ISSN I581-63II
anagin
Managing
Global
Boštjan Antončič
International
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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, Open Society Institute,
Slovenia
Cene Bavec, University of Primorska,
Slovenia
Jani Beko, University of Maribor, Slovenia
Vito Bobek, University of Primorska,
Slovenia
Štefan Bojnec, University of Primorska,
Slovenia
Suzanne Catana, State University of New
York, Plattsburgh, usa
KariDehli, University of Toronto, Canada
David Dibbon, Memorial University
of Newfoundland, Canada
Jeffrey Ford, The Ohio State University, usa
Tim Goddard, University of Calgary, Canada
Noel Gough, Deakin University, Australia
George Hickman, Memorial University
ofNewfoundland, Canada
Robert D. Hisrich, Case Western Reserve
University, 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
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
of Entrepreneurship, 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
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
Zvone Vodovnik, University of Ljubljana,
Slovenia
Manfred Weiss, Johan Wolfgang Goethe
University, Germany
Min-BongYoo, Sungkyunkwan University,
South Korea
Pavel Zgaga, University of Ljubljana, Slovenia
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The publication of the journal is supported
by the Slovenian Research Agency.
Managing Global Transitions
International Research Journal
volume 3 • number 1 • spring 2005 • issn i58i-63ii
Table of Contents
3 The Editor's Corner
5 E-Learning and the Changing Face
of Corporate Training
and Development
Max Zornada
23 School Leadership Training under Globalisation:
Comparisons of the uk, the us and Norway
Arild Tjeldvoll
Christopher Wales
Anne Welle-Strand
51 Evidence of Returns to Education Among Roma
in Central and Eastern Europe and
Their Policy Implications
Susanne Milcher
Katarina Zigova
71 Restructuring and Business Reengineering
in Integrative Processes
Drago Dubrovski
95 Key Sector Analysis: A Case of
the Transited Polish Economy
Henryk Gurgul
Pawel Majdosz
The Editor's Corner
With this new issue, the journal begins with a renewed editorial team and
board. At this occasion I would especially like to thank, among others
who contributed to the birth and growth of the journal, the past editor
Anita Trnavcevic for setting good foundations for the development of
the journal.
In its third year of existence the journal continues focusing on the
transition research and emphasizing the openness to different research
areas, topics, and methods, as well as the international and interdisci-
plinary research nature of scholarly articles published in the journal. The
current issue covers topics such as the importance of e-learning in cor-
porate training and development change, school leadership training, re-
turns to education, restructuring and business reengineering, and sec-
toral analysis of transition.
This issue starts with a paper on the nature of e-learning-driven
change of training and development delivery in organizations. Max
Zornada examines the approaches used by several leading global Aus-
tralian and Asian corporations, and identifies some emerging trends and
practices that enable a successful deployment of e-learning strategies. In
the second paper, Arild Tjeldvoll, Christopher Wales, and Anne Welle-
Strand focus on school leadership training in the context of globalisa-
tion, and make a comparison between the uk, the us, and Norway. In the
third paper, Susanne Milcher and Katarina Zigova analyze educational
issues faced by Roma households on the basis of data from Bulgaria, the
Czech Republic, Hungary, Romania, and Slovakia. The fourth paper of
Drago Dubrovski discusses restructuring and business reengineering in
integrative processes, while the last - fifth paper of Henryk Gurgul and
Pawel Majdosz examines the structure of Polish economy by means of
the key sector analysis finding persistence of characteristics of a centrally
planned economy rather than characteristics of a market economy.
Boštjan Antoncic
Editor
E-Learning and the Changing Face
of Corporate Training
and Development
Max Zornada
As much as erp is critical to a manufacturing supply chain
environment, e-learning is critical in a knowledge
dependent supply chain environment.
Larry Pereira, Motorola
Internet technologies and the advent ofe-learning applications in many
organisations have made a fundamental difference to the way organ-
isations deliver training and development content, activities and ex-
periences to their employees. Some of the organisations at the fore-
front of deploying e-learning technologies have been global corpora-
tions and/or transaction processing intensive organisations, who typ-
ically have difficulties assembling their staff for traditional classroom
based training activities, either due to logistical difficulties or because
of the impact this would have on work flows and business continuity.
Such organisations have developed approaches to e-learning and com-
petency development that overcome the logistical problems of conven-
tional training by making innovative use of e-learning. This paper ex-
amines the approaches used by several leading global, Australian and
Asian organisations, including Cisco Systems, Motorola, Qantas and
several others by drawing on a field study conducted by the writer dur-
ing 2003-2004. It attempts to identify some key emerging trends and
practices in the field, and lessons that can be learnt from the experiences
of organisations reviewed, for the successful deployment of e-learning
strategies.
Key Words: e-learning, learning and content management systems,
Australia and Asia Pacific
jel Classification: m53, 033
Introduction
Since widespread internet access became available during the early to
mid 1990's, business has looked for opportunities to harness this new
technology for its benefit.
Max Zornada is an Adjunct Lecturer at the Adelaide Graduate School
of Business, The University of Adelaide, Australia
This paper presents and discusses the results of the writer's field based
review of how several major corporations in Australia and in the Asia
Pacific region more broadly are applying e-learning technologies to sup-
port the implementation of their training and development strategies.
The applications observed and discussed range from the tentative first
steps to make a single topic module available for study on the corpo-
rate intranet, through to sophisticated corporation wide learning and
content management systems (lcms) deployed by Cisco and Motorola
which are indicative of the substantial commitment to e-learning being
made by these organisations.
Methodology and Approach
The findings and cases presented and discussed in this paper are based
on a combination of:
•	Field based interviews of managers at the organisations reviewed
and review of e-learning practices.
•	Information drawn from research reports into e-learning submitted
by managers at some of the featured organisations, submitted as
part of the assessment requirements for the writer's e-business mba
subject in which these managers were students, in Adelaide, Hong
Kong and Singapore.
•	Desk based review of published literature in this field.
Companies specifically referred to and included within the scope of
this study include, Westpac Banking Corporation, Qantas Airways of
Australia, Motorola, Cisco Systems Asia Pacific and the University of
Adelaide.
The First Small Steps Towards E-Learning
The experiences of a major Australian bank, Westpac, are typical of the
first steps to e-learning taken by many organisations.1 During the late
1990's the Australian Government introduced changes to legislation af-
fecting the granting of credit. This was known as the Uniform Credit
Code (ucc). The impact of the legislative changes was that all staff in-
volved in any aspect of decision making concerning credit were required
to be familiar with the legislation and were required to make decisions in
a manner consistent with the legislation. In the bank's Home Mortgage
Processing operations, almost all employees were affected by this legis-
lation to some extent and would need thorough training to familiarise
themselves with the details and how it affected their work decisions. This
created the need to train and update thousands of employees.
The approach used by most financial institutions including Westpac
initially, was to develop a class room based training program that all em-
ployees were required to attend. The class room training concluded with
an exam and only employees passing the exam were accredited to be al-
located to roles affected by the ucc.
The key problem with this approach related to the fact that the major-
ity of staff would only use the knowledge gained on an ad hoc basis due
to the normal variations in the flow of work and personnel allocations.
This meant that enough time could pass between successive occasions
when staff would be called upon to apply the knowledge learned in the
class room, that there was ample time to forget and make errors. This
represented an unacceptable risk to the bank. Other problematic issues
included:
•	Orientation and training of new employees. The need to establish
a 'critical mass' of new employees in order to make the classroom-
based training viable meant that there could often be a significant
lead time from when employees joined to when they received the
required training in the ucc. This severely restricted the range of
tasks employees could be asked to perform and restricted manage-
ment's ability to manage workloads and service levels.
•	The legislation itself was also subject to change over time. Facilitat-
ing shorter follow-up workshops such as the initial classroom-based
program to brief staff on changes, everytime a change happened
was seen as undesirable because of the large number of employees
affected and the consequent disruption this would cause to opera-
tions.
This is an example of Regulation-Driven Demand (Barron 2002), an
area in which Barron's research suggests there are significant opportuni-
ties for e-learning based applications.
In Westpac's case, the solution came in the form of an online system
delivered through the desktop on the bank's organisation wide intranet.
The functionality built into the online system addressed many of the
problem issues previously mentioned. The online system was offered as
an option to attending the classroom-based training.
A new employee could work through a series of 'programmed learn-
ing' style modules delivered to the desktop. Employees could work
through these at their own pace and spread them out over several ses-
sions without leaving their workstation. In this manner, employees could
often exploit quiet periods during the working day in order to complete
individual modules without being absent and effectively unavailable for
work for the entire training day, as they would have if they had attended
a classroom-based session. This feature gave the team leaders the abil-
ity to schedule required training modules into normal working days by
taking advantage of naturally occurring periods when workloads were
lower, while still having team members available at their desks to cope
with periods when workloads were high.
Each module featured an online test which gave the employee imme-
diate feedback on performance. Upon completion, the final accredita-
tion exam was delivered and assessed on line. The employee's final result
was automatically recorded in the Human Resource Management sys-
tem, and if they had not achieved a sufficient level of proficiency this
would automatically be flagged when their team leader made work al-
locations. Employees could repeat the training and the exam as often
as they liked, until they passed the exam. The online system also kept
track of when each employee had last been accredited and at predeter-
mined intervals would flag the need to re-accredit. This was particularly
important for employees who only used these skills on an ad-hoc basis
and might forget some of the content between subsequent applications.
Once flagged, employees had a set amount of time to re-accredit, oth-
erwise their ucc status would be suspended. The re-accreditation exam
was delivered online with immediate feedback of results. If the employee
did not achieve re-accreditation the system would flag their unavailabil-
ity for tasks requiring accreditation until such time as they successfully
re-accredited. All results and details of training completed were updated
on their employee file, and impacted on the range of tasks they could be
assigned to do.
The e-learning module provided an effective vehicle for the delivery
of training activities. However, by linking the assessment process to the
Human Resources database, the e-learning system supported processing
quality by ensuring that only qualified and accredited employees were
assignment to tasks requiring those skills and that the need for ongoing
maintenance of critical competencies was efficiently met.
Qantas Airways of Australia, Australia's national airline, similarly were
an early mover into e-learning. Qantas has a workforce of some 30,000
employees, with approximately 18,000 employed in Sydney, Australia, the
remainder deployed around the world. A major barrier to training for an
international airline like Qantas are the impacts and difficulties of getting
a critical mass of employees in one location at one time for conventional
classroom-based training. Not only is there the cost impact of releas-
ing personnel from the workplace to attend training, there are also the
cost impacts and logistical difficulties associated with a global workforce
which is constantly on the move.
As early as 1995, Qantas commenced work with an Adelaide based
solutions development company, TechWorks, to investigate the poten-
tial of e-learning to meet their needs.2 Although starting as a relatively
simple system implemented as a vehicle for updating its globally dis-
persed workforce on company policies and procedures, the Qantas e-
learning platform (currently managed by Hudson Learning Solutions),
very quickly grew into Qantas College Online.
Qantas College Online won the prestigious anta Australian Training
Award in 2001 and was finalist in the 1997 Australian Technology Awards
(see www.learning.hudson.com). Qantas College Online is accessible to
any Qantas employee anywhere in the world at any time, and now has
more than 10,000 registered learners (Hudson Learning 2004). The sys-
tem routinely tracks learner progress, assessment and accreditation.
