to be influenced by unforeseen events that Many small retailers have yet to set up a data retention
are not possible to forecast. Quarterly forecasts are often system that is organized in a manner to facilitate forecast-
made for one or two years (four to eight quarters). Monthly ing and other forms of data analysis that can aid in
forecasts are also decision making. In
typically used for part this is because
relatively short THE FORECASTING PROCESS doing so once required
periods (perhaps as a large expensive
long as twelve to computer and the
PECIFY OBJECTIVES
eighteen months). For
some situations
S Why is forecast needed?
corresponding com-
puter skills which may
How will forecast be used?
weekly or daily not have been avail-
forecasts may be able to the small
LARIFY TIME DIMENSIONS
desired. These are
usually prepared for
C How many periods should forecast cover?
retailer. No longer is
this true. Currently a
even shorter time How urgent is the forecast? computer that would
horizons, such as three serve such a purpose,
to six months ahead. ATA CONSIDERATIONS and a multitude of
Second, one must D What data is available inside/outside the business? others, can be ob-
consider the urgency How is data retained? tained for less than
of the forecast. Is it $2,000. The necessary
needed tomorrow? Is software is also
ETERMINE HOW TO PREPARE FORECAST
there ample time to D What method is most appropriate?
inexpensive and user
explore alternative What are results of model testing? friendly. Today the
methods? The amount obstacles to maintain-
of time one has ing a data base are
ORECAST PREPARATION AND TRACKING
available to develop a F Develop worst case, best case, and most likely forecast.
more related to the
forecast may influ- perceived time
How did forecast deviate from actual results?
ence the possible Evaluate entire process.
commitment and/or a
methods that can be failure to recognize
employed. Proper the advantages of
planning is appropriate here. The need for proper planning having data readily available.
is one reason why the forecasting process should be It is best for a retailer to save dis-aggregated data, by
integrated into ongoing operations. Having a forecasting type of product or even by stock keeping units (SKUs ),
process in place contributes to the development of better and for as short a time period as is reasonable (weekly or
forecasts. monthly data are often best). For example, bar and food
sales for a restaurant should be kept separately and should
Step 3: Data Considerations be maintained on a daily basis. If weekly or monthly
The data necessary in preparing a forecast may come forecasts are desired, it is an easy matter to aggregate
from within the business and/or may be external. Con- days to weeks or months. Going the other way is impos-
sider first internal data. It is often believed that internal sible.
data are readily available and easy to incorporate into the External data are available from a wide variety of

28 Mid-American Journal of Business, Vol. 13, No. 2


sources. Data from national, state, and local government
agencies are generally available at low cost. We have
worked with a restaurant on a major two lane highway
outside a midsized, Midwestern city. The restauranteur
thought that the local unemployment rate and the traffic
flow on the highway might be important determinants of
the number of customers served. Both the unemployment
rate and traffic count data were available from state
offices and both turned out to be significant determinants
of the number of customers. Other sources of secondary
data include industry or trade associations and private
companies that compile and sell data. Often secondary
data are available on computer disk or may even be
available via electronic transfer from the Internet.
Step 4: Determine How to Prepare the Forecast
There are many alternative methods one can use to
make any forecast. Purely judgmental methods are the
least formal and the least accurate, but unfortunately are
common among small retailers. The best forecasts are
likely to come from quantitative methods, perhaps in
combination with subjective judgments (Wilson and
Allison-Koerber 1992).
How can one determine which methods are most
appropriate? Some of the things that should be considered
in making the selection include:
1. The type and quantity of data available
2. The historical pattern of the data
3. The urgency of the forecast
4. The length of the forecast horizon
Selecting the appropriate methods to use is of sufficient
importance to warrant further discussion later in the
paper.
Once the methods to be used have been selected, one
should do some initial evaluation of how well they work.
For quantitative methods one should apply the techniques
to historical data and evaluate how well the results match
with reality in a retrospective sense. If they do work well
in the historical context, it is likely that they will perform
adequately in the unknown domain of the future. For
judgmental forecasts one should track the historical
results and evaluate the errors that are observed. Looking
at a time series plot of the errors is often more helpful in
this regard than looking at a tabular report of the errors.
If one has sufficient historical data, a good approach to
model testing is to use a “holdout” period for evaluation.
For example, suppose that one has quarterly data on sales
for ten years. Only the earliest nine years (36 data points)
might be used to make a forecast for the tenth year. If the
model performs well when the forecast values are com-
pared with the known values for the four quarters of year
ten, there is reason to believe that the technique may also
work well when the forecast period is indeed unknown.
Suppose the techniques turn out not to perform well
when tested. The purpose of testing is, at least in part, to
Wilson and Miller
help avoid using a method that does not work well in the
unique situation at hand. If one method does not work well
enough, select another method that is appropriate to the
problem and try again. There is no way to tell ahead of
time exactly how well a particular method will actually
perform in a specific forecasting environment. One can
apply reasoned judgment to the initial selection of a
forecasting method, but ultimately “the proof is in the
pudding.” One must apply the method to see whether it
performs adequately for the particular situation being
analyzed.
Step 5: Forecast Preparation and Tracking
Once one or more methods have been selected for
use in developing the forecast they should be used to
prepare a range of forecasts. For example, one might
prepare a worst-case forecast, a best-case forecast, and a
most likely forecast. The latter may be based on a
combination of forecasts. The use of two or three
different methods has been shown to improve forecast
accuracy when the methods are combined (Wilson and
Allison-Koerber 1992).
Deviations between the forecast and the actual results
should be evaluated in an objective and positive manner.
The objectives of such evaluations should be to under-
stand why errors occurred, to determine whether the
magnitude of the errors was sufficient to have made a
difference in the decisions that were based on the fore-
cast, and to reevaluate the entire process with the intent of
improving performance in the next round of forecasts.
One often looks at forecast errors only from a negative
perspective. However, when such errors are carefully
evaluated, they often provide insights which help to
improve future forecasts.
Choosing The Right Forecasting Method
Charles W. Chase (1991), a noted professional in the
field of forecasting, commented that: “The key task of
a practicing forecaster is to determine at the outset the
best match possible between the situation and the methods
before doing anything else.” There are few hard-and-fast
rules regarding selection of a forecasting method, but
there are guidelines to assist in making that determination.
Let us consider some of the most promising forecast-
ing methods for use by a small retail business. These
require relatively little computer power along with
reasonably inexpensive and easy to use software. The
particular methods we suggest fall into two broad catego-
ries: smoothing methods and regression based forecasts.
We have selected these because they are methods that we
have found to work well in retail applications. In addi-
tion, there is a significant body of literature that supports
the notion that these relatively simple methods are used
frequently, are found to provide results which are more
accurate than subjective/judgmental methods alone, and
Mid-American Journal of Business, Vol. 13, No. 2 29
Wilson and Miller

are at least as accurate as more mathematically complex
methods most of the time (Chase 1997, Mentzer and
Kahn 1995 and 1997, Sanders 1997, Tashman and Kahn
1996, Wilson and Daubek 1989).
Earlier we mentioned four things to consider when
deciding on methods that might be appropriate for a given
forecast: 1) the type and quantity of data available; 2) the
pattern that the data have exhibited in the past; 3) the
urgency of the forecast; and 4) the length of the forecast
horizon. The first two of these relate to data and the last
two relate to time. As we discuss forecasting methods that
are likely to be good candidates for many small retailers,
we will focus on these considerations. Figure 1 provides a
quick reference summary of the discussion which follows.
Simple Exponential Smoothing (SES)
The simple exponential smoothing model is:
Ft = wAt-1 + (1-w)Ft-1 ;
where, Ft is the forecast for time period t, At-1 is the
actual value one period earlier (t-1), Ft-1 is the forecast
that was made for one period earlier (t-1), and w is a
weighting value that is between zero and one.
Some historical data are necessary to establish the best
Figure 1
A Guide to Selecting an Appropriate
Forecasting Method
Quantity of
Forecasting Data Historical Data
Method Patten (# ofObservations)
weighting factor in simple exponential smoothing, but
thereafter only the most recent observed and forecasted
values are required. Five to ten past values are typically
sufficient to determine the weighting factor. The data
series should be stationary (i.e., have no trend and no
seasonality) when SES is used. This method is appropri-
ate for short-term forecasting and requires little technical
sophistication. While the arithmetic work can be done by
hg.d, a computer can be helpful in determining the best
weighting factor. Once the weighting factor is known,
forecasts can be developed very quickly.
Holt’s Exponential Smoothing (HES)
This method is similar to simple exponential smoothing
but adds another equation and an additional weighting
value which take into account a trend in the data. Thus,
there are two weights, alpha and beta1. As in SES, the
Holt’s exponential smoothing model requires historical
data to determine weighting values, but only the very
recent past is required to apply the model. It is desirable to
have at least ten to fifteen historical observations in
determining the two weights. HES can be used effectively
with data series that exhibits a positive or negative trend,
and thus this method has a much wider scope of applica-
tion than SES. However, it should not be used when the
data contain a seasonal pattern. HES is appropriate for
short- and medium-term forecasts and, like SES, can be
implemented rapidly once the weights have been selected.
Users with little mathematical background can understand
HES well enough to use it properly. A computer is desir-
able, but not necessary, for model development, especially
Forecast
Horizon if one wants to select optimum values for w1 and w2.

Simple Winters’ Exponential Smoothing (WES)

Exponential Stationary 5 to 10 Short
Smoothing
Winters’ exponential smoothing adds yet another
layer of complexity to the model in order to account for
Holt’s seasonal patterns. This model incorporates three
Exponential Linear trend 10 to 15 Short to weights, alpha, beta, and gamma2. Because retail sales
Smoothing medium are so often seasonal, this model is frequently quite
Winters’
effective as a forecasting method. Sufficient historical
Exponential Trend and At least 4 or 5 Short to data to determine the weights are necessary in using
Smoothing seasonality per season medium Winters’ exponential smoothing model. A minimum of
four or five observations per season should be used (i.e.,
Time-Series Can handle Enough to see 2 Short, for quarterly data, at least sixteen or twenty observations
Decomposition trend, seasonal, peaks and troughs medium,
patterns in the cycle and cyclical
should be used). Since this method incorporates both
and long trend and seasonal components, it is applicable to a wide
spectrum of data patterns. Like HES this method is most
Regression Linear and Minimum of 10 Short to appropriate for short- to medium-term forecasts. Once
Based: nonlinear trend with 4 or 5 per medium the weights have been determined, the process of
Trend with or season if seasonality
without is included
making a forecast moves quickly. The preparer needs
seasonality some technical expertise, but the nature of the method
can be understood by users with little technical back-
Regression Can handle Minimum of 10 Short, ground. Use of a computer is recommended for the
Based: nearly all data per independent medium, process of selecting the best values for the weights in
Causal patterns variable
and long
the WES model. Even if weights are restricted to one

