Volume 4
issn 1581-6311
anagin
Managing
Global
Boštjan Antončič
International
ir n R^V^fy*
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journal
Managing Global Transitions
International Research Journal
EDITOR
Boštjan Antoncic, University of Primorska,
Slovenia
ASSOCIATE EDITORS
Egon Žižmond, University of Primorska,
Slovenia
Dušan Lesjak, University of Primorska,
Slovenia
Anita Trnavčevič, University of Primorska,
Slovenia
Roberto Biloslavo, University of Primorska,
Slovenia
EDITORIAL BOARD
Zoran Avramovič, University of Novi Sad,
Serbia and Montenegro
Terrice Bassler Koga, Open Society Institute,
Slovenia
Cene Bavec, University of Primorska,
Slovenia
Jani Beko, University of Maribor, Slovenia
Vito Bobek, University of Maribor, Slovenia
Štefan Bojnec, University of Primorska,
Slovenia
Suzanne Catana, State University of New
York, Plattsburgh, usa
David Dibbon, Memorial University
of Newfoundland, Canada
Jeffrey Ford, The Ohio State University, usa
Tim Goddard, University of Calgary, Canada
Noel Gough, La Trobe University, Australia
George Hickman, Memorial University
of Newfoundland, Canada
Robert D. Hisrich, Thunderbird - The Garvin
School ofInternational Management, usA
Andras Inotai, Institute for World Economics
of the Hungarian Academy of Sciences,
Hungary
Hun Joon Park, Yonsei University,
South Korea
Štefan Kajzer, University of Maribor, Slovenia
Jaroslav Kalous, Charles University,
Czech Republic
Leonard H. Lynn, Case Western Reserve
University, usA
Monty Lynn, Abilene Christian University, usa
Neva Maher, Ministry of Labour, Family and
Social Affairs, Slovenia
Massimiliano Marzo, University of Bologna,
Italy
Luigi Menghini, University of Trieste, Italy
Marjana Merkac, College
ofEntrepreneurship, Slovenia
Kevin O'Neill, State University of New York,
Plattsburgh, usA
David Oldroyd, Independent Educational
Management Development Consultant,
Poland
Susan Printy, Michigan State University, usA
Jim Ryan, University of Toronto, Canada
Hazbo Skoko, Charles Sturt University,
Australia
David Starr-Glass, State University of New
York, usa
Ian Stronach, Manchester Metropolitan
University, uk
Ciaran Sugrue, Dublin City University,
Ireland
Zlatko Šabic, University of Ljubljana,
Slovenia
Mitja I. Tavcar, University of Primorska,
Slovenia
Nada Trunk Širca, University of Primorska,
Slovenia
Irena Vida, University of Ljubljana, Slovenia
Zvone Vodovnik, University of Ljubljana,
Slovenia
Manfred Weiss, Johan Wolfgang Goethe
University, Germany
Min-Bong Yoo, Sungkyunkwan University,
South Korea
Pavel Zgaga, University of Ljubljana, Slovenia
EDITORIAL OFFICE
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Managing Global Transitions
International Research Journal
volume 4 • number 3 • fall 2006 • issn i58i-63ii
Table of Contents
195 The Editor's Corner
197 Building Core Competencies in a Turbulent Environment:
An Exploratory Study of Firm Resources and Capabilities
in Chinese Transitional Economy
Justin Tan
Shaomin Li
Weian Li
215 Cooperation after War: International
Development in Bosnia, 1995 to 1999
Eric C. Martin
Sue R. Faerman
David P. McCaffrey
231 Language and Culture in International
Legal Communication
Alenka Kocbek
249 Home Education: Globalization Otherwise?
Christian W. Beck
261 Global Education in Manufacturing:
Basic Framework, Industrial Survey
and Possible Implementation
Asbj0rn Rolstadäs
Slavko Dolinšek
The Editor's Corner
This is the third of the four issues of volume four. As of this year, the
journal is a quarterly publication, with Spring, Summer, Fall, and Win-
ter issues. The focus of the journal is still on transition research but we
would also like to emphasize its openness to different research areas, top-
ics, and methods, as well as the international and interdisciplinary nature
of scholarly articles published in the journal. The current issue covers
topics on building core competencies, after-war cooperation, the use of
English in business communication, as well as themes related to home
education and global education.
The first paper of the present issue is by Justin Tan, Shaomin Li, and
Weian Li, who examine firm resources and capabilities and their impact
on firm performance among Chinese enterprises. In the second paper,
Eric C. Martin, Sue R. Faerman, and David P. McCaffrey discuss how
initial predispositions to cooperate, the issues or incentives involved in
a decision, the number and heterogeneity of the parties involved, and
leadership jointly influenced cooperation in the international effort to
develop Bosnia and Herzegovina. In the third paper, Alenka Kocbek dis-
cusses the use of English as lingua franca. The focus of the fourth pa-
per, authored by Christian W. Beck, is the relation of home education
to globalization. In the last - fifth paper, Asbjorn Rolstadas and Slavko
Dolinšek present the results of the international framework for a Mas-
ter degree curriculum in manufacturing strategy and an example of the
integration of competence in technology and business.
Boštjan Antoncic
Editor
Building Core Competencies in a Turbulent
Environment: An Exploratory Study of Firm
Resources and Capabilities in Chinese
Transitional Economy
Justin Tan
Shaomin Li
Weian Li
The impact of firm resources and capabilities on performance among
Chinese enterprises has been a subject of anecdotal speculation due
to its significant implications for organizational researchers as well as
practitioners. Yet empirical evidence has been very limited. In this re-
search, set in the People's Republic of China, we examine firm resources
and capabilities and their impact on firm performance among Chinese
enterprises. Using large sample of 12,047 Chinese firms from 1991 to
1992, we found that most of the firm specific resources and capabilities
examined in this study have a positive impact on performance. We dis-
cussed the implications for organizational researchers, policy makers,
and managers, and proposed directions for future research.
Key Words: economic transition, firm strategy, resources
and capabilities
jel Classification: m10, l10, l20.
Introduction
In recent years, the study of firms operating in China's transition econ-
omy has attracted growing attention from mainstream organizational re-
searchers. As the Chinese economy increasingly becomes integrated into
and plays an important role in the global economy, an understanding of
organizational issues in China has not only economic implications, but
theoretical significance as well. Since China differs from Western mar-
Dr. Justin Tan is a Professor and the Newmont Chair in Business
Strategy at the Schulich School of Business, York University, Canada.
Dr Shaomin Li is a Professor at the College of Business
Administration, Old Dominion University, usa.
Dr Weian Li is a Professor and the Dean of the Nankai
Business School, Nankai University, China.
ket economies in varying dimensions, it offers fascinating grounds for
testing existing organizational theories and advancing new ones.
Understanding firm performance differences and sources of sustained
competitive advantage has been a major area of research in the field of
strategic management (Porter 1985; Rumelt 1991). Since the 1960s, a ma-
jor framework has been used to structure much of this research. This
framework suggests that firms obtain sustained competitive advantages
by implementing strategies that exploit their internal strengths, through
responding to environmental opportunities, while neutralizing external
threats and avoiding internal weaknesses. Most research on sources of
sustained competitive advantage has focused either on isolating firm's
opportunities and threats, describing its strengths and weaknesses, or
analyzing how these are matched to choose strategies. For researchers
following industrial organization economics (e. g., Porter 1980; 1985), the
primary concern is to identify those structural characteristics that con-
tribute to industry attractiveness and consequently, superior firm perfor-
mance, in order to provide policy implications on how firms can favor-
ably position themselves. For resource-based view theorists (e. g., Barney
1991), the ultimate goal is to learn what resources and capabilities firms
contribute to sustainable competitive advantage, so that firms can ac-
quire and develop these resources and capabilities.
These theories, regardless of their conceptual orientations, were de-
veloped from market-based economies. Their applicability in other eco-
nomic contexts, such as the centrally planned economies undergoing
transition toward market economies (e. g., China, the former Soviet re-
publics, and East European countries), is yet to be established. As these
emerging economies become increasingly integrated into the global mar-
ket, improved knowledge has become an urgent challenge to organiza-
tion researchers as well as practitioners. As organizational theorists con-
tinue to debate on the merit of these perspectives, multinational corpo-
rations have to compete in these emerging markets.
In this study, we join the debate by testing the resource-based theory
in China. The purpose of the study is to identify what firm-specific re-
sources and capabilities have contributed to firm performance.
Economic Transitions, Environmental Turbulence,
and Firm Strategies
As a legacy of the Soviet-style command economy, the pre-reform in-
dustrial structure in China was characterized by rigid central planning
and extensive government control of state-owned enterprises (soes, see
Perkins 1994; Tung 1982). Firm-level decision making among soes was
focused on aligning with administrative bodies, regulatory bureaus, and,
in some cases, local governments (Child 1994; Nee 1992). Consequently
the pre-reform soes had very limited decision-making prerogatives and
were not quite concerned with performance.
The transition from a planned economy to a market economy 'changes
fundamental managerial assumptions, criteria and decision making, and
represents a genuine transformation of the business' (Tan and Litschert
1994, 3). These transitions since 1978 have created a great deal of turbu-
lence for soes (Child 1994). As the state gradually relinquishes its finan-
cial responsibility for soes, these firms, especially their managers, are
increasingly being held responsible for their performance (Peng 1996).
As a result, the stable comfortable environment based on the network of
interlocking relationships has disappeared. Instead, soes are being given
more autonomy, and, hence, more financial responsibilities (Perkins
1994; Tan and Litschert 1994). Although most soes are newcomers to
the game of competition, they are nevertheless under stress to learn the
game fast for two reasons. First, a great number of Western multina-
tionals have penetrated the China market and created pressures for local
firms. Second, the new environment has also introduced a new class of
private and collective firms, which are more entrepreneurial than their
soe counterparts. Being 'stuck in the middle', soes can no longer afford
to be passive now but have to join the competition.
To many strategic management researchers, Porter's seminal work on
competitive strategy (1980) and advantage (1985) represents an impor-
tant perspective on competitive advantage. However, such a perspec-
tive only offers partial answer to firm level competitive advantage since
firm resources and internal capabilities vary widely. From the strategic
management standpoint, these firm differences can prevent certain firms
from implementing strategies that other firms can implement (Barney
1986). While all firms face the same environment, which has profound
impacts on firm performance, the structural characteristics cannot ex-
plain why some firms perform better than others. To understand perfor-
mance differences, we consider the resource-based view as an alternative
explanation to firm performance.
The resource-based view of competitive advantage has its conceptual
origins in the work of Chamberlin (1933), Penrose (1959) and Chandler
(1962). As discussed by Wernerfelt (1984), a firm's resources are the fun-
damental determinant of competitive advantage. Accordingly, resource
constraints will limit a firm's performance. The resource-based view of
the firm substitutes two alternative assumptions in analyzing sources of
competitive advantage. First, firms may be heterogeneous with respect to
the strategic resources they possess. Second, these resources may not be
perfectly mobile across firms, and thus heterogeneity can be long lasting.
In other words, strategically relevant resources are those that are valu-
able, rare, difficult to imitate, and without strategic substitutes. Based on
these, firms develop a sustained competitive advantage (Barney 1991).
In this article, firm resources include all assets, capabilities, organiza-
tional processes, firm attributes, information, and knowledge, controlled
by a firm that enable the firm to conceive of and implement strategies
that improve its efficiency and effectiveness (Barney 1986; 1991). In the
language of traditional strategic analysis, firm resources are strengths
that firms can use to conceive of and implement their strategies (Porter
1980). The attention of the resource-based view is primarily internal with
its focus on the characteristics and capabilities of the firm. First, that a
particular form of resource is valuable refers to the ability of the firm
to utilize the resource to exploit specific opportunities or to neutralize
certain threats. Therefore the value of a resource is firm-specific, since
a firm's relationship to its environment (opportunities and threats) is
unique. Consequently, the unit of analysis is the resources of the firm,
and the focus is on the relationship between resources and competitive
advantage, or firm performance. Furthermore, firm resources must be
rare in order to be of strategic use. That is, if many firms have equal
access to the same resource, the resource's utility in producing competi-
tive advantage is limited. Finally, resources and capabilities must not be
easily copied. If other firms are able to emulate the resources and capa-
bilities easily, the performance advantage will be competed away. This is
not to say, however, that imitation is not possible. As firms escalate their
competition, and imitation becomes widespread, winning attributes are
increasingly becoming the target of imitation. In this sense sustainability
should be considered as a relative term.
In transition economies, both market forces and the legacy of cen-
tral planning are influencing firm performance. soes are partially liber-
ated from the central planning. Using the running metaphor earlier, the
athletes are now encouraged to run with their feet freed, although their
hands are still tied up. Although they face the same imperfect market
conditions typical of transition economies, they can nevertheless run.
The critical issue they face is to identify the particular muscle groups
(resources) that help them improve performance.
For resource-based view theorists, history plays an important role
since firm resources and capabilities are attained over time, often in a
unique fashion (Barney 1986). One of the more interesting characteris-
tics of capabilities is that they are path dependent, which is to say that
an organization's future behavior is constrained by its historical routines
and past investments (Teece, Pisano and Shuen 1997). Previous theorists
have introduced path dependence using the simple conceptualization
that 'history matters' to focus attention on the importance of initial con-
ditions in predicting path direction (Teece et al. 1997). Capabilities are
specific to the firm and embedded in operational routines and, as such,
are accumulated over time (Dierickx and Cool 1989; Makadok 2001).
Once these capabilities have been accumulated, firms develop a cost ad-
vantage for using practiced routines, relative to experimenting with new
processes, reinforcing previous choices (Zollo and Winter 2002). This
implies that future resources will reflect a pattern of integration and re-
configuration similar to historical resources. However, there has been
very limited effort to empirically examine the impact of specific inputs
on firm performance in China's transition economy. As a result our un-
derstanding of the trajectories of these paths of evolution and the pro-
cesses which shape them has yet to be fully explored, and there is little
information in the literature or empirical evidence that will lead to a set
of testable hypotheses. In this study we explore what specific resources
and capabilities have led to superior performance.
Research Design and Data Collection
Mainstream perspectives such as industrial organization economics and
resource-based view theories grew out of the behavior of firms operat-
ing in a market economy. Whether they can be plausibly extended to
a Chinese setting remains to be debated (Peng 1996; Pye 1992; Tan and
Litschert 1994). While Shenkar and Von Glinow (1994) called for extreme
caution when extending mainstream theories to China, other researchers
have demonstrated the applicability of some of these theories in the Chi-
nese environment, as long as institutional variations are accounted for
(e. g., Tan and Litschert 1994). As Western management theories are in-
troduced to the Chinese audience, and as Chinese managers compete and
cooperate with their Western counterpart, they become familiar with
theories, concepts, and terminology from Western management litera-
ture (Tan and Litschert 1994).
In the past, organizational research set in China has employed quali-
tative as well as quantitative methods. In many cases, since large-sample,
firm-level data are difficult to collect in China, most existing studies have
relied on case studies. Although highly insightful for theory develop-
ment, case studies are less useful when the objective of the research is
theory testing. This study joins the handful of studies on soes in China
that used quantitative analysis of data from a relatively large sample to
test theories.
DATA
The data set for this study comes from the 1991 and 1992 Survey of Large
and Medium Industrial Firms in China (slmif) conducted by the State
Statistical Bureau of China (ssb). It includes all firms in China that are
categorized by the ssb as 'large' or 'medium'. The number of firms in
the database ranges from 14,942 (1991) to 16,384 (1992). The total sales
of the all the firms in the 1992 slmif are rmb 1,544 billion (usd 182 bil-
lion), accounting for 42 percent of total industrial output (ssb 1995,375),
thus indicating that the data set represents a substantial part of business
activities in China.
The ssb reports that the accuracy of the information in the survey,
in particular the financial data, has been carefully checked. For example,
sales information is often checked against actual output so as to detect
discrepancies (ssb 1994). The ssb uses a logic-testing method, which
links related variables together to identify illogical data, and a histori-
cal method that tracks an enterprise's historical data. In its survey and
report system manual, the ssb specifies more than 120 logic tests for ma-
jor project surveys and more than thirty logic tests for industrial surveys
(ssb 1994). The ssb industrial survey data has been used in different
forms by academics in the social sciences. Since this is the most author-
itative official survey, which has been used by the state government for
making major economic decisions, the reliability has been tightly mon-
itored, and any inaccuracy and deviation from accounting regulations
has been strictly disciplined. Consequently, this is the most accurate and
reliable archive data in China.
measurement and variables
In this study we used the 1991 firm internal variables as independent vari-
ables, and the 1992 performance measures as dependent variables. Inde-
pendent variables and controlled variables were extracted from the 1991
data. They are briefly described below.