What is E-Learning
The previous two companies examined, document the implementation
of e-learning in their respective corporate environments.
Although the term e-learning can be applied to a broad range of tech-
nology supported learning approaches, for the purposes of this paper,
the term e-learning will be used to refer to the more contemporary ap-
proaches. In particular, approaches that make use of Web-based systems
and Learning and Content Management Systems for making training
and development activities available on the desktop using intranet or in-
ternet based platforms. This includes:
•	Synchronous (instructor led or mentored) programs, where the
learner follows an instructor determined schedule and interacts
with the instructor during the course of study using email, chat
technology or forums - also referred to as 'blended' learning when
coupled with class room based activities.
•	Asynchronous (individual/self paced) programs, which the learner
progresses through independently and at his/her own pace.
Let us now consider how a large technology savvy organisation might
go about rolling out an e-learning strategy and consider the case of Mo-
torola.
Motorola
As might be expected from a company that regards itself as at the fore-
front of information technology, Motorola has made the internet a key
element of its information technology infrastructure.
Since 1997 is has progressively migrated most of its management
and employee transactions from paper based systems to online B2E
(Business-to-Employee) portals (Pereira 2004). This includes portals
such as:
•	my.mot.com, a personalised business information portal,
•	myhr.mot.com, a human resource processes portal,
•	pm.mot.com, employee performance management systems portal,
•	enet.mot.com, an employee database portal,
•	travel.mot.com, a travel information portal,
•	mu.mot.com, an e-learning portal.
This network of portals, illustrated in fig. 1, is used by managers and
employees on a daily basis and can be accessed from the desktop at work,
home or while travelling.
We will discuss the e-learning portal in more detail and the way it
implements Motorola's E-Learning strategy.
E-LEARNING @ MOTOROLA
Motorola University (mu) is the foundation on which employee learn-
ing and education is built at Motorola. mu has a global presence with a
charter to implement Motorola's Learning Policy.
The business impact of the internet led Motorola University to estab-
lish an e-learning group in October 2000 as an incubator for Motorola's
entry into large scale e-learning. The e-learning organisation was initi-
ated to be the premier destination for e-learning services and as an ag-
gregator for designing, collecting and delivering e-learning solutions to
Motorola employees.
Industry studies in 2000 showed that Returns On Investment of be-
tween $3 and $33 saved for every $1 spent could be realised by the effective
use of E-Learning (Whalen and Wright 2000).
finance.mot.com
•	Finance policies
•	Department expenses
•	E-procurement
enet.mot.com
•	Employee information
•	Rewards planning
•	Organisation structure
•	Recruitment
my.mot.com
Business/tech news
Stock watch
Google search
myhr.mot.com
Policies, benefits
Career planning
Work/life balance
pm.mot.com
•	Performance
management system
•	Employee goal tracking
mu.mot.com
•	Learning solutions
•	E-learning
•	Learning management
systems
figure 1 Motorola's B2E portal network (not exhaustive)
mu set a goal of 30% of delivered training to be done online in 2001,
increasing to 50% by 2003. While initially targeted at Motorola employ-
ees, its longer term strategy is to include suppliers, channel partners and
customers (E-Learning Strategic Plan 2001).
The E-Learning process steps supported by the mu e-learning portal
are illustrated in fig. 2 in the form of an 'egg-diagram' - a technique
proposed by Rayport and Jaworski (2002) for mapping out the decision
processes and functionality of online systems.
As illustrated by the Egg Diagram, the e-learning portal offers a com-
plete Learning Management System providing employees access to a total
learning solution for online or instructor led courses. The system main-
tains a list of courses taken by an employee and through the Learning
Plan provides the capability of identifying gaps in an employee's skills. It
can then register the employee for courses to fill skills gaps. Skills assess-
ments are done through the Performance Management system and are
initiated after dialog between an employee and their manager.
The e-learning portal caters for the delivery of synchronous (instruc-
tor led or mentored) programs or asynchronous (individual/self paced)
programs and registration for class room based training.
The overall process supported by the Motorola e-learning systems can
be depicted as an 'E-Learning Value Chain', shown in fig. 3.
figure 2 Diagram of decision process of online course enrolment
The e-learning Value Chain, as Motorola have called it, is in effect,
what e-learning platform providers would refer to as a Learning and
Content Management System or lcms. The process commences with
the business needs and skills assessment. The learner accesses the learn-
ing portal, which through the learning delivery server gives access to the
content database. This includes internally developed and externally de-
veloped licensed content.
The learning management server provides access to learning process
management resources. Details of the learner and programs completed
are tracked in the student database.
The participant environment in which the program is delivered can be
at the desktop for purely online components, Learning Resources Cen-
Business need Course	Course delivery	Course
and skills content	participant
assessment selection	environment
i-H-H-
Discovery Digitisation	Delivery
figure 3 The Motorola e-learning value chain
tres (state of the art facilities dedicated to multiple learning categories
located at major Motorola facilities) or classroom-based.
Some of the key benefits stated by Motorola employees and managers
include the access to a wide variety of courses, around the clock, at any
location and at a lower price.
Cisco Systems
Apart from technology and product leadership, Cisco aims to be recog-
nised as a forerunner in how future business will be run. The company's
Networked Virtual Organisation (nvo) is the showcase for using the In-
ternet to provide customer support, sell products, offer training, and
manage finances (Heng 2003).
Internally, the role of the intranet is critical. Cisco regards its intranet
and the applications deployed through the intranet as a key enabler of
workforce optimisation (Nolan, Porter, and Akers 2001). A key applica-
tion is that of e-learning. E-learning modules are available to employees
directly on the desktop.
The use of the modules as well as information about their effectiveness
is tracked to determine the extent of use. From the tracking information,
the quality and effectiveness of the modules can be assessed as the needs
of the organisation change over time.
Heng (2003) of Cisco Systems Asia Pacific, Singapore states: 'Training
- Cisco stays competitive by responding effectively to change. They en-
sure that their employees can quickly learn new skills, update old skills,
and assimilate vast amounts of information about new products, mar-
kets, and the competition. E-learning is a revolutionary way to empower
a workforce with the skills and knowledge it needs to keep pace with a
rapidly changing market. The people, companies, and countries with the
greatest knowledge, skills, and ability to efficiently create and share in-
formation are most likely to succeed in the knowledge-based economy'.
Cisco have also pushed ahead with the use of their e-learning plat-
form as a vehicle for training vendor partners as well as their own staff.
An example of this is Cisco System's Account Manager Learning Envi-
ronment (amle) e-learning initiative (Cisco 2003). This system provides
Account Managers with online learning resources to improve their pro-
fessional effectiveness. The courses which make up amle are targeted at
Cisco's own 5,000 internal account managers and 2,000 external channel
partners located in 60 countries around the world. Account Managers
can access the amle through the learning portal, where they can select
from a range of delivery options - online or offline with a web based les-
son, a downloadable paper based booklet, with interactive sales scenar-
ios. When they have finished a program they can complete the mastery
assessment.
A key part of Cisco's approach is the identification and development
of 're-usable learning objects' rlo's which are modularised pieces of
learning content whose value can be leveraged across other modules and
courses.
The E-Learning Advantage
COST benefits
The cost advantages of e-learning were identified by Periera (2004) as
being predominantly in the area of cost avoidance.
By transitioning what was traditionally run as a class room based sem-
inar onto an online e-learning environment, many costs usually associ-
ated with training can be avoided. Avoided costs included:
•	Accommodation costs for staff who have travelled to the training
venue.
•	Travelling costs associated with travelling to the training venue.
•	The cost of the training venue (room hire).
•	Instructor costs.
This is supported by the work of Hall who suggests that the costs of
travel and entertainment can be reduced by 50% and Hemphill who
quotes a more aggressive 80% reduction reported by thinkq (2004).
A summary of Cisco's cost-benefit analysis for their amle system is as
follows:
Users of the amle platform reported that before its introduction, an
average of two hours a week was spent gathering knowledge required to
perform their duties. The online course reduced this by an average of
40%. In addition, the online training reduced the time required to gain
technical competency in the selected areas, and knowledge acquisition
was reported to be from 40-80% faster than without the amle system.
The research time savings alone translate into $511,000 saving per week
across the enterprise team. The cost of delivering a full suite of courses
to a learner is estimated at $1,000 per person.
In another example, Cisco replaced a classroom-only course with a
blended learning course on Interorganisational Information Systems
(ios). Savings in travel, accommodation and lost productivity amounted
to approximately $1.2 Million per annum for a program that is offered
twice a month to 40 participants at a time.
Both Cisco and Motorola report that costs to set up an effective e-
learning system are initially high, but delivery costs are low, offering ex-
cellent scale economies.
This made them ideal for situations where large numbers of employees
needed to be trained, or where there was a need to offer a course on a
frequent basis. Examples of what Barron (2002) calls Certification Driven
Demand and Training Intensity Driven demand training markets.
productivity and organisational benefits
The results of other studies in the field of computer based and multime-
dia based training, summarised by thinkq (2004) suggest that the key
advantages of e-learning should be:
•	Less time taken without diminishing learning benefits.
•	Time away from work is reduced.
•	Better meets the needs of a geographically dispersed workforce.
•	Course delivery is more consistent.
•	Instruction can be better tailored to individual learners.
•	More cost effective.
The experience of Westpac, Qantas, Motorola, Cisco Systems reviewed
as part of this study and discussed in this paper, as well as the experience
of the University of Adelaide in general support the above views. How-
ever, the experiences of the organisations reviewed can further lead us to
make more specific statements regarding benefits.
E-learning led to a sustained and deeper level of understanding of the
program content by learners, particularly in the case of Westpac where
employees were required to re-accredit on a regular basis. This translated
into higher work quality (less errors and less risk of non-compliant de-
cisions) and higher worker productivity levels.
Higher productivity levels were experienced in more general terms,
not just as a result of less errors and better decisions. This was attributed
to several sources. The option of taking a course online, particularly one
for which the skills and knowledge could be immediately applied to give
improved work performance, meant that employees could take the on-
line training at any time (usually just-in-time). There was no need to
wait until enough new employees were available to have a critical mass
of participants to make a classroom training program viable. Employees
could do the training as soon as required and apply it immediately. This
was of particular value in making new employees productive as quickly
as possible or for training employees in areas that were new to them.
Because e-learning modules could be completed at an employee's reg-
ular workstation, when travelling or in remote offices, employees could
take the training over an extended period of time and at their own pace,
often utilising what otherwise would have been unproductive downtime.
Not only did this allow learners to use their own time better, it also
made it easier for their managers, who did not end up losing employees
for whole days or longer when attending a training course. This simpli-
fied resource planning and workload balancing. The fact that employees
could move through the modules at their own pace, repeat them as de-
sired, and that training was often taken just-in-time followed by imme-
diate application, led to a deeper level of learning.
It was the case in all the organisations reviewed, that the e-learning
option did indeed better meet the needs of a dispersed workforce - par-
ticularly a globally dispersed workforce. In many of the organisations
reviewed, particularly Qantas, it was the training challenges posed by a
globally dispersed and highly mobile workforce that led them to become
one of the early adopters of e-learning.