30 Mid-American Journal of Business, Vol. 13, No. 2


decimal place, the number of combinations that might be
evaluated becomes too cumbersome to do by hand.
Time-Series Decomposition (TSD)
The time series decomposition forecast methodology
takes the time series of sales data and breaks it into trend
(T), seasonal (S), cyclical (C), and irregular (I) compo-
nents. Each of these components is modeled separately
and then put back together to make the forecast. The most
common time series decomposition model is multiplica-
tive such as:
Y = (T)x(S)x(C)x(I);
where Y represents the level of sales.
The quantity of data needed for time-series decomposi-
tion should be enough for one to see at least two peaks
and two troughs in the cycle factor, if the cycle factor is
important. If the cycle factor does not appear important
(i.e. has not been far above or below 1.0 for the last
several years), then the quantity of data needed should be
determined by what is necessary to adequately identify
the seasonal pattern. A rule of thumb would be at least
four or five observations per season (e.g., for quarterly
data one should have at least sixteen to twenty observa-
tions). Time-Series Decomposition is quite good at
picking up patterns in the data. The challenge is for the
analyst to successfully project the patterns through the
forecast horizon. This is generally fairly easy for the
trend and seasonal patterns but is more difficult for the
cyclical pattern. Time-Series Decomposition is especially
appropriate for short-term and medium-term forecasting.
If the cycle pattern is not important or if it can be pro-
jected with confidence, the method can also be used
effectively for long-term forecasts. The particular
advantage to this method is that it can be used often to
identify turning points. Doing so is dependent on one’s
ability to correctly interpret when the cycle factor may
turn up or down. The preparation time for a TSD forecast
is relatively short and most small retail managers find the
concepts inherent in the TSD model quite consistent with
how they see the world.
Regression-Based Trend Models
The basic regression trend model is:
Yt = a + bT;
where Yt is the forecast for time period t, T is an index
for time equal to one for the first period through n for the
last period in the historical data set, a is the intercept, and
b is the slope. The slope measures the rate at which sales
are increasing (b is positive) or decreasing (b is negative).
The data requirement for using a regression-based
trend depends to a considerable extent on the consistency
in the trend and whether or not the trend is linear. We
look for enough data that the t-statistic for the slope term
(this value is reported by virtually all statistical software)
Wilson and Miller
is significant (a t-value of 2 or more in absolute value is a
handy rule of thumb). For a simple linear trend, ten
observations may be quite sufficient.
A simple trend model can be effective when the
series being forecast has no pattern other than the trend.
Such a model is appropriate for short- to medium-term
forecasts and can be developed and implemented rela-
tively quickly. The preparer needs to have a basic
understanding of regression analysis but does not need a
sophisticated background in mathematics or statistics.
More complex nonlinear trends require deeper under-
standing. Using a computer simplifies preparation of the
forecast.
Regression-Based Trend Models with Seasonality
The basic regression trend with seasonality included
may be represented as:
Y t = a + b 1 T + b 2 Q2 + b 3 Q 3 + b 4 Q4 ;
where Yt, T, and a are defined as above. Now, b1 is
the slope, b2 is the average by which quarter two (Q2)
differs from the base period of quarter one, and b3 and b4
are the analogous values for quarters three (Q3) and four
(Q4). The variables Q2 , Q3 , and Q4 are called dummy
variables. A dummy variable is either one or zero. In this
application a dummy variable is one for the season it
represents and zero otherwise. For example, a retailer
with strong fourth quarter sales may use a dummy
variable (perhaps named Q4) that would be a one for each
fourth quarter and zero for quarters one, two, and three.
Seasonal patterns in the series are often modeled quite
well by using such dummy variables.
To include seasonality in a regression-based model, it
is desirable to have at least four or five observations per
season. Thus, for quarterly data a minimum of sixteen
observations would be appropriate. For monthly data
forty-eight or more observations should be used. As with
simple trend models, linear or nonlinear forms can be
used; the models are best for short- to medium-trend
forecasts, and the time necessary for preparation is short.
Except when nonlinear models are used, little mathemati-
cal sophistication is necessary to develop and use the
forecast. A computer regression program is a virtual
necessity.
We have used a model of this type successfully for a
retailer who rents tuxedos and related formal wear. In this
application the client wanted to make monthly forecasts,
so eleven dummy variables were used for the months of
February through December, using January as the base
period. As one might expect, June and December were the
strongest sales months and we were able to quantify their
strength using this methodology.
Regression Models with Causality
A causal regression model may be represented as:
Yt = a + b1X1 + b2 X2 + b3 X3 + ... + bn Xn ;
Mid-American Journal of Business, Vol. 13, No. 2 31
Wilson and Miller

methods, and time series decomposition are all techniques

where Yt and a are defined as above. Now, b1 is the slope
that can be employed with relative case in the context of a
for some causal variable designated as X1 , and b2 through
small retail business. We have applied these methods to
bn are the slope terms for the other causal variables.
forecasting sales in a tuxedo rental shop, restaurants, a
Examples of such causal variables (X1 , X2 , etc.) would be
bowling alley and sports complex, among others, and
consumer incomes, prices, population size, advertising
have found considerable success. ■
expenditures, the unemployment rate, and so forth.
The quantity of data required for the development of a
causal regression model depends on the number of
independent variables in the model and on how much
Notes
contribution each of those variables makes in explaining 1. Holt’s Exponential Smoothing
the variation in the dependent variable. One rule of thumb Ft = α Xt + (1 – α) (Ft +Tt)
+1
is that you should expect to have a minimum of ten
Tt + 1 = β (Ft +1 – F t) + (1 – β) Tt
observations per independent variable. Thus, for a model
with three independent variables, one should try to have Ht +m = Ft + 1 + mT t + 1
at least thirty observations.
where
Developing and maintaining a database for multiple-
regression models can be a significant undertaking. The
Ft + 1 = Smoothed value for period t + 1
effort may be worthwhile, however, since multiple-
regression models are often effective in dealing with α = Smoothing constant for the data (0 < a < 1)
complex data patterns. Seasonality can be handled by X t = Actual value now (in period t)
using dummy variables. F t = Forecast (i.e., smoothed) value for time period t
Causal regression models can be useful for short-,
Tt + 1 = Trend estimate
medium-, or long-term forecasts. However, it can take
considerable effort to develop a good causal regression β = Smoothing constant for the trend estimate (0 < β < 1)
model. Once the model is developed, preparation of a m = Number of periods ahead to be forecast
forecast can be done reasonably quickly. In using causal Ht + m = Holt’s forecast value for period t + m
regression models, one should reestimate equations at
least once a year so that structural changes are identified 2. Winters’ Exponential Smoothing
in a timely manner. The person who prepares regression
forecasts should have a sound background in regression F t = α Xt /St – p + (1 – α) (Ft – 1 +Tt – 1)
analysis. Managers, on the other hand, can use such St = β X t /Ft + (1 – β ) St — p
forecasts effectively as long as they have a basic under- Tt = γ(F t – F t – 1) + (1 – γ)T t – 1
standing of regression methods.
Wt +m = (Ft + mTt)St + m — p

Summary
Forecasting is an important decision-aiding tool which
is all too often neglected by the small retailer. Many
small business owners/managers feel they have inad-
equate time available for formal forecasting and/or that
they lack the expertise to do more than simple judgmental
forecasts. However, inexpensive computers and forecast-
ing software make it possible for small retailers to utilize
a number of forecasting methods in a cost effective and
timely fashion.
Managers in small retail establishments need to
develop a simple forecasting process such as the one
illustrated on page two. Doing so will enable them to
better anticipate the firm’s future level of sales which in
turn will help them in planning for future contingencies.
This should lead to greater business success.
The methods suggested here have a proven record of
success among larger firms in virtually all sectors of the
economy. Exponential smoothing, basic regression
where
F t = Smoothed value for period t
α = Smoothing constant for the data (0 < α < 1)
X t = Actual value now (in period t)
Ft — 1 = Average experience of series smoothed to period t –1
Tt + 1 = Trend estimate
St = Seasonality estimate
β = Smoothing constant for seasonality estimate (0 < β < 1)
γ = Smoothing constant for trend estimate (0 < γ < 1)
m = Number of periods in the forecast lead period
p = Number of periods in the seasonal cycle
Wt + m = Winters’ forecast for m periods into the future
References
Chase, C.W. 1991. Forecasting Consumer Products. Journal of

32 Mid-American Journal of Business, Vol. 13, No. 2

 Wilson and Miller

Business Forecasting. 10(1):3.

Chase, C.W. 1997. Selecting the appropriate forecasting method.
The Journal of Business Forecasting 16(3):2, 23, 28-29.
Lawless, M.J. 1997. Ten prescriptions for forecasting success.
The Journal of Business Forecasting 16(1): 3-5.
Mentzer, J.T. and K.B. Kahn. 1995. Forecasting technique
familiarity, satisfaction, usage, and application. Journal of
Forecasting 14:465-476.
Mentzer, J.T. and K.B. Kahn. 1997. State of sales forecasting
systems in corporate America. Journal of Business Forecast-
ing 16(1):6-13.
Peterson, R.T. 1996. An analysis of contemporary forecasting in
small business. Journal of Business Forecasting 15(2):10-12.
Sanders, N.R. 1997. Management forecasting: survey findings
and business implications. Mid-American Journal of
Business 12(1):35-39.
Tashman, L.J. and J.M. Kruk. 1996. The use of protocols to
select exponential smoothing procedures: a reconsideration
of forecasting competitions. International Journal of
Forecasting 12(2):235-253.
Wilson, J.H. and H.G. Daubek. 1989. Marketing managers
evaluate forecasting models. The Journal of Business
Forecasting 8(1):19-22.
Wilson, J.H. and D. Allison-Koerber. 1992. Combining
subjective and objective forecasts improve results. The
Journal of Business Forecasting 11(3):3-8.

About the Authors

J. Holton Wilson is Professor of Marketing at Central

Michigan University where he teaches in the areas of forecast-
ing, marketing research, and business economics. He has
published in a number of forecasting, marketing, and economics
journals as well as several texts. His most recent text is the 3rd
edition of Business Forecasting (with Barry Keating) published
January, 1998 by Irwin/McGraw-Hill.

Robert Miller is Professor of Marketing at Central Michigan

University where he teaches in the areas of retail management,
merchandising management, and retail strategy in addition to an
introductory marketing course. He presents workshops for the
Small Business Development Center and has served as an
advisor for the Small Business Institute.