1.	Outsourcing is measured by the amount of materials, energy, elec-
tricity, and other inputs that were purchased from external suppli-
ers, as opposed to those produced by the firm's own subsidiaries.
From a resource dependence perspective (Pfeffer and Salancik
1978), such vertical integration reduces firm dependence and uncer-
tainties associated with such dependence. However, overemphasis
on vertical integration and diversification burdens firm's resource,
leaving little for future growth. When markets were introduced after
the beginning of the reform, increasingly resources were no longer
allocated by the state but rather through the market, and firms
began to rely on outsourcing. Outsourcing allows the firm to con-
centrate in its core business, thereby improving its performance.
Overall, we would expect outsourcing to have a positive impact on
performance.
2.	Earmarked Special Funds. We devised three composite measures un-
der this category based on fund similarities. They are (1) depreci-
ation and major repair funds, (2) new product development and
production expansion funds, and (3) employee reward and wel-
fare funds. These three measures were all based on the means of
the two funds in each category, respectively. These funds are usu-
ally accumulated as a portion of previous year's total sales revenue
and are used for specific purposes. For instance, major repair funds
and depreciation funds are taken as a percentage of the value of
the firm's capital equipment. According to government regulations
and accounting procedures, they should be used for the repair or
replacement of major equipment. However, it is not a secret that
some managers use these funds as 'slack' accounts temporarily for
other needs. Special funds also include those used for new prod-
uct development and production expansion. Finally, there are those
funds accumulated for employee reward and welfare.
3.	Reserve Fund is based on the amount reported. This type of fund
is used on a contingency basis for daily operations. It is similar to
slack resources, with more flexibility than earmarked special funds.
Previous research in market economies indicates that slack funds
provide a 'cushion' during environmental turbulence and help the
firm to sustain smooth operation (Bourgeois 1981,30).
4.	Inventory is measured by the value of unsold products. This includes
funds that are utilized in the form of inventory.
5.	Borrowing Capacity. The capability to borrow from lending agencies
is quite often a strong indicator of firm's unique position. Even in
Western literature, borrowing capacity has been considered as an
unused slack resource that can be used for strategic purposes. In
this case we would expect this resource type to contribute positively
to performance.
6.	Marketing Intensity. This includes a firm's effort in marketing. Un-
der central planning, there was no need for marketing. Before the
economic reform, the Chinese market, both factor input and con-
sumer market, were characterized by shortage. In such a seller's
market, the prevailing paradigm is 'Emperor's daughter should not
have to worry about getting a suitor.' The reform has changed the
fundamental rule of the game and Chinese firms now find them-
selves at the mercy of customers. Among those firms we studied,
the most successful ones often demonstrate good marketing capa-
bilities. We thus expect marketing intensity to be positively associ-
ated with most measures of performance.
7.	r&D Capability is measured by the percentage of scientists and en-
gineers who specialize in new product development and research to
total employees. In Chinese industrial enterprises, r&d personnel
are specially designated based on their education, qualification, and
specific functions they perform in the firm. Numerous studies sug-
gest that firm's r&d has significant impact on performance (e. g.
Hill and Jones 1995).
8.	Retained Earning is measured by the amount of retained earnings
at the end of the fiscal year. These are perhaps the most flexi-
ble resources that managers can legitimately use for discretionary
purposes. As a major step toward revitalizing the stagnant indus-
trial sectors and giving firms incentives to improve performance,
the Chinese government has implemented a 'responsibility system',
which gives a greater residual claim right to the firm as a function
of performance. If a firm's performance exceeds a contracted level,
the residual profit will be shared between the government and the
firm in the form of retained earnings. Managers have much greater
freedom to decide how they spend the money since these funds are
uncommitted, or unutilized.
9.	Performance was measured using the 1992 total revenue and profit
(loss). We also created revenue per employee and profit per asset
(or return on assets) to obtain a more standardized measure of pro-
ductivity and profitability. Regressions are conducted on these four
dependent variables, namely, revenue, profit, revenue per employee,
and profit per asset.
We included also three controlled variables. They are fixed capital of
a firm, workforce of a firm, and firm ownership. The first two variables
measure firm size.
10.	Fixed Capital is the total fixed capital of a firm.
11.	Workforce is the total number of employees of a firm.
12.	Firm Ownership Type is measured by using the official firm owner-
ship type code designated by the ssb. It is '1' if a firm is an soe and
'0' if it is a collective, private, or foreign-funded firm.
Data Analyses and Results
Table 1 provides information about descriptive statistics and correlation
coefficients. We first examine the zero-order correlation coefficient ma-
trix of all independent variables for potential sources of multicollinearity
(see table 1). As can be seen from table 1, the correlation coefficients be-
tween different funds are quite high, which may cause multicollinearity
problems in the multiple regression analysis. In order to avoid such prob-
lems, we first conduct a factor analysis on all independent variables and
then use factors along with the controlled variables as regressors in our
models.
Our factor analysis generated two factor coefficients (see table 2). The
first factor seems to represent all slack resources. Outsourcing also has
a high loading on the first factor. The second factor seems to present
r&d and new product development effort. Marketing intensity has high
loadings on both factors.
We used regression analysis to test various relationships (see table 3).
We tested the effects of resources and capabilities on the four dependent
variables - total revenue, total profit, revenue per employee, and return
on assets, while controlling firm size and ownership.
All four regressions reveal significant relationships between measures
of firm resources and capabilities and performance. Measured by four
different performance variables, the results are consistent and the factors
significantly affect both revenue and profit in the predicted direction.
The consistency across four measures indicates that the results are ro-
bust.
table i Means, standard deviations, and correlation coefficients of dependent and independent variables
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	Variables	Mean	sd 2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17
1.	Total Revenue (92)	100755	400606 .400	.206	.106	.898	.836	.840	.883	•577	.815	.592	•043	•365	•534	•037	.742	.676
2.	Total Profit (92)	3094	48473	•135	•304	•370	•157	.096	.227	•083	.205	.291	.054	.212	.500	-.003	-.068	.105
3-	Revenue/employee (spe) (92)	52.2	107		.400	.169	.021	.054	.128	.510	.066	.182	.196	.078	.120	-.128	.049	-.030
4-	Profit/asset (roa) (92)	.0307	.114			.061	-.002	.002	.018	-.065	-.015	.119	.127	.066	.108	-.068	-.010	-.055
5-	Outsourcing (91)	50761	154				•715	.663	.842	•571	•754	•583	•038	•417	• 491	•039	.622	•637
6.	Reward-Welfare Funds (91)	2200	IOO55					•849	•794	.501	.766	•457	.008	.184	.516	.061	•833	.802
7-	Depreciation Funds (91)	11375	72760						•754	.525	.813	•430	.021	.198	•319	•038	.890	.670
8.	Reserve Funds (91)	13230	45455							.600	•784	.580	.044	•305	.476	.056	•723	.683
9-	Inventory Funds (91)	7301	13360								•584	•437	•063	•320	.250	.040	•494	•503
10.	Borrowing Capacity (91)	47553	168604									•463	.042	.282	•376	.059	•777	.676
11.	Marketing Intensity (91)	1902	65 99										.065	•339	•322	-.003	•353	.441
12.	r&d Personnel (91)	.067	.0472											.092	.045	•083	.022	-.046
13-	r&d Funds (91)	213	1331												•135	•032	•159	.222
14-	Retained Earnings (91)	1311	14487													.012	.298	•321
15-	Ownership (91)	•833	.3726														.044	.095
16.	Fixed Capital (91)	57345	341036															.664
17-	Total Employees (91)	2307	6100															
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Notes: N = 12,047. Coefficients with absolute value of 0.017 or greater are significant at 0.05 level; coefficients with absolute value of 0.024 or greater are significant at
0.01 level. Variable definitions: For variables with clear meaning, we do not give further definitions. The following variables need detailed definitions: (5) outsourcing
includes three expenditures on purchasing material and energy; (6) reward-welfare funds include workers welfare fund, welfare and bonus funds drawn from special
funds; (7) depreciation funds include four funds: depreciation reserve, major repair reserve, depreciation funds drawn in current year, and major repair funds drawn
in current year; (10) borrowing capacity = total debts; (11) marketing intensity = total marketing and sales expenditure; (12) r&d personnel = (number of technical
staff/total workforce); (15) ownership = 1 if state-owned, otherwise = o. (91) = data in 1991; (92) = data in 1992.
table 2 Factor analysis of independent variables
Variables*	Factor 1: Firm Resources	Factor 2: R&D Capabilities
Outsourcing (91)	.856	.264
Reward-Welfare Funds (91)	.912	-.043
Depreciation Funds (91)	.877	-.018
Reserve Funds (91)	.908	.160
Inventory Funds (91)	.646	.311
Bank Loan (91)	.882	.098
Marketing Expenditure (91)	.584	.399
R&D Personnel (91)	-.095	.675
R&D Funds (91)	.247	.716
Retained Earnings (91)	.561	.023
Variance Explained by Each Factor	5.08	1-33
Final Communality Estimates		Total = 6.41
Notes: * See table 1 for definitions.
table 3 Regression results (standardized coefficients)
(1)	(2)	(3)			t-statistic			
			(4)	(5)	(6)	(7)	(8)	(9)
Model 1:	.900	.0001	**	1.037**	.173**	-.004	-.047**	-.088**
Total revenue			(42.0)	(175)	(60.0)	(-1.33)	(-9.16)	(-19.5)
Model 2:	.342	.0001	**	1.070**	.146**	-.002	-.838**	-.159**
Total profit			(14.6)	(70.3)	(19.6)	(-.238)	(-63.7)	(-13.8)
Model 3:	.086	.0001	**	.233**	.218**	-.130**	.010	-.207**
Revenue/employee			(39.3)	(13.0)	(24.9)	(-14.8)	(.619)	(-15.2)
Model 4:	.031	.0001	**	.115**	.139**	-.067**	-.005	-.137**
Profit/Asset			(21.2)	(6.24)	(15.4)	(-7.45)	(-.326)	(-9.72)
Notes: Column headings as follows: (1) dependent variables; (2) R2; (3) prob. > F; (4) Intercept;
(5) factor 1; (6) factor 2; (7) ownership; (8) fixed capital; (9) workforce. N = 12,046; **p < 0.01,
* p < 0.05.
While all four regressions are highly significant, their goodness of fit is
different. The regressions of total revenue and total profit achieved high
R-squares: 90% and 34.2%, respectively. The regressions of standardized
measures - revenue per employee and profit per asset - have lower R-
squares, 8.6% and 3.1%, respectively. The explanatory powers of the two
revenue regressions are substantially greater (90% and 8.6%) than those
of the two profit regressions (34.2% and 3.1%). This pattern of difference
suggests that the relationship between firm resources and capabilities and
firm revenue is stronger than the relationship between firm resources
and capabilities and firm profit.
Outsourcing, which measures the level of vertical integration, received
mild support. Among four regression models, positive associations were
found in two tests. For the three special funds tested, results were mixed.
From the organizational theory perspective, these funds are similar to
those of slack resources. Some slack can act as an inducement, which
represents 'payments to members of the coalition in excess of what is re-
quired to maintain the organization' (Cyert and March 1963, 36). Other
types may be employed as a technical buffer, which 'reduces the amount
of information that must be processed during task execution and pre-
vents the overloading of hierarchical channels' (Galbraith 1973,15). Nev-
ertheless, these funds are earmarked for certain specific purposes, and
deviation from accounting rules can lead to disciplinary actions from
the government. Therefore the managerial discretion is limited. Ulti-
mately, misuse of these funds can jeopardize other activities supposed
to be funded by these resources. More studies are needed to reach con-
clusive results.
Reserve funds also received mixed results. It had a positive impact on
revenue but negative impact on profit. Inventory funds, which represent
resources tied up in mostly unsold products, had a positive impact on
total revenue, but exhibited negative relationships with the other three
measures of performance. Keeping a certain level of inventory helps the
firm to meet fluctuating market demand. In many of the cases we stud-
ied, Chinese companies deliberately maintain some inventory much the
way of stockpiling slack resources (Singh 1986), which may have a 'pro-
duction smoothing' effect.
However, during our study, we learned that excessive inventory was
often the result of unsold products. This in fact is a major problem with
those firms that have been used to selling whatever they produce to the
state (as opposed to produce which the market demands) are still inca-
pable of dealing with the market directly. They isolate themselves from
the market and often produce products that they cannot sell. This type
of inventory is slack resource that has already been utilized and cannot
be used for other strategic purposes, and therefore is more likely to have
a negative impact on performance.
Borrowing capacity was found to have a positive impact on perfor-
mance. Among the four measures, we found positive relationship in two
tests, while in the other two tests, its impact was not significant.
Marketing intensity, r&d capacity, and retained earnings showed the
strongest and most consistent results. Marketing intensity had signifi-
cant positive associations with all the four measures of firm performance.
r&d capacity, which was measured by the percentage of scientists and
engineers specializing in research and development, also had strong pos-
itive associations with profit, profitability ratio, and revenue growth, and
its positive contribution to total revenue almost reached the traditionally
accepted significant level. Finally, retained earnings also had a consistent
relationship with all performance measures.
We also examined the impact of several control variables. First, we
found that firm age was negatively related to revenue and revenue
growth. Overall firm age was associated with inertia and became a li-
ability for sustained growth in an increasingly competitive environment.
During our research we learned that some of the oldest firms included
in our study were founded several hundreds years ago, such as pharma-
ceutical companies specializing in traditional Chinese herbal medicine,
and were known for their national reputation and trade secrets. In recent
years, they have faced stiff competition from foreign companies armed
with deep pockets and more technologies, and their unique trade secrets
have become the subject of imitation. The traditional competencies were
losing ground. On the other hand, our data did not include those intan-
gible resources such as trade secrets. Further research is needed to draw
definitive conclusions.
Secondly, we found evidence that firm ownership types had signifi-
cant performance implications. Privately owned and foreign-owned en-
terprises had competitive advantage over firms under state ownership
and control. These results are consistent with previous studies that have
examined the Chinese soes (e. g., Tan and Listchert 1994), and validated
results on ownership and performance from empirical studies using sur-
vey methods (e. g., Luo, Shenkar, and Tan 1998; Luo and Tan 1998).
Finally, we examined the percentage of fixed capital on production,
which in the Chinese context, measures the level of concentration on
core business. Results were inconsistent. Specifically, this ratio had a pos-
itive impact on two performance measures, i. e., total revenue and prof-
itability, but had a negative impact on revenue growth.
In sum, the results generally suggest that certain firm resources and ca-
pabilities have significant performance implications. Among them, mar-
keting intensity, r&d capacity, and retained earnings had consistent pos-
itive impact on nearly all major performance indicators.
Implications and Conclusions
The impact of firm resources and capabilities on performance among
Chinese enterprises has been a subject of anecdotal speculation due to
its significant implications for organizational researchers as well as prac-
titioners. Yet empirical evidence has been very limited. Motivated by a
deep curiosity in, using the language of Williamson (1996), 'what is go-
ing on there' behind the 'bamboo curtain', and underpinned by a strong
conviction that organizational researchers have much to gain as well as
to offer by focusing on transitional economies, we use large archive data
in this study to examine the impact of firm resources and capabilities
on performance. Results indicate that most of the firm specific resources
and capabilities examined in this study have a positive impact on perfor-
mance.
A closer examination of these resources and capabilities indicates that
most of them have been considered as slack in Western literature. There-
fore, our study lends support to organizational theory literature, which
has established a positive relationship between slack resources and firm
performance. On the other hand, in the context of Chinese transitional
economy, firms have been known to maintain a large inventory of or-
ganizational slack, and their lackluster performance has often been at-
tributed to their inefficiency represented by slack (Aharoni 1986; Kornai
1992). Despite the lack of empirical evidence to support this proposition,
there has been little hesitation for Western advisors to recommend that
slack be eliminated. As a result, the 'evil' of slack in soes in transitional
economies has become a part of the well-accepted but rarely tested con-
ventional wisdom (Tan and Peng 2003). Thus, our study also has the
benefit of empirically examining a previously untested link between or-
ganizational capabilities and firm performance in a transitional econ-
omy. Such insight has profound implications for research and practice
because developing capabilities constitutes one of the most soe strate-
gies during the economic transition (Tan and Tan 2005).
Taking the preliminary results reported here as a point of departure,
we suggest that future research expand the resource based view and take
a 'dynamic' approach in examining firm resources and capabilities. Teece
and colleagues (1997) saw dynamic capabilities as a separate strategic
paradigm from the resource based view, specifically oriented to an envi-
ronment of rapid change and innovation-based competition. 'Dynamic'
connotes the capacity to renew resources in response to market changes
and 'capabilities' connotes processes for adapting, integrating, and re-
configuring inimitable resources to keep pace with a changing business
environment (Teece et al. 1997,515). Such future effort can potentially re-
veal how resources are reconfigured over time in firm-specific processes
that are dependent upon initial assets and environmental dynamism
(Eisenhardt and Martin 2000; Teece et al. 1997).