Barron (2002) suggests that e-learning is ideally suited to:
•	Certification Driven Markets - where large numbers of learners
need to be accredited to certain standards to achieve certification
e. g. certification of Cisco and Microsoft Certified Engineers.
•	Regulation driven markets - where large numbers of learners need
to be kept up to date on regulations e. g. Westpac and ucc.
•	Training intensive markets - where a lot of training is required
as part of the normal operating environment or a given training
course needs to be repeated frequently. This is the case in many
technology industries.
•	Multinational organisations - where a large dispersed workforce
needs to be trained, preferably in a consistent manner.
•	An effective e-learning system can effectively provide training cus-
tomised to individual learners' needs and produce more even out-
comes across a training population.
For example, Barker College, a private boys school in Sydney, Aus-
tralia providing K-12 education uses an e-learning system as a supple-
ment to traditional learning. The system records learner responses and
then uses this information to generate additional tasks, questions and
exercises that it presents to the learner in order to develop weaknesses
detected from previous responses.
Limitations of E-Learning
Turban (2004) discusses some of the drawbacks of e-learning.
Some of the key ones include:
•	Lack of face-to-face interaction with a learning peer group,
•	Equipment, software and support needs.
•	Maintenance and updating of content.
•	Program development costs.
•	Learner drop out.
•	Assessment i. e. guaranteeing that is was the actual intended learner
who completed the assessment.
The lack of face-to-face interaction with a peer group can be a signifi-
cant issue in a corporate environment depending on the objectives of the
training. This may mean that e-learning will only be suitable for deliver-
ing certain types of training, and class room based training will continue
to survive as an important forum for corporate learning. Each approach
will find its suitable context. For example, many training programs deliv-
ered in corporate settings are focused on developing interpersonal skills,
team skills, leadership - all topics which ideally will required contact with
a training peer group as part of the learning process. In addition, many
training activities have an underlying agenda such as team building and
group bonding - again, requiring interaction with a peer group as part
of the learning process.
The other issue revolves around the fact that many participants see the
group interaction and discussion as a key facilitating process for their
own learning.
The writer's own experience in teaching in a blended learning program
at the Master's level, found that students were far more talkative and in-
teractive, wishing to discuss and debate issues at greater length with the
instructor as well as with other class mates during face-to-face sessions
compared to students who were enrolled in the classroom-based option
only. It seemed that the blending learning students almost craved the so-
cial interaction that comes from a classroom environment and were us-
ing the scheduled face-to-face sessions to overcompensate for what they
were not getting online. It may be that some topics as well as some learn-
ers, may just not be suited to e-learning.
The issues of learner dropout and assessment guarantee, which Tur-
ban (2004) discusses with respect to open subscription e-learning pro-
grams, may not be such an issue in the corporate environment. The
higher levels of learner accountability and supervisory direction and
control associated with learning activities in a corporate environment
would work against learner drop out and assessment identity uncertainty
which may occur in uncontrolled public subscription environments.
The issue of costs has previously been addressed, with organisations
such as Motorola noting that the initial set up costs were high, but bene-
fits came in the form of lower delivery costs.
The development, updating and maintenance of content is a signif-
icant issue. Current practices by leading adopters of e-learning suggest
that this will only be able to be done effectively by drawing on both ex-
ternally sourced as well as internally developed content. This in turn will
create opportunities for third party organisations wishing to develop,
supply, update and maintain content on e-learning systems on behalf of
clients, such as is the case in the relationship between Hudson Learning
Solutions and Qantas.
Comparisons and Conclusions
By comparing some of the major characteristics of the way e-learning
has been implemented at each of the major case studies considered in
this paper, we can identify some common themes that cut across all of
the organisations as well as some significant points of difference. These
include:
•	A relatively large and dispersed workforce. In the cases of Qan-
tas, Cisco and Motorola - globally dispersed, making traditional
classroom-based training logistically difficult.
•	All organisations used e-learning initially to deliver what could
be best described as 'technical' content - product and technology
knowledge, legislative knowledge and knowledge of company pro-
cesses and procedures. In this respect, the e-learning system is in
effect being used as a major element in the management and dis-
bursement of organisational knowledge. Although there were stated
intentions to do so, the writer did not observe management and in-
terpersonal skills development content being effectively delivered
by e-learning, at this point in time.
•	In all cases, the e-learning programs offered were online versions of
training previously (and in many cases still) offered offline.
•	All organisations had built links back to Human Resource Man-
agement systems to keep track of courses completed, competencies,
needs and gaps.
•	In all cases, the e-learning functionality was available as a function
in a company wide intranet - available everywhere, anytime. In the
case of Cisco and Motorola e-learning was part of a comprehensive
web-enabled corporate it system.
•	The initial focus of e-learning delivery was on internal employees,
although Cisco and Motorola had deliberate strategies to roll this
out to vendor partners.
•	All companies report that the costs of implementing e-learning
were 'significant'. The major cost benefits came by way of good scal-
ability and repeated use of e-learning modules.
The most significant differences observed were mainly related to de-
gree of commitment to e-learning and aggressiveness of implementa-
tion targets - with Motorola and Cisco projecting that the majority of
their training requirements would be delivered in this manner. The other
key difference was in the degree of outsourcing used. Qantas has chosen
to outsource all aspects of providing the e-learning platform, while the
other organisations retained this inhouse.
Finally, the key conclusions we can draw from the study reported in
this paper are:
•	Organisations are using e-learning as an increasing part of deliver-
ing on the training strategy.
•	Organisations using e-learning are substituting E-Learning based
delivery of training and content for what was previously classroom-
based training.
•	E-Learning is seen by many oganisations as a low risk E-Business
initiative and can be used as a pilot to the deployment of more com-
prehensive business critical intranet or extranet portals.
•	Many of the companies at the forefront of internet technologies
e. g. Motorola and Cisco have been at the forefront of pursuing e-
learning and have set aggressive targets for the proportion of overall
training to be migrated to e-learning.
•	There are real benefits to e-learning which suggest that in many
training areas, it yields superior outcomes to classroom-based
learning for the learner.
•	There are real cost and productivity benefits for organisations from
e-learning.
•	E-learning is not universally applicable to all learning areas of inter-
est to corporates.
•	The cost of developing and implementing an e-learning platform
is significant and offers opportunities for independent, third part
organisations to develop and deliver this functionality to corporate
clients (as is the case with Hudson Learning Solutions and Qantas).
•	The significant effort required to develop, update, convert and
maintain content suggests that externally sourced content and out-
sourced content management services will emerge as a key feature
of effective corporate e-learning implementations, as was found in
cases reviewed.
It would appear that e-learning has not only arrived, but is here to
stay as a permanent feature of the corporate learning landscape in today's
organisations, playing a role together with more traditional approaches
to employee training and development.
It appears that e-learning offers organisations the opportunity to ex-
ploit 'Virtuous Circles' in the way they implement training and devel-
opment activities (Hallowell 2002). That is, opportunities where the e-
enablement of what was previously an offline activity allows organisa-
tions to achieve improved outcomes at lower costs.
In today's increasingly competitive and globalised business environ-
ment, e-learning is something organisations cannot afford to ignore.
Notes
1	The information was obtained from a conversation with John Pawal-
ski, Manager at the Westpac Banking Corporation, Mortgage Process-
ing Centre, in 1999.
2	The information was obtained from a conversation with Mark Keough,
Chief Executive Officer of TechWorks, in 1995.
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School Leadership Training under Globalisation:
Comparisons of the uk, the us and Norway
Arild Tjeldvoll
Christopher Wales
Anne Welle-Strand
In common the three countries see a need for increased quality of
schooling as necessary because of globalisation. Leadership is crucial
to achieve quality. However, there are distinct critiques in all countries
fearing ineffective bureaucratization. There is resistance among educa-
tion researchers towards the market orientation and the application of
the language of business. Universities have played a conservative role.
In terms of differences, the uk is uniform by its centrally organised Na-
tional College, while the us with over 500 programmes and no national
coordination shows complexity, if not chaos. Norway, with its National
Network gives much freedom to individual institutions, although the
diversity leads to tensions when the municipalities now can choose the
training providers. All three nations are attempting to 'reframe and re-
form'. Some educators think the defining factors will be quality of per-
formance and quality of collaboration, while others believe that there
must be a shift from focus on performance to focus on learning.
Key Words: globalisation, school leadership, training, policy
jel Classification: 120,123,128
Introduction
According to the oecd Report, New school management approaches, into
School leadership across nine countries, 'School management is essentially
a twentieth century invention' (oecd 2001, 17). The current situation,
it is claimed, arose from the need to 'download' managerial responsi-
bility to the individual school leader. The Report argues that these de-
velopments have placed the role of the school manager under the spot-
Arild Tjeldvoll is a Professor at the University of Oslo, and an Affiliated
Professor at the Norwegian University of Science and Technology.
Anne Welle-Strand is a Professor at bi Norwegian School of
Management and Director of the School's Centre of Education
Management Research.
Christopher Wales is a doctoral student at the Centre of Education
Management Research, bi Norwegian School of Management.
light. In an era of focus upon increased accountability and quality, the
school leader's role is changing and the question as to how well they are
prepared for it is a valid one. Two of the countries highlighted in the
oecd Report are the United Kingdom and the United States of America.
Related to an ongoing comparative study on school leadership training
in five countries it is found interesting to make a comparison of school
leader training in the uk and us with a third oecd nation, Norway.1 To
which extent is there convergence or recurring difference in how school
leadership training is organised in the three countries - and, how are
current policies assessed by education researchers in these countries?
As an introduction we present what education researchers in the three
countries see as the historical development of leadership programmes,
followed by analysis of how training is currently organised. Finally, we
wonder if globalisation makes it likely to see convergence, or recurring
differences between them.
The United Kingdom
There has been much written about the development of educational
'leadership' and 'management' in the uk. Hence some key information
has to be omitted, in favour of a brief outline of key elements in the
British tradition. In the 1970s there was little reason to consider, and no
apparent imperative to be interested in, educational management (Day et
al. 2000, 7), in an educational system described as a 'triangle of tension'
between central government, local government and individual schools
(Garner 2000). Garner argues, however, that since the 1988 Education
Reform Act (era), the triangle has been redefined to one of a tension be-
tween society, the state and providers of education (Garner 2000). Much
of the political decentralisation that took place during this period seems
to be aimed more at removing the powers of middle and local layers of
government, than at directly improving schools. This changed the role of
the school leader significantly, within a class structure still evident and a
country used to gaps in society.2
Martin McLean (1997) considers the political tradition of the uk to
be one of pluralism, and its curriculum tradition essentialist (Holmes
and McLean 1992). While his definition of pluralism is helpful, Little and
Smith's (1992) definition of realism seems to be a more appropriate def-
inition for the system in the uk. Garner adds that 'Education has been
seen as instrument of both control and entitlement' (2000, 99).3 This
led to two main educational philosophies of education simultaneously;
the pursuit of knowledge for its own sake and education as a technical
device, product focused and meeting society's needs. This, according to
Garner, has been the focus for the last 20 years in the uk. This sets the
scene for an understanding of school leadership practices in the uk.