Mid-American Journal of Business, Vol. 13, No. 2 33

Gender Differences in the Job Attitudes of Accountants
Abstract
The cost of losing quality employees can be expensive
for companies and firms. Higher rates of turnover for
women, particularly in public accounting, have sparked
efforts to resolve the problem. To further understanding
of the current job attitudes of men and women accoun-
tants, over 500 accounting graduates employed in a
variety of positions were surveyed.
Scales were used to measure the following job atti-
tudes: two types of Organizational Commitment (Affec-
tive Commitment and Continuance Commitment), Job
Satisfaction, Intrinsic Satisfaction, Job Security and
Turnover Intentions. The results indicated that the men
and women accountants had many similar, positive job
attitudes, but there were some notable cross-gender
differences. Overall, men tended to be more intrinsically
satisfied and affectively committed to their jobs, prima-
rily because they were older and had been in their jobs
longer. For the women, unlike the men, job tenure was
not associated with higher satisfaction levels or greater
feelings of attachment to their organizations. Addition-
ally, economic-related factors such as percentage of
household income contributed, job security, and continu-
ance commitment (attachment to a job’s benefits) were
associated with lower reported turnover intentions for
men, but not for women. Implications of these findings
are discussed.
Introduction
The ability of employers to retain and promote women
accountants has been an issue generating considerable
debate, particularly in the context of public accounting.
The traditional viewpoint that women leave employment
positions primarily to raise children has been largely
refuted by prior studies, which indicate that women have
left public accounting primarily for better professional
opportunities with other employers (AWSCPA 1986;
Trapp, Hermanson and Turner 1989). However, studies
also show that misperceptions may still remain. For
example, Trapp et al. (1989) found that while women
cited better opportunities as the number one reason for
Jane E. Baird, Mankato State University
Robert C. Zelin II, Mankato State University
Dale E. Marxen, Mankato State University
With women comprising approxi-
mately half of all accounting gradu-
ates, high levels of turnover among
women are of particular concern.
leaving public accounting, the male accountants cited
family responsibilities as the number one reason women
leave.
Despite the fact that female accounting majors, on
average, have outperformed their male counterparts in the
classroom (Pillsbury, Capozzoli and Ciampa 1989), and
that no significant differences have been found in person-
ality traits of female and male accounting majors
(Pillsbury et al. 1989), there is still a significant
underrepresentation of women accountants at the top in
public accounting (Omundson, Schroeder and Stevens
1997; Pillsbury et al. 1989). Little has been written
concerning women accountants in nonpublic accounting
positions, but recent research indicates that the turnover
problems and advancement issues are of concern in
industry accounting positions as well (Hunton,
Neidermeyer and Wier 1996).
These issues have raised concerns among employers,
since turnover of qualified employees costs employers
in terms of training, lost experience and productivity—
factors that are even more critical in today’s highly
competitive and complex workplace. With women
comprising approximately half of all accounting gradu-
ates, high levels of turnover among women are of particu-
lar concern. In public accounting, the firms have responded
with more flexible work arrangements, mentoring
programs, and other attempts at keeping women in
their ranks and increasing the number of women at the
partner level (Rose 1997; PAR 1996; Alter 1991). In
private industry, similar efforts are being made by at
least some employers, although progress in both types
of employment has been slow (Himelstein and Forest
1997).
Given the changes taking place in both public account-
ing and other employment opportunities for female
accountants, how do these women feel about their jobs
35
Baird, Zelin, and Marxen
today? How do their job attitudes compare with those of
their male counterparts? Are women equally satisfied
with their jobs? Are they committed to their employers?
This study presents the results of a recent survey of both
male and female accountants in an effort to address these
questions.
Prior Literature
Prior research documents differences in career-related
expectations of male and female accountants, which could
result in differences in satisfaction, commitment, and
turnover. Generally, this stream of research, conducted
primarily in public accounting environments, indicates
that women feel they have fewer advancement opportuni-
ties and more career-related conflicts with family respon-
sibilities than their male counterparts. Lathan, Ostrowski
and Pavlock (1987) found that fewer female public
accountants expected to become partners, as compared to
their male counterparts (38 percent versus 51 percent),
and a slightly greater percentage of the women expected
to leave public accounting within the first six years (61
percent versus 55 percent). Likewise, Alter (1991) found
that women in public accounting perceived fewer partner-
ship opportunities, especially if they were parents. Trapp
(1989) found that, although both genders felt men and
women were equally competent to perform on the job,
there was disparity between male and female accountants’
perceptions of a woman’s chance of making partner. The
women rated a woman’s chance of making partner
significantly lower than men rated a woman’s partnership
opportunities. This indicates that the women perceived
more barriers to promotion to partnership rank than the
men think they have. Maupin (1993; 1992) found similar
results among senior accounting students; more females
expected problems coordinating work and family respon-
sibilities and fewer women expected to be working full-
time ten years after graduation. Gaertner, Hemmeter and
Pitman (1987) reported that women in public accounting
perceived that gender had an effect on promotions and job
assignments. Likewise, Hunton (1996) found that women
in industry accounting perceived more discrimination
than men in terms of promotion opportunities, job task
assignments and compensation.
These perceptions have been supported with research
indicating that females are perceived to have different
attributes than males that may not fit the role of success-
ful business leaders (Stivers and Campbell 1995; Lehman
1990). A recent example is Anderson, Johnson and
Reckers (1994) that reports the results of an experiment
in which accountants rated individuals in differing
scenarios as to their suitability for promotion. The
respondents assigned significantly lower advancement
ratings to females as compared to males, and female
advancement ratings were more negatively affected by
family structure than were advancement ratings for males.
36 Mid-American Journal of Business, Vol. 13, No. 2
Research on the related variables of
organizational commitment, job satisfac-
tion and turnover have provided mixed
reports on gender differences.
Research on the related variables of organizational
commitment, job satisfaction and turnover have provided
mixed reports on gender differences. Mathieu and Zajac
(1990) performed a meta-analysis on over 200 articles on
organizational commitment published from 1967 through
1986 for all types of employees. The results indicated
that, overall, women exhibited higher commitment than
men, particularly in regard to attitudinal commitment, but
results were inconsistent. In accounting, results have also
been inconsistent. Prior research suggests that women
accountants are no less professionally committed or
upward striving than their male counterparts (Street,
Schroeder and Schwartz 1993; Earnest and Lampe 1982),
and might even be more committed to their careers than
men (Trapp 1989). However, in regard to commitment to
their specific organizations, some researchers have found
no significant gender differences (Reed and Kratchman
1990; Reed et al. 1994; Gaffney, McEwen, and Welsh
1993), while others report women accountants to be less
committed than their male counterparts (Aranya et al.
1986).
In terms of job satisfaction and intended turnover,
Reed et al. (1994) found females were less satisfied with
their jobs and indicated higher turnover intentions than
males. Aranya, Kushnir and Valency (1986) also found
lower overall job satisfaction for women accountants.
Similarly, Earnest and Lampe (1982) found that more
women auditors expected to leave their jobs as compared
to their male counterparts. In contrast, Omundson et al.
(1997) found there were no gender differences in turnover
expectations of accountants.
Gaertner et al. (1987) surveyed people who had
actually left public accounting and found that women
were generally more dissatisfied, especially with overtime
hours. Bullen and Martin (1987) reported that women
were less satisfied regarding promotion-related aspects of
their jobs. Ward, Moseley and Ward (1986) found that
women employed by CPA firms are generally satisfied,
but are least satisfied with promotion opportunities and
pay. The AICPA (1990) found females rated overtime
burden, time for personal life, and time for parenting less
satisfactory than males. In contrast, Brown and Corless
(1990) reported that women government auditors were
more satisfied with their jobs on three components—
coworkers, promotions, and pay—but lower on happiness
with supervision.
Collins (1993) found higher actual turnover rates for
women in public accounting compared to men, but found
there were no gender differences in job satisfaction while

those same individuals were still in public accounting.
Likewise, Omundson et al. (1997) found that job satisfac-
tion of accountants did not differ by gender.
Seiler and Sapp (1979) reported that, for accountants
employed by manufacturing firms, there were no differ-
ences in most facets of job satisfaction across genders,
but the women were more satisfied with their supervisors.
In contrast, Hunton et al. (1996) found lower overall job
satisfaction and higher turnover intentions for women
employed in private accounting positions as compared to
men in similar jobs.
To summarize, while prior research on gender differ-
ences of accountants has produced some conflicting
results, the preponderance of studies indicate that men
and women in accounting are equally committed to their
careers, but that women are more likely to be dissatisfied
with their jobs, often due to a perceived lack of advance-
ment opportunities. The prior research indicates women
are often less committed to their organizations and more
likely to quit their jobs for better opportunities elsewhere.
However, a vast majority of those studies were conducted
in public accounting settings at the exclusion of other
types of accounting employment. In addition, these studies
examined only one facet of organizational commitment,
whereas the social science literature indicates that there
are at least two distinct types of organizational commitment
(Meyer and Allen 1984). Affective Commitment (AC) is
an individual’s commitment to the organization because
of feelings of attachment to or identification with the
organization. Continuance Commitment (CC) is an
individual’s commitment to the organization because of
necessity, arising from such things as (1) a lack of alterna-
tive employment options or (2) accrual of benefits, such
as seniority and retirement benefits, that would be lost if
the individual left the organization. The current paper
updates and extends prior studies by reporting current
job-related attitudes (including both types of organiza-
tional commitment) of men and women with accounting
degrees who are now employed in a variety of positions.
Method
Sample Selection
A questionnaire was mailed to 1,494 accounting
alumni from a medium-sized Midwestern state university.
The participants were randomly selected from the
university’s alumni mailing list of accounting majors,
and were assured that their responses would remain
anonymous. The initial mailing resulted in 411 usable
responses. A second mailing was conducted using a
random selection of 500 individuals who had not re-
sponded to the first mailing. This second mailing yielded
an additional 96 usable responses, for a total of 507
participants and a response rate of 34 percent. A test was
conducted on each of the dependent variables to deter-
Baird, Zelin, and Marxen
mine the potential for nonresponse bias by comparing the
results of the first mailing to results of the second
mailing. The early and late respondents were statistically
different on one of the dependent variables, Continuance
Commitment, with the late respondents scoring signifi-
cantly higher on that variable. If the late respondents are
more representative of the nonrespondents, then the
sample might be biased in showing a lower level of
Continuance Commitment than exists in the population.
The results of the study should be interpreted in light of
this potential bias. However, because the late response
bias existed for both the men and the women, compari-
sons across groups may not be affected. The gender
breakdown of the sample is 316 males (62 percent) and
191 females (38 percent). While the breakdown of current
accounting majors at the university is more evenly split
across genders, the sample is representative of past
accounting graduates.
The questionnaire included scales to measure several
job-related attitudes of interest as well as demographic
questions. The attitudes measured were: Organizational
Commitment (two measures), Job Satisfaction, Intrinsic
Satisfaction, perceived Job Security, and employee
Turnover Intentions. These attitudes and the scales used
to measure them are described below. The questionnaire
was pretested by fourteen individuals in a variety of
occupations, including public accounting, private ac-
counting, and nonaccounting positions.
Dependent Variables
Organizational Commitment. Two types of organiza-
tional commitment are measured in this survey: Affective
Commitment (AC) and Continuance Commitment (CC).
Both AC and CC are measured using separate eight-item
scales developed by Meyer and Allen (1984). Each of the
questions asked for a response on a seven point Likert
scale. The overall AC and CC scores for each subject were
computed by averaging the scores on the eight scale items,
with negative statements being reverse coded for analysis.
Examples of scale items can be found in Exhibit 1; the
complete scales can be found in Allen and Meyer (1990).
Job Satisfaction. Overall Job Satisfaction includes an
employee’s satisfaction with all facets of his/her job.
This was measured using an established four-item scale
(Hoppock 1935). Sample scale questions are provided in
Exhibit 1. Responses were made on a seven-point scale,
with each subject’s overall Job Satisfaction computed by
averaging the four responses.
Intrinsic Satisfaction. Intrinsic Satisfaction is a
measure of how well the employee likes the work he/she
is doing—the actual work tasks—at the exclusion of other
job-related factors. Since no established concise scale was
available, a four-item scale was developed to measure
Intrinsic Satisfaction, including the items shown in
Exhibit 1. The scale items were written by the authors and
pretested for reliability.
Mid-American Journal of Business, Vol. 13, No. 2 37
Baird, Zelin, and Marxen
Exhibit 1
Example Survey Questions
Affective Commitment:
I would be very happy to spend the rest of my career with this
organization.
This organization has a great deal of personal meaning for me.
I do not feel ‘emotionally attached’ to this organization.
Continuance Commitment:
It would be very hard for me to leave my organization right now,
even if I wanted to.
Too much in my life would be disrupted if I decided I wanted to
leave my organization now.
I feel that I have too few options to consider leaving this
organization.
Job Satisfaction:
How much of the time do you feel satisfied with your job?
How well do you like your job?
Intrinsic Satisfaction:
Overall, I am very satisfied with my job activities.
Even if I could earn more pay elsewhere, I like the work I do now
too much to leave my job.
I don’t find the work I do very interesting.
I would continue working at my present job even if I could receive
my salary and benefits by staying home.
Job Security:
I am worried that my job will not last as long as I would like.
My job security depends significantly on my performance.
It is unlikely I would lose my job even if my job performance were
poor.
My job offers a lot of employment security.
Turnover Intentions:
I will leave this job as soon as I get a good opportunity.
I am planning to get another job as soon as I can.
I am actively looking for other jobs.
I have no intention of ever leaving this job.
Responses were made on a seven point Likert scale.
The overall Intrinsic Satisfaction score for each subject
was computed by averaging the scores on the four scale
items, with negative statements being reverse coded for
analysis.
Job Security. A four-item scale was developed by the
researchers to measure each individual’s perceived level
38 Mid-American Journal of Business, Vol. 13, No. 2
of Job Security. Existing Job Security scales could not be
used because they included factors such as changes in
existing job characteristics (Hartley et al. 1991), while
the objective in this survey was to focus only on the
individual’s perceived ability to maintain his or her
current employment. The questions used in the scale are
included in Exhibit 1. As with the Intrinsic Satisfaction
scales, the items were written by the authors and pretested
for reliability.
Responses to each item were recorded on a seven point
Likert-type scale, with negatively worded items reverse
coded for analysis. A mean response to the four items was
computed to determine each individual’s Job Security
score.
Turnover Intentions. A four-item scale developed by
the authors was used to measure the extent to which the
individuals intended to leave their current positions.
These four items are shown in Exhibit 1. Due to the
number of variables studied, it was necessary to use
concise scales so that the survey could be completed in a
reasonable amount of time. Therefore, use of more
lengthy existing scales was not appropriate. This scale
was pretested for reliability.
Responses were made on a seven point agree-disagree
scale for each question. Negatively worded statements
were reverse coded for analysis. The overall Turnover
Intentions score for each individual was the mean of that
individual’s responses to the four scale items.
Analysis
For each of the dependent variables, the mean re-
sponses of the males and females were compared using
independent samples t-tests to determine if the job
attitudes differed by gender. Additionally, the relation-
ships among the variables were analyzed by gender using
correlation analysis. A summary was then prepared
comparing the significant correlations for the males
versus the females to determine if the relationship among
the variables differed by gender.
Results
Survey Respondents
Table 1 summarizes the demographic information for
the survey respondents. The women were slightly
younger, on average (34 years versus 39 years), and
earned a smaller percentage of their households’ income
(64 percent versus 80 percent). Both the men and the
women averaged approximately one dependent child,
but a lower percentage of the women were married (67
percent versus 77 percent). Although the women reported
higher average GPAs, a greater percentage of men had
obtained advanced degrees and/or professional certifica-
tion, and a much higher percentage of the men had
advanced to the levels of manager, officer, or owner
 Baird, Zelin, and Marxen

men did not report a significantly greater need to remain

Table 1 with their organizations (Continuance Commitment)
Sample Demographics (p=.38). The men reported higher levels of satisfaction
with their job tasks, measured by the Intrinsic Satisfaction
scale (p=.05), but did not report significantly higher
Males Females
levels of overall Job Satisfaction (p=.35). The two groups
Number in Sample 316 191
reported similar levels of perceived Job Security (p=.15)
Average Age 39 34 and Turnover Intentions (p=.23).
Average Percent of Family Income 80 64 Therefore, when sample means were simply compared
Average Number of Dependent Children 1.3 0.97 across gender, the men and women accounting graduates
reported similar job attitudes, except that the men were
Average Tenure with Current Employer (years) 8.58 5.82
more affectively committed and enjoyed their job tasks
Married 77% 67% more. However, because these results could be driven by
Advanced Degree 13% 7% other demographic variables differing across gender,
Self-reported GPA >3.0 65% 81% separate cross-gender comparisons were performed on
each dependent variable (AC, CC, Job Satisfaction,
Professionally Certified 55% 48%
Intrinsic Satisfaction, Job Security and Turnover Inten-
Owner, Officer, Manager 71% 45% tion), with age, household income percentage, and job
Employed in: tenure included as covariates. With these additional
Public Accounting Firms 19% 20% variables included in the analysis, the job attitudes did not
differ across gender.
Private Industry - accounting jobs 47% 45%
Government/Non Profit - accounting jobs 9% 13%
Related Executive Positions 13% 12%
Other Jobs 12% 10% Table 2
Job Attitudes: Means and Standard Deviations