The implications for policymakers in transitional economies are that
underutilized resources may not necessarily be an 'evil' associated with
the inefficiency of soes. In a turbulent environment, slack helps buffer
the firm from the assault from unpredicted directions, thus ensuring a
certain level of performance. Moreover, possession of some slack enables
managers to take on more risky and innovative projects that may pay off
in the long run. In this sense, slack resources can be sources of competi-
tive advantage. For soe managers, our findings help support a long-held
belief that having some slack is not only necessary, but also beneficial
to the firm. As D'Aveni (1994) and Porter (1985) pointed out, firms with
substantial slack are able to adapt to unanticipated situations and fight
back.
While these implications may not be novel to policymakers and soe
managers familiar with the workings of transitional economies, the im-
plications for foreign investors can be profound. An increasing number
of foreign investors have entered transitional economies such as China in
search of joint venture partners and market opportunities (Yan and Gray
1994). soes are usually the top candidates as joint venture partners, who
tend to avoid soes with a seemingly excessive amount of slack. More-
over, even when teaming up with these soes, foreign investors typically
like to slice the soes, and form joint ventures only with the relatively 'ef-
ficient' part that does not have much slack. However, such a strategy may
backfire in a highly turbulent environment during the transition.
In sum, the resources-based view of the firm advances our under-
standing not only by identifying what the resources and capabilities are,
but also how these resources and capabilities are utilized to build com-
petitive advantage and improved firm performance. Therefore, for for-
eign investors looking for joint venture partners in transitional econo-
mies, our findings suggest a departure from the widely accepted conven-
tional wisdom. Specifically, they should study potential partners more
carefully. While absorbed slack such as excess capacity may be undesir-
able, unabsorbed slack such as discretionary fund may be highly attrac-
tive. Instead of just focusing on reported levels of efficiency and perfor-
mance, foreign investors should also attempt to evaluate their prospec-
tive partners' resources not reflected in revealed capacities, because such
unreported slack may be indicative of a better potential. Our prelim-
inary, with its limitations notwithstanding, offers a ground for future
exploration and falsification.
Acknowledgments
This research was completed while the first author was us Fulbright
Distinguished Professor and spent the 2005-2006 academic year in
Nankai University. Support from Nankai University is gratefully ac-
knowledged. The research was in part supported by National Science
Foundation of China (985 Project to Nankai University) and by Uni-
versity of Electronic Science and Technology of China.
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Cooperation after War: International
Development in Bosnia, 1995 to 1999
Eric C. Martin
Sue R. Faerman
David P. McCaffrey
This paper discusses how predispositions, incentives, the number and
heterogeneity of participants, and leadership (Faerman et al. 2001)
jointly influenced the international effort to develop Bosnia and Herze-
govina. International coalitions, task forces, and advisory groups are
increasingly charged with implementing reforms following civil con-
flict. This requires a complex web of interorganizational relationships
among ngos, donors and host nations at both global and 'ground' lev-
els. To better understand development assistance, attention must be
paid to the relationships between these varied players. We find that
four factors influenced relationships between policy, donor, and im-
plementing organizations; and those strained relationships, in turn, af-
fected development success. The paper draws on interviews, conducted
in Bosnia, with 43 development professionals, observation of develop-
ment meetings in Tuzla and Sarajevo, and review of related documents
from international development programs.
Key Words: international development, interorganizational
relationships and cooperation
jel Classification: 019, p41
Introduction
The development of collective action arguably poses the central orient-
ing question for the social and management sciences (Arrow 1974; Os-
trom 1998). How do individuals and other types of parties engage each
Dr Eric Martin is an Assistant Professor at the Department of Business
Administration, Eastern Connecticut State University, usa.
Dr Sue Faerman is the Vice Provost for Undergraduate Education,
Director of the Center for Excellence in Teaching and Learning, and
a Professor at the Nelson A. Rockefeller College of Public Affairs and
Policy, University at Albany, State University of New York, usa.
Dr David McCaffrey is a Distinguished Teaching Professor at the
Nelson A. Rockefeller College of Public Affairs and Policy,
University at Albany, State University of New York, usa.
other, and what factors determine whether conflict, cooperation, or in-
difference dominate this engagement?
This paper discusses how four factors jointly influenced cooperation
in the international effort to develop Bosnia and Herzegovina (gener-
ally shortened to 'Bosnia', or 'BiH') between 1995 and 1999. These factors
include (1) the initial predisposition of parties to cooperate, or not to
cooperate, early in a process, shaped by personal experiences and insti-
tutions; (2) the issues or incentives involved in a decision; (3) the number
and heterogeneity of the parties involved; and (4) leadership at various
levels (Faerman, McCaffrey and Van Slyke 2001; McCaffrey, Faerman and
Hart 1995). These four factors prove useful in the analysis below. And the
situation in the Balkans provides a useful context to explore this interor-
ganizational relationship (ior) framework in a very complex setting.
International coalitions increasingly are involved in social, political,
and economic reconstruction and transition following civil conflict.
These efforts require a complex web of interorganizational relationships
among ngos, donors and host nations at both global and 'ground' levels.
Effective, cooperative relationships among these many players seem vital
to successful implementation of development projects.
Practitioners interviewed for this research, and other critics of devel-
opment in Bosnia offered many reasons for limited success, despite the
enormous amount of time, effort and money spent. Some argued that
the ethnic divisions predisposed local parties not to cooperate. Others
stressed that the international community did not respect each others'
work. Many questioned the bureaucracy of bilateral organizations, the
unilateral positions of nato, wb and imf, and the legitimacy of ngos as
partners. Others suggested that few stakeholders had the incentive to suc-
ceed. Contractors received their payment often regardless of accomplish-
ing goals. Power brokers in the divided society retained control as long
as the situation remained uncertain. And frankly, given other hotspots in
the world, Bosnia's top billing as the darling of the development world in
1995 faded dramatically, reducing multilateral and bilateral enthusiasm.
Some believed that too many players with too many different perspec-
tives were working toward undefined solutions. Others suggested weak
leadership, from the Office of the High Representative, to local govern-
mental officials, to the major international heads of state that failed to
secure Bosnia's future from the start.
All of these perspectives individually contributed to the Bosnian de-
velopment story. However, in an effort to reframe and better understand
development assistance, we suggest that these problems might more ap-
propriately be viewed as contextual features of a complex interorganiza-
tional puzzle. These problems did affect development, but more notice-
ably, directly and immediately, they affected the relationships between
organizations trying to implement specific development reforms. This
more subtle theme emerged repeatedly in our interviews.
Development settings require complex arrangements between orga-
nizations. It is helpful, perhaps, to examine development in Bosnia as
a set or system of iors (Martin 2004; Martin and Miller 2003). Doing
so highlights ground-level implementation concerns. It also helps facili-
tate analysis by specifically targeting the ior as the unit of analysis. This
study anchors itself to those iors, so we therefore view many contex-
tual variables more directly as sources of influence or pressure on these
relationships. Doing so requires multiple perspectives. Faerman, McCaf-
frey and Van Slyke's (2001) four factors emerged from the literatures in
management, economics, political science, sociology and public admin-
istration. While acknowledging the relevance of each, disciplines weigh
the salience of factors differently. However, generally, a desire to increase
levels of cooperation, and reduce unproductive conflict or harmful indif-
ference, motivates much of this writing. Below we discuss these factors
as they relate to international development. We focus less on determin-
ing which of these factors proved most salient, instead recognizing how
all of these factors combined to provide opportunities and obstacles for
cooperative, coordinated collective action between organizations.
Interorganizational Cooperation in Bosnia
'Initial dispositions toward cooperation' refers, for example, to preju-
dices and stereotypes players have against others. Institutionalized prac-
tices, safeguards, norms, and culture favor certain kinds of behaviors.
They can shape individuals' encounters with each other and can leave
individuals more or less favorably disposed to cooperating on an issue.
But these initial mindsets also can undercut cooperation, as in the case
of 'traditional enemies.' Understanding this institutional background is
essential to understanding interorganizational cooperation. Obviously,
development dynamics are fraught with complex predispositions typi-
cally weighing heavily against cooperative activity.
Such initial prejudices might be overcome, however, depending upon
the 'issues and incentives' at play. We recall a striking example of this
after an international embargo was placed on Serbian goods. Serbs in
Bosnia, more favorably disposed to trade with Serbs in Serbia, very
quickly learned to adjust and find markets with Muslims and Croats
in Bosnia instead. Other issues, sometimes as seemingly mundane as
the spelling of city names in documents, were simply too contentious
to find common ground. Development settings necessarily include both
reforms and issues that are highly contentious as well as those that are
much more acceptable to all.
The 'number and variety' of players also proves important in this set-
ting, as the Dayton Peace Accords solidified the partition of the country
into two entities to be split among three ethnic groups, divided further
into cantons and municipalities. This made the logistics of cooperation
difficult, regardless of the issues at play, incentives involved, or initial pre-
dispositions to even begin negotiations. Even intense cooperation can
decay when the forces pulling people together-such as the compelling
nature of a common task or a charismatic leader-no longer dominate
the forces that pull them apart, like deep conflicts over values, or con-
flicting personal or group ambitions and concerns. The sheer number
of stakeholders in Bosnia made differences in issues and incentives and
predispositions, more likely.
We see 'leadership' as an ability to make sense of situations and or-
chestrate actions that is required throughout an organization; which ac-
tors play key leadership roles depends on the nature of the tasks involved
(Graham 1996; O'Toole 1995). Leaders can legitimize solutions to prob-
lems; they can facilitate action that otherwise might break down; and
they can 'nudge' people to act in ways that favor or inhibit cooperation
(Faerman, McCaffrey, and Van Slyke 2001). Leaders help define situa-
tions for individuals often getting people to think about issues and in-
centives, and maybe even initial dispositions, in particular ways (Gray
1989; Weick 1995).
RELATIONSHIPS BETWEEN THE FACTORS
Each of these factors is important individually, but how they play out
in particular situations depends on how they interact with each other.
Each factor potentially moderates the effect of the others on cooperation
(Faerman, McCaffrey, and Van Slyke 2001). As such, these features of the
Bosnian case serve as important contextual variables to the relationships
among those players involved in Bosnia. For example, institutionalized
patterns likely shape the issues that surface in an area, the types of leaders
that are rewarded, and the groups that become involved in an issue. Or,
as noted above, the types of issues that surface may lead us to reassess in-
stitutionalized practices, the desirable qualities of leaders, and the groups
that ought to be included in a decision. Perhaps leaders' strongest source
of influence is in how they might be able to shape followers' perceptions
of the way things 'are' done (institutions), 'ought' to be done (issues),
and who ought to be engaged in a decision (groups) (Gray 1989; We-
ick 1995). The number and heterogeneity of groups involved in a de-
cision process influence the range of institutionalized practices and is-
sues brought into play, and the pool of people from which leaders sur-
face. These are only illustrations of interactions among the factors. What
strikes us is the variety of ways in which they can weave together, of-
ten reinforcing the present situation, but also creating the potential for
change, when change in one factor induces changes in the others.
Methods
This paper stems from research conducted in Bosnia in 1999. Forty-three
different senior executives, mid- and upper-level managers, staff and
consultants in national, international and multinational organizations
were interviewed. Thirty of these were tape recorded and transcribed;
others were reproduced using detailed notes. Nineteen participants were
us citizens; five from the European Union; eleven from Bosnia; and eight
from other nations.
Initial access and preliminary interviews were obtained through the
help of a key informant at usaid. A conference held in Tuzla entitled,
'Development of Production in Bosnia and Herzegovina for 21st Cen-
tury' provided entree into the community. During this conference, the
first author was invited to attend the Industry Task Force meeting, an of-
ficial coordination meeting of all the major players in private sector de-
velopment, sponsored and led by usaid. Most participants at this meet-
ing were subsequently interviewed, as were additional representatives of
nearly every other member organization involved. Several interorgani-
zational coordination meetings were then observed, as were bi-weekly
macroeconomic and privatization meetings covering topics like Payment
Bureau Reform or Tax Harmonization. Many of the same players tended
to reappear at these various forums, suggesting subjects indeed repre-
sented the core organizations involved in private sector development.
Interviews with more peripheral or niche players also proved rewarding
and balanced the sample.
This paper also relies on documents, reports, flyers and websites, pro-
duced by the various organizations involved in the effort. We especially
rely on the reports prepared by the International Crisis Group. This or-
ganization has established a reputation within Bosnia for compiling de-
tailed, influential analyses. For example, its April 1999 report on the fail-
ure of plans to encourage private investment in Bosnia became an unoffi-
cial focus of the conference at Tuzla, mentioned above, and an important
piece of work known to nearly everyone we interviewed.
Findings
Our findings reveal how relationships between development organiza-
tions in Bosnia were shaped by the four factors. We focus below on ele-
ments of the case that we believe fundamentally shaped outcomes.
initial predispositions to cooperate
Reliable procedures are the distinctive advantage of bureaucratic forms
of organization (Gerth and Mills 1958), and are key to successful econo-
mies (North 1990). On the other hand, weak legal structures, group
threats and insecurity, and ongoing hostility reinforce each other, as peo-
ple come to rely on political force and actual or threatened violence. The
development effort in Bosnia and Herzegovina tried to reverse such a
situation. The Dayton Peace Agreement outlined a process to rebuild
the nation's infrastructure, reduce social tensions and foster economic
growth and transformation; and establish a political and legal order that
recognized ethnic identities, but prevented them from dominating so-
cial, political, and economic life.
All of the major national donors participate in annual meetings of
the Peace Implementation Council (pic). These are 'scorecard' meetings
where governments and institutions pledge millions to certain efforts,
define broad task areas, and identify lead parties. Participation at these
meetings is at the ministerial level. Beneath and answerable to the pic
are smaller Steering Committees. These committees target broad areas
of activity and establish reasonable 'benchmarks' given the funds and di-
rection expected from the pic. At this level, cooperation seemed overt,
effective and tangible, but implementing those policy directives seemed
more difficult.
Informal, ground-level meetings were, according to one respondent,
'just something that kind of started. Initially, these task forces just tried
to keep track of who was doing what; and now it has gone very much
beyond that to, ok, what needs to be done, who's going to take care of it,
what kinds of policies need to be respected in proceeding with this oper-
ation . . . its not just a show and tell.' Another official described them as
'meetings with different parties that are active in this reform process . . .
to discuss relevant issues; . . . where are we, what are the next steps to
take, how are we going to get there?'
Many respondents described these ongoing conversations as, 'A mat-
ter of doing good work, you want to do good work so you need to know
what else is going on out there; also, a lot of these people you know, or
if you don't know you might have heard of, and if you don't know at all
you want to get to know - you learn from other people - it's just pro-
fessional to explore what programs ... are in your area.' Social networks
are important in this 'industry'; 'There is a small arena of people who do
this. A lot of the aid people I worked with in southern Africa somehow
appeared here in the Balkans, you know people's credibility, professional
conduct, skill levels . . . and then at the appropriate time it is referenced.'
The ohr represents the organizational embodiment of the peace ac-
cords. The ohr formally has the authority to remove national and lo-
cal officials, and has other strong powers to direct implementation of
the Dayton Peace Agreement; in effect, it presently is the highest legal
authority in Bosnia and Herzegovina. Yet, this formidable international
presence has had a difficult time coping with the ethnic tension that con-
tinues to dominate Bosnia; the forces that produced the war have consis-
tently undermined the effort to rebuild the country after it. The idea was
that this tension could be reduced through the establishment of reliable
institutions, economic growth, and security for the different groups; the
Office of the High Representative would have the power to force changes
when necessary. However, a report by the International Crisis Group in
November 1999 (1999c, 42) observed that,
The ohr has - at least on paper - 'final authority' to inter-
pret and implement the dpa [Dayton Peace Agreement]. In
some regards the ohr constitutes the highest legal authority
in Bosnia and Herzegovina, higher even than the Annex 4 con-
stitution. Nonetheless, the ohr's authority does not translate
into actual power. Lacking an enforcement mechanism, such
as a loyal constabulary, the ohr is forced to rely on the good-
will and full co-operation of the parties to implement its de-
cisions, as well as to implement dpa. Often, the High Repre-
sentative is reluctant to remove obstructionist officials, fearing
that the ohr's lack of power will become apparent when those
officials remain in office. The result is an implementing body
that lacks the ability to implement.
These types of tensions intrude on routine activities in development.