In terms of school leadership, the 'time of change' that Day et al. (2000,
6), describe has seen a focus on quality of headship, which impacts the
motivation of teachers and quality of teaching. This focus upon qual-
ity has been a key development in the uk. Day et al. (2000, 7-10) argue
that these initiatives are to be welcomed, but point also to the changing
context in the uk, especially one of increased accountability and mar-
ket orientation for head teachers. In quoting Gerald Grace they see that
'contemporary head teachers are [...] expected to "market the school",
"deliver the curriculum", and to "satisfy the customers."' The language of
business has become the language of the staff room, which is where the
pluralistic focus has been most sharply felt. Southworth suggests that the
tradition of school leadership in England is individualistic, proprietal,
pivotal and powerful (in Walker and Dimmock 2003, 200).
Brundrett's recent research (2001) revealed a patchwork of provisions,
including certificate, diploma, ma, mba, MEd, msc and EdD courses
which, despite such confusing variety, provides a comparatively struc-
tured provision of progressive academic qualifications grounded in both
theory and practice. Slowly the purely academic basis was being changed,
with the focus drawing away from the universities as sole providers. It
was at this stage in the early 1990s that the concepts of leadership and
management were being rethought.
MacBeath (2003) writes that leadership itself is 'a term full of ambigu-
ity and a range of interpretations [...] that can mean just what we want
it to mean'. The trend was a shift from notions of management, to re-
branding movements, projects and organisations under the leadership
banner, which creates a distance between leadership and management -
the latter being seen as a more limited concept and too closely associated
with managerialism, a somewhat discredited approach based on rational,
'scientific' principles.
Nathan (2000) highlighted a need for new head teachers to receive
proper preparation and more induction, arguing that this was even more
necessary after the era 1988, which changed head teachers from admin-
istrators of lea policies with limited budgets into managers of an organ-
isation with decision and policy making powers, and resulted in a totally
delegated budget.
The United States of America
In a review of the isllc Standards,4 Murphy (2003a) shows the devel-
opment of school administration in the usa that is a helpful accumu-
lation and update of previous research. The initial phase was formed
from philosophy and religion which resulted in a kind of doctrine of
applied philosophy. Murphy sees little of this concept from the 1800s
of administrator as 'philosopher-educator' surviving as the profession
develops. The profession was 'constructed [...] on a two layered founda-
tion' (2003a, 6) with concepts and theories drawn from management and
the behavioural sciences. The idea of school leader as business manager
developed early in the twentieth century and continued alongside new
principles in the business world of how the corporate sector should be
managed effectively.
Changes in the usa post World War ii impacted upon school leaders.
The new gurus of development were scientists. The quest for a 'science
of administration' in schools, based on the behavioural sciences devel-
oped 'a ladder shaped structure for the profession, with one leg fostering
the growth of ideas from management and the other leg nurturing the
development of concepts from the social sciences'. The solution was to
deal with unanswered questions by adding lengths to either side of the
ladder, believing that management problems require new management
approaches and theoretical problems require new theories of science, fol-
lowing the vogues of sociology from political science to anthropology to
postmodernism and to the new favourite Emotional intelligence.
Change, it is therefore argued, would need to come from a new arena.
Murphy sees the development of isllc as the new pathway and believes
that focus should be placed on the effectiveness of the organic whole,
where the most important issues are quality, equity and the value added
dimension. The aim is to change school administration from manage-
ment to educational leadership and from administration to learning,
while linking management and behavioural science knowledge to the
larger goal of student learning. This is not a new alternative, but a re-
framing. The isllc standards are seen as the Change Engine. This may
answer the problem raised by Young et al. (2003,1), of how to rebuild the
foundations of school administration 'within the practice and academic
domains of the profession'. The isllc has refocused school leadership to
being about students, learning and teaching away from an organizational
understanding of schools towards that of a community approach.
Norway
It was in 1936 that the term 'overl^rer' (head teacher) first appeared,
implying the idea of the school leader as 'first among equals'. In the
1970s focus was placed on the assumed authoritarian relationship be-
tween teacher and pupil. Any focus on authority of either head teacher
or teacher at that time was deemed to hinder and inhibit true dialogue
and communication. The head teacher was still the first among equals,
in what Telhaug and Medias (2003) refer to as a flat structure. The educa-
tion system of Norway has developed firstly along encyclopaedic curricu-
lum lines and then towards progressivism, within the social democratic
tradition of Scandinavia, and needs to be seen in the light of regionalism
(Smith 1997).
Karlsen (2002) argues that it is only since the 1990s that focus has
shifted to the power relationship between the adults in the school sys-
tem. This recent development has focused on the planning, effectiv-
ity and control of the educational process. This shift essentially moved
the school head teacher from being the first among equals to a profes-
sional management representative for the education system (2002, 27).
The development of terms used is interesting. Karlsen asserts that the
term 'rektor',5 which appeared post 1975 as a development from the term
'skolestyrer' (literally meaning school manager), may be more associ-
ated with the Macro level of thinking, whilst the new favoured term
'skoleleleder' (school leader) is more suited to the organisational level.
This is attributed to the beginning of the period of New Public Manage-
ment (npm) (Karlsen 2002, 28). In the Norwegian context 'leadership'
used to mean, in principle, to control the relationship between the inside
and outside of an organisation, the result being that as long as clear roles
and regulations are followed, leadership with authority is not needed,
merely a gifted administrator (Karlsen 2002, 76). This is contrasted with
the concept of'management', which has more to do with control. It is im-
portant to distinguish between actors, their influence, direct and indirect
and processes, including strategies and dynamics.
Stalsett (2000, 281) writes that the leadership focus in schools should
be on 'pedagogical leadership', that is, to concentrate on planning for
and inspiring the main pedagogical processes of school, learning and de-
velopment. This is a widespread norm amongst academics in the field
of education and pedagogy in Norway (e. g. Groterud and Nilsen 2001,
Lillejord 2003, Moller 1996). The different opinions between the Ministry
and education researchers about the need for a more executive school
leader can also be related to different interpretations of the level of pro-
fessionalism of Norwegian teachers. If, as has been claimed (Tjeldvoll
1980a), a de-professionalisation process among teachers has taken place
since the 1960s, the authorities' initiatives for a stronger leadership make
sense. Teachers and education researchers (many of them former teach-
ers) may have in common values and interests that are contrary to the
Government's, of either left or right ideological orientation. Also in the
Norwegian context, globalisation has impacted the education system and
forced change upon the authorities. As a result the general focus of school
leadership has become increasingly goal-oriented.
With no qualification initially available at universities or colleges, es-
pecially as the rektor was merely a promoted teacher, in-service train-
ing courses were instigated by the authorities in Norway from the 1970s.
There was much variation in both content and delivery style reflecting
the more decentralised nature and an 'accept all views, favour none'
mentality in Norwegian school politics (Andersen 2002). The role of a
school leader was not to be as concrete as it had been seen in the uk.
A period of increased decentralisation in the 1980s (Andersen 2002,17)
saw each school taking more responsibility for the content of the school
day. Three programmes were introduced during the period 1980-2000
aimed at renewing and developing the role of school leadership and,
ultimately, the system itself. The first programme, in the period 1981-
1986, aimed at school development combined with leadership training,
seemed to weaken the school leader's position. The Ministry's Board for
Lower Secondary and Primary Education commissioned a nation-wide
external evaluation of the programme (molis). The evaluation's con-
clusion was that the programme had been a complete failure, firstly in
terms of having goals that were not consistent with current education
policy goals, secondly, the content of the training courses was neither
consistent with the programme itself nor national policies. The training
activities were incidental, and there was no evaluation of the participants'
learning achievements. At the school level there were no effects observed
whatsoever (Johansen and Tjeldvoll 1987). In a follow-up report the eval-
uators outlined recommendations for a new programme that would be
rational and consistent in terms of theoretical underpinning and policy
relevance and with consistency amongst programme goals, training ac-
tivities and evaluation procedures (Johansen and Tjeldvoll 1988).
However, subsequent programmes, although increasingly accepting
the necessity of increasing both administrative and pedagogical com-
petence of the school leader, failed to succeed in achieving the double
goals of school leadership competence and school development. It seems
that the project managers lacked theoretical understanding and practical
skills for programmes of this character. A more important reason for the
lack of success is probably the fighting behind the scenes between differ-
ent stakeholders having conflicting interests. Especially the main teacher
trade union was negative towards seeing the appearance of a new school
leadership profession that might disturb and curb their traditional, next-
to-complete control over classroom activities. In the molis Evaluation
there were found several indications of teachers and head teachers to-
gether sabotaging the programme, because real involvement would re-
quire them to change ways of working in a more innovative pedagogical
way, which they thought would imply more work for them (Johansen
and Tjeldvoll 1987). Teacher autonomy can result in either innovation
or conservation. The quality of the school leader is likely to be decisive
for one or the other. In 1993 the municipality was given responsibility to
decide who should provide school leadership education.
Summarised, the development in the uk has been from decentralised
to centralised control measures of school development, particularly indi-
cated by the head teacher being expected to implement centrally decided
policies. In the us a long period of understanding school leadership from
the view of 'administrative science' seems to be challenged by pressures
to focus more on leadership than on administration. In Norway an early
period with the head teachers as an administrator, as the 'first among
equals' was followed by instituting the rector as a manager above his
'equals'. This development has over the recent decades been challenged
by ideas of 'pedagogical leadership'. However, the present policies seem
to reinforce the management character of the role, stimulated by the in-
fluence of New Public Management ideas.
In the next section we will observe the present situation in the three
countries, and try to track the influence of different stakeholders, inter-
ests and ideologies upon programmes for school leader training.
Uniformity, Complexity and Freedom
Key differences between the three countries are obvious. The us is a fed-
eral state with education ministries only at state level, and with strong
local influence at district and community levels. Educational philosophy
is pragmatist and progressivist. The uk used to have a decentralised sys-
tem, but Post era 1988 has turned both highly centralised and school-
based simultaneously. Educational philosophy is essentialist and elite-
oriented. Norway is a small country, with a centralist policy tradition,
although significantly influenced by local interests and values. The teach-
ers' union and 'the education lobby' still have a strong influence on pol-
icy formation and implementation. Educational philosophy historically
was encyclopaedic, but since ww ii American progressivism has become
increasingly more dominant. These differences given, what the three,
however, now have in common are governments who see increased qual-
ity of education output as crucial for their future competitiveness in the
global knowledge economy. In this section we try to see how this com-
mon policy interest plays out in terms of how training is organised and
assessed by education researchers in the three countries.
the uk: cooperation and uniformity?
the national college for school leadership
2001 saw the first graduates of new headship training programmes as
a result of the Government setting up the National College for School
Leadership (ncsl) in 2000. In September 2000 the former Secretary of
State, for the then Department for Education and Employment, David
Blunkett, transferred responsibility for the administration of the three
national headship training programmes to ncsl to be a 'single national
focus for school leadership development, research and innovation' (DfEE
2000). The College has three core areas of activity:6
1.	leadership development (national and partnership programmes,
including the National Professional Qualification for Headship
(Headlamp) and the Leadership Programme for Serving Head-
teachers,
2.	research and development and
3.	online learning, networks and information - including Talking
Heads and Virtual Heads, which are the College's online communi-
ties.