(71 percent versus 45 percent). Approximately equal

percentages of males and females were employed in each Males Females
of the organizational types. Standard Standard
Mean Deviation Mean Deviation
Affective Commitment 4.76 1.22 4.46 1.12
The Scale Reliabilities
Continuance Commitment 4.14 1.00 4.06 1.00
Scale reliabilities were computed for each scale
Intrinsic Satisfaction 4.57 1.19 4.37 1.09
utilized in the questionnaire, using Cronbach’s coefficient
Job Satisfaction 5.15 0.92 5.08 0.76
alpha (Cronbach 1951). For the preexisting scales,
Perceived Job Security 4.03 1.15 4.18 1.07
coefficient values were .87 for Affective Commitment,
Turnover Intentions 3.09 1.51 3.25 1.36
.70 for Continuance Commitment, and .89 for Job
Satisfaction. These fall within the ranges reported in prior
research, which were .84 to .88 for AC (Meyer, et al. Job Attitudes: Correlations
1989), .70 to .84 for CC (Meyer et al. 1989), and .76 to Correlations among the variables studied were also
.89 for Job Satisfaction (Snead and Harrell 1991). For the examined to determine if the relationships among the
scales developed in this study, the coefficient alpha variables differed across gender. The significance of each
values were .72 for Intrinsic Satisfaction, .58 for Job correlation (a=.05) was computed separately for the males
Security, and .86 for Turnover Intention, all of which and females, with the results summarized in Table 3.
exceeded minimum values considered acceptable in scale As Table 3 indicates, for both the men and women in
development (Dunham, Grube and Castaneda 1994). the sample, Affective Commitment was positively
associated with Intrinsic Satisfaction, Job Satisfaction,
Job Attitudes: Direct Comparisons and perceived Job Security, and negatively associated
The mean responses to the job attitude variables are with Turnover Intentions. For the men only, age and
summarized in Table 2. Both the men and women tenure with the organization were positively correlated
reported fairly high levels of Affective Commitment, with Affective Commitment.
Continuance Commitment, Job Satisfaction, and Intrinsic Continuance Commitment’s relationship with the other
Satisfaction. When simply compared across gender, the variables differed much more by gender. The only
men reported a significantly higher level of Affective correlation which was significant for both men and
Commitment (p=.01), indicating that they felt more a part women was a positive correlation with job tenure (years
of their organizations than the women did. However, the with the employer); as employees invest more time

Mid-American Journal of Business, Vol. 13, No. 2 39

Baird, Zelin, and Marxen

with one employer, Continuance Commitment increases
because they tend to have increased seniority and accrued
benefits. For the men in this study, age was positively
associated with CC, meaning the older the men were,
the more they perceived a need to maintain their jobs.
In contrast, age was not significantly correlated with
Continuance Commitment for the women. Additionally,
Table 3 indicates the men with higher reported Continu-
ance Commitment were less likely to quit their jobs,
whereas for women the level of CC was not significantly
associated with Turnover Intentions. For the women
only, the reported percentage of household income they
contributed and the number of children they had were
positively correlated with Continuance Commitment.
As indicated in Table 3, for both the men and women,
Intrinsic Satisfaction and Job Satisfaction were positively
correlated with each other and with age, and negatively
associated with Turnover Intentions. That is, the older the
accountants were, the more satisfied they were with their
jobs and work tasks, and the less likely they were to quit.
Regardless of age, higher Job Satisfaction and Intrinsic
Satisfaction were associated with lower Turnover Intentions.
For the men only, the number of years with the employer
was associated with increased Job Satisfaction and increased
Intrinsic Satisfaction, and the number of children was
associated with increased Job Satisfaction.
Job Security was not significantly correlated with any
of the job attitudes or demographic data for women,
except for Affective Commitment. For men, higher levels
of Job Security were associated with lower Turnover
Intentions and with younger age levels. In other words,
the older male accountants in this sample reported less
perceived Job Security than their younger counterparts.
For both the men and the women respondents, age and
job tenure were negatively associated with Turnover
Intentions. For the males only, the higher the percentage
of household income they contributed, the less likely they
were to quit their jobs, as indicated by the negative
correlation.
Not surprisingly, the older individuals reported having
more children and having been with their jobs longer. For
the women only, number of children was negatively
correlated with Income Contribution, meaning the more
children they had, the lower income percentage they
contributed in their household.
Discussion and Implications
What are the implications of these results? Given that
public accounting firms and other employers are particu-
larly concerned with retaining women employees, cross-
gender differences in job attitudes, rather than similari-
ties, will be the primary focus of this section. Although
the men and women in this study were both fairly satis-
fied with, and committed to, their jobs, there were some
notable cross-gender differences in how job attitudes
related to various demographic variables and interrelated
among themselves.

Table 3
Job Attitudes: Correlations for Both Genders
Correlation Significance at α = .05

Continuance Intrinsic Job Job Turnover Respondent Income Number of Years with
Commitment Satisfaction Satisfaction Security Intentions Age Contribution Children Employer
Affective
Commitment N B B B -B M N N M
Continuance
Commitment N N N -M M F F B
Intrinsic
Satisfaction B N -B B N N M
Job
Satisfaction N -B B N M M
Job
Security -M -M N N N
Turnover
Intentions -B -M N -B
Respondent
Age N B B
Income
Contribution -F N
Number of
Children B

N=not significant; B=significant for both; M=significant for males only; F=significant for females only; “-”=negative correlation

40 Mid-American Journal of Business, Vol. 13, No. 2


Although men and women were equally likely to quit
their jobs, they were apparently motivated by different
factors to keep them. The women’s Turnover Intentions
were solely related to affective measures—how much
they liked their jobs and job tasks and felt a part of their
organizations—while the men’s Turnover Intentions were
additionally associated with economic-related factors.
This was evidenced by the fact that Job Security, Income
Contribution, and Continuance Commitment were all
negatively correlated with Turnover Intentions for men
but were unrelated to Turnover Intentions for women.
Whether women are actually less motivated by a job’s
economic benefits or whether they feel they can readily
replace them may be an interesting topic for further
research. If economic factors do not prompt women
accountants to keep their jobs, then employers should
consider concentrating on fostering high levels of
Job Satisfaction, Intrinsic Satisfaction, and Affective
Commitment in order to retain women employees.
A related concern is that the women’s Job Satisfaction,
Intrinsic Satisfaction, and Affective Commitment were
not positively associated with job tenure. Why did the
men enjoy their jobs more and feel more a part of their
organizations the longer they were with their employers,
while the women did not? Perhaps the women did not
experience the same advancement successes, an explana-
tion consistent with findings of prior research (Omundson
et al. 1997; Hunton et al. 1996; Pillsbury et al. 1989). A
possible “glass ceiling” problem is evidenced by this
study’s findings that a much greater percentage of the
men had achieved upper-level positions within their
organizations. Further exploring this and other potential
causes of the women’s relative job dissatisfaction, such as
perceptions of exclusion in a male-dominated corporate
culture (Himelstein and Forest 1997), may be a fruitful
area for further research.
Another notable cross-gender difference was that
women with more children tended to contribute a lower
portion of their households’ income, whereas for men,
the number of children was not correlated with Income
Contribution. Research exploring the causes of this
difference would contribute to the understanding of
workplace gender issues. For example, are women with
more children choosing different types of jobs than those
with fewer children?
Even though the women accountants with more
children tended to contribute a lower portion of their
households’ income, they reported a greater need to
maintain their employment than did the women with
fewer children. Whereas conventional thought suggests
that a greater number of children would create more home
demands and, therefore, more work-role conflict and
higher Turnover Intentions (see, for example, Trapp et al.
1989), our results indicate the opposite. Perhaps the
income contributed by the women with larger families
was perceived to be very important due to current
Baird, Zelin, and Marxen
economic demands necessitating two-earner households.
Two findings in this study have specific implications
for accounting researchers. First, the lack of a significant
correlation between the two types of organizational
commitment, AC and CC, indicates they are two distinct
constructs, as reported in prior social science research
(Mathieu and Zajac 1990). Consequently, as expected, the
two were found to have differential associations with the
other attitudes reported herein. Therefore, past studies in
accounting have likely omitted potentially important
information by looking exclusively at the affective
aspect of commitment. Secondly, the cross-gender
demographic differences found in this study are consis-
tent with other reported gender differences in working
accountant populations (Schroeder and Reichardt 1997).
As these demographic differences were responsible for
the cross-gender differences in Intrinsic Satisfaction and
AC found herein, their impact should be considered when
interpreting the results of prior cross-gender job attitude
studies and when designing future studies.
Limitations
This study has limitations which should be considered
when interpreting the results. The study surveyed indi-
viduals with accounting degrees from one university and,
therefore, the results might not generalize to all accoun-
tants. However, the survey respondents in this study were
quite diverse in terms of age and job type. As with all
surveys, the responses were self-reported perceptions and
opinions of the individual participants rather than verifi-
able objective data. Also, the results could be affected to
the extent that the men and women in the sample differed
on non-gender attributes not controlled for in the study.
Additionally, the possibility of nonresponse bias exists
with the use of survey methodology. This study reported
job attitudes, but did not attempt to obtain data regarding
the determinants of job attitude differences across
genders. Research exploring the reasons for cross-gender
similarities and differences in job attitudes could provide
useful information to the profession. ■
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 Baird, Zelin, and Marxen

About the Authors

Jane E. Baird is Assistant Professor of Accounting at

Mankato State University. Her research interests include
auditor decision making, organizational behavior issues related
to CPA firms, and accounting education research. She was
formerly a manager with Arthur Andersen & Co.

Robert C. Zelin II is Associate Professor of Accounting at

Mankato State University. His primary research interests
include behavioral research, management accounting issues,
and accounting education research. He was formerly an auditor
with Price Waterhouse.

Dale E. Marxen is Assistant Professor of Accounting at

Mankato State University. His research interests include
auditing and behavioral issues. His publications have appeared
in journals such as Accounting Horizons, Behavioral Research
in Accounting, and Research in Accounting Regulation.