One individual noted that 'In this whole area it's also about the past... As
long as they continue to argue about who was actually the bravest at the
Kosovo battle and who killed my grandfather or your grandfather we are
going nowhere.' Another pointed out, 'For example last week we had a
stupid decision at the Council of Ministers. They were fighting ... nearly
two years about a border crossing agreement between Croatia and BiH,
they all agree on the border crossing, they all agree on everything except
for the names of the towns in the written document.' A third added, 'If
the Serbs say something then obviously the Croats and the Muslims say
something exactly opposite.'
The various tensions and contextual concerns mentioned above se-
emed to create initial predispositions against cooperative activity. While
certainly not, in and of themselves, insurmountable, coupled with the
other concerns below, they made cooperative, coordinated action, or at
least a cooperative culture of change and progress, difficult.
issues and incentives
It is easier to address some issues rather than others; thus, we expect
development efforts to succeed in some areas and flounder in others. As
noted above, perhaps the major contribution of the Dayton Peace Agree-
ment was that it stopped the overt warfare. One individual commented
that 'I value the [dpa] because it stopped the killing and I think every-
one would agree that stopping the killing was paramount.' Furthermore,
some development tasks are easier and more visible than other tasks.
Activities like building bridges and roads, while difficult in this environ-
ment, were more tangible, more easily quantified and more visible to all
constituents than the development of civil society, for example. Said a
local Bosnian, 'people see the results, they build some bridge and you see
that and can use it.'
The legal, political, and economic institutions in Bosnia, however, im-
proved minimally at first, given the time, effort and resources devoted to
them. Control of appeals processes, judicial decisions, business licensing,
electoral administration, and other key activities were core political tools
in the tensions among the three ethnic groups. Thus, leaders of local po-
litical factions valued highly their control over these institutions, and the
institutions did not remotely approximate the idea of bureaucratic eq-
uity and efficiency described by Weber (Gerth and Mills 1958). Studies
by the International Crisis Group documented how there had been no
substantial improvements since the Dayton Peace Agreements in the ju-
dicial system (1999b), the system of public administration (1999d), and
in the development of functioning economic institutions (1999a). For ex-
ample, with respect to external investment, the Group noted that, from
1997 to early 1999, private sector investment in BiH totaled approximately
usd 160 million, a figure equal to 4.7% of total donor aid. Of this, 80%
came from foreign investors, though many of these were in fact Bosnians
using off-shore companies and funds. It characterized total private sector
investment in BiH as being 'so low as to be insignificant'; interviews with
Bosnian and foreign businessmen indicated a widespread reluctance to
invest in Bih. Donor aid accounted for up to 30% of gdp, and, with-
out it, economic growth likely would be negative (International Crisis
Group 1999a; 1999c). Theoretically, the ohr had the authority to direct
changes in institutions, but it clearly did not have the political and tech-
nical strength to effect or enforce such changes with broad societal sup-
port (International Crisis Group 1999c; 51).
Lacking an enforcement mechanism, the ohr is forced to beg,
plead, negotiate endlessly, and occasionally 'bribe' local offi-
cials with the promise of donor funds ... Local Bosnian politi-
cians will typically co-operate only when it is in the direct in-
terest of their political party. These politicians typically require
the international community to undertake expensive and oc-
casionally unwarranted projects, prior to complying with dpa.
Unfortunately, after receiving international community aid,
Bosnian politicians often refuse to comply with dpa or struc-
tural reform efforts. This is especially true of Croats, Serbs and
to a lesser extent, the Bosniaks.
number and variety of players
Tensions among national groups in Bosnia certainly hindered develop-
ment. However, we are not only concerned with the number and variety
of ethnic groups within Bosnia. There were hundreds of institutions in-
volved in reforms, each with a wide variety of perspectives on problems
and solutions, often, not surprisingly, at odds with others'.
Much of the criticism of the ohr involved weakness in enforcement.
Groups did not make concessions partly (though certainly not entirely)
because they did not believe that other parties could be forced to make
concessions. Thus, the most prominent proposals for addressing the
problems in Bosnia involved either abandoning the project, or inter-
vening with a force and police powers sufficiently strong to enforce the
Dayton Agreement (International Crisis Group 1999c; Daalder and Fro-
man 1999). The idea was that this would give reform elements within
the country enough confidence, and political leverage-backed by exter-
nal powers-to try to effect change, which would set in motion the slow
process of building economic and political institutions within Bosnia,
and developing internal administrative capabilities. The criticisms of the
proposals were that they would be politically unacceptable externally-
because they might constitute an 'open-ended' commitment; and, in-
ternally, they raised the image of 'external occupation' of the country in
such a way as to antagonize nationalistic sentiments.
Finally, we cannot fail to recognize the sheer volume of players in this
environment. In addition to the three ethnic divisions, reforms in Bosnia
were implemented (or not) through the massive public sector, with na-
tional, entity, canton and municipal levels, dozens of multilateral and
bilateral programs, and by 1999, over 500 ngos. The number and variety
of players operating in this small nation was enormous, each with their
own funding streams, political persuasions, constituents, opinions about
the causes and suggested solutions.
leadership
Successful projects in challenging environments require a large number
of professionals with high levels of technical and/or managerial skills
(Van de Ven, Polley, Garud, and Venkataraman 1999). 'It is much more
hands on than a lot of other places, because there is a political dimension
to everything here, and while the contractor can go out and implement
a complex technical program, he'll inevitably get caught up in the back
and forth between counterparts who aren't of the same ethnic group or
areas that are in competition with each other or bureaucrats who don't
like each other.' A number of factors work heavily against developing ef-
fective leadership in such a setting.
First, global and domestic politics tightly constrained major decisions
on site. We already discussed the challenges of dealing politically with the
three factions, each of which refuses to make concessions partly because
it worries about the others refusing to do so, or making concessions and
then reneging on them. One way to address this collective action problem
is to have a central authority that, after consultation and careful thought,
can direct and enforce decisions. Clashing parties may be willing to com-
promise if they believe that settlements can in fact be enforced-that co-
operation will not lead to a 'sucker's payoff' (Axelrod 1984). In fact, the
ohr was expected to play this role, but (icg 1999c, 51-2):
Lacking an enforcement mechanism, the agency responsible
for implementing the civilian aspects of dpa - the Office of the
High Representative - began life permanently handicapped.
The ohr, along with the un, osce, and the donors have
been forced to rely largely on the good will of Bosnia's ruling
ethnically-based political parties to voluntarily comply with
dpa, the same parties who agreed to dpa in the first place ...
[A]nxious to achieve anything that could be categorised as
progress, officials in many organisations often follow the path
of least resistance. Rather than enforce dpa, they reinterpret it
to fit the political distortions that they lack the political will to
change, particularly the refusal of local officials to co-operate
with dpa implementation.
Second, there was a vicious circle affecting recruitment and retention
of skilled people at all levels (Huddleston 1999). Bosnia was a difficult
place to work, leading to high turnover; high turnover means that the
system did not retain a sufficiently large core of people with the com-
mitment and talents to work effectively there; and this in turn prevented
substantial improvements in the situation, and created difficulty for lead-
ers to emerge. This surfaced repeatedly in the interviews.
You can't consistently keep the chain of communication open
with all the turnover; it takes people too long to learn their job
and what they're doing, and then to do it and retrain the next
guy, there's so many people to learn all the places and what
they're supposed to do for you it's just crazy.
That's a problem. They come for half a year, it is difficult. It is
not a team for a long time. They just come together for a short
time and try to work together. It's a difficult circumstance.
It is very difficult to create organizational entities [with] a
strong team and corporate spirit, and also a unified system of
testing individual performance [and] accountability.
That was the main problem, that people would only stay for
4 or 6 months and then the memory was lost, and we had to
start again from the beginning,
Third, there was a vicious circle impeding development of managerial
skills within Bosnia. That is, foreign donors generally did not trust in-
dividuals in Bosnian institutions with major projects; host country na-
tional skills therefore were not developed internally, leading to further
mistrust - and again, undermining any potential benefits from strong
leadership.
The international community tends to not put money through
them because when they did put money through, things went
wrong, and so it's a vicious circle. They are not empowered so
people don't use them, and people don't use them because they
continue to show themselves incompetent.
There is no state authority, so there is no big advantage to have
relations with state institutions here. Because ofthat, the devel-
opment institutions are quite powerful, and they bring money
or expertise and there is, I think, quite an imbalance between
the money and expertise from outside experts and from state
institutions and this discourages cooperation between institu-
tions.
We've just created this net, and unless we encourage the lo-
cals to get over the victim mentality to wean off this extensive
donor support, which is creating a very skewed local economy
with all the money we've put in here ... [and] until we force
them to compromise and find joint solutions on their own, we
are doomed to continue to be the babysitters for Bosnia.
As such, we view these three factors as important variables in reducing
the effectiveness of leadership, at all levels, not only leadership in terms
of the overall development initiative, but within each of the agencies de-
signed to implement such tasks.
Discussion
The logic of this and many development programs is that stronger po-
litical and economic institutions induce 'virtuous circles' of economic
growth and stability, clearing the path for further reform. Reformers in
Bosnia have made strides towards this eventuality. We employed an in-
terorganizational approach to provide insight into some of the reasons
why policy objectives did not always translate into effective implementa-
tion success on the ground.
Our unit of analysis, interorganizational relationships, provides a
meso-level perspective often overlooked in development studies, use-
ful not only as yet another source to analyze potential problems, but as a
more easily altered condition than some of the more entrenched social,
political and economic obstacles to change. More effective relationships
between organizations might represent the proverbial low-hanging fruit
in terms of best practices and lessons learned from less successful reform
efforts.
Ethnic conflict clearly undermined development. However, it seems
too simple or convenient to base an analysis of development failures on
this. Agencies involved in post conflict work should be accustomed to
social division. The ethnic conflicts, however, were so pervasive early on
that only an external enforcer with extraordinarily strong powers could
enforce change. Even if this was politically acceptable, it would have run
into a host of problems characterizing central control of national de-
velopment (Scott 1998). Forcing cooperation likely does not work and
thus reaffirms the 'vicious circle' perspective. This calls into question the
ohr's role as 'lead coordinator'.
The economic perspective of ownership also weighs heavily on any
discussion. Which of the many players discussed above truly own de-
velopment reform efforts? Who pays and who benefits from these? In
complex post-war environments, ownership questions seem a secondary
concern, second only to immediate action to secure peace and begin
making critical reforms. Development assistance agencies must recog-
nize the importance of local citizen engagement and the crucial role it
plays in cooperative action, whether locals are directly or indirectly in-
volved. Development organizations, though powerful, clearly are tightly
constrained by contextual difficulties experienced by locals. Typically,
development administration studies focus on flows from donor to host.
This paper stressed the equally important flow from host to donor.
Related, development organizations also need to be concerned with
the creation of a moral hazard to action - where the more they do, the
less their local counterparts feel compelled to do. In something akin to
dependency theory, the international organizations, while trying to do
good, undermine local efforts, stifling local ownership of reform respon-
sibility and accountability. As such, in an effort to turn things over to the
locals, in something akin to a turnkey operation, the ic should be pre-
pared in some cases to try not to push through reforms, as the reform
itself may not be the key outcome. The process, successful or not, might
be the ultimate goal. Implementers, politicians and observers might be
more patient with some reform efforts and more carefully select projects
so critical as to necessitate bypassing local decision makers.
One might take heed of modernization theory's deterministic pitfalls
in examining this case. Perhaps the lack of local engagement undermin-
ing cooperative activity (and thus reform success) was based, in part,
on the international community's insistence that reforms take the forms
that they dictated. In the immediate aftermath of the war, it proved diffi-
cult for international players to work effectively with local counterparts.
Unlike in Poland, for example, where local control proved paramount,
transition efforts in Bosnia were constrained by the divided local politi-
cal environment. Thus is the paradox of development and international
intervention. Regardless, efforts must be made to pass the torch on to
locals from the very beginning, involving more mentoring at a time of
great stress and urgency - painful perhaps, but possibly time well spent.
The notion of timing proves salient on a variety of fronts. First, devel-
opment is a very long term process. Funding must be available through-
out the life of necessary reforms, and not just early on when the conflict
receives greater attention. Funding should be spread out over time, and
when analyzing successes and failures, this longer time horizon must be
considered. This study period (1995-1999) represented to many profes-
sionals an 'initial' phase of activity. Reforms continue to this day, and
minor successes or even seeming failures made during that initial time
period may have set in place the foundation for greater success later in
the process. We caution observers to perhaps expect less from a society
drained, exhausted, and tortured with the memories of an all too re-
cent bloody ethnic conflict. Observer optimism about Poland's reforms,
for example, may have altered interpretations of other more difficult set-
tings.
Finally, we must respect the constantly changing environment in
Bosnia. International priorities and policies changed over time, as hot-
spots emerged all over the globe. But also Bosnia changed. Regional
realities, elections, major investments, ohr leadership, nato and un in-
volvement, etc. all changed dramatically within the short time period we
discussed above, but also dramatic changes took place in the years since
1999. These changes reverberate through the 'system' described above,
for better or worse, and must be considered, coupled with the other
concerns highlighted above, with any understanding of development
success, or more immediately, interorganizational cooperation.
In conclusion, our work reduces some of the complexities of interna-
tional development efforts into the potentially more manageable anal-
ysis of interorganizational relationships. As such, we found several key
and somewhat obvious issues that moderated or mediated successful re-
form. Certainly, some political, economic and social conditions cannot
be changed by international development assistance. However, a focus on
being more effective and efficient with limited resources by working in a
more cooperative, coordinated manner, seems more than just a passing
desire. For us, it strikes at the heart of any successful development effort.
Acknowledgments
We thank Brian Fahey and the many professionals in Bosnia who gra-
ciously found time in their busy schedules to discuss their difficult
and often misunderstood work. We would also like to thank the mgt
Editor, Dr. Bostjan Antoncic, and the anonymous reviewers for con-
structive criticisms that strengthened this manuscript.
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Language and Culture in International
Legal Communication
Alenka Kocbek
In the contemporary business world, partners belonging to different
nations, and hence different cultures, conduct business operations in
either the language of one of the parties involved or in a third, neu-
tral language, serving as lingua franca. Thus, language skills, as an es-
sential component of the communicative competence, imply a certain
extent of implicit or explicit translating and interpreting. The func-
tionalist approaches in translation science, and most of all the Skopos
theory by J. H. Vermeer, view translation as an intercultural transfer,
which inevitably entails taking into account intercultural differences.
As intercultural business communication is directly affected by the le-
gal systems of the cultures involved, the communicating parties need
to be acquainted with both the source and target legal systems. This is
especially the case with English, as the Anglo-American legal system,
based essentially on common law, differs substantially from continen-
tal law, to which most of the European countries belong. English as
the world's most commonly used lingua franca will have to be adapted
to its new function by adopting terms and concepts from other cul-
tures and, within the eu, take into consideration the existing discrep-
ancies between the continental and the Anglo-American legal systems.
In this paper, cases of non-equivalence regarding legal terms are illus-
trated with examples from company law. In conclusion, some linguistic
and cultural implications of the use of English as lingua franca, as well
as their impact on teaching and learning practices are presented.
Key Words: translation, lingua franca, Skopos, cultural embeddedness
jel Classification: K33, L84, M5, M53
Translation in Business Communication:
The Functionalist Approach
Within intercultural business communication translating is viewed as
a communicative activity occurring between a source and a target lan-
guage/culture by using verbal (texts) and non-verbal signs. The purpose
of this activity is to enable communication across culture and language
barriers and it thus has to take into account cultural differences.
Alenka Kocbek is a Lecturer at the Faculty of Management Koper,
University of Primorska, Slovenia
Translation science - especially the so-called functionalist approaches
- places special emphasis on purpose, i. e. function and cultural embed-
dedness as essential features of the source/target texts, and thus seems to
provide an adequate theoretical basis for translation in a business envi-
ronment.
By taking up concepts from communication and action theory the
functionalist approaches in translation science define translation as a
purpose-driven communicative action (Holz-Mänttäri 1984, 7ss) involv-
ing not only the traditional functions of sender and receiver but also a
series of other roles and players:
•	the initiator: the company or individual who needs the translation;
•	the commissioner: the individual who contacts the translator;
•	the source-text producer: the individual who composes the source-
text;
•	the target text producer: the translator;
•	the target text user: the person(s) by whom the target-text is used;
•	the target text receiver(s): the final recipient(s) of the target-text.
In certain situations, some of these roles may overlap, e. g. the source-
text producer may at the same time be the initiator and/or commissioner
or even the translator, etc.
The Skopos Theory: Translation as Intercultural Transfer
Translation as a communicative activity pursues a certain purpose or
goal which the German scholar H. Vermeer terms skopos (Greek for aim
or purpose). This purpose determines the translation method and strate-
gies to be used in order to produce a functionally adequate translation.