The process is underway to dovetail the many paths available today
into educational leadership. According to Bush et al. (1999), ncsl shall:
'Promote clear links between npqh and appropriate Master's degrees, as
advocated by the Secretary of State, to enable aspiring heads to "twin
track" towards both qualifications and to move freely between routes
in accordance with their professional development needs'. These ideas
have also been raised by Brundrett (2001) pointing out that the 'national
programmes have created a complex, highly structured and centralized
provision, which has led to concern about the dangers of establishing a
heavy bureaucratic apparatus'. Along the same lines, Glatter claims that
'all our experience, both within education and outside it, shows that it
would be counterproductive' (in Brundett 2001). He recognised that the
ncsl could change this, but that still remains to be seen.
In its Framework for leadership (2002), ncsl highlight that a National
Leadership Learning Network will draw together all existing strands as
well as addressing more issues besides. Brundrett commenting upon
ncsl's programme, claims that in the post-modern, pluralistic era
'competence-based training should have assumed apparent dominance'
(2000, 366) and that simplicity and measurability may be the key to its
success, but at the same time be cause for critique 'as simplistic, atom-
istic and behaviourally determinist'. Brundrett's concern is whether these
programmes are merely reductionism, or whether they 'develop the kind
of reflective knowing and higher order cognitive abilities that will un-
doubtedly be required by leaders in the increasingly complex world of
educational leadership in the twenty-first century'. He further pointed
out (Brundrett 2001) that 'the uk has moved toward more cognitive-
based learning in concert with practice experiences', closer to the Amer-
ican style of training. He hopes that balance will be brought between
theory and practice in the training programmes.
The programmes have been criticised in a national evaluation for not
showing a 'clear progression in the content of the three national train-
ing programmes for head teachers' (ofsted 2002, 6), and are under re-
evaluation, as are the National Standards in order to make them both
'inspirational and aspirational' as opposed to the criticism of being 'over-
complicated and uninspiring [...] and only used to a limited extent by
head teachers and other stakeholders' (ncsl 2003). The first diagram in
fig. 1 attempts to represent the current situation in the uk.
usa: complexity or chaos?
Cambron-McCabe and Cunningham (2003) write that the most central
question in the usa today is what does it mean to lead? They point out
that whilst ideas have changed about school leadership and needs have
changed amongst school leaders and even institution members seem to
embrace these ideas - the programmes themselves have not changed to
any noticeable effect. The isllc Standards mentioned in section 2 were
Current leadership training structures in the UK
Current leadership training structures in Norway
Thick line circle indicates an actor in the process of school leadership training.
Broken lined circle indicates movement.
Thick lined arrow indicates focus of actor.
Dotted line indicates growing communication and cooperation.
Broken lined arrow indicates Government implementation.
HEIs - Public higher education institutions.
GOV - Government (SU - Norwegian national education office).
PRIV - Private higher education institutions, and consultancy firms etc.
HEAD - Individual headteacher.
KS - The Norwegian Association of Local and Regional Authorities (NALRA)
in Norwegian Kommunenes Sentralforbund, KS).
NCSL - National College for School Leadership.
figure 1 The current situation in the uk and Norway: The National College for
School Leadership and the National Network for School Leadership
rapidly adopted by 30 of the 50 state departments of education and have
become the central point of a process of re-conceptualization of school
leadership. The curricula of preparation programmes in universities are
now being reformulated to include the teaching of the Standards together
with the core courses such as school finance, law, curriculum develop-
ment and instructional supervision.
Wagner points out that the main challenge to school leaders nowadays
is to develop a framework for change by recuperating the spirit of com-
munity at each school. Schools have developed themselves as bureau-
cracies often managed by leaders who rely on compliance and not on
commitment, as leaders in communities do, and they '[require] a leader
with qualities of heart and mind that are very different from those asso-
ciated with the traditional role model' (Wagner 2001). Murphy (2003b)
sees 'a movement away from a century-long preoccupation with man-
agement ideology and with the dominant metaphor of superintendent
as manager'.
There are over 500 training programmes and over 60 doctoral pro-
grammes for educational leadership in the United States and a wide va-
riety of approaches and models. Two leading institutions are Harvard
University and Stanford University. The Change Leadership Group at
Harvard University focus primarily on the reinvention of the American
school system through the return of the spirit of community. The em-
phasis is put on the development of leaders able to create a new frame-
work for change. Other examples of a more humanist approach towards
educational leadership are the training programmes and ongoing re-
search at the University of Wisconsin at Green Bay and at the University
at Buffalo in the State of New York.
The training programme of Stanford University seems to follow a dif-
ferent tendency. In the Joint Degree Programme of the Graduate School
of Business and the School of Education, the student obtains simulta-
neously a Master's degree in Business Administration and a Master's de-
gree in Education. The focus of the programme is to prepare students
to apply management skills to the field of education. The programmes
focus on issues such as the application of technology to education, ed-
ucational policy and management. The training programme of Lehigh
University in Pennsylvania also follows this more business-influenced
approach. The universities of New Mexico and San Diego aim at provid-
ing professionals with ability to improve learning not only at the school
level but also in the business world, military and government.
In the usa a recent article by Townsend (2002,31) highlighted dissat-
isfaction with Doctor of Education (EdD) programmes describing them
as to 'seemingly fail to provide practitioners with the knowledge, skills,
and behaviours needed for effective leadership in educational settings'
These degrees seem to offer institutions with more status than the qual-
ification offers to graduates. This further highlights the question raised
by the 'conservative' Thomas B. Fordham Foundation's Broad Manifesto
Better leaders for America's schools: Are school leaders merely 'certified' or
are they 'qualified' for their role? The Manifesto (Broad Foundation and
Thomas B. Fordham Institute 2003) concludes that The United States
is approaching a crisis in school leadership. Nearly 40% of its 92,000
principals are eligible to retire in the next four years. They say that in
many school systems, two-thirds of the principals will reach retirement
age during this decade. These, they call the leaders that they already have,
not the same as the leaders they say that they need. Their solution is to
open up roles to those from non-educational backgrounds to lead the
schools of tomorrow.
The League: Interdependence, Complexity and Collaboration
The usa is considered too complex to reduce to a simple response to the
question of reforming school leadership training, but Young et al. (2003),
in their ncaelp report, attempt to offer a new metaphor that may help
resolve some of the underlying problems and lead to a possible refram-
ing. As described earlier, each state in the usa has freedom to set up
expectations and requirements for its school leaders. Young et al. (2003)
argue that most programmes offered by institutions have therefore been
at the whim of the ethos of the institutions themselves and reflect little of
what is required of school leaders today, in relation to state and federal
education policies.
Young et al. (2003) use two key words to describe the situation in the
us today as one of'complexity' that requires 'collaboration'. Quoting Ser-
giovanni (1991) it is suggested that, in order to develop a new leadership
practice, the metaphors must be changed and they present a strong case
for Costas' metaphor of a league to be applied to schools leadership.7
Costas points out that in a league, each franchise is not independent,
but interdependent. The necessary interdependence of schools and edu-
cational institutions is forced by what the authors term 'the only last-
ing definition of success [...] the achievement of children' (1991, 22).
This idea is paramount to all schools, but seems especially relevant in
figure 2 The league of key-stakeholders contributing to
the quality preparation of educational leaders
(Young, Petersen, and Short 2003, 24)
the American culture and climate today. The authors claim that the im-
pact upon leadership preparation 'must be the development of compe-
tent, compassionate, instructional leaders committed to the success of
every child', maintaining that it is vital for all schools that their 'concur-
rents' are in just as healthy a position as they are themselves - where the
perception of health should be equally understood by stakeholders and
customers. The authors take the idea one step further and suggest that
programmes for the preparation of educational leadership should adopt
the same protocol as Costas suggests baseball should, in order to enter a
period of growth again.
Young et al. (2003) consider there to be too many fragmented and con-
flicting programmes available to school leaders in the us today. No 'na-
tional standards' have been enshrined as yet in the us, unlike the uk.
It would seem that with globalisation leading to demands and pressures
upon universities to compete in attracting customers, this fragmentation
will continue as development takes place with no fixed norms and little
'national accountability'. That is, without a national system of evalua-
tion and inspection, fragmented competition will continue to dominate
current thinking. Of course, given that education, according to the Con-
stitution, is a state task, this issue may always be an unresolved problem
in the us. However, the problem could perhaps be overcome with the
recognition of 'collective responsibility' among stakeholders and an in-
tention to associate in the preparation of 'competent, compassionate and
pedagogically oriented leaders' (2003, 23). The decisive proposition that
each of the key stakeholders could adapt and work collectively is helpful.
However, most of these issues are shrouded by their key issue, that what
is preached is not practised. Intentions are not enough, binding struc-
tures and accountability are needed. These pointers tie in with the results
from the Wallace foundation's Making sense of leading schools (Portin et
al. 2003), that most school leaders believe that the skills they developed
in their jobs have come since they were settled in post. Comments from
providers in the uk note that after 5 years in post there is little difference
between those who have received training in school leadership and those
who have not (Wales 2004).
norway: freedom and tension?
national network for school leadership
In 1998, as the most recent nationwide school leader in-service training
project was implemented, a regional network for school leadership pro-
gramme providers was set up. The University of Oslo (uio) was given
responsibility as leader of this network. The purpose of the Network was
to draw out the best of the competence in school leadership training that
had been developed in all regions of Norway and to develop it further.
This was to be partly focused on by improving it based programmes that
would provide greater access for all. In 2000 the project was completed,
and was handed over to the Learning Centre at the Ministry of Educa-
tion, for further development. At this point, and confirmed later in the
Government white paper of 2002, uio was given the national role for
coordinating school leadership programmes amongst the 19 other par-
ticipating higher education institutions. The focus of the Network is to
build up a decentralised resource bank, share experience, focus on re-
search and reflect on international developments. Significantly there is
no requirement to run the same types of programme in each region.
In 2001 an analysis of the last nationwide in-service training pro-
gramme was made by Moller8 (2001). Although this was not an overall
evaluation of all institutions' findings it does contain interesting mate-
rial. The Network of providers led to a great difference in what was on
offer, especially in terms of a theoretical versus a practical based struc-
ture to the programmes. Moller criticised the Government's revision
in 2000, amongst other things, for a shift towards mainly it provision
and learning, over and above the more broadly based approach of the
first programmes. She saw all of the new developments in the light of
the previously mentioned shift by the Government towards New Public
Management and application of goal and result orientated philosophies.
Moller maintained that the difference between private and public leader-
ship was becoming less clear. The fact that the municipal school adminis-
tration had been made responsible for leader training makes the shift to-
wards the private somewhat inevitable, since the training provider would
be chosen according to the municipal administration's interpretation of
quality, relevance and price. In the country at large there would operate
highly different understandings of goals as far as the role a school leader
should play. The municipality stands between the Ministry of Educa-
tion and the school. Moller highlights what she terms the Government's
rhetoric on the importance of curriculum analysis and school develop-
ment, whilst the municipality seemed to be focusing on making their
school leaders like all other local authority leaders and becoming more
like small businesses trying to 'sell themselves'. Implicit in her view seems
to be that there is a contradiction between school leadership and leader-
ship as a profession.