Mid-American Journal of Business, Vol. 13, No. 2 43

Influence Tactics as Signals of Fit and Precursors of Turnover:
An Exploratory Study
Abstract
A major premise of this paper is that organizational
values are likely to be expressed in the type of influence
tactics successful individuals employ. The purpose of this
study is to explore the notion that individuals can gauge
their fit with the organization according to their percep-
tion of the influence tactics they think are important for
success. Specifically, this research is premised upon the
assumption that individuals, over time, acquire a sense of
the influence tactics they believe are important, and
gauge their fit with the organization accordingly. This
study is longitudinal in nature, and includes a measure-
ment of turnover, permitting further exploration of the
individual’s perception of fit with the organization. This
study is unique in that no research to date has explored
the relationship between turnover and individuals’
perceptions of those tactics they think are important for
success.
Introduction
Person-organization fit is defined as “the congruence
between patterns of organizational values and patterns of
individual values” (Chatman 1991, 459). Recent scholarly
work has shed some light upon the manner in which
individuals’ fit with their organizations’ values affects
such things as level of satisfaction and organizational
commitment (Meglino, Ravlin, and Adkins 1989), job
satisfaction, and turnover (O’Reilly, Chatman, and
Caldwell 1991). For example, a sense of fit is likely to
lead to positive perceptual feelings about the organiza-
tion, and choices to stay in that environment (Pervin and
Rubin 1967; Emmons, Diener, and Larsen 1986). High
person-organization fit has also been found to be nega-
tively associated with intent to leave and positively
associated with organizational tenure (Chatman 1991). In
addition, high person-organization fit has been found to
predict positively the probability of an individual remain-
ing with the company (O’Reilly, Chatman, and Caldwell
1991).
A major premise of this paper is that organizational
values are likely to be expressed in the type of influence
Rebecca A. Thacker, Ohio University
tactics successful individuals employ. The purpose of this
study is to explore the notion that individuals can gauge
their fit with the organization according to their percep-
tion of the influence tactics they think are important for
success. The study is an extension of a doctoral disserta-
tion and a 1995 study (Thacker 1995). Additional data
have been collected permitting a longitudinal analysis
that allows investigation of a new line of questioning.
…individuals, over time, acquire a
sense of the influence tactics they
believe are important, and gauge their
fit with the organization accordingly
Specifically, this research is premised upon the
assumption that individuals, over time, acquire a sense
of the influence tactics they believe are important, and
gauge their fit with the organization accordingly; i.e.,
those who leave are more likely to feel that they do not
fit with the organization as well as those who stay.
This study is longitudinal in nature, and includes a
measurement of turnover, allowing further exploration
of the individual’s perception of fit with the organiza-
tion. This study is unique in that no research to date
has explored the relationship between turnover and
individuals’ perceptions of those tactics they think are
important for success.
Theoretical Background
Chatman (1991) makes the argument that, in defining
fit, values are the starting point. Organizational pro-
cesses such as selection and socialization cement indi-
viduals’ perceptions that they fit or do not fit with the
organization. In essence, values are the basis for social
expectations, norms and behaviors within the social unit;
i.e., the “bedrock of any corporate culture” (Deal and
Kennedy 1982, 21). Past research into culture has
focused on expectations that have their roots in the value
system of the social group (Cooke and Rousseau 1988;
O’Reilly 1989). Ultimately, the organization’s culture is
45
Thacker
affected and shaped by its values, becoming a mechanism
by which organizations can influence how employees act
(Deal and Kennedy 1982). In outlining common elements
that contribute to organizational culture, Rousseau (1990)
suggested a framework that included patterns of behavior
as one of the elements. The theoretical underpinning of
this study is that values are internalized beliefs that can
guide behavior; influence tactics are manifestations of
that behavior and behaviors are part of what defines
culture.
values behavior culture
influence tactics
As a construct, culture is generally viewed as something
that evolves and becomes collectively understood (Denison
1996). From this perspective, influence tactics can be
viewed as part of the evolutionary, culture-creating
process, helping to define the behaviors that are considered
acceptable and providing the basis for a shared system of
values (Weiner 1988). As observable manifestations of
those acceptable behaviors, influence tactics provide
signals by which individuals can judge their “fit” with
those behaviors considered acceptable. Such cognitive
judgments are salient to employees gauging their chances
of success in the organization and making decisions about
whether to stay with that organization.
As observable behaviors, influence tactics are capable
of providing accurate information about an individual’s
fit with the organization. For example, prior research
indicates that influence tactics affect various work-related
outcomes such as salary (Dreher, Dougherty, and Whitely
1989), performance ratings (Kipnis and Schmidt 1988)
and assessments of subordinates’ promotability (Thacker
and Wayne 1995), corroborating previous research that
supervisors make attributions about subordinates’
behaviors (Green and Mitchell 1979). Moreover, percep-
tions of a person’s fit with his/her situation prompt
attitudinal and behavioral responses on the part of the
individual (Schneider 1987). This study investigates the
notion that turnover may be one of those behavioral
responses. To the extent that the display and interpreta-
tion of behaviors that accompany the exercise of influ-
ence tactics become linked in individuals’ minds to the
organization’s values and culture, influence tactics then
become mechanisms by which people make decisions
about whether they fit or not.
Deal and Kennedy (1982) state that in order to become
successful, people must understand their company
culture; thus, becoming successful (as defined by salary)
requires that individuals adopt the company’s way of life.
One way to understand how to become successful is to
look at the behavior of people who are successful in a
monetary sense. In a sense, salary becomes a proxy for
understanding the culture. People who choose a company
choose a culture. Previous research indicates that people
46 Mid-American Journal of Business, Vol. 13, No. 2
perform better when their organization has values they
feel are important (Diener, Larsen, and Emmons 1984).
For those individuals who do not choose to adopt the
company’s culture or way of life they can opt to leave. If
they opt to stay, but fail to buy into the corporate culture,
Deal and Kennedy (1982) would predict that their level of
personal success would be less than those who do accept
the company’s culture. One reason for that lack of
success, and relatively lower monetary reward, may be a
failure to exhibit the types of influence tactics deemed
appropriate to the culture.
People who choose a company
choose a culture.
To measure influence tactics, researchers have identified
and developed instruments to assess six key dimensions of
influence: rationality; ingratiation; assertiveness; coalition
building; exchange; and appeal to higher authority (Kipnis,
Schmidt, and Wilkinson 1980; Kipnis and Schmidt 1988;
Schriesheim and Hinkin 1990; Yukl and Falbe 1990). Past
research suggests that influence tactics have relationships
to various work-related outcomes, and therefore have the
potential to be perceived as signals of fit. For example,
rationality has been found to affect salary (Dreher,
Dougherty and Whitely 1989), as well as perceptions of
managers’ effectiveness (Yukl and Tracey 1992). Ingratia-
tion tactics have been found to correlate positively with
performance ratings (Kipnis and Vanderveer 1971), while
the assertiveness tactic has been found to have a negative
influence upon supervisors’ assessments of subordinates’
promotability (Thacker and Wayne 1995). Coalition tactics
have been found to be successful in achieving the desired
influence (Keys, Case, Miller, Curran, and Jones 1987),
while another study found that managers who used
coalition tactics were likely to receive low performance
ratings (Kipnis and Schmidt 1988). Other evidence
suggests that coalition building has no effect on achieving
valued outcomes (Case, Dosier, Murkinson, and Keys,
1988; Dosier, Case, and Keys, 1988). Regarding exchange
tactics, Dreher et al. (1989) found that reliance on ex-
change tactics resulted in higher salaries for males,
although exchange tactics have generally been found to
have nonsignificant effects on individuals’ attempts to
influence those at organizational levels above their own
(Case et al. 1988; Mowday 1978). Ultimately, the potential
exists for individuals to recognize that those who are
successful (e.g., those who have higher salaries, higher
performance ratings, and greater perceived promotability),
send “signals” in the form of influence tactics about how
successful people behave.
This study also addresses the issue of whether indi-
viduals gauge their fit with the influence tactics they

think are related to success, and upon finding their choice
of tactics different from those they perceive to be re-
warded, make a decision to leave. As previous research
into the effects of influence tactics on work-related
outcomes shows, influence tactics can be viewed as signs
of political ability to become successful (Judge and Bretz
1994). For example, if the perception is that ingratiation
and coalition building are tactics that lead to success,
individuals are likely to believe that the organization
values these tactics. Organizational values are group-level
variables. As such, organizational members are generally
aware of the support for those values (Enz 1988; Schein
1985). In effect, an organization’s central value system
takes on a life of its own when individuals buy into and
exhibit behaviors that reflect those values. Individuals
who do not may be more likely to leave.
Thus, a focus of this study is that influence tactics are
mechanisms for assessing one’s fit with the organization’s
values. The contention is that influence tactics are
manifestations of values, providing percepual points of
comparison and signalling individuals’ fit with the
organization. Influence tactics provide foreground
dimensions upon which individuals can compare them-
selves to others because tactics are manifested in ways
that are observable. Much as new recruits to an organiza-
tion become acculturated through interaction with longer-
tenured members (Louis 1980, 1990), individuals learn
the influence tactics that are rewarded by observing those
who are successful. This study investigates whether those
who leave the organization and those who stay differ in
their perceptions of the importance of the influence
tactics that are related to success.
Proposition
The major premise of this paper is that individuals can
gauge their fit with the organization through perception of
the tactics they believe important. Ultimately, those who
do not feel that they fit will be more likely to leave than
those who feel that they fit. Individuals can gauge their fit
by comparing their use of influence tactics with those of
individuals who are successful. An objective measure of
success is salary, although there are multiple influences
upon the determination of one’s salary, such as labor
market conditions and individual performance. Nonethe-
less, salary can provide a signal because individuals can
compare the influence tactics they use with the tactics
used by those who are doing well monetarily. If they
perceive that they are behaving differently than the
successful individuals, they may be more likely to believe
that they do not fit with the organization, and therefore be
more likely to leave.
To test this proposition, it is necessary to know several
things:
1. The influence tactics that are significantly related
to salary. This question is measured by using the
Thacker
variables that ask respondents to report the
frequency of their use of each of the influence
tactics.
2. Whether leavers and stayers differ in their
perception of those tactics that are necessary
for success. This question is measured by using
the variables that ask respondents to report how
important they think each of the influence tactics
is for becoming successful in the organization,
and then testing for significant differences be-
tween stayers’ and leavers’ perceptions. Particular
attention will be paid to those tactics that are
found to be significantly related to salary (see
Question 1).
3. Whether there is a significant difference in 1986
salary between those who have left the organiza-
tion by 1990 and those who remain. Salary is an
objective measure against which individuals can
gauge whether their perceptions of who is success-
ful are accurate; hence, salary is a measure of
whether an individual’s “fit” with the organization
is a good one. A significant difference in salary in
1986 (between those who eventually leave by 1990
and those who remain) would be an indicator that
the organization was delivering information about
who fits and who does not, thus validating individu-
als’ perceptions.
Methods
Setting and Sample
The population for the present study consisted of
occupants of administrative and exempt staff positions
originally surveyed in 1986 at a Southwestern state
university system for a 1987 doctoral dissertation. The
respondents were resurveyed after four years, and this
final sampling frame included 111 position titles repre-
senting administrative and staff positions. Within these
positions, participants were randomly selected resulting
in a stratified sampling frame of 600 subjects. Each
subject was assigned a participant number from the
master list and a confidential questionnaire with the
participant number in the upper right hand corner was
then mailed to each of the 600 potential study partici-
pants. A total of 289 subjects returned usable question-
naires, for a response rate of 48.2 percent. Of those
respondents, 52.8 percent were female and 47.2 percent
were male, which approximates the gender composition
of the study organization.
Using the original numbered master list of partici-
pants, additional salary data points were collected in the
follow-up study by referencing the university staff
directory and the budget. Of the 289 respondents from
Mid-American Journal of Business, Vol. 13, No. 2 47
Thacker
the original survey, 34 individuals were listed in the
staff directory, but were not in the budget, and were
treated as missing (that is, they were not included in the
turnover analysis); 157 were found in the budget; 98
were not in the directory or the budget, and were
assumed to have left employment with the university
system. The organization’s workforce is nonunionized,
and salary increases are largely at the discretion of the
supervisor, within the percentage guidelines determined
by state funding constraints.
The culture of the organization was described by
employees who were asked as part of the study to provide
anecdotal information about the culture. In general,
employees felt that those who valued visibility, recogni-
tion, prestige, and the opportunity to influence important
decisions were the most successful individuals (from a
monetary perspective). Friendliness with upper-level
administrators and acquiescence to their requests were
viewed as vehicles for success. There was much “inbreed-
ing” at the university, as many of the employees in staff
positions were graduates of the university. The university
was formerly an all-military institution, and the military
culture was still pervasive. Hence, a common perception
of the organization culture was one in which well-defined
and clearly articulated procedures and channels of
communication were established.
Measures
Salary. Respondents reported their 1986 annual salary on
the survey. All but one respondent reported a salary figure.
Turnover. The ninety-eight individuals who were no
longer in the staff directory or the budget at the point of
the follow-up were assumed to have left the university
system. The turnover variable was coded “0” for those
who were still with the university, and “1” for those who
had left
Influence tactics. An instrument developed by Kipnis,
Schmidt, and Wilkinson (1980) was used to measure
influence tactics. Instrument items measured the follow-
ing influence tactic scales: rationality (5 items),
assertiveness (7 items), higher authority (4 items),
coalition (1 item), exchange (5 items), ingratiation (7
items). The items included in each scale are listed in the
Appendix. Reliability coefficients were computed as
follows: rationality (.72), assertiveness (.66), higher
authority (.70), coalition (one item, no alpha), exchange
(.70), and ingratiation (.74).
Respondents were first asked to rate the frequency
with which they engaged in a specific behavior described
by the statement. A 5-point scale was used, with anchors
consisting of 1 =never used, 2=seldom used, 3=some-
times used, 4=frequently used, and 5=very frequently
used. An additive sum of the individual items for each
scale was computed, and an average score was calculated
for each tactic.
48 Mid-American Journal of Business, Vol. 13, No. 2
Perceptions-of-importance measures. The stem of the
original items used to measure influence tactics was
again employed to ask the respondent, “How important is
this behavior for becoming powerful and successful in
your organization?” The 5-point scale ranged from 1=not
at all important, 2=not very important, 3=somewhat
important, 4=very important, 5=extremely important.
Mean values were substituted for items with missing
values. An additive sum of the individual items for each
scale was calculated, and an average computed to
measure each tactic. Reliability coefficients were esti-
mated and are as follows: rationality (.75), assertiveness
(.77), higher authority (.71), coalition (one item, no
alpha), exchange (.77), and ingratiation (.73).
Control Variables
In studies where salary is the dependent variable,
variables known through previous empirical evidence to
affect salary must be controlled to better understand the
effects of influence tactics on salary. Control variables
include the following human capital variables: years of
education beyond high school, tenure with the organiza-
tion, and continuity of work force experience. Previous
research indicates that years of education, organizational
tenure, and continuity of work force experience (i.e.,
fewer gaps in one’s work record) have positive effects
upon salary (Becker 1975; Corcoran and Duncan 1979;
Mincer and Ofek 1982; Mincer and Polachek 1978). Job
level is an important control variable identified in
Whitely, Dougherty, and Dreher’s study (1991) of career
progress. Because organizations are hierarchical, those
with shorter tenure may realize lower salaries than those
with longer tenure. Gender has frequently been found to
be a significant explanatory variable in studies of salary
determination, with females generally found to have
lower salaries than males (e.g., Dreher et al. 1989; Filer
1985; Mincer and Polachek 1978; Thacker 1995).
Tenure, Education, Labor Force Participation. Organiza-
tional tenure was measured by asking respondents to
report the length of time (in months, which was then
converted to years) they had been working at the univer-
sity. Education was assessed by asking respondents to
report how many years of education they had completed
since high school. A labor force participation measure
was computed by subtracting the length of time (in years)
respondents reported being out of the work force from the
number of years since their high school graduation.
Job level. The university system did not employ a formal
system of job evaluation for exempt positions. However,
two wage and salary analysts employed by the human
resources department were deemed “expert” at assessing
the relative worth of positions sampled in the present
study. The analysts were given a list of the 111 position
titles used in the present study and asked to sort them into
groups of similarly valued jobs. Interrater agreement
 Thacker