Moreover, translation takes place in concrete, definable situations which
are limited in time and space and involve members of different cultures.
These situations can be said to be embedded in given cultures, which,
in turn, condition the situations (Reiß and Vermeer 1984). Within a cul-
tural community the situations of sender and receiver generally overlap
enough for communication to take place, whereas in cases when they
belong to different cultures, an intermediary, i. e. a translator, might be
needed to enable communication. In some situations, the sender will act
as translator as well. Translation is thus an intercultural transfer within
which communicative verbal and non-verbal signs are transferred from
one language into another. In order to enable this kind of transfer, es-
pecially with relation to its non-verbal aspects, a good knowledge of the
source and target culture is needed and the translator, i. e. participant in
intercultural communication, has to act as an intercultural expert. Ac-
cording to Christiane Nord (1997, 34), translating means comparing cul-
tures, i. e. interpreting source-culture phenomena in the light of one's
own knowledge of that culture, from either inside or outside, depending
on whether one translates from or into one's native language and culture.
Language is thus an essential means of communication, but it has to be
used in the context of the corresponding culture. In Translation Studies
Bassnett (1991,14) illustrates the interrelatedness and essential interde-
pendence of language and culture by means of the following metaphor:
No language can exist unless it is steeped in the context of cul-
ture; and no culture can exist which does not have at its center,
the structure of natural language.
Language, then, is the heart within the body of culture, and
it is the interaction between the two that results in the contin-
uation of life-energy. In the same way that the surgeon, oper-
ating on the heart, cannot neglect the body that surrounds it,
so the translator treats the text in isolation from the culture at
his peril.
Besides a good command of the language, participants in intercultural
business communication therefore need to have a thorough knowledge
of other aspects of the cultures involved, which have to be taken into con-
sideration in order to prevent communication problems or even com-
munication breakdowns.
Some of these aspects can be deduced from the following definition of
culture by Vermeer (1987, 28): culture is 'the entire setting of norms and
conventions an individual as a member of his society must know in order
to be "like everybody" - or to be able to be different from everybody.'
Reiß more specifically points out that norms have a stronger prescrip-
tive character (indicating what the members of a society have to do or are
not allowed to do) and are as such obligatory, whereas the term conven-
tion indicates that a rule of behaviour has gradually been established by
general consensus and thus indicates the recommended, expected forms
of behaviour in a society (cf. Reiß and Vermeer 1984,178).
In his work Le sfide di Babele Paolo Balboni describes these rules as
'grammars' which regulate other spheres of communication, apart from
the verbal one (Balboni 2002, 62 ss.).
According to Balboni, the intercultural communicative competence
consists of linguistic and extralinguistic competences. Among the latter
he lists the following as the most significant:
•	la competenza cinesica - kinesic competence regarding gestures,
body languages, mimics;
•	la competenza prossemica - proxemic competence regarding dis-
tance and/or contact between communication partners (which in-
directly determines the choice of language register, i. e. formal - in-
formal);
•	la competenza vestemica - competence regarding the mastering of
the rules referring to clothing, uniform, fashion, etc. (based on the
semiotic structure of fashion according to Barthes);
•	la competenza oggettuale - competence regarding the use of objects
as instruments, by means of which the social status, function and
role of a person are communicated (the furnishing and decoration
of an office, car, presents and objects as status symbols).
Similarly, Hofstede (1991) speaks of 'softwares of the mind', which
are typical of individual cultures (or even individual organisations), in
that they condition the different aspects of communicative competence
(through concepts of time, power, hierarchy, etc.) and need to be taken
into account in communicative situations involving participants from
different cultural environments.
Norms, on the other hand, are not merely recommended rules, but
have a binding character. Namely, if we compare the concept of culture as
specified by Vermeer and Reiß with the definition of law as it is found in
the Collins dictionary (2000, 877), i. e. 'a rule or set of rules, enforceable
by the courts . . . regulating . . . the relationship or conduct of subjects
towards each other', the norms (i. e. what members of a society have to
do or are not allowed to do) can easily be seen as reflected in the legal
system of a society.
In international business communication, norms affecting commu-
nicative situations certainly include the legal system. In order to avoid
communication problems, participants in this communication require a
good knowledge of the legal systems of both the source and the target
culture.
The Legal System as Communication Framework
in Intercultural Business Communication
In international business communication the legal systems of the par-
ties involved directly affect communicative situations through the le-
gal provisions and regulations applying to concrete business transac-
tions and business relations in general. Accordingly, participants have to
agree which legal system will be adopted as the communication frame-
work. Within this communication framework legal concepts have to be
translated (culturally transferred) from one language/culture/legal sys-
tem into another.
Gerard-Rene de Groot (Professor of Comparative and Private Inter-
national Law at Maastricht University, the Netherlands) points out that
the crucial issue to be taken into consideration when translating legal
concepts is the fact that 'The language of the law is very much a system-
bound language, i. e. a language related to a specific legal system. Trans-
lators of legal terminology are obliged therefore to practice compara-
tive law.' (de Groot 1998, 21 ss.). Legal systems differ from one state to
another, and so far no standardized international legal terminology has
come into existence. Every state (sometimes even regions within a state)
has developed independent legal terminologies, whereas a multilingual
international legal terminology is being only gradually created within
supranational legal systems, such as the law of the European Union, and
is being introduced in single areas of the European law as they undergo
harmonisation.
When translating from one legal system into another the differences
existing between them have to be considered. Sandrini points out that
in essence the translatability of legal texts depends directly on the relat-
edness of the legal systems involved in the translation (cf. Sandrini 1999,
17). Legal systems exist independently from the legal languages they use
and are created through social and political circumstances. There is no
direct correlation between legal language and legal systems. One legal
system may use different legal languages (Canada, Switzerland, bilingual
areas in Slovenia, Austria, Italy, Belgium, etc.), while one language area
may be divided into different legal systems, as is the case in the United
Kingdom or in the usa.
If the legal systems are analyzed as to their sources, their historical
background, the extent of codification and the specific legal institutes
applied within them, some legal families show a greater relatedness than
others. The legal systems pertaining to the so-called civil (i. e. continen-
tal) law, which includes the Romanic, the German and the Nordic legal
systems, are relatively related. They have common foundations in the
Roman legal tradition and are characterized by codification - the most
important rules and regulations are set out in written sources of law. In
the case of the continental legal systems, a considerable closeness with
respect to the legal concepts applied can be expected. On the other hand,
the legal systems of other countries and cultures, derived from different
traditions, are difficult to compare - such as the Far-Eastern, the Islamic,
the Hindu and finally, the so-called Anglo-American legal family, based
on common law, equity and statute law. Within the Anglo-American le-
gal family, common law is the legal system in force in England, Wales
and with some differences in the usa, whereas Scotland and Ireland have
substantially different legal systems related to the continental law, simi-
larly to the legal system of Lousiana, which has its foundations in the
French law.
These differences certainly affect the translatability of terms from/into
different legal languages, as there is no complete equivalence between
the legal concepts. According to de Groot, the first stage in translating
legal concepts involves studying the meaning of the source-language le-
gal term to be translated. Then, after having compared the legal sys-
tems involved, a term with the same content must be sought in the
target-language legal system, i. e. equivalents for the source-language le-
gal terms have to be found in the target legal language. If no acceptable
equivalents can be found due to non-relatedness of the legal systems, one
of the following subsidiary solutions can be applied: using the source-
language term in its original or transcribed version, using a paraphrase
or creating a neologism, i. e. using a term in the target-language that does
not form part of the existing target-language terminology, if necessary
with an explanatory footnote (cf. de Groot 1998, 25).
The level of equivalence of the terms depends on the extent of related-
ness of the legal systems (and not of the languages) involved. The related-
ness of languages may, in some cases, even cause the creation of so-called
false friends, such as the German Direktor versus the English director.
When deciding on the solution to be used, the context of the transla-
tion, its purpose (skopos) and the character of the text play an important
role. A wide range of skopoi is possible - from a mere information on
the source text for a receiver who does not speak the target language to a
translation which will have the status of an authentic text parallel to the
source-text (as is the case with international contracts made in two or
even more equivalent language versions).
These different purposes of translation are reflected in the type of
translation to be produced. Nord classifies translation in two basic types:
a documentary translation, i. e. a document in the target language of
(certain aspects of) a communicative interaction in which a source-
culture sender communicates with a source-culture audience via the
source-text under source-culture conditions; or an instrumental trans-
lation which aims to produce in the target language an instrument for a
new communicative interaction between the source culture sender and
the target language audience by using (certain aspects of) the source text
as a model (Nord 1997,47).
According to the Skopos theory, the translation brief, i.e. commis-
sion can contribute considerably to the quality and functionality of the
translation by providing the translator with explicit or implicit informa-
tion about the intended target-text functions, addressees, the prospective
time, place and motive of production and reception of the text (Nord
1997, 137). In the case of legal translation this information should also
indicate the legal system to be observed as communication framework.
English as Lingua Franca in International
Business Communication
Irrespective of their cultural background and origins, participants in in-
ternational business communication nowadays mostly choose English as
the language of communication, i. e. the lingua franca. The widespread
use of English as a lingua franca is closely connected with its rise as a
world language (Crystal 1997, 8-10). In the last century English has un-
doubtedly acquired the status of a 'global' language - a situation that was
predicted by Sapir as early as in 1931 (Sapir 1931, 66). This global spread
of English has been brought about by a number of different factors. Al-
though some linguists argue that it is the intrinsic qualities of English
as a language, such as its rich vocabulary created through its contacts
with other European and non-Western languages and its resulting flex-
ibility, or according to Jespersen, its businesslike nature, with its lucid
syntax (Jespersen 1938,1-16), that justify its global spread, its acquisition
of the status of a world language is primarily the result of historical devel-
opments involving extra-linguistic circumstances, ranging from political
and military to merely economic factors (Crystal 1997,7-8). As explained
by van Essen (van Essen 2002,11), in the 19th century and the first half
of the 20th century Britain held the position of the world's leading in-
dustrial and trading nation, as well as of the biggest colonial and one
of the leading military powers. Owing to this leading position, the En-
glish language spread to all territories subjected to British influence. As
Britain lost this status after the Second World War the leadership role was
taken over almost imperceptibly by the United States. The period follow-
ing the Second World War has been decisive for the diffusion of English.
Van Essen claims that if the English-speaking nations had not won the
war, German and Japanese could have acquired the status of world lan-
guages (van Essen 2002,12). But even if a language may be established
as dominant by military power, it requires economic power to maintain
this status and expand it, and nowadays the United States are the only
nation to have at their disposal the resources to uphold this status.
Other factors that have contributed to the establishing of English as a
global language are the development and the rapid growth of new tech-
nologies (e. g. satellite-Tv, the Internet) and the fact that many impor-
tant international organisations use English as their principal working
language (e. g. the United Nations, the World Health Organisation, the
International Monetary Fund, the World Bank).
Presently, English in its different varieties is used as a first language by
some 400 million people, mainly in the usa, Canada, Britain, Ireland,
Australia, New Zealand and South Africa and, in addition, it has the sta-
tus of a second language in over 70 countries, where it is spoken by at
least another 400 million people. Moreover, 1,500 million people today
are thought to be competent communicators in English (Crystal 2002,
16). Consequently, it is not the number of mother-tongue speakers that
has been decisive for English in gaining the status of a world language,
as according to this parameter it is undoubtedly outdone by Chinese or
Urdu (van Essen 2002,11), but the fact that it is 'the dominant voice' in
international politics, banking, the press, the news agencies, science and
technology, communications and many other fields (Crystal 2002, 16).
By becoming so widespread English does not refer to a single centre of
reference or a single culture. The consequence of this development is the
emerging of 'New Englishes' - new varieties of English spoken by popu-
lations all over the world (e. g. 'Singlish' - short for Singaporean English
or 'Spanglish' - being the Hispanic/English mixed language used in some
communities in the usa).
On the other hand, due to its worldwide expansion and its status of a
world language, English is nowadays increasingly used as a lingua franca
in communication between non-native speakers. In this respect, House
distinguishes between languages for communication (such as English used
as lingua franca) and languages for identification, which are used for in-
terpersonal exchange across cultures and for expressing one's identity as
a member of a particular cultural community (House 2001). In particu-
lar communicative contexts (e. g. official or formal, and thus also busi-
ness circumstances) English is generally regarded as the most appropriate
language for communication even in multilingual environments, where
participants in communication could choose from a wider repertoire of
languages. At international meetings and conferences, lectures are often
delivered, papers presented, negotiations conducted and the correspond-
ing documents drawn-up in English, whereas the less formal contacts
between the participants, in which their cultural identities are expressed,
often occur by using other languages shared by the interactants in the
communication. Graddol (1997,12 ss.) has established that this is due to
the fact that there is an implicit linguistic world hierarchy with English
and French at the top, whereby French is clearly on the decline and En-
glish on the rise. Van Essen (2002,13), on the other hand, points out that
English as a lingua franca is mostly used not to socialize with native-
speakers, but to become a member of an international community of
experts and to communicate with other members of such a community
(e. g. business people, lawyers, bankers, etc.) in the language (i. e. regis-
ter) of that community about topics of common concern. In these con-
texts, English is not only used as a lingua franca but also as a language
for specific purposes (lsp). The majority of such communicative inter-
actions worldwide occur between non-native speakers of English whose
cultural background is neither English nor American and for whom tra-
ditional cultural knowledge regarding the Anglo-American culture may
prove utterly useless. Considering the fact that there is a number of na-
tive and non-native Englishes, plus the many regional (such as Span-
glish) and functional (English for specific purposes) varieties, the need
has been felt to establish a common standard for English used as a lingua
franca in order to ensure mutual intelligibility. As van Essen points out
(2002, 14) there have been attempts to establish common standards as
far as the linguistic aspects (pronunciation, grammar, vocabulary) of the
lingua franca are concerned.
With regard to pronunciation the most convincing model so far de-
veloped is Jenkins's Lingua Franca Core (Jenkins 2000), which is aimed
at guaranteeing international intelligibility among non-native speakers
rather than imitating native-speakers, and contains elements derived
from Standard British, Standard American and varieties of English as
lingua franca and/or English as a second language.
Written English is less diversified as far as grammar and vocabulary
are concerned, but nevertheless no definite decision has so far been taken
as to which model a standard English lingua franca should be based on
(van Essen 2002,14). Although in the past the British model seemed to
be the obvious choice for European countries, this choice seems to be
less logical now, and as far as American English is concerned, for vari-
ous extra-linguistic, mostly political reasons, the American variety could
prove problematic. As van Essen suggests, a good solution would be the
adoption of a separate standard for English as lingua franca which would
favour neither of the existing native-speakers' varieties.
Within the European Union some linguistics experts are presently pro-
moting the concept of English as a lingua franca for Europe (or 'Euro-
English', cf. Labrie and Quell 1997, Jenkins and Seidlhofer 2001), also
known by the abbreviation elfe, which aims to standardize the use of
the English language in the European Union. elfe attempts to make En-
glish easier to learn (e. g. by emphasizing the elements of English which it
shares with other European languages). There are, however, several rea-
sons (e. g. difficulties regarding pronunciation, intonation, punctuation,
vocabulary, spelling, cultural specificity) which render the idea of simply
adopting an already existing form of English for its use as lingua franca
hardly acceptable. The elfe is meant to be a kind of neutral, 'politi-
cally correct' language, which so far has not yet been precisely described
or defined and is therefore still a merely hypothetic linguistic reality, an
'object of speculation' which according to Jenkins and Seidlhofer only
exists at an 'embryonic stage in its evolution' and is 'likely to be some
kind of European-English hybrid which, as it develops, will increasingly
look to continental Europe rather than to Britain or the United States for
its norms of correctness and appropriateness' (Jenkins and Seidlhofer
2001).
In order to establish the standards which will apply to a future En-
glish as lingua franca, authentic texts used by English as lingua franca
speakers are being collected and examined in the form of corpora (i. e.
bodies of written text or transcribed speech which can serve as a basis
for linguistic analysis and description). A useful example of such a cor-
pus is the voice, the Vienna-Oxford International Corpus of English -
a structured collection of language data and the first computer-readable
corpus capturing spoken English as lingua franca interactions. voice is
currently being compiled at the Department of English at the University
of Vienna and is supported by Oxford University Press and the Austrian
Science Foundation; it includes different speech events such as group dis-
cussions, panel discussions, professional presentations, business meet-
ings, workshops, seminars, lectures, telephone conversations and others
features. It aims to record and transcribe for analysis 1 million words of
spoken elf from various professional, educational and informal settings
and thus allow for a large-scale and in-depth linguistic description of the
most common contemporary use of English. This corpus acknowledges
and recognizes the phenomenon of English as lingua franca and will cer-
tainly provide a useful tool for establishing common standards for the
use of English as a lingua franca based on its various authentic applica-
tions.