Moller throughout her report focuses on this shift away from the
tradition of control of the Norwegian school system by the 'education
lobby'.9 At the same time she highlights the issue of the shift away from
using primarily the public teaching institutions for leader training. She
notes that whilst the Ministry of Education had given the role of Net-
work coordinators to its Universities, Colleges and teacher training insti-
tutions, it was bi Norwegian School of Management, a private business
school, that was called upon to train the Ministry's top administrators in
leadership of the education system (Moller 2001,20). But is this an unre-
alistic a situation? Moller herself admits that this may be due to greater
satisfaction with the quality of the programme and a perception of the
training being of greater relevance. Her fear is of programmes with a fo-
cus away from the basic goal of the Norwegian school system at the ad-
ministrative level that in turn will influence the school at the lower level.
The irony is, however, that Moller's own programme in school leadership
at uio in 2003 is being widened to target leaders from other sectors than
education. The University seems being drawn into making competitive
based reforms (Carnoy 1999), if it wants to stay in business.
Despite the fact that the training programmes are stated to be assessed
according to the Ministry of Education's aims (Stalsett 2000), the 'patch-
work provision' that has been on offer in Norway has not been struc-
tured in the same way as in the uk. The 2002 Government white paper
highlighted the fact that research showed that about 60% of school lead-
ers had no formal leader training and only 8% had 20 study points10 or
above. In addition to improved teacher training, the Government saw
professional training for all school leaders as the most important mea-
sure for the general quality improvement of Norwegian education. Com-
petition is encouraged and private providers are welcome.
University of Oslo has already taken 'the market challenge' and is de-
veloping its school leadership programme into a Master's in Educational
leadership, which is aimed at both teaching professionals and those work-
ing in public administration. The latter target group might be seen as
the University adapting to npm rationales. This course will be devel-
oped in cooperation with two other higher education institutions. It is
a part time course, relying on a theoretical and practical approach with a
heavy focus on personal guidance for candidates. Other institutions have
offered courses in school leadership that are much shorter, modular pro-
grammes that can be tailored to suit individual needs (e. g. Buskerud
University College). With more focus on the development of Master de-
grees many of these types of courses are disappearing or being subsumed
into other programmes. There has also been the development of a na-
tional it cooperative project in further education of school leaders called
Rektorskolen (the Head Teacher School) aimed at teachers and others
wishing to develop skills for educational leadership. This programme has
been available to all since autumn 2003.
Today there continues to be a heated debate around the focus upon
leader of a school as a manager or as a 'pedagogical leader' (Telhaug and
Medias 2003). This question ought, however, to be seen as part of deeper
changes in the Norwegian society; moving from collectivist welfare state
and progressivist school philosophies towards a liberalist market econ-
omy, and school quality related to the knowledge economy. It also has
much to do with the break up of the Welfare State and relative national
autonomy as a result of globalisation.
Another question being raised about the future of the Network and the
development of its ideas is a proposal for the 2003 plan for the National
Network for School leadership to seek closer cooperation with ncsl
(Moller 2003). This could be an interesting development, but exactly how
similar are they in practice? There is a special focus with those academics
who hold a similar educational philosophy to their own, for example
Chris Day talking of the 'intelligent head with an intelligent heart' (Day
et al. 2000,24). Which academic group/education philosophy is the most
dominant in the two countries?
Also interesting developments may take place in the private universi-
ties and the extension of their Master programmes in educational lead-
ership and management. Will they develop in parallel, in competition
or cooperation, and how will they be affected by the particular Norwe-
gian tradition of educational progressivism? These questions need fur-
ther analysis, and only some of them will be focused on in the next sec-
tion. The second diagram in fig. 1 (see page 32) attempts to represent the
current situation in the Norway.
Converging or Different Rationales and Strategies?
Walker and Dimmock (2003) claim that there has been much borrowing
in the arena of educational leadership:
The content of educational leadership programmes has con-
siderable similarities in different countries, leading to a hy-
pothesis that there is an international curriculum for school
leadership preparation. Most courses focus on leadership, in-
cluding vision, mission and transformational leadership, give
prominence to issues of learning and teaching, often described
as instructional leadership, and incorporate consideration of
the main task areas of administration or management, such
as human resources and professional development, finance,
curriculum and external relations (Bush and Jackson 2002,
420-421).
Returning to Brundrett's dichotomy (Brundrett 2000; 2001), and tak-
ing the uk as a starting point, what has been the recent development?
Has it moved away from the 'simplistic, atomistic and behaviourally
determinist' approach and has there been congruence with the us and
other countries?
national policy background
MacBeath notes that the current governments in the United States and
the uk have placed education at the head of their policy programmes,
and in an interesting development have made themselves figureheads for
the development. This has also been true to a great extent in Norway,
where the current (2004) education minister Kristin Clemet has contin-
ued to head up policy development. MacBeath (in Walker and Dimmock
2003, 104) writes that countries today are bound together by globalisa-
tion. This factor is important, as he notes how hopes for school leader-
ship have been based on what he claims to be several myths, including
acceptance of the business model, objective measurement for improve-
ment, economic productivity and standards. This seems to be a common
approach amongst politicians across the three countries. It would seem
that this concurs with the earlier mentioned metaphor of ladder exten-
sions of Murphy (2003a). It does seem bizarre to suggest that leadership
of schools should now be refocusing on the learner again, what else could
really be the focus of learning institutions? This has been the focus all the
time, many would think, while others wonder if the teaching profession
as such or the administrative apparatuses have become ends in them-
selves, with a primary concern for their own material interests, with less
focus on children's learning achievements. However, attention has varied
about the significance of non-academic goals, and which organisational
means would lead to high quality learning for all.
To adopt the league metaphor of Young et al. (2003) would demand
outstanding quality of each individual provider in order to secure sur-
vival of the whole league. However, will each individual provider be na-
tionally accountable in the us? A college will perhaps focus on equipping
a group of prospective leaders through a nationally relevant curriculum,
but will the individual leaders be accountable in their special situation
and local climate? A network will allow for breadth and diversity, but
can accountability be achieved without any standard format that can be
tested or referred to nationwide? Accountability proved by systematic ex-
ternal evaluations seems to be a common denominator of policies in all
three countries. However, MacBeath (2003) claims that research does not
suggest that overall standards improve as a result of evaluations.
Murphy (in Cambron-McCabe and Cunningham 2003) calls for lead-
ers to embed new dimensions in their approach to all pupils at their
school, by becoming moral stewards, educators and community builders.
Surprisingly enough these factors seemed to have been suggested for
some time, discussed and been approved of, but still do not make it
into programmes. Educators do not seem to have been able to convince
the policy makers and mandators of education about the relevance and
wisdom of their suggestions. Or, maybe the educators have not been suf-
ficiently motivated to follow 'the call' of Murphy and others? If Murphy's
new dimensions were taken seriously by policy makers and educators in
administrative positions one would expect to see the dimensions as main
criteria of goal achievement expressed in terms of reference for external
evaluations. And the us, unlike the uk, without a national system of
stringent testing, will find it increasingly harder to hold programmes
to a desired common standard. Related to accreditation requirements,
maybe 'learning management competence' of the leadership of the insti-
tutions offering training programmes ought to be externally evaluated?
An interesting interconnecting line needs to be drawn to both the Na-
tional network for school leadership in Norway and the National College
for School leadership in the uk. The us could be described as sitting in
between the uk and Norway, but at this present time due to the ideolog-
ical climate considerably closer to the uk. The Norwegian educationalist
academic response would tend to suggest that the mood is one of being
able to select those ideas that suit development in what is seen as a well
balanced system, whereas the current Christian Party-led conservative
coalition government11 calls for more wide-sweeping changes, claiming
that the very basis for the education system and its training is in need of
an overhaul. Over and above, the Norwegian scene can be seen as a battle
between the Conservative party, parts of the Labour Party, the business
community on the one hand, and, on the other the Socialist Left Party in
association with the Education Lobby.
providers
In a time when research suggests that school leaders may come from
non traditional backgrounds (Slenning 1999; Nytell 1994), Murphy as-
serts that leaders must still be constructed as educators and be 'much
more knowledgeable about the core technology of education in particu-
lar' (2003b, 10) and among educators there is still great reaction to em-
ploying non-teachers as school leaders. Of course, this point of view can
both be due to reasons of principle, or to protecting the profession from
invaders.
Cambron-McCabe and Cunningham (2003) highlight that ncaelp
sponsored articles have recognised a diversity of providers for school
leader training in the United States, something which mirrors to some
extent the uk experience, but has had relatively little impact in Norway.
However, instead of offering a pre-packaged programme like the cen-
tralised focus directed by the ncsl in the uk, the American system has
been far more fluid. One wonders if a similar approach to that in the uk
would have developed in Norway had there been a national requirement
for leadership training and development. Most of all these ncaelp pa-
pers have highlighted the shift away from university involvement, not so
much at the pre-service preparation stage, but within professional devel-
opment. The uk has seen more initial training offered by private com-
panies, but within a prescribed curriculum.
the future
Whereas each country will need to adopt programmes to suit their so-
cietal culture (Walker and Dimmock 2003), academic quality and policy
relevance, especially the needs of the knowledge economy, must be as-
sured. But how will it be assured? There is a need for greater leader au-
tonomy anchored in solid professional competence based on profound
theoretical understanding of organising of learning, of national educa-
tion policy goals and of 'educational efficiency', as well as skills in plan-
ning, implementing and evaluating how the school organisation meets
the goals of the students, the community and the nation. To evaluate
school leaders according to these criteria, and only let leaders who meet
the standards keep their job, will require huge paradigm shifts in each of
the three countries.
However, if we use the label of learner centred lifelong learning, ob-
viously the learner is at the centre and all resources must be directed to
developing, training and supporting school leaders in this ultimate goal.
The learner's achievement level is the ultimate criterion of success for
the school leader. This might require each country to break with their
treasured traditions and adopt an approach like that of a league;: real in-
volvement of all stakeholders, and taking responsibility for finding the
common ground necessary for cooperation and accountability in terms
of reaching equity by delivering quality education to all students. How-
ever, the key agent, decisive for making such educational justice happen,
is the professional school leader. This leader ought to be employed on
contract with a competitive salary, and the contract renewed only when
the external evaluation had confirmed that he or she had made the school
reach the goals of learning achievements of quality for all students.
To what extent, however, could - as Murphy (2003b) and Wagner
(2001) call for - schools be perceived as communities again? One might
argue that they have neither developed as organizations nor as commu-
nities, but finding another definition is difficult. The individual school
may more closely represent either of these ideas depending on the influ-
ence of the individual approach of the school leadership, but in general
practice, the political atmosphere has always decided the path a school
shall take. One must therefore follow developments in education policy
and curriculum traditions to come closer to a satisfactory definition.