among the raters was high, at 87 percent agreement on
the initial pass at classifying the positions. Subsequent
discussions resulted in 100 percent agreement on position
categorization. Based on their groupings, three distinct
categories of jobs, low-valued, mid-valued, and high-
valued, were identified. The three variables were used
as indicator variables, and dummy-coded, with 1 =
“respondent’s job is in this category,” and 0 =“respondent’s
job is not in this category.” The reference category is
high-valued jobs. With indicator variable coding, the
effects for the low- and mid-valued job level categories
are interpreted only in comparison to the high-valued job
level category.
Gender. Gender of respondent was requested on the
survey. Gender is coded “0” for females, “1” for males.
Results
The purpose of this study is to explore the notion that
individuals can gauge their fit with the organization
according to their perception of the influence tactics
they think are important for success. Specifically, this
research is premised upon the assumption that individu-
als, over time, acquire a sense of the influence tactics
they believe are important, gauge their fit with the
organization accordingly, and then make a decision to
stay or to leave.
Means, standard deviations, and correlations are
reported in Table 1. Reliabilities are reported on the
diagonal of the correlation matrix, to address Question
1, concerned with determining which of the influence
tactics is significantly related to salary, hierarchical
regression analysis was conducted. A regression model
was estimated, with 1986 salary as the dependent
variable. The control variables were entered first
(human capital, job level, and gender), followed by the
influence tactics variables. The influence tactics vari-
ables were those that came from responses to the
question about how frequently the respondent used each
influence tactic. Two influence tactics were found to be
significantly related to salary: ingratiation (positively
related) and exchange (negatively related) (see Table 2).
Regarding Question 2 results, t-tests were conducted
to determine if there were significant differences
between leavers’ and stayers’ perceptions of whether the
influence tactics were important for success. The t-tests
were conducted on responses to the “Perceptions of
Importance” question; that is, how important respon-
dents believed the influence tactics were for success in
the organization. Results indicated a significant differ-
ence between leavers and stayers on the exchange tactic
and the higher authority tactic (see Table 3). In both
cases, the leavers’ mean was higher than the stayers’
mean. (NOTE: A strong correlational relationship exists
between the reported use of the tactic and the perceived

Table 1
Means, Standard Deviations, and Correlationsa

Variables Means S.D. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

1. 1986 Salaryb 25703.00 8368.0
2. Turnover .38 .49 -13
3. Gender .46 .50 36 -11
4. Tenure 7.15 6.97 35 -12 02
5. Education 5.16 2.72 11 05 13 -30
6. LFP 15.84 10.08 49 -18 16 59 -23
7. Job Level .31 .46 54 -07 18 12 09 22
8. Ingratiationc 2.68 .64 07 04 -05 -08 14 -12 03 (74)
9. Exchange 1.94 .60 -08 09 -01 -18 16 -19 05 50 (70)
10. Rationality 3.28 .61 11 -03 -02 -05 18 -10 14 48 40 (72)
11. Assertiveness 2.09 .49 10 -08 08 05 02 07 15 26 38 43 (66)
12. Higher Authority 2.15 .58 05 -02 03 -06 09 -03 06 28 37 43 47 (70)
13. Coalition 3.20 .75 11 09 -02 06 06 02 14 36 34 60 30 40 (NA)
14. Ingratiationc 2.72 .68 04 05 -05 -03 05 -09 02 56 30 34 12 19 25 (73)
15. Exchange 2.21 .73 -11 12 -04 -18 11 -20 -02 42 67 33 22 26 30 55 (77)
16. Rationality 3.54 .71 02 02 -03 -04 02 -07 03 30 26 44 29 29 37 47 40 (75)
17. Assertiveness 2.41 .63 01 05 08 03 -04 03 10 20 26 21 50 27 14 22 38 22 (77)
18. Higher Authority 2.62 .76 02 13 -05 -06 05 -11 05 26 28 26 32 52 20 24 40 25 61 (71)
19. Coalition 3.17 .85 02 -02 -02 10 -01 10 05 30 25 29 28 24 44 44 34 66 17 13 (NA)

a Decimals have been omitted for clarity. Correlations above .12 are significant at the p < .05; correlations above .16 are significant at the p < .01 level. Coefficient alphas
are reported in parentheses on the diagonal.
b N=287 to 289 for all correlation pairs.
c The
first set of influence tactics refers to the “frequency of use” questions. The second set of influence tactics refers to the “how important is the behavior for success”
`questions.

Mid-American Journal of Business, Vol. 13, No. 2 49

Thacker

Discussion
Table 2
Results of Hierarchical Regression Analysis
Salary is one of the most commonly used criteria for
with 1986 Salary as the Dependent Variable evaluating individuals’ career success (Markham, Harlan,
and Hackett 1987). In the study organization, salary
Variables Beta information was a matter of public record, providing
Gender .237*** readily available evidence of organizational success for
Tenure .148** those who wished to compare their salary to others’
Education .142**
salary. Social comparison theory (Festinger 1954) posits
LFP .306***
Job Level .377*** that people compare themselves to one another to reduce
uncertainty. Assuming that pay systems are reflective of
Ingratiation .127** organizational values and culture, individuals’ fit with the
Exchange -.113* pay system is an indicator of their fit with the organiza-
Rationality .044
tion. Dakin and Arrowood (1981) contend that when
Assertiveness -.014
Higher Authority .007 rewards are distributed competitively, such a strategy for
Coalition .023 self-evaluation will ensue.
Salary provides an indicator of organizational
R2 .52 success, and two influence tactics were significantly
Equation F 26.11***
related to salary in this sample: ingratiation’s effect was
N 276
positive, while exchange’s effect was negative. Com-
*** p < .001 pared to those who stayed with the organization, indi-
** p < .01 viduals who left the organization were significantly
* p < .05
more likely to perceive use of the exchange tactic as
important to success. However, exchange was negatively
Table 3 related to salary, potentially providing a signal that
T-test Results for:
individuals who use exchange tactics do not fit with the
Differences in Perceptions of Importance
of Influence Tactics for Success
organization. Higher authority, although not signifi-
cantly related to salary, nonetheless displayed a signifi-
Importance for Success
cant difference between leavers and stayers about
Leavers’ Stayers’
whether the tactic was important for organizational
Variable Mean Mean t-value success. Leavers were more likely to view reliance on
Ingratiation 2.74 2.72 -.40 higher authority as a tactic critical for success when, in
Exchange 2.34 2.16 -1.93* fact, it had no significant effect upon salary. Given the
Rationality 3.60 3.57 -.40 culture of the organization, appeals to higher authorities
Assertivenes 2.43 2.36 -.95
-1.90*
would not be viewed positively because supervisors
Higher Authority 2.41 2.20
Coalition 3.13 3.05 -.89 would perceive such influence tactics as attempts to go
over their heads and skirt their authority.
* p < .05
While the cognitive processes that prompted individu-
als to leave the organization cannot be discerned with
certainty, prior research evidence that lack of fit can lead
importance of that tactic, and that may partially be a to negative perceptual feelings (O’Reilly, Chatman, and
result of mono-method bias.) Caldwell 1991) is germane. One of the characteristics of
Looking at the two tactics that were significantly related organizational culture is a display of approval or disap-
to salary, leavers were more likely than stayers to perceive proval of certain behaviors (Deal and Kennedy 1982;
that exchange (negatively related to salary) was important O’Reilly 1989). Relatively speaking, leavers were more
for success. However, no significant difference was found likely to believe that the exchange and higher authority
between leavers and stayers on the other influence tactic tactics were of greater importance to organizational
significantly related to salary, ingratiation. success than were stayers. Such misperceptions may
To investigate Question 3, public information was eventually be translated into negative perceptual feelings,
examined. Salaries are a matter of public record in this as leavers realize that they misunderstood the
organization. A t-test between leavers’ and stayers’ organization’s values.
1986 salary revealed that, in fact, a significant differ- Influence tactics are behaviors that manifest those
ence (t=2.11, p < .05) did exist between those who values, becoming part of the rituals that surround appropri-
stayed with the university and those who left between ate organizational demeanor (Schein 1985). Ultimately,
1986 and 1990; stayers’ salary was, on average, when individuals assign worth to themselves by compari-
$2,218.31 higher in 1986 than the salary of those who son with referent others (Dakin and Affowood 1981;
eventually left the organization. Singer, 1966), a lack of congruence can make them feel