The above mentioned standards covering the use of English as lin-
gua franca, however, mostly take into account its linguistic dimensions.
What may prove problematic are interactions conducted in English as
lingua franca, as in this case reference may be made to cultural elements
which are part of the specific socio-cultural environments of the inter-
actants but alien to - or non-existing - in the Anglo-American culture,
and which still have to be conveyed by using English. While it may not
be easy to develop linguistic standards for English as a lingua franca, it
seems almost impossible to establish a common cultural basis to which
to refer in English as lingua franca interactions. This is especially the case
with aspects of culture which are as precisely defined as the legal system,
and due to their extremely sensitive nature demand an utterly precise
and non-ambiguous use of the language.
As mentioned above, in contemporary business communication En-
glish is the commonly adopted lingua franca. At the same time this
type of communication refers to a very precisely defined communication
framework represented by the legal system(s) underlying the commu-
nicative situations. In order to avoid communication problems, the prin-
ciple of the cultural embeddedness of a language, i. e. adapting the lan-
guage to the corresponding culture, has to be applied very carefully. Us-
ing the English language by consistently linking it to the Anglo-American
legal system in communicative situations, in which participants originat-
ing from cultures/legal systems belonging to continental law interact, can
cause communication problems or even communication break-downs,
as the legal systems of the participants and the legal system underlying
the lingua franca used for communication are not equivalent and thus
there is not sufficient equivalence of the linguistic signs.
Consequently, viewing the legal system as a fundamental feature of
the source and target cultures and choosing English as target language in
such situations leads to a discrepancy between the culture as translation
basis and the cultures, i. e. legal systems of the sender and/or receiver.
English as lingua franca is especially problematic as the Anglo-American
legal system, which is based predominantly on common law, differs con-
siderably from the so-called continental (or civil) law. Unfortunately, not
many dictionaries provide sufficient information to make the user aware
of these potential problems/pitfalls.
The Difference Between Continental and Common Law
In comparative law, the dichotomy civil (i. e. continental) versus com-
mon law (case-law), which is not based on written, codified legal sources,
is widely discussed.
The fundamental sources of the Anglo-American legal system are com-
mon law, equity and statute law. Common law is often described as judge-
made law, which is not based on written codes but on precedents, i. e.
decisions of judges taken in previous legal cases. Equity, on the other
hand, is a term referring to a system of rules which are applied in ad-
dition to common-law and have no equivalent in the continental legal
system. Finally, the term statute law applies to written law (e. g. the Acts
of Parliament), i. e. those legal sources which exist in written form in the
Anglo-American legal system.
The discrepancies between common and continental law are reflected
in the frequent lack of equivalence between the terms and concepts used
in the two legal systems.
The legal representative authorized to act in court, for example, who
is called Rechstanwalt in German, avvocato in Italian, odvetnik in Slovene
and has a basic role in every continental legal system, has no direct equiv-
alent in the Anglo-Saxon system, as its corresponding translation may
either be barrister (authorized to appear in a superior court) or solicitor
(who may only appear in an inferior court) in the United Kingdom, or
attorney-at-law in the usa.
Within the scope of international business communication the lack of
equivalence in the field of company law is especially relevant. The Anglo-
American company law does not distinguish between the categories of
Kapitalgesellschaften / societä di capitali / kapitalske družbe and Person-
engesellschaften / societä di persone / osebne družbe, but merely between
incorporated companies, which have the status of legal persons and un-
incorporated ones which have no legal personality.
The function of a Prokurist / procuratore commerciale / prokurist does
not exist in British and American companies and to describe it either the
source-language term or a paraphrase is used.
The terms public limited company and limited liability company can
be used relatively safely when translating the company forms Aktienge-
sellschaft/ societä per azioni / delniška družba and Gesellschaft mit besch-
ränkter Haftung / Societä a responsabilitä limitata / družba z omejeno
odgovornostjo, but there are no equivalent terms in the English legal ter-
minology for company forms such as Offene Handelsgesellschaft/societä
in nome collettivo / družba z neomejeno odgovornostjo or Kommanditge-
sellschaft/societä in accomandita / komanditna družba.
Other cases of non-equivalence derive from the fact that two opposite
governance systems are applied in public limited companies, the Anglo-
Saxon one-tier and the continental European two-tier systems. Namely,
the one-tier system only has one governing body, i. e. the board of direc-
tors, whereas in the two-tier system there are two governing bodies, i. e.
the management board (Vorstand / consiglio d'amministrazione / uprava)
and the supervisory board (Aufsichtsrat/collegio sindacale / nadzorni svet).
The terms management board and supervisory board thus do not exist in
the Anglo-American legal language and can be classified as neologisms
according to de Groot. In practice, the executive (inside) directors have
a function similar to the role of the members of the management board
in the continental system and the non-executive directors to that of the
members of the supervisory board.
The problems deriving from the discrepancy between common law
and continental law are also felt within the European Union where En-
glish is most often used as lingua franca (cf. Kj«r 1999,72). Namely, when
English is used to describe specific aspects and concepts of the European
Law or of national legal systems belonging to the continental legal fam-
ily within the eu, terms are often used which are tainted by the mean-
ing attributed to them within the Anglo-American legal system. Such
terms tainted by national law often cause problems in interpreting inter-
national or supranational legal texts (cf. de Groot 1992,283).
Conclusion
English will certainly remain the most widely used lingua franca in inter-
national business communication. According to a Eurobarometer survey
carried out in 2001,47% of the citizens of the European Union spoke En-
glish well enough to hold a casual conversation, a higher proportion than
any other language in Europe. English is also the most commonly taught
second language in Europe (Crystal 2002). The member states of the Eu-
ropean Union use a wide variety of languages and presently there are 20
different official languages. Due to the language policy of the European
Union, which promotes the importance of the languages of its member
states, other languages will certainly gain ground besides English in the
future. On the other hand, although the eu attempts to provide equal
treatment for all member state languages, this generally requires large
amounts of time and money and therefore the need for a common lan-
guage that could be used by every member to communicate with every-
one else is strongly felt. The elfe (English as a lingua franca for Europe)
project will therefore have to be developed more intensely in order to
establish feasible standards applying to this prospective common Euro-
pean language. In order to function as a proper lingua franca, elfe will
have to include so-called Euro-English terms, i. e. English translations
of European concepts that are not native to English-speaking countries.
Due to the United Kingdom's involvement in the European Union these
terms will have to be adopted by and included into the vocabulary of the
native-speakers of English as well. Accordingly, English as a lingua franca
and its terms will certainly have an impact on the native-speakers' vari-
eties of English worldwide, in that not only will new words enter their
vocabulary, but as a consequence, new concepts will be transferred into
the corresponding cultures. An example of such cultural and linguistic
interference was provided by the Prime Minister of the United Kingdom,
Tony Blair, as in his speech delivered at the European Parliament on 23
June 2005, he used the French term delocalization (i. e. companies mov-
ing operations abroad), a word that did not previously exist in English.
With the ongoing harmonization of the legal systems of the eu mem-
ber states, a sort of supranational language, i. e. legal Euro-English, is be-
ing created, which includes terms which are neologisms with respect to
the Anglo-American legal language. This language (and this will proba-
bly also be true of elfe in its early stages), however, lacks a wider cultural
dimension and is only linked to the legal and political system of the eu.
It is a somehow impoverished, deculturized language, which has little
in common with the languages of the British, American and other En-
glish speaking cultural communities. It is therefore suitable to be used as
a language of communication, but not as a language for identification.
On the other hand, while becoming acquainted with the concepts and
terms of this lingua franca, native speakers of English will be able to ef-
fectively communicate with other citizens of the eu, expand and enrich
their vocabulary and thus adopt new cultural concepts. In the long term
it is therefore to be expected that English as a common language used
for communication within the eu will contribute to creating a common
cultural basis, i. e. elements of a common European culture which will
be shared by all its speakers. This vision, however, drastically changes
the approach to language learning and teaching. English should hence
not be learned primarily with the aim of interacting with native speak-
ers but acquiring access to a wider (global) community and thus should
not be linked exclusively to Anglo-American culture. Accordingly, in the
future, language policies, as well as the goals and contents of foreign lan-
guage education will have to be fundamentally revised and an English-
as-lingua-franca dimension incorporated in textbooks, teaching mate-
rials/methods and dictionaries to raise the awareness of learners as to
this particular use of English. 'Native-likeness' will cease to be the prin-
cipal objective in teaching and using English, especially in the field of
the language used for specific purposes, where the specific characteris-
tics of the different spheres of activities (such as e. g. the legal and eco-
nomic system) will have to be taken into account. In translation science
the use of a lingua franca will have to be thoroughly analysed and de-
fined, especially with respect to the principle of cultural embeddedness
of such a language. In the case of English used as lingua franca, consis-
tently embedding the language in the English native-speakers' culture(s)
could prejudice intelligibility and hinder communication.
In the field of business and legal communication, where a particu-
lar language (e. g. English) is used as a language for specific purposes,
the parties interacting in an international environment should be aware
that, if linked consistently to the Anglo-American legal system, the En-
glish language offers no suitable equivalent for many terms and notions
existing in legal systems belonging to the so-called continental legal fam-
ily and that often, when referring to concepts from continental law, neol-
ogisms (such as many Euro-English terms) should be used. The discrep-
ancy between common and continental law requires the parties involved
to be acquainted with and consistently observe the legal systems underly-
ing the business relation. The principle of the socio-cultural embedded-
ness of a language will thus have to be applied very carefully, while taking
into account the potential problems deriving from the use of English as
lingua franca.
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Home Education: Globalization Otherwise?
Christian W. Beck
Home Education seems to be a successful way to educate. Academic
results and socialization processes in home education are promising.
Already home education is global, home educators everywhere educate
their children themselves without schools. They develop new forms of
local and international co-operation. Is home education an impulse to
a renewing of modern education? Is home education globalization oth-
erwise?
Key Words: home education, globalization, educational politics,
pedagogy
jEL Classification: 121,128
Introduction
Education is expanding through formal schooling and more people are
gaining new possibilities. At the same time throughout the modern
world we observe contours of new school problems. Assessments (oecd
2004), show that quality of education in the modern school is under
pressure. Schools also have new problems with violence and bullying.
In the middle of school-expanding some leave the lowest and most es-
tablished level of the educational system, primary and lower secondary
school, and give their children education themselves at home. Home ed-
ucation is developing in most modern countries. At its strongest, home
education is practised in leading modern countries like the usa and
Great Britain (Bauman 2002; Rothermal 2003). Is home education coun-
terworking or renewing future education and schools? No matter what
the answer to this question is, it is necessary to discuss home education
in relation to ongoing globalization.
Globalization and Modern Schooling
There is an economical and technological development towards a more
united world, which cannot be reversed. The ideology that follows this
kind of processes is called globalism. International capitalism operates
on world wide markets. International organisations like eu, un, The
Christian W. Beck is a Professor at the Institute of Educational
Research, University of Oslo, Norway.
World Bank etc, play a dual part. Such institutions administer global pro-
cesses, but also they try to oppose them or balance them. If these organi-
sations in cooperation with national states are not able to do the latter, it
could lead to a capitalistic world control with a consequent economical
rationality, where the national state, the welfare state and social justice
are breaking up, and where individualism dominates. This is called glob-
alism (U. Beck 2001).
Against this Beck puts globality, where global processes are led into
a different direction, where human rights, cultural differences, social
unity and local distinctive character are respected and kept alive. He then
speaks about the world community as a multiplicity without unity (U.
Beck 2001).
The processes of globalization are grounded on development of an
economy of knowledge, which brings education and school into the core
of such processes. One has to emphasize both individual learning pro-
cesses and social cooperation. A number of people hold that school must
educate human beings to become competent participants in a globalised
world. This is the right wing of global educational politics. The left side
is critical of such aims and wants schools as a counterweight to global
capitalism. They want more national controlled schools, which includes
everyone and emphasizes social competence and equality.
It is astonishing, how people in all countries get more or less the same
understanding of school. This is also a part of globalisation. Doubtless,
both political right and left find more schooling positive. One disagrees
on the content in school. However everyone wants more education, and
more education means to them, more school.
Modern schools are expanding in the form of large scale education, the
like of which the world has never seen. Standardization and bureaucrati-
sation will be necessary in order to carry through such an education for
all. International educational management is already a power in higher
education. In primary- and secondary education the same development
can be observed (Olssen 2004).
In postmodern societies the concept of capital is given a broader
meaning (Luzon 2002). Social capital in this connection includes ideas
from theories of human capital (Schulze 1961), welfare-state thinking, J.
S. Coleman's theory on social capital as informal social networks (1988).
P. Bourdieu's ideas of both social- and cultural capital extend the concept
of capital further (Bourdieu 1986).
Social and cultural capital may become an ideological and economic
link between the left and the right of global educational politics. Knowl-
edge will be transformed among social, economic and cultural spheres
so that actors will achieve an ambiguous surplus value, connected to de-
velopment, transferring- and use of knowledge. Education will become
the new ambiguous capital's important linking area.
Do we see the contours of an international united and centralized gov-
erning system of education where knowledge, equality as well as social
competence are joined in an extended economic idea of utility, under-
stood as capital, where the possibility of capital gain will be guiding so-
cieties and each person's involvement in school? The outcome could be
more control in education and less emphasis on freedom and criticism.
Modern schooling is grounded on pedagogy digging deep in post
modern identity. We can observe a new pedagogic and methodological
orientation, characterized both by more objectivism and more subjec-
tivism.
Objectivism. With increased international mobility schools and ped-
agogic strategies must be comparable and as similar and governable as
possible. This forces the global education towards bureaucracy and con-
formity, in a direction of technocracy. Programmes, plans, tests, method
evaluation and documentation with the use of advanced computer tech-
nology are necessary for a world wide administration and control of
schools.
The struggle for equality and demand for competence will directly, but
also indirectly through compensatory pedagogy and a universal system
of special education, lead to internationalization and standardization of
diagnosis, educational programs and diplomas. One needs to use objec-
tive facts and measurement more than ever. Such a development will be
the frame and the structure of modern schooling.
Subjectivism. The contents and the processes in modern schools are
developing in the direction of a social competence, communicative skills
and production of identity. In postmodern societies the concept of iden-
tity is given political and pedagogical meaning (Giddens 1991), which can
be expressed as educational subjectivism with the focus on:
•	A relative conception of knowledge with emphasis on subjective ex-
perience of totality.
•	Focus not only on knowledge but on social conditions of teaching
and learning and processes, rather than on objective factual knowl-
edge.
In such an ideology subjectivity is expressed as humanism. Objec-
tivism and subjectivism are tangled into a new pedagogy which forms
an ideological fundament for modern schools. Objective factual knowl-
edge must give way for the subjective- and social- processes of shaping,
which can be observed in methodology for measuring pupils' learning
styles in schools. Then identity and social processes are coded into mod-
ern school's demand for objective management, evaluation and control.
This may end up in ignoring personal freedom and lead to alienation in
education.
Two Different Home Education Countries
Home educators do the same everywhere. They take responsibility for
their children's education rather than sending them to school. Home ed-
ucation is legal education otherwise than school participation in most
modern countries (Baumann 2002; Petrie 1995).
Home educators break with the school institution. Home education
goes on in the middle of real life, in family and in society. The home
educators concentrate on learning theoretical and practical knowledge.
The socializing process appears more naturally in this case, out of the
home education's integration in, and openness towards the actual social
life, outside school.
Many home educators use Internet to a great extent. Across borders
there is wide contact, and networks are established both electronically
and more directly among home educators. It is possible for home educa-
tors to join electronic 'schools' or educational centres where they can get
admission to educational programmes/materials, both with and without
payment.
In the usa modern home education started in the late 1960s. There
are today more than one million home educators in the usa (Bauman
2002; Princiotta, Bielick, and Chapman 2006). Norway is a small country.
Home education appeared here much later, at the beginning of the 1990s.
There are few home educators in Norway, both absolutely and relatively
in comparison with the usa. The home educating population in Norway
is approximately 400 (Beck 2003). Home education has a very different
status in these two countries. It is of interest to compare them:
A comparison of social background for a sample of 128 home educated
pupils with corresponding information for the Norwegian population is
made (Beck 2003; see table 1).
Home educating families in the Norwegian survey have less education
table 1 Comparison between the survey sample and the Norwegian population*
Circumstances	The sample	The population
The household's income (nkr)	271,250	517,800
Living in urban areas	25.2%	77.3%
Living with both father and mother	88%	77%
Number of brothers and sisters	3.6	1.7
Mother's education		
Some or completed secondary school	49.6%	55.2%
Only compulsory school / comprehensive school	17.1%	8.0%
Father's education		
Some or completed secondary school	53.6%	55.8%
Only compulsory school / comprehensive school	12.7%	8.8%
* The data for the population are from Statistisk Sentralbyra (The National Bureau of
Statistics). Income is for the population take-home pay for households with children
from 9-16 in 2000. The income of the selection is also take-home pay. The educational
data from the population is for the group from 30 to 39 years of age in 2000.
than the corresponding group in the population. One should especially
notice that there is a relatively larger group of home educating mothers
with only compulsory school qualifications.