There is also the issue of licensure across all countries. Just who should
we look for, leaders with 'hearts' and ability for the role that are willing
to be trained, or should we train the interested and formally qualified
and then see if they are good enough and employable? Murphy (2003b)
claimed that leadership should be determined by backward mapping
from student learning. Therefore, simply put, key leaders would invest
in the core business of schools, that is, organising of goal-effective learn-
ing for all students. Simply put, first, we look for people having demon-
strated that they can organise learning effectively; secondly, within that
group we look for people who can demonstrate that they can make their
teacher colleagues develop their professionalism; and thirdly, within the
group covering these two first criteria, we select those who have also
demonstrated that they can manage (administratively) the school as an
organisation in an effective and efficient way.
These factors seen together return us to the issue of whether teachers
and only teachers make good school leaders. Murphy's suggestions that
practicing teachers make the best future school leaders could be ques-
tioned (2003a). Among the applicants scoring highest on learning man-
agement, personnel management and organisation management, those
short-listed should be given a probation period - to prove, in practice,
that they can deliver. Whatever their professional background, those who
make their school deliver successful organising of learning making all
learners strive to achieve optimally according to their abilities - they are
the good school leaders.
Concluding Remarks
The purpose of this paper was to reflect upon a) to which extent there is
convergence or recurring difference in how school leadership training is
carried out in three countries, and b) to identify how current policies are
assessed by education researchers in the three countries.
Convergence or Recurring Differences?
Globalising factors have increased demands for greater standards and
improved skills of school leaders. The onset of competition creates a di-
chotomy in relation to their role. Although schools are enclosed within
national boundaries (and often regional to local ones) the effects of their
outcomes are felt on a national and worldwide scale. Results matter and
leaders are increasingly made to become more accountable. Accompa-
nying decentralisation and public spending cutbacks have placed greater
managerial responsibility upon the school leader role.
Alongside this one must recognise historical, social and societal con-
texts and backgrounds when examining school leadership practices. In
one respect, each of the models mentioned in this paper might appear to
provide internally appropriate responses to match cultural conundrums.
However, at least in Western Europe, there appears to be a growing con-
vergence towards even greater decentralisation of management respon-
sibility and alongside central control of curriculum and targets. This in-
creased accountability will require more consistent standard setting at
national levels. Here the network model will find difficulty in retaining
its coexistence of diversity, with insitutions finding greater difficulty in
securing funding to promote the variety of programmes. The empha-
sis on 'education' over 'training' may continue to remain popular at the
practitioner level, at least for some, but inappropriate at the mandator
level. The claim for academic freedom may be relegated to the passing of
the Humboldtian style University.
At the same time, the professional college model will need to make
greater provision for bottom-up change whilst downloading state de-
sires. Tension between implementers of national programmes, i. e. be-
tween the public and private instituions, will need to be regulated more.
Is a national qualification enough to ensure the progression needed
to manage a complex organisation such as a school and develop skills
through the leadership and management team?
The league model remains at its conceptual stage and may develop to
be nothing more than a good idea. Questions remain as to whether it
is the golden middle way between the rigid structure of a college model
supported by a national qualification and the diversity and fluidity of the
network approach. It may 'suit' the American situation merely because
of the geographic and societal complexity, but a reconsideration of the
model - developing cooperation and competition at the same time -
may be too hard to manage.
Educational Researchers' Assessment of Current Policies
What are the similarities and differences between the three countries?
An interesting similarity between Norway and the us is that education
researchers in both countries are suggesting a move away from greater
focus on managerial practice towards the teaching process, in Norway
expressed as the need for 'pedagogical leadership' and the head teacher
as 'the first among equals'. However, programmes in the us maintain the
understanding of organizational management: a leader with authority
above the staff is needed. Collaboration and linkage between stakehold-
ers are seen as the way ahead in the us. Similar moves are now seen in
the Norwegian network. Debate as to who makes up the stakeholders is
perhaps a little more deferential, and collaboration is spread less widely
in Norway. The dilemma is as yet unresolved in the us.
One factor that has been seen in all three countries is that active re-
form has taken place outside of the university. The slow moving univer-
sities have been extremely reluctant to either give up ground to others
or change internally, or perhaps merely to respond to public policy. In
the us competition is forcing their hand, in Norway it seems that a crisis
of culture is forcing this, and in the United Kingdom it is governmental
reform all stemming from the same external, globalizing pressures.
All three nations are attempting to 'reframe and reform', and some
educators think the defining factors will be quality of performance and
quality of collaboration, while others believe that there must be a shift
from focus on performance to performance on learning.
Acronyms
DfEE Department for Education and Employment
era Education Reform Act 1988
lea Local Education Authority
molis Milj0 og ledelse i skolen (Environment and School Leadership)
ncaelp National Commission for the Advancement of Educational
Leadership Preparation
ncsl National College for School Leadership
npm New Public Management
npqh National Professional Qualification for Headship
uio University of Oslo
Notes
1 The direct reason for doing this comparison is a Norwegian research
pilot project on School Manager Training for Accountable Quality Ed-
ucation (head), funded by the Research Council of Norway's special
programme for Research on Innovation and Renewal of the Norwe-
gian Public Sector 2002-2006. The purpose of the head Pilot was to
prepare a four year action research and comparative research project
(2004-2007) on curriculum, organisation and achievements of school
manager training programmes within 'the value chain of education' in
Norway (see www.bi.no/cem).
2	Societal culture in the uk is said to be based on three continuing ide-
ologies; individualism, intelligence and behaviour - described as nor-
mality (Garner 2000, 98).
3	At the same time the 1960s saw departure to a more child centred ap-
proach to the learning environment.
4	The Interstate School Leaders Licensure Consortium (isllc) Stan-
dards for School Leader's, developed by the National Policy Board for
Educational Administration and by representatives of 23 state depart-
ments of education (see http://www.sru.edu/depts/educatio/National
%20Standards%20Principalship.doc). This document is composed of
six standards, all beginning with the sentence 'a school administra-
tor is an educational leader who promotes the success of all students
by [...]':
Standard 1: Facilitating the development, implementation, and stew-
ardship of a vision of learning that is shared and supported by the
community.
Standard 2: Advocating, nurturing and sustaining a school culture and
instructional program conductive to student learning and staff profes-
sional growth.
Standard 3: Ensuring management of the organization, operations,
and resources for a safe, efficient, and effective learning environment.
Standard 4: Collaborating with families and community members, re-
sponding to diverse community interests and needs, and mobilizing
community resources.
Standard 5: Acting with integrity, with fairness, and in an ethical man-
ner.
Standard 6: Understanding, responding to, and influencing the larger
political, social, economic, legal and cultural contexts.
5	In Norwegian the title is rektor - from the Latin word meaning 'to rule
over'.
6	Http://www.ncsl.org.uk/index.cfm?pageid=ldf.
7	Applied by Costas to baseball.
8	Moller, in addition to analyzing the programme as a researcher, also
played two other roles: the administrative coordinator of the Network
and teacher at uio's programme in school leader training.
9	The Norwegian 'education lobby' consists of the dominant teacher
union, the education administrative bureaucracy at municipality,
county and central levels, the majority of teachers and researchers
of the field of education at the universities and colleges - and the
'Teachers' Political Party' in Parliament - The Socialist Left Party.
10	Equivalent to less than one semester of full time study.
11	The Norwegian Government 2004 is a coalition of the Conservatives,
the Christian People's Party and the Liberals, led by a Prime Minister
from the Christian People's Party.
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Evidence of Returns to Education Among Roma
in Central and Eastern Europe and
Their Policy Implications
Susanne Milcher
Katarina Zigova
In this paper we analyze specific educational issues faced by Roma
households using data from the undp/ilo survey conducted in
Bulgaria, the Czech Republic, Hungary, Romania and Slovakia in
2001. Roma situation is characterized by poverty, low educational
achievements, and consequently limited employment opportunities.
We believe that the core of this trap is insufficient education, non-
preparedness for entry into the labor market of a market economy. This
is demonstrated by the existence of vital returns to education estimated
for Roma households throughout the region. The patterns are similar
over the whole region and hence the need for a systematic and common
education policy of Roma is both necessary and beneficial.
Key Words: returns to education, Roma minority, poverty,
labour market
jel Classification: j15, j24, j31
Introduction
In 2001, the United Nations Development Programme (undp) con-
ducted a large survey on Roma households in five Central and East-
ern European countries, which revealed a critical socio-economic status
of this ethnicity. Roma live predominantly in disadvantaged areas iso-
lated from the majority population, facing poor housing standards and
health care. Due to their segregation in settlements, Roma find it harder
to attend and complete education comparable with that of the major-
ity. Consequently, they encounter constraints on the labor market. As
a result of these problems and specificities, the Roma minority belongs
Susanne Milcher is a Specialist in Poverty and Economic Development
of the United Nations Development Programme, Regional Centre
Bratislava, Slovakia.
Katarina Zigova is a Consultant at the Strategic Research and
Economy Branch of the United Nations Industrial Development
Organization, Vienna, Austria.
throughout Europe to the poorest ethnic group. They suffered dispro-
portionately from restructuring and more than ten years later, they are
worse off in terms of nearly all basic social welfare indicators.
The crucial issue of our paper is returns to education. Some empirical
results from Central and Eastern European countries (Jones and Ilaype-
ruma 1994 for Bulgaria; Halpern and Korösi 1997 for Hungary; Chase
1997; Flanagan 1995 for the Czech Republic and Slovakia) suggest that the
returns to education increased for higher educated individuals in com-
parison with the socialism period. As conventionally assumed, results
indicate that returns to education increased during transition, since con-
tributions by skilled individuals were devalued in the communist system.
On the other hand, some skills learned under socialism are no longer ap-
plicable in modern market economies, therefore returns to experience
obtained under communism are found to decrease during transition
(Filer, Jurajda and Planovsky 1999). Several attempts to establish global
patterns have been made during the last 40 years (Psacharopoulos 1973;
1985; 1994; Psacharopoulos and Patrinos 2002). The latest update of the
classic pattern of falling returns to education by level of economic devel-
opment and level of education estimates a 10% average rate of return to
another year of schooling for 42 countries. However, returns to education
for Roma tend to show different patterns because they are rarely high
educated, and most of their skills attained during socialism are not mar-
ketable any more (World Bank 2001). Secondly, the majority of Roma
live in less developed areas, where unemployment is more pronounced
and dependency on social contributions or irregular jobs is present. This
therefore causes disincentives to invest into education of their children
and creates a continuous circle of a weakly educated labor force.
In this paper, we analyze regional and ethnic disparities in five most
Roma populated countries of Europe, where three of them are members
of the enlarged Europe. In Bulgaria, the Czech Republic, Hungary, Ro-
mania and Slovakia there live, according to the estimates, more than 50%
of the whole European Roma population (Vašecka et al. 2003). We utilize
here two kinds of information sources. Firstly, we discuss the relations
between the educational enrollment and log gdp (ppp1) measures in
the corresponding sub-regions of these five countries. We find that there
is a notable gap between capitals and other regions within the country.