50 Mid-American Journal of Business, Vol. 13, No. 2


uncomfortable because they view themselves as not fitting
in with the culture and the organization’s values (Weiner
1988). Findings from this study suggest that this process
may take place and that, for some, the “accepted” influence
tactics may not be the best ‘fit’ for them. Eventually, they
leave the organization, a response suggested by prior
research (Chatman 1991; O’Reilly, Chatman, and Caldwell
1991). Over time, as individuals realize that their percep-
tions are incorrect concerning what “fits” and what is
rewarded by the organization, their comfort level with
knowing how to play the success game will diminish,
ultimately contributing to a decision to leave the organiza-
tion. Chatman (1991) found that individuals who felt that
they fit with their organization were more likely to remain
members of that organization than those who felt that they
did not fit their environment. Potentially, this is an under-
lying reason for the turnover in this study.
…as individuals realize that their
perceptions are incorrect concerning
what “fits” and what is rewarded by
the organization, their comfort level
with knowing how to play the success
game will diminish.
An implication from this study is that management
may send signals about the organization’s culture by
exhibiting certain influence tactics. If, for example,
managers engage in ingratiatory tactics, and look down
upon reliance on higher authority as a tactic, then they are
sending a signal about the acceptability of these tactics.
Previous research (Thacker and Wayne 1995) suggests
that the tactics subordinates use affect their supervisor’s
assessments of their promotability. This study, along with
others (Dreher, Dougherty, and Whitely 1989; Thacker
1995) indicates the significance of influence tactics
relative to salary attainment. Therefore, in subtle ways,
the tactics individuals exhibit may affect their chances for
career success.
Furthermore, top management should be aware that the
influence tactics they use may communicate messages
about the tactics that are acceptable. Relatively speaking,
members of top management are more monetarily
successful than other employees of the organization. Due
to their monetary success, top management has the
potential to send the signal that certain influence tactics
are more acceptable than others. For example, top
management can employ influence tactics to create a
culture that fosters teamwork by employing tactics such
as coalition-building that promote cross-functional
interaction. By the same token, employees should be
aware of the effect that their influence tactics can have
upon such work-related outcomes as salary. In the same
Thacker
manner that working conditions and job descriptions
affect individuals’ decisions about whether they want to
work for an organization, ‘fit” with the influence tactics
that are important for success should also be considered.
This is an exploratory study only, and some limitations
must be noted. One limitation is that the influence tactic
items are susceptible to social desirability bias, as they
were self-reported. This concern is mitigated somewhat
by the significant difference between leavers’ and
stayers’ 1986 salaries, which validates perceptions of
leavers that they did not “fit in” as well as those who
stayed. A limitation with this, as with other exploratory
studies, is that causality cannot be inferred. The evidence
here is correlational in nature; thus, the degree to which
individuals’ perceived lack of fit is directly responsible
for their departure from the organization is unknown.
Finally, although this is a single educational institution
from which generalizability is limited, the exploratory
nature of the study must be emphasized. The purpose of
the study was to discover whether influence tactics can
provide signals of fit, and to furnish justification for
carrying such a line of research forward.
Suggestions for Further Research
Neither an inclusive description of what constitutes
successful influence tactics for salary attainment purposes
nor a prescriptive approach for individuals seeking to
enhance their own organizational success can be sug-
gested from results of this study. Much will depend upon
the culture and the values of the organization in question.
This conclusion echoes Davis-Blake and Pfeffer’s
argument (1989) that the specificity of organizational
variables such as job descriptions, culture and organiza-
tional values, often precludes the generalizability of many
of the variables that would be included in person-situation
studies of fit. A suggestion for future research into
influence tactics as signals of fit is to avoid inter-organi-
zational studies, concentrating rather on studies of an
intra-organizational nature, at least until a broader
theoretical foundation can be laid.
Obviously, the fit between turnover and perceptions of
importance of influence tactics for success deserves much
more attention. Future studies should attempt to collect
exit interview data concerning perceptions, and use of
influence tactics in an effort to establish a more explicit
linkage than was possible in this exploratory study.
Another suggestion for future researchers is to delve
into the reasons why individuals do not “learn” the
desirable tactics well enough to succeed. In other words,
why, despite efforts by the organization to optimize
person-organization fit through recruitment, selection,
and post-entry socialization, do some individuals fail to
learn or display the appropriate behaviors successfully? Is
it that individuals fail to recognize the appropriate
Mid-American Journal of Business, Vol. 13, No. 2 51
Thacker
behaviors, or that they choose not to exhibit them even
though they recognize them, or that they attempt to use
them, albeit poorly? Future research should focus upon
successful newcomers to understand how they recognize,
learn, and display appropriate behaviors effectively.
As organizations move to structures that are decentral-
ized and more fluid, shared organizational values and
culture will be important control mechanisms. Under-
standing the role that influence tactics play in signalling
an individual’s fit with the organization’s culture and
values can do much to assist organizations in making the
best selection decisions.
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About the Author

Rebecca A. Thacker is an Associate Professor of Human

Resource Management in the College of Business at Ohio
University. She received her Ph.D. from the College of
Business Administration at Texas A&M University. Her current
research interests center around influence tactics and their
effect on various work-related outcomes, as well as the role
influence tactics play in defining person-organization fit.

Mid-American Journal of Business, Vol. 13, No. 2 53

Thacker
Appendix
Influence Tactics Scale Items
Ingratiation
Make others feel important by noting that only they have the brains,
talent, and experience to do what I want.
Act very humble and polite while requesting things I want.
Go out of my way to make others feel good about me before asking
them to do what I want.
Sympathize with others about the added problems my request could
cause.
Wait until others appear to be in a receptive mood before asking
them to do what I want.
Act in a friendly manner toward others before making a request of
them.
Show my need for others’ help.
Exchange
Offer an exchange in which I will do something that someone else
wants if he or she will do what I want.
Remind others of how I have helped them in the past and imply that
now I want compliance with my request.
Provide others with job-related personal benefits, such as a work
schedule change, in exchange for doing what I want.
Offer to make personal sacrifice such as giving up my free time if
others will do what I want.
Offer to help with others’ work if they will do what I want.
Rationality
Write a detailed action plan to justify ideas that I want to imple-
ment.
Use logical arguments to convince others to do what I want.
54 Mid-American Journal of Business, Vol. 13, No. 2
Present facts, figures, or other information to others in support of
my position.
Very carefully explain to others the reasons for my request.
Demonstrate my competence to others before making my request.
Coalition
Obtain the support and cooperation of coworkers to back up my
request.
Assertiveness
Demand in no uncertain terms others do exactly what I want.
Simply order others to do what I want.
Tell others the work has to be done as I specify, unless they can
propose a better way.
Set a date or time deadline for others to do what I want.
Scold others so they will realize that I am serious about my request.
Repeatedly remind others of what I want.
Point out to others that organizational rules require that they
comply with my request.
Higher Authority
Make a formal appeal to higher management to back up my request.
File a report with higher management as a means of pressuring
others to do what I want.
Defer to higher management to solve problems.
Obtain the informal support of higher management to back me up in
getting what I want.
 BOOKSHELF
The Human Equation:
Building Profits By Putting People First
by Jeffrey Pfeffer
Boston, MA: Harvard Business School
Press: 1998
Reviewer: Sandra A. King
Northern Illinois University
The Human Equation is a sequel to Jeffrey Pfeffer’s
earlier work, Competitive Advantage Through People,
published in 1994. He is the Thomas D. Dee Professor of
Organizational Behavior at Stanford University. His
purpose in publishing this book was to change current
management approaches in view of the increasing
evidence indicating their negative impacts. It seems that
while evidence supports a more participative approach to
management, current business practices have more
closely resembled those of Frederick Taylor—a scientific,
control-oriented management style. Pfeffer presents
evidence, through case studies as well as scholarly
research, suggesting a company can gain a sustainable
competitive advantage within its industry by treating
employees as the most valuable resource.
He begins by dispelling what he terms “conventional
wisdom.” One common belief is that the top performing
firms of today are found primarily in the technology
industry. However, the fifteen best performers over a
five-year period were from a variety of industries, and
technology is represented by only a small percentage
within this group. Another business fallacy, according to
Pfeffer, is the belief that cost-cutting is the only way to
increase profitability. Often, firms rely on downsizing as
a means of increasing profits. These organizations rarely
realize the expected financial rewards as remaining
employees become distrustful and uncommitted to a
company that considers them a disposable commodity.
Another common myth is that today’s successful firm is
global. While a global perspective is not necessarily
harmful, several of the most successful firms were
domestic. The author provides examples that support his
rejection of this conventional wisdom.
Chapter 2 is devoted to providing a review of method-
ologically-sound, scholarly evidence that indicates the
way in which a firm manages its people has a direct
impact on its financial success. He highlights the ability
to increase profitability and improve the five-year
survival rates of initial public offerings through the use of
people-oriented management practices. Pfeffer also
reviews studies from the following industries: automo-
bile, steel, apparel manufacturing, semiconductor, oil
refining, and service firms. He identifies the following
seven dimensions as the key to increasing profitability
through people:
1. Employment security;
2. Selective hiring of new personnel;
3. Self-managed teams and decentralization of
decision making as the basic principles of organi-
zation design;
4. Comparatively high compensation contingent on
organizational performance;
5. Extensive training;
6. Reduced status distinctions and barriers, including
dress, language, office arrangements, and wage
differences across levels; and
7. Extensive sharing of financial and performance
information throughout the organization.
The dimension, employment security, contradicts the
beliefs and practices of many of today’s managers and
their employees. Employment security is, simply stated,
the guarantee of employment. Today’s managers believe
employees should be encouraged to develop skills
enabling them to be mobile, that the notion of employ-
ment security is a thing of the past. They want to avoid
making such guarantees in the event they decide to
downsize. Unfortunately, managers fail to realize the
negative ramifications of downsizing decisions. Pfeffer
asserts that employment security is the cornerstone of the
other six high performance management dimensions. He
likens the employer/employee relationship to a personal
relationship. It would seem ludicrous to ask someone to
be committed and loyal to you until such time that you
find them no longer valuable to you. This would clearly
not elicit a positive response in a relationship, nor does it
elicit a positive response within the work environment.
Pfeffer asserts that a workforce that has the commitment
of the organization will be more productive and act as a
partner with their organization.
The seventh dimension, information sharing, is also
intriguing. He indicates the importance of sharing
financial and performance information with the person-
nel. He cites one company, Whole Foods, that lists all the
employees, including top management, by name with
their respective salary information for the year. The CEO,
John Mackey, states that too much time and energy is
wasted on wanting to know “who made what,” so he
55
King
eliminates the guesswork and enables his employees to be
more productive.
Pfeffer asserts that one of the problems with today’s
managers is their failure to align business practices with
stated goals. Management should determine what types of
employee management processes will work to achieve
corporate goals. He cites the example of a defense
contractor with a goal of diversifying. An analysis
completed by top executives in the firm indicated that
none of the management practices supported this goal,
therefore, the diversification of the business was not
going well. If a company wants to achieve its goals,
management needs to have the support of the employees.
This can be achieved through management practices that
support the seven dimensions stated above.
The following is a listing of ten reasons that the author
has identified as sources of resistance to the high perfor-
mance management dimensions:
1. The desire to do what everyone else is doing and to
follow the crowd—a problem if the conventional
wisdom is incorrect;
2. Managerial career pressures, derived from the need
to “make the numbers” and to have a track record
that makes one “mobile,” pressures that create an
emphasis on short-term results;
3. A belief in leadership and a tendency to overvalue
things we have helped produce, making delegation
difficult;
4. Demands for accountability and reproducibility in
results and decisions that destroy the benefits of
expertise, which is inevitably dependent on tacit
knowledge;
5. Career trajectories—who gets promoted—that
seemingly reward financial rather than human
resource or people management;
6. Excessive focus on measuring costs—often short-
term costs—and neglecting to assess the returns to
those costs and investments;
7. An emphasis by the press on “mean” or “tough”
managers, and business schools’ proliferation of
this management style by inviting such managers as
guest speakers;
8. A management education and training focus on
finance and accounting rather than on human
resources or organizational behavior;
9. The normative and economic value placed on being
a skilled analyst—on knowing—compared to the
value placed on being able to manage people; and
10. Capital market primacy over other stakeholders and
demands for short-term performance that make
long-term investments in people more difficult.
Pfeffer maintains that a company using downsizing as
an initial means of reducing costs and increasing profit-
56 Mid-American Journal of Business, Vol. 13, No. 2
ability has a stronger likelihood of repeating the
downsizing process. Evidence shows that while the
workforce continues to shrink, morale and commitment
diminish as well. Pfeffer encourages firms to use
downsizing as a last resort. Means of avoiding
downsizing include the reduction of work hours across
the board, salary cuts (of all employees, including
management), pulling outsourced jobs back into the
organization, increasing inventory, utilizing downturns
for training purposes, working on maintenance, imple-
menting a hiring freeze, encouraging innovation among
all employees, and using staff in other roles (production
workers become salespeople). However, if an organiza-
tion must downsize, he suggests a more sensible ap-
proach. The majority of the layoffs should be done as
soon as possible. This gets the pain over with quickly and
prevents the waves of layoffs that many organizations
such as IBM and Digital Equipment have endured.
Secondly, treat the employees that are leaving with
dignity and respect. Let them know as far in advance as
possible, providing assistance with resume preparation
and job placement. Make severance packages as generous
as possible. Some organizations have gone as far as to
have farewell parties for departing employees. These
efforts send the message to remaining employees that
they are valued by their employer.
Pfeffer discusses reward systems in detail. He main-
tains that the conventional practices of focusing on lower
pay rates as a means of achieving a greater competitive
position, rewarding individual efforts, and excessive
tampering with pay systems can inflict significant damage
upon the organization. He makes the distinction between
labor costs and labor rates. Labor costs include the rate of
pay as well as productivity, whereas labor rates simply
reflect the rate of pay. His contention is that the contribu-
tions of a higher paid employee may actually reduce labor
costs. Evidence shows that labor costs are not necessarily
the determining factor in gaining a competitive advan-
tage. He cites several examples of organizations that have
achieved a competitive advantage and have paid a wage
above market. This shows the employee that they are
highly valued by the organization.
Another concern is the current focus on individual
reward programs. Systems that reward individual efforts
may lead to the following problems for an organization:
1. Employees learn that political efforts may be
rewarded more than individual performance.
2. The system may erode teamwork as individuals
compete for their rewards.
3. Reward systems do not contribute to concern for
organizational performance.
4. These systems lead to a short-term rather than a
long-term focus.
5. There is an overall sense of “fear” rather than
teamwork in the workplace.
 King