The income of the home educators lies at a lower midlevel. About 60%
of the home educating households earn from 20,000-40,000 euro a year.
They have an average income less than half of what the corresponding
groups in the population got.
Typical for Norwegian home educators is that they live out in the
countryside. Home educating families often have a number of children.
Home educated children have an average of 3.6 brothers and sisters.
However, there is a great variety. 40% of the home educated children
have two brothers and sisters or less. Home educated children to some
extent live more often together with both parents, than is the case in the
population as a whole (Beck 2003).
In a national survey about home education in the usa home educa-
tion families are compared with data from the school-population fam-
ilies in the usa, (Princiotta, Bielick, and Chapman 2006). The greatest
difference between Norwegian and American is that American home
educating families earn somewhat above the average of the American
school population families and that they have some a somewhat higher
educational level than the average. In the usa the home educators are
most numerous outside the big towns and suburbs dominated by a white
population, and less numerous in central areas in big towns (Princiotta,
Bielick, and Chapman 2006).
About 50% of Norwegian home educators start home education on
the basis of motives of principle, either pedagogical or religious. The
other 50% home educate for reasons connected to certain events in
school, for example bullying. If they continue home education for a
long time, they get a more principled view of their own home educa-
tion (Beck 2003). In England different kinds of pedagogic motives are
most common (Rothermal 2003). Many parents do home education on
a broader basis of values than purely education
The home educating teacher is the mother. In a few cases the father
takes part in the teaching, then mostly in mathematics and practical sub-
jects. A number of home educators give their children practical tasks and
practical project work in addition to teaching them basic subjects. The
most common teaching form is an effective theoretical teaching from the
parents, often in combination with the pupils working on the subjects by
themselves, solving problems and cooperating with brothers and sisters
or sometimes with other home educated children. The majority of Nor-
wegian home educators are generally satisfied with their home educa-
tion. The parents are fairly satisfied with the progress their pupils make
in the core subjects - mathematics, reading and writing (Beck 2003).
Research from the usa throughout a number of years shows that
home educated children get high scores on final tests (Ray 1997; Rudner
1999; Bauman 2002). The average home educated pupil scores way above
the average for school pupils. These results must be corrected because of
the differences between the home educating population and the national
school population. The home educating parents in the usa have a some-
what higher education and income than the parents of the school pupils,
and there is a greater part of white middle class families with both parents
in the household. In spite of such corrections, the conclusion that home
educated children are doing very well at exams is maintained (Bauman
2002).
It is difficult to obtain an objective and justifiable answer to how well
Norwegian home educated pupils are doing on their exams. Home ed-
ucated pupils in Norway do not have an obvious right by law to get a
certificate with marks, when they finish compulsory education as home
educated pupils. Such a right is a matter of conflict in Norway. A num-
ber of home educators do not wish to have marks on the certificate. The
right to be admitted to further education does not depend on a certificate
from compulsory education containing marks. Experience from several
single cases over several years does indeed give the impression that we
in Norway have the same situation as in the usa. Home educated pupils
often get good marks on tests and exams.
Home Education: A Critic of Modern Schooling
Home education contributes to the debate on educational politics with
new ideas and perspectives. Home education gives a new basis on which
to evaluate educational thinking, which can be formulated on three main
levels.
Level 1. This is a pedagogical and philosophical basis for pedagogic
critics. The concepts of unschooling and natural learning are used by a
number of home educators as a way of expressing the specific pedagog-
ical and educational aims of home education (Fredriksen 2002; Gatto
1992; Holt 1968). These ideas have parallels within the school-based con-
cepts of pupil-centered learning and reform pedagogy (0sterud 2004).
Home education puts more emphasis on the pupil's learning than in-
struction per se, and stress is put on the importance of an education
which is based on practical activities and work.
Level 2. This is home education as criticism of the school-institution.
Parents break ties with the school as an institution. And take responsi-
bility for their child's education. Some families make connections with
other home educators and various other groups and individuals. Home
education thus serves as the focal point of new networks and their struc-
tures. Here one can observe clear ties to deschooling tendencies of the
1970s (Illich 1972), but also to the contemporary concept of situated
learning (Lave and Wenger 1999).
The connection between situated learning, informal learning and
home education are dealt with (Thomas 2002; Barson 2004). A mu-
tual principle here is the view that learning and education are socializ-
ing processes for participation in society, and that these supersede and
transcend school attendance. Such processes must occur where social
activity is actually taking place. Therefore, education must often break
loose from the constraints of a closed educational institution and be free
to move about in the wider society.
Level 3. This involves educational politics on a general level. Home ed-
ucation provides a critique of our contemporary educational politics in
which there is an increasing focus on schools and governmental control.
In its most extreme form, this is formulated as resistance to the statism
of our time (Gabb 2004). Here one is protesting against government in-
tervention and state-sponsored socialization strategies. Such critique is
especially aimed at the public schools as these represent the key institu-
tion behind statism. Public schools are viewed as a threat to individuality,
parental rights, the family and to quality in education.
These three levels are representative of dissimilar and sometimes con-
tradictory aspects of the critique of educational politics, which are at the
core of home education.
On the other hand, there also exists a socio-educational basis for cri-
tique of the practice of home education. This critique is most clearly ar-
ticulated in the usa where home education is most widely practised. In
general terms, the criticism consists of the view of home education as a
threat to social unity, both in the context of the schools and in the wider
society as a whole (Lubienski 2000; Apple 2000).
Lubienski views education as a zero-sum game. If resources are dedi-
cated to home education, there are negative consequences in the public
schools in terms of material and human resources.
Apple brings this critique up to a socio-ideological level. He sees
home educators as playing key roles in populist, neo-liberal and neo-
conservative movements, which now have considerable influence in the
usa. He points out that these groups consider themselves as being state-
less because of the secular humanism, which is now so prevalent in pub-
lic schools. They are involved in a serious conflict of values due to the
prevailing educational ideology of the public schools.
Apple views the home educators as an important group within the
rightist political base, with an emphasis on individualism, fundamental-
ism and freedom. He considers these as cultural necessities for globalised
capitalism. Apple places the government and public schools on the op-
posite side of this scenario as the protectors of equality and community.
Over the course of time, home education in the us has mostly become
a movement involving white, Christian members of the middle-class. Al-
though recent developments have modified the situation somewhat, this
still holds true in general terms (Bauman 2002).
Conclusion
Home educators in most countries generally represent a form of protest
against public schools as an institution, against pedagogical methods,
against the degradation of family values, and they are fighting for indi-
vidual and local freedom. This emphasizes the populist aspects of home
education. Populist being understood as a movement with its origins
among the common folk and ultimately forming a sub-culture in the
modern sense of the term, which in both Norway and in the usa can
be traced back to more traditional sub-cultures and their evolution from
movements in rural areas.
Home education in Norway compared with the usa is a small-scale
phenomenon, which is still in its start phase. Additionally, the politi-
cal situation as concerns education in Norway is quite different. Here
criticism of educational politics is almost by necessity a critique of both
government and market since these chief institutions are so closely inter-
twined in forming educational politics, in a way that is unlike the situa-
tion in the usa.
Home education in Norway and also in other European countries, like
England (Rothermal 2003) and Sweden, appears in some degree to have
different social and political characteristics than in the usa. This is not
only expressed through recruitment to home education from another
social class. In Norway, we also observe ideological differences, such as a
reference by home educators to the leftist, educational ideologists from
the 1970s (Freire 1971) in a project in local history (Beck 2000,38).
Norwegian home education clearly has a firm foundation both in re-
ligious motives and in local-society based political ideology from the
1970s. In concrete terms, this type of communitarian, ideological origins
is visible when some local communities implement home education in
an effort to keep local schools that have been closed. One observes simi-
lar indicators, in another form, in terms of the tight, internal integration
we find in new home education sub-cultures.
Home educators may be examples of what the sociologist Z. Baumann
calls our time's missed community, collectivism and community in an
individual world. The missing community is those communities which
are necessary to handle issues which cannot be solved individually, where
there is concern and responsibility for all people's right to be a human
being and the right to act according to this right (Baumann 2001). We are
here speaking about the renewal of informal, communities, civil society
and populistic values.
Modern education is forced towards a greater degree of formal institu-
tionalization. This pressure is being made upon the schools by both the
market and the national state. One resulting problem appears to be that
education has a shortage of individual freedom and a firm foundation
among the people. One might say that converting this to a surplus is the
political ideal of home education.
When modern home education came to Norway (1991-1994) it aroused
conflicts and debates. Home education has given impulses to arguments
for personalized education and populistic perspectives in education. In
Canada there is a development in the direction of home education as a
more normalized form of education, and home education has effect on a
more personalized education in school (Davies and Aurini 2003). Maybe
we now will see such a trend in Europe and other modern countries?
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Global Education in Manufacturing:
Basic Framework, Industrial Survey
and Possible Implementation
Asbj0rn Rolstadas
Slavko Dolinšek
Many new challenges and opportunities have arisen for Slovenia since
May 2004 when it became a full member of the eu. On the one hand
we have some successful economic players who can definitely gain from
new opportunities, on the other hand some structural changes still have
to be accomplished. One of the most demanding tasks is related to
higher education and in particular to harmonization of eu and global
educational systems. The paper presents the results of the international
framework for a Master degree curriculum in manufacturing strategy
and an example of the integration of competence in technology and
business. A good example of meeting Bologna goals is to establish a
system of easily recognisable and comparable educational degrees and
to accelerate the employment of eu citizens as well as the competitive-
ness of the European higher educational system.
Key Words: manufacturing, education, training, industrial organisation
jel Classification: L60,121, M53
Introduction
A few years ago Ridderstrale and Nordström published their best-seller
Funky Business (2000) where they said:
With the introduction of the plantation we moved from the
hunting and gathering society into the agricultural one, and,
with the coming of electricity, we entered the industrial era.
Some call our world the knowledge society and others the
brain one. The only certain thing is that the critical skills and
answers of tomorrow will not be those of today. The future
cannot be predicted - it has to be created. Either you see things
happen or you make them happen.
DrAsbj0rn Rolstadäs is a Professor at the Department of Production
and Quality Engineering, Norwegian University
of Science and Technology.
Dr Slavko Dolinšek is an Associate Professor at the Faculty
of Management Koper, University of Primorska, Slovenia.
A similar observation considering the recent development within the
industry has been written by Moseng and Rolstadas (2002):
The industry has over the last decade undergone a significant
change. It is no longer home-based; it operates in a global mar-
ket. Digital business has become a strategy to survive. The ex-
tended enterprise is being implemented. Parts are made where
conditions are most favourable. Non-core activities are out-
sourced. These service companies then become part of the
supply chain that also spans suppliers and distributors. They
all comprise an international co-operative network to provide
manufactured goods and support services for a world market
just in time, at low prices and with quality surpassing cus-
tomer's expectations.
And also (Rolstadas 2004):
In order to meet the challenge of the future way of business
operation for the manufacturing industry, a new type of cur-
riculum in manufacturing strategy is needed. For this reason
the ims project Global Education in Manufacturing (gem)
has been launched. The main objective of gem is to develop a
new curriculum covering both manufacturing technology and
manufacturing business - a Master degree in Manufacturing
Strategy.
At the first gem information day within the annual professional con-
ference of the former School of Management Koper, this new approach of
education in manufacturing was presented (Dolinšek and Prodan 2003).
Furthermore the tasks of smk as a Slovenian partner, the products, ex-
pected benefits, and the first experiences obtained in the gem project
were discussed. However one of the main questions was whether it is
possible that something developed within the gem approach can also
be successfully applied to the development of the education curricula in
Slovenia. In relation to such a question Dolinšek (2002) concluded that:
The very first question to which we need to find an answer
in relation to such global education activities should certainly
be: is such a global education system suitable for the Slovenian
specialties with respect to the recent form of the educational
system (five years of engineering study and three years of fur-
ther scientific Master's degree study), and is this approach or
are these curricula also appropriate for the specific needs of the
Slovenian manufacturing industry?
Thinking about such a dilemma and about the necessary skills and
knowledge of Slovenian engineers in relation to the gem approach
Dolinšek (2003) also stated that:
In respect of the other nas (Nearly Associated States) Slovenia
has a relatively highly developed industry, which also largely
contributes to the whole export from the country. To a large
extent the main competitive advantage of this industry is based
on professional skills and knowledge of engineers and the ex-
tensive investment of companies in the education of the work-
force. We can establish that in that sense the needs for skills
and knowledge of many Slovenian manufacturing companies
are far ahead from what the academic institutions can provide.
Therefore links and benefits, such as those provided through
the gem project, can be an excellent support for Slovenian
educational institutions on their way to becoming part of the
global education system.
On the basis of a response from the Slovenian industry (these tasks
were completed within the gem project) we also published the results
(Dolinšek and Prodan 2004) and concluded that:
One of the most important demands in developing the new
curriculum is, therefore, firstly to define and understand the
needs of the manufacturing industry for training and educa-
tion on a global basis. The approach presented forms part of
the international gem project (Global Education in Manufac-
turing), a project in which Slovenia is also involved as a part-
ner, and some experiences obtained in the gem project and
research into the needs in the education of the manufacturing
strategies are also presented.
At the gem workshop organized within the international ims Forum
2004, where we presented our efforts and results in introducing gem
curricula into the Slovenian educational practice, it was also stated that
(Dolinšek, Starcic, and Kopac 2004):
Many new challenges will arise for Slovenia as a full member
of the eu from May 2004, and also many opportunities. On
the one hand we have some successful economic players who
can definitely gain from new opportunities, but on the other
hand some structural changes still have to be accomplished.
Among them, one of the most demanding tasks is related to the
higher educational system which has to be harmonized with
the eu and global educational systems. The paper discusses the
above mentioned problems and puts particular emphasis on
the needs of the Slovenian industry, particularly those related
to the competencies, as a contrast to the discipline-based edu-
cation practice mainly offered by Slovenian universities. Links
and benefits, such as those provided through the gem project,
can be an excellent support for Slovenian educational institu-
tions on their way to becoming part of the global education
system.
The actions that followed were focused on the implementation of
gem curricula in relation to the changes of educational programmes due
to the Bologna declaration and the Slovenian law on higher education
(Slovenian gem industrial workshop), the last achievements of the gem
project, the possibilities of introducing gem results into the Slovenian
universities, and also on the gem industrial training model.
Competences Needed in Modern Manufacturing
In the most general sense, manufacturing is central to the existence or
survival of a business, and the manufacturing industry is a key indus-
try. The activity of manufacturing is much more than machining metals
or etching wafers: a manufacturing enterprise is an extended social en-
terprise. Within the manufacturing industry, challenging activities influ-
encing competitiveness are therefore connected to radical new ways of
operating (digital business) and to new products (extended products).
Digital business involves an advanced use of the information and com-
munication technology in every link of the supply chain to simultane-
ously reduce costs and lead times and to increase profit. Interesting prob-
lems are connected to e-commerce within the manufacturing systems
design and production management, and e-commerce within the design
and product development. In this context, manufacturing should not be
understood in the traditional sense but as a new way of working as a
digital business with extended products. Extended products mean tak-
ing a lifetime product support perspective and thus including all services
to support the product in addition to the manufacturing of the product
itself.
This will require that intelligence is embedded in the product. It in-
cludes both tangible and intangible products and services. The main
challenge is within the support services for the product. Digital business
significantly accelerates the flow of information within the extended en-
terprise. The creation of extended products through digital business is
illustrated in figure 1.
In manufacturing companies the required knowledge, skills and en-
gineering competence are provided by mechanical engineers, industrial
engineers and electrical, electronic and computer engineers. Their ba-
sic education is discipline oriented, focused on mechanics, operation re-
search, cybernetics, electronics, etc. To a limited extent this education
reflects the real needs of the industry that faces problems of an integra-
tive nature across the traditional disciplines such as:
•	working with digital tools for communication;
•	working in a multicultural environment;
•	working in interdisciplinary, multi-skill teams;
•	sharing of tasks on a global and around-the-clock basis;
•	working in a virtual environment.
The existing curricula for Masters in manufacturing are directed more
towards manufacturing engineers rather than the manufacturing strat-
egy. They have often tended to emphasize theory over the process and
have failed to meet the needs of the manufacturing enterprises operating
as future extended and virtual enterprises.