These gaps coincide unfortunately also with enrollment gaps, particu-
larly in pre-school and secondary enrollment rates. This means that the
education coverage is unequal throughout the region, as well as within
table 1 Roma population shares throughout the countries considered
Country	(1)	(2)	(3)
Bulgaria	4.6%	10%	700,000-800,000
Czech Republic	0.3%	3%	250,000-300,000
Hungary	4.0%	6%	550,000-600,000
Romania	2.5%	10%	1.800,000-2.800,000
Slovakia	1.6%	9%	480,000-520,000
note: Column headings as follows: (1) World Fact Book (2003 estimates, based on 2001
census); (2) estimates of real proportions; (3) Estimates of real numbers (VašeCka et al.
2003).
the countries. Some of our results suggest that exactly the more Roma
inhabited regions are the ones with weaker economic performance and
lower enrollment rates. This, more or less intuitive fact, motivates our
second part. Here we attempt to show that education matters for Roma
as well. The patterns are similar over the whole region and hence a need
for systematic and common education policy of Roma is both necessary
and beneficial. For this part we use a unique regional dataset from the
undp/ilo survey conducted in 2001, and estimate rates of return to dif-
ferent education levels for Roma households in these countries.
The presented paper is organized as follows. The next section intro-
duces and discusses relations between sub-national log ppp levels and
educational enrollment rates for different levels in 2001. In the third
section we compute correlations to assess significant bivariate relations
among variables. Afterwards a probit regression is used to estimate an al-
ternative of the Mincerian log wage equation. Predicted probabilities are
calculated in order to interpret the relevant outputs of this model. The
last section presents the conclusions.
Educational Attainment and Economic Indicators
The Roma population composes a not negligible part in the considered
countries (cf. table 1). One should exactly differentiate between the Roma
numbers counted within the national rounds of censuses and the esti-
mates of real amounts. The first number is usually much smaller (col-
umn 1) as lots of Roma do not self-identify as members of the majority
population in the country they live in. One should rather rely on the es-
timated proportions (column 2), which are based on surveys and local
municipalities' sums.
The situation, in which a big part of the Roma population lives, is
alarming. Long-term unemployment, reaching up to 80-100%, very of-
ten connected with extreme poverty, lack of hygiene and basic health
care, or strong dependency on social assistance. We believe that at the
core of this trap, is insufficient education, which causes disadvantages on
the labor market.
It is conventionally assumed that educational enrollment rates and the
level of education increase with economic development in the market
economy. In the context of transition countries, the case might be differ-
ent, as enrollment rates in almost all types of education had been already
extraordinarily high during socialism, while economic development was
stagnating. Since the breakdown of the socialist regime, educational re-
form has taken place parallel to economic and social turmoil that charac-
terized transition countries. Due to large declines in gdp measures start-
ing at the beginning of transition, two main challenges with respect to
education can be identified:
1.	As gdp declined rapidly and economic conditions have been un-
favorable, governments and households are limited in their ability
to finance school costs, and graduates may be limited in their labor
market opportunities.
2.	Reduced government revenues impede a sufficient provision of
quality education.
These impediments led to declines in enrollment rates in the first half
of the 1990s (Micklewright 2000). With improving economic indicators,
after 1995, enrollment rates started to increase again at national level.
However, economic development did not occur equally within the coun-
tries but often only in certain regions. In 2001, which is our benchmark
year, substantial regional disparities between economic development and
enrollment can be observed when having a closer look at nuts ii or
iii level (nomenclature of Territorial Units for Statistics). This implies
threats to future equally distributed prosperity of certain parts of the
countries, as education is a core driver of economic growth. In the fol-
lowing part we illustrate several examples of existing regional disparities
within, and to a certain extent, between countries. Due to insufficient
data sources, a comparison is made only between at most two countries.
Moreover, there exist substantial differences between education systems
as well as between the state of economic development (three new eu
member states, two second-wave candidate countries). Hence, the inter-
country comparison should be treated with caution.
Plotting pre-school net enrollment rates against log gdp (ppp) for the
Czech Republic and Slovakia in 2001 (cf. fig. 1a on p. 56) shows:
1.	substantial disparities between the capitals Prague and Bratislava
and the rest of the country,
2.	a positive trend in pre-school net enrollment rates with rising gdp
and
3.	that those regions with a large share of Roma are characterized by
lower economic development and lower net enrollment rates.
The gdp (ppp)in 2001 by nuts ii level were calculated from gdp lev-
els in 2001 in national currencies and the average usd exchange rate for
2001. The regions with a large share of Roma population were identified
using various expert estimations.2 Disaggregating the data by nuts iii
level in Romania in 2001 (cf. fig. 1b on p. 57) shows also a positive trend
between economic development and net enrollment rates. However, the
capital Bucharest, displays a surprisingly low level of pre-school net en-
rollment although having the highest gdp level.
For primary education we observed almost constant net enrollment
rates, independent from the magnitude of gdp. This can be easily ex-
plained, as universal primary education is obligatory in all five countries
and even in disadvantaged regions, universal enrollment is guaranteed.
For secondary education, the situation again looks different (cf. fig. 1c
on p. 56). First, a considerable difference can be observed between the
economic development level of the two countries examined, the Czech
Republic and Bulgaria. Lower average net enrollment rates for Czech re-
gions result most likely from differences in education systems and mea-
surements. Again, within each country, a positive trend between gdp
and net enrollment rates can be seen. The two capitals, Sofia and Prague
stand out substantially. The regions with a larger share of Roma are char-
acterized again by both lower gdp and by lower net enrollment rates.
Lastly, we look one level deeper and plot net high and vocational en-
rollment rates against gdp at nutsiii level for Romania in 2001 (cf.
fig. 1d on p. 57). Here, there exists again a positive trend with two out-
liers, one is expectedly the capital, which displays the highest levels of
economic development and enrollment in higher education. The second
one is a district belonging to Bucharest (Ilfov - black rectangle) with ex-
tremely low net enrollment rates compared to its corresponding level of
economic development. This might be due to the large share of Roma
living in this area.
figure 1a Regional differences in the Czech Republic and Slovakia -
pre-school, 2001 (nuts ii)
100
90
80
70
50
40
A
A
7.5
8.0
-+-
-+-
8.5	9.0
In GDP (PPP)
figure 1c Regional differences in Bulgaria and the Czech Republic -
secondary school, 2001 (nuts ii)
100
90
80
70
60
50
40
A
• N
I O
\ O
BG
_J__
/ «h"» N
I H» \
I CZ I
\ . /
7
7.5
8.0	8.5
In GDP (PPP)
• Region with majority population
o Region with large share of Roma
9.0
10.0
A
9.5
Capital
source: Statistical Offices ofthe Czech Republic, Slovakia, and Bulgaria.
g 60
The comparisons suggest two implications. First, disadvantaged re-
gions lack opportunities for parents to enroll their children in pre-school
and incentives for students to enroll in higher education. There is most
likely a lack of funding from local governments to provide pre-school in-
stitutions. Moreover, the lack of labor market opportunities is a disincen-
tive for students to proceed with secondary and higher education. The
Evidence of Returns to Education Among Roma 57
figure 1b Regional differences in Romania - pre-school, 2001 (nuts iii)
!.5	9.0
In GDP (PPP)
figure 1d Regional differences in Romania - high and vocational school,
2001 (nuts iii)
100-
<B 90
ts
£ 80
n
<D
o 70
S 60
>
50
to
be
40
7.5
8.0
.5	9.0
In GDP (PPP)
A Capital • NUTS III region
source: Statistical Office of Romania.
10.0
A			
a			
•	•• •		
•w •			
•	*«		
• . • •			
--H?-	-H	■	-1-1
10.0
second problem arising here is that poorer regions imply poorer house-
holds. They cannot afford pre-school and secondary education if it is
combined with fees or requires longer distance travel. Obviously, Roma
face all these problems disproportionately, since they live to a larger ex-
tent in the identified disadvantaged regions in all five countries. Returns
to higher education did not develop fast enough in certain regions to
convince the population that the investment in education will bring sub-
stantial benefits. In particular, many Roma families face the trade-off
between high costs of education and low chances on the labor market
because of low educational achievements.
These regional disparities in enrollment rates will have a large impact
on labor market chances and on the economic development of the coun-
try in the coming years. Entering the eu, the low enrollment rates in
secondary and higher education prevent the creation of a 'knowledge
society' envisaged in the 'Lisbon Strategy' by the European Union. Hav-
ing in mind that Roma live predominantly in disadvantaged regions,
and thus they have weak employment opportunities, a natural question
arises. Does it make sense for Roma to invest into education?
Returns to Education
In this section, we address the question of whether the returns to educa-
tion are present in Roma households. The return to education is already
a classic theme in economics, where factors of the individual's wage are
investigated. However, estimating the returns for marginalized groups,
in particular for Roma is, to our knowledge, a unique idea.
A significant deviation from the original Mincerian model settings
was necessary. Throughout subsequent return-to-education analysis we
use solely the household's characteristics rather than individual ones. The
reasons for this are twofold. First, the nature of the dataset requires
household-based analysis. Second, using households as the unit of anal-
ysis has a rationale with regard to Roma lifestyle as well. Roma house-
holds are larger and broader than the majority households. This is not
only given by the fact that they have more children, but very often broth-
ers and sisters live together even when reaching adult age. Hence, their
decisions, in this case educational and working decisions, are very much
influenced by the interaction among adult household members.
In the following part, we firstly introduce the data set and main find-
ings from the bivariate analysis, where influential factors of the wage
variable are depicted. Finally we set up the model of Roma returns to
education and show the main findings and implications.
data set
The results discussed in this paper are based on the survey data collected
from face to face interviews with 5034 Roma respondents, who represent
at the same time a whole household, in Bulgaria, the Czech Republic,
Hungary, Romania, and Slovakia. In a number of respects this survey
is unique in its scale and consistency over countries. The results from
each country are comparable because they are based on a common ques-
tionnaire, translated into the respective local languages and an identical
sampling design methodology. The sample size in each country was close
to 1000. The survey is a representative sample of the Roma population in
a respective country.
bivariate relations
According to the classic study by Mincer (1974), the model estimating
returns to education is based on those factors which influence the wage
of individuals. Among them, the major role is played by education at-
tained and experience acquired. Indeed, more factors are added to the
model depending on the examining data background. Prior to running
the model, we analyze bivariate relations with the wage variable, in order
to account for its significance and magnitude. This exercise helps us to set
up the components of the Roma wage equation. We consider here a set of
household variables, in particular, economic, demographic, educational
and social ones. Table 2 displays descriptive statistics of these variables.
These variables prove to be significant both in the bivariate relation and
in the returns to education model.
The proxy of the household's wage is an ordinal variable, which we
created on the basis of the question: 'Which sources provide the most
money for your household?' We aggregated the sources to four cate-
gories with clear ranking. The lowest category consists of sources as loans
and remittances from people outside the household. This is clearly the
worst version of dependency, as this source is highly informal and fragile.
Slightly better is the dependency on the social contributions of various
types. Here belong those households which stated child support, unem-
ployment or social benefits as their main sources of money. One rank
higher are those households which receive most money from various ir-
regular jobs, mainly without an official contract. Clearly at the top we
put households, which receive most of their money from regular wage
jobs, mainly with an official contract.
The set of independent variables should necessarily contain two vari-
ables: education attained and experience acquired. The first variable is
based on the answers to the question: 'What is the highest level of ed-
ucation reached by a member of your household?' Here