Pfeffer recommends a compensation approach that question the quality of the jobs being created. In addition,
focuses on a combination of rewarding team efforts and evidence shows that job creation is unrelated to unem-
organizational performance. The goal is to create a work ployment, economic performance, and inflation, but is
environment that is fun, challenging, and empowered. He instead related to demographic (age) and social structure
reminds us that pay systems send an implicit message. (divorce). Another important misconception is that
For example, pay systems with wages below the industry government regulations pertaining to labor policies are
average send the message that employees of that organi- detrimental to business. Studies of other countries with
zation are not highly valued. Performance-based compen- labor regulations much more stringent than in the U.S. do
sation is another symbolic message sent through pay not support this conclusion. He asserts, rather, that
systems. If the organization prospers through the efforts government policy can actually increase organizational
of all the employees, then everyone should share in the competitiveness by encouraging high performance
rewards rather than just a chosen few top executives. management practices.
Incentive plans such as gainsharing, profit sharing, and This book provides insights into the means of achieving
stock ownership have produced more positive results than record levels of profitability as well as a sustainable
individual rewards, as do rewards at the group or team competitive advantage through management of the most
level. One of the arguments against such a system valuable organizational resource: people. Pfeffer certainly
concerns individuals who do not pull their weight within takes what will be deemed by many managers as a contro-
the group or team, a/k/a “slackers.” There are concerns as versial position, particularly with respect to employment
to why these individuals should reap the rewards that security and unions. He strengthens his argument by
others have actually achieved. Pfeffer cites empirical providing cases of companies that have implemented these
evidence suggesting that the impact of behavior by practices with proven results. In addition, he has supported
slackers is minimal and he encourages managers not to these case studies with methodologically sound research.
hesitate implementing group reward systems. In general, The Human Equation: Building Profits By Putting People
Pfeffer takes the approach that reward systems should First is a “must read” for today’s manager ■
include non-financial rewards. A focus solely on financial
rewards can take away from the intrinsic motivation of
the employees. Reference
One of the powerful assertions he makes is that Pfeffer, Jeffrey. 1998. The Human Equation: Building Profits
companies should not remain adversarial with the By Putting People First. Boston, MA: Harvard Business
employee unions. This is a highly controversial perspec- School Press.
tive as management historically has disliked unions and
would prefer they did not exist. Pfeffer cites several
examples of corporations that have developed more of a
partnership with the union, and the results have been
phenomenal. One such example, Magma Copper, a
mining company, was in the midst of typical adversarial
union contract negotiations in 1989 while the company’s
continued existence was questionable. The new CEO
wanted to end the negative relationship with the union
and hired an outside consultant to bring the two sides
together to achieve this goal. By 1992, Magma was well
on its way to recovery as operating costs were reduced by
24 percent and their stock was ranked first on the New
York Stock Exchange in appreciation for the first half of
the year. This was achieved by the cooperative efforts of
management and the union employees. Pfeffer maintains
that unions can encourage change within an organization
by garnering the support of its people.
Pfeffer discusses several of the misconceptions that are
relayed through financial markets. First, the financial
markets are not at all appreciative of the high perfor-
mance management practices. Financial markets tend to
maintain a short-term economic focus and exemplary
management skills are largely ignored by these markets.
He addresses the fallacy that large amounts of job
creation is a good economic indicator—it is necessary to

Mid-American Journal of Business, Vol. 13, No. 2 57

Watchter
Net Gain
by John Hagel III and
Arthur G. Armstrong
Boston, MA: Harvard Business
School Press 1997
Reviewer: Renee M. Wachter
Ball State University
Companies are establishing themselves on the Internet
in the race to reach the rising mass of networked, on-line
customers. Despite a significant number of entries,
commercial success remains elusive and profit streams
have been unreliable. Uncertain of how and where to
invest in this electronic marketplace to obtain tangible
results, many firms are searching for a more effective
business model than affordable by traditional web sites
and electronic storefronts.
Based on their multimedia consulting work at
McKinsey & Company and anecdotal evidence, John
Hagel and Arthur Armstrong argue enthusiastically that
on-line communities, virtual communities, provide a
means by which firms can obtain a competitive advan-
tage. In their vision of the marketplace, virtual commu-
nities of consumers, not isolated individuals, will be the
purchasing unit with which companies will transact
business, and for which they will vie against one
another. Written for a managerial audience and pre-
sented in nontechnical language, Net Gain presents an
overview of virtual communities, a business case for the
reasons firms should consider seriously sponsoring or
implementing a virtual community, and a series of
principles for successful development of a community.
The treatment of these topics is comprehensive, al-
though the authors do not consider their presentation to
be a “how to” manual.
The first portion of the book describes commercial virtual
communities and builds a case for adopting the virtual
community business model by examining the changing
vendor-consumer relationship as consumers move on-line.
The authors begin with the observation that the first on-line
communities, like the Well, were noncommercial, attracted
thousands of members, and served as a forum for discus-
sions on a variety of topics. The communities were success-
ful because they addressed the basic needs which cause
individuals to congregate—the need for fantasy enactment,
the need to relate or form relationships, the need to transact
or buy goods and services, and the need to fulfill one’s
interests. Commercial virtual communities address the same
58 Mid-American Journal of Business, Vol. 13, No. 2
needs, but they also exist to generate profit. The authors
envision the community as a central electronic repository of
competing vendor information organized for member
accessibility and as a place for members to engage one
another. This member interaction might consist of product
comparisons, purchasing advice, or engagement in a role-
playing game (e.g., virtual football game in a sports commu-
nity). To support their argument, the authors reference
examples of successful on-line businesses such as
Amazon.com (electronic bookstore) and the Motley Fool
(financial investment advice) which offer both products and
opportunities for members to share their opinions.
When large numbers of community members are
present, the purchasing power which is associated with
these members inverts the power relationship between
supplier and customer. Traditionally, customers are at the
mercy of vendors who capture, buy, and sell their demo-
graphic and transaction histories. Customers in virtual
communities control their own information, and the
community serves as an agent on behalf of the customer,
using that information to gain purchasing power. Thus,
members of large communities can demand special
products and pricing because of their purchasing clout.
Vendor firms that control these communities or that
work closely with community organizers garner a variety
of competitive advantages. These include reduced search
costs for their consumers, increased propensity for
consumers to buy because of the interaction capability the
community provides, enhanced ability to target consum-
ers through community member information, and a
greater ability to tailor existing products and services.
Further, these communities offer broader geographic
reach, require lower capital investment than do many
other methods of accessing customers, and have the
ability to reach the consumer directly.
Steps on how to build a virtual community, where to
look for revenue and value, and the likely evolution of the
virtual community business as a whole are the focus of
the second portion of the book. The evolution of virtual
communities begins with virtual villages or highly
fragmented communities, each containing small subcom-
munities. Concentrated constellations consist of core
communities (e.g., travel) which then develop affiliated
niche communities (e.g., European travel). Coalitions
form when core communities aggregate across comple-
mentary core topics (e.g., travel, finance, and sports
which would form a coalition) and share services and
member management functions. Finally, the communities
become “infomediaries” or agents for the members,
managing their demographic and transactional informa-
tion to maximize value to the members.
 Wachter

The authors put forth several critical assumptions or The implication of the virtual community is that
requirements for success for each stage of virtual commu- customer loyalty will reside with the community rather
nity business evolution. The primary requirement initially than with a particular vendor, even though the member is
is the generation of excitement and services to attract the using an intermediary to interact with the vendor, typi-
traffic of large numbers of consumers. Tips on how to do cally for a fee. As vendors seek to mass customize and
this include creating “buzz” and recruiting experts. reach out to customers directly, the need to go through a
Further growth of the community depends on developing third party is likely to be less compelling.
consumer profiles and using these profiles to bargain with While the book is directed toward “senior management
vendors and to customize the community’s offerings of large companies capable of embracing the model…and
according to member needs. The development of con- entrepreneurs who are experimenting with the elements of
sumer profiles and offerings is predicated on the ability of the new business model (p. xi),” much of the discussion
the community organizer to capture, organize, store, and seems to suggest that these communities cannot be spon-
disseminate information from and for the community. sored or controlled by one vendor because consumers will
The concluding chapters of the book address the need not stand for it. Vendor firms are relegated to cooperating
for recognizing the impact of virtual communities on the with some other neutral, but profit-minded community
sponsoring organization, and reiterate how virtual organizer, or to offering competing information.
communities may require a more concentrated effort for Even if one does not agree with the optimistic outlook
data mining, mass customization, effective pricing, and for virtual communities, this easy-to-read book should
customer management. The need to effectively manage serve to encourage firms to reexamine the ways in which
the growth of the community mandates changes in the they interact with their customers and offers valuable
sales and marketing organization and places new empha- suggestions to firms. The final advice of the authors is to
sis on the information technology department of the go on line and experience the Internet. At a minimum,
organizing body. Virtual communities likely will require this means that management should get on line, if they
extensive partnerships among vendors to achieve success, haven’t already, to understand how powerful the Internet
will undermine traditional sources of advantage (capital can be as a vehicle for developing stronger customer
and brand name) and will spur competition. relationships. Aside from managers, this book would be
The book clearly reflects the changing nature of excellent to stimulate discussion in an M.B.A. curricu-
commerce and highlights the need of businesses to lum or advanced undergraduate course, in the context of
interact more intimately with their customers. As Hagel economics, marketing, or information systems ■
and Armstrong suggest, loyalty has often been a “one
way street” in favor of the vendor. The authors urge
companies to start forming virtual communities now, Reference
stating “if you don’t convert your customers to virtual Hagell III, John and A.G. Armstrong. 1997. Net Gain. Boston,
communities, someone will do it for you (p. 10).” The MA: Harvard Business School Press 1997.
longer firms wait the greater the cost of entry into the
new marketplace.
Some readers, however, may find the authors suppo-
sitions to be controversial if not exaggerated. For
instance, the scale required to realize a significant level
of consumer power is quite large, requiring hundreds of
thousands if not millions of members. It is a game of
numbers, and the capability to retain consumer attention
is unproven. The best of associations, trade or other-
wise, currently do not have the kind of purchasing
power described.
The role of member profiles for the success of these
ventures is unclear. On one hand, the authors suggest
that this information is critical to tailor the community
and to use as a bargaining mechanism with vendors.
Yet, the authors recognize the trend toward regulations
which secure the privacy of consumer information. The
inability to collect, to use, or to sell this information
undermines the ability of the virtual community to
negotiate with vendors in the manner the book sug-
gests. It also reduces the number of avenues for
revenue streams.

Mid-American Journal of Business, Vol. 13, No. 2 59

Watchter

NOTES

60 Mid-American Journal of Business, Vol. 13, No. 2