A curriculum in Manufacturing Strategy will be designed for a Masters
programme. It will be based on traditional engineering bachelor degrees.
However, it will deviate from the traditional education by focusing on to-
morrow's industrial situation, requiring enterprise architects and prod-
ucts architects. The future education in Manufacturing Strategy must
build the industrial competence by providing a learning atmosphere in
the company (a co-operation between academia and industry).
The competence areas have been divided into three main areas (for a
detailed overview of all topics see Dolinšek and Prodan 2003):
•	technological competence (Product related topics, Production re-
lated topics, Business operation related topics),
•	humanistic competence (Individual related topics, Company re-
lated topics),
a
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figure i The concept of digital business and extended products ( gem-nas 2002)
• business competence (Business and economic related topics, Man-
agement related topics).
The companies were asked to rate on scale 1-5 the importance of the
topics today, and in five years time. They were also asked about the needs
for future education and training.
survey methodology
The survey was undertaken in the manufacturing industry worldwide in
order to get the industry point of view on education for the develop-
ment of an international curriculum. The questionnaire was developed
and conducted by sintef Industrial Management, Norway. The con-
struction of the questionnaire was focused on measuring current needs
and practices in the industry as well as getting an idea about future de-
velopment.
The questionnaire was divided into two parts; the first part covered
the general demographical information to be used as classification vari-
ables for the analysis, and the second part covered the competence areas.
Within each competence area the companies were asked to rate the im-
portance of different pre-selected topics for their job performance today,
within five years, and also rate the need for further education and train-
ing (scale 1-5, from no importance to high importance).
The survey was accessible on the internet to a contact person in each
country. In addition a paper version was sent to the contact persons.
The questionnaire was in some cases translated in order to meet lan-
guage problems in different countries. There were three different ways
of sending the questionnaire to the companies. If the internet-version
was used, the contact person forwarded the mail containing the link to
the questionnaire to the companies after entering contact information.
After the companies had entered their information into the scheme the
results were transferred directly to the database. The two other ways of
data collection were to send the paper copy by mail to the companies or
to interview persons at the companies either by personal interviews or by
telephone. In both cases the filled in questionnaires were handled by the
national contact person, who entered the information into the electronic
scheme and sent them directly to the database.
Research was conducted from September to December 2002, and 21
countries responded to the questionnaire (17 from eu, usa, Australia,
Japan and Korea). Within the sample of 556 companies, 20 respondents
were from Slovenia. The companies were divided into three groups refer-
table 1 Importance of different competences (%)
	Slovenian research	gem research
Management-related topics	14.65	14.47
Business & Economic-related topics	13.55	14.11
Company-related topics	14.65	14.22
Individual-related topics	14.65	13.83
Business operation-related topics	13.55	14.11
Production-related topics	13.92	14.50
Product-related topics	15.02	14-75
ring to size in number of employees; with group 1 having 1-250 employ-
ees, group 2 having 251-1000 employees and group 3 consisting of com-
panies with more than 1000 employees. All statistical analysis was per-
formed using the program spss, version 11; descriptive statistical analy-
ses were applied and correlation analysis was based on relation to region
and company size.
survey results
Survey results show that the industry considered all competences almost
equally important (see table 1). The most important competences are
product related (in gem and also in the Slovenian research).
A comparison of results obtained in all ims regions and in Slovenian
companies is shown in table 2. We can see that there are some similarities
between the results.
If we analyse which competences are important today and try to find
out which will be important within 5 years we can conclude that:
•	topics which are important today also need education in the future;
•	less important topics today (remanufacturing of products, simula-
tion in production, sustainable manufacturing, simulation in busi-
ness operations, multicultural skills, e-learning...) seem to be more
important in the future;
•	all proposed topics need a focus in a new curriculum.
The gem framework identifies seven core knowledge areas within any
new manufacturing curriculum all of which reflect the current and fu-
ture needs of the manufacturing industry. Table 3 shows an overview of
the knowledge areas.
A skeletal framework is illustrated in figure 2. The framework has a
Global Education in Manufacturing 269
table 2 Today's importance of competences in industry (mean values)
Slovenian research1 gem research2
Management-related topics
Finance
Innovation management
Change management
Management information
Benchmarking/Performance
Productivity improvement
Entrepreneurship
Strategic Planning
Health, Environment
Legal aspects and Intellectual
Business & Economic-related topics
Marketing & Sales
E-commerce
Procurement & Contract management
Cost engineering/Cost management
Branding
Company-related topics
Organizational aspects	3.7	3.8
Knowledge management	3.4	3.7
E-learning	2.8	3.2
Interdisciplinary team (building)	3.3	3.4
Multicultural strategy	2.8	3.2
Corporate social responsibility	3.0	3.5
Company culture	3.3	3.6
Company image and branding	3.8	3.9
Continued on the next page
number of elements. Students will enter a particular programme with a
bachelor's degree and may or may not be induced into the programme or
university through a series of induction, bridging or capstone courses or
workshops. The details of these activities are solely the responsibility of
the university concerned. A number of courses will then be available to
students. Universities do not offer courses in advance. On the contrary,
3.9	3.6
3.3	3.7
3.8	3.6
4.0	3.6
3.7	3.5
3.9	4.0
3.3	3.4
4.1	3.8
3.9	3.7
3.4	3.6
4.2
2.1
4.1
4.2
3.6
3.8
3.0
3.7
3.9
3.7
table 2 (continued)
Slovenian research1 gem research2
Individual-related topics
Creativity	4.0	4.0
Interpersonal communication skills	3.8	4.2
Multicultural skills	2.9	3.4
Teamwork capabilities	3.9	4.3
Motivation	4.0	4.2
Business operation-related topics
Enterprise modelling	2.7	3.3
Extended enterprise design	2.9	3.2
Extended enterprise operation	3.1	3.1
E-work	2.7	3.2
Project management	3.5	3.9
Logistics and Supply chain management	4.1	3.6
Simulation in business operation	2.5	3.0
End-of-life management	2.4	3.2
Quality management	4.1	4.2
Production-related topics
Intelligent manufacturing	2.5	3.5
Manufacturing technology	4.0	4.1
Material flow	3.5	3.8
Manufacturing systems	3.6	3.8
Simulation in production	2.5	3.3
Cleaner production	3.3	3.4
Sustainable manufacturing	2.8	3.3
Product-related topics
Product development in general	4.1	4.0
Extended product development	3.7	3.6
Simulation in product development	2.5	3.5
Clean products	3.4	3.3
Remanufacturable products	1.6	3.0
1. N = 20 2. N = 556 Source: Dolinšek and Prodan 2004.
they will develop courses on the basis of their core competencies on cam-
pus. However, the gem framework will be available to help educators in
identifying and specifying courses of interest.
table 3 gem knowledge areas (Rolstadas 2004)
Knowledge area
Description
a Development of
extended products
b Digital business
along the supply
chain
c End of life plan-
ning and operation
d Business operation
and competitive
strategy
e Intelligent manu-
facturing processes
F Intelligent manu-
facturing systems
design
g Enterprise and
product modelling
and simulation
The development of a combination of a physical product and
associated services/enhancements that improve marketability.
Information on how a business can use e-commerce and re-
lated technologies and processes to develop, expand or en-
hance its business activities along the facilities and functions
involved in producing and delivering a product or service.
Techniques on how to develop methodologies and tools to
support the end-of-life routing/processing decision based on
economic, environmental and societal criteria.
Explanation of how organizations function and interact with
competitors and their market place, and deliver performance
over time.
Elaboration of techniques applicable for handling complex
production working in an uncertain, changing environment,
with special emphasis on artificial intelligence and machine
learning approaches.
Tools on how to model the skills and knowledge of manufac-
turing experts so that intelligent equipment and machines can
produce products with little or no human intervention.
Information on how to develop and use computational repre-
sentations of the structure, activities, processes, information,
resources, people, behaviour, goals and constraints.
Industrial Training
The gem curriculum is developed for a Masters degree to be delivered at
universities. To implement this, the gem Alliance has been formed.
In addition, gem Europe has the ambition to deliver appropriate
training to people working in industry. Such students will, however,
differ from campus students:
•	the student will pursue his/her studies while working;
•	students can only be away from work for short periods, normally
not more than one week at a time;
•	training will have to be delivered at the place and at a time the stu-
dent decides;
•	the student will not directly select an extensive programme, but
would rather build a training from smaller components;
•	the company of the student may be supporting such training both
financially and morally.
GEM
knowledge
'area'
GEM 'course'
H—
GEM
'subjects'
or 'units'
GEM Graduate Programme (leading to'Masters Degree and IMS accreditation)
Q Approved courses Q Approved and available courses I I Other courses
figure 2 The gem framework skeleton (Rolstadäs 2004)
These differences create a need for a different learning approach:
•	the training has to be modular so that the student can 'take small
steps' towards a full training;
•	the student will have access to real life problems and examples from
own company;
•	training will have to be based on blended learning.
Blended learning is an approach that has proven successful in other
cases. This means that the students meet as a class in plenary sessions
for a limited number of times, and that they work individually or in
small groups by learning over the internet using a learning portal (vir-
tual sessions). Learning over the internet has been tested through the
gem demonstrator which gave a positive feedback on the approach. An
Bachelor's Degree
important issue, though, is an interactive supervision with a moderator
or a teacher. This has proved to be one of the most critical success factors
in e-learning. Unfortunately, it is a factor that is overlooked in many of
existing e-learning offers in the market where the focus is often on the
portal's learning management system.
It is suggested that gem Europe adopts a blended learning approach
as follows:
•	two plenary sessions; one at the beginning and one at the end;
•	a number of virtual sessions in between; each session to be carried
out within a given time window;
•	plenary sessions to provide learning through the interaction be-
tween students and by an extensive use of industrial experts;
•	virtual sessions to include various activities such as readings, video
lectures, slide-shows, assignments and tests;
•	optional project assignments going over the whole learning period,
to be executed in small groups and to be based on real life problems
in the students' companies.
a strategy for industrial training
For the gem Europe partners a possible strategy for implementing in-
dustrial training could be based on the following items:
•	interested partners will form an, alliance or some other form of
partnership, to be regulated through a memorandum of under-
standing or an agreement;
•	the partners operate a common training programme so that learn-
ing objectives and skills attained are the same across all partners;
•	training to be offered at two levels:
1.	engineer update level and
2.	executive level;
•	training to be offered on an annual basis;
•	exchange of students, courses and teachers.
What follows is a brief introduction to an implementation model for
each of the two levels.
training at the engineer update level
Training at an engineer update level could be named gem Manufactur-
ing International Update. A possible delivery model is shown in figure 3.
It is assumed that similar programmes following the same model with
the same objectives are offered annually by each partner in their own
country. The schedule should be synchronized in order to allow a stu-
dent exchange.
Each of the two plenary sessions is offered by each participating part-
ner. Lectures may be in the local language. The first will focus on knowl-
edge area b and the second will be devoted to presentation and discus-
sion of the project assignments. Students may be exchanged, i. e. a single
student may choose to follow a plenary in a country different from the
host university.
The student will have to select four virtual sessions. Each partner will
normally offer at least one virtual module of 2 ects. There may be
several modules in each knowledge area, allowing the student to select
which one to follow. However, at the end all knowledge areas will have to
be covered to obtain a certificate.
Each partner delivering a virtual module will be responsible for han-
dling all students that follow this module.
The student is enrolled at one university (Host University). Credits
earned at other partnering universities will have to be acknowledged by
the host university that will issue the final certificate upon completion.
The student should be able to take single modules and gradually build
up a full curriculum for the certificate. There will be separate course fees
for each of the plenary and virtual modules as well as the project as-
signment. These are payable to the host university which in turn will
reimburse the other partners depending on which modules the student
follows. There will be an administrative overhead for the host university.
training at the executive level
Training at the executive level could be named gem Manufacturing Ex-
ecutive International Forum. A possible delivery model is shown in fig-
ure 4. There will be one fixed programme with fixed locations and a vir-
tual session per year. Locations will rotate amongst the partners. The
whole training is delivered in English.
Both plenary sessions will focus on knowledge area d. The education
will be highly interactive, drawing upon international experts from the
manufacturing industry and with the universities in a facilitating role.
The student will follow all four virtual sessions. Each session will be
offered by one of the partners. The training in virtual sessions will follow
the same approach as the engineer update level.
Plenary session
2 ECTS
Each partner gives
same content in
own language
at different
locations
Virtual sessions
4x2 ECTS
One partner responsible for one module.
Students follow all sessions in sequence.
Each session may offer electives.
Plenary session
2 ECTS
Each partner gives
same content in
own language
at different
locations
P1
Knowledge
area B
Academic
tutors
Industrial
guest
lectures
V1	Knowledge area	Readings, videos,
	A	assignments, tests
V2	Knowledge area	Readings, videos,
	C	assignments, tests
V3	Knowledge area	Readings, videos,
	D	assignments, tests
V4	Knowledge areas	Readings, videos,
	E, F, G	assignments, tests
Project assignment
,_ 5 days ,	4x3 weeks (with a 1-week intermission) ^ i 5 days ,
_5.5 months_
1 ECTS = 20-25 work hours
Fi GURE 3 Model for training at the engineer update level
The student is enrolled at one university (Host University). Credits
earned at other partnering universities will have to be acknowledged by
the host university that will issue the final certificate upon completion.
The student should be able to take single modules and gradually build
up a full curriculum for the certificate. There will be separate course fees
for each of the plenary and virtual modules. These are payable to the host
university which in turn will reimburse the other partners. There will be
an administrative overhead for the host university.
Conclusions
The main objectives of gem were to define and understand the needs
of the manufacturing industry for training and education in manufac-
turing strategy on a global basis to comply with the concept of digital
business, extended products and entrepreneurship. On the basis of the
Plenary session
2 ECTS
Virtual sessions
4x2 ECTS
Plenary session
2 ECTS
Executed at one
location, which
circulates between
partners annualy
5 days
One partner responsible for one module.
Students follow all modules in sequence.
4x3 weeks (with a 1-week intermission)
5.5 months
Executed at one
location, which
circulates between
partners annualy
P1		V1	Knowledge area	Readings, videos,
Knowledge			A	assignments, tests
area D				
Interactive group work		V2	Knowledge area C	Readings, videos, assignments, tests
				
Industrial experts		V3	Knowledge area D	Readings, videos, assignments, tests
Academic				
facilitators		V4	Knowledge areas E, F, G	Readings, videos, assignments, tests
5 days
1 ECTS = 20-25 work hours
fi gure 4 Model for training at the executive level
survey among all ims regions compared by Slovenian companies we can
conclude that there are similarities between the results. If we compare
those results with the importance of competence in five years we can see
that:
•	topics which are important today also need education in the future;
•	less important topics today (remanufacturing of products, simula-
tion in production, sustainable manufacturing, simulation in busi-
ness operations, multicultural skills, e-learning, etc.) seem to be
more important in the future;
•	all proposed topics need a focus in a new curriculum;
•	concerning technological competence product development in gen-
eral, the product related manufacturing technology and quality
management are considered as most important topics;
•	among the humanistic competences, teamwork capabilities and im-
age and branding seem to be the most important;
• within the business competences, cost management and productiv-
ity improvement are considered as the most important topics.
Slovenia has a relatively highly developed industry that needs profes-
sional skills and knowledge of engineers not only in the field of engi-
neering but also in the business field. We know that the need for skills
and knowledge of many Slovenian manufacturing companies is far ahead
from what the academic institutions can provide; a co-operation be-
tween industry and academia is therefore necessary. The gem project
is based on industry needs and can thereforebe an excellent example of
how to prepare new curricula.
Acknowledgments
The work has been funded by the European Commission through the
ist Project gem Europe - Global Education in Manufacturing, ist
2001-32059.
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L Mic
^	Management International Conference
Advancing Business and Management
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Managing Global Transitions
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Beech, M. H. 1982. The domestic realm in
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In Separate worlds: Studies of purdah in
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Jackson, R. 1979. Running down the
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Geographer 14 (May): 175-84.
Lynd, R., and H. Lynd. 1929. Middletown:
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Managing Global Transitions
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volume 4 • number 3 ■ fall 2006 ■ issn i581-63h
197 Building Core Competencies in a Turbulent Environment:
An Exploratory Study of Firm Resources and Capabilities
in Chinese Transitional Economy
Justin Tan
Shaomin Li
Weian Li
215 Cooperation after War: International
Development in Bosnia, 1995 to 1999
Eric C. Martin
Sue R. Faerman
David P. McCaffrey
231 Language and Culture in International
Legal Communication
Alenka Kocbek
249 Home Education: Globalization Otherwise?
Christian W. Beck
261 Global Education in Manufacturing:
Basic Framework, Industrial Survey
and Possible Implementation
Asbj0rn Rolstadäs
Slavko Dolinšek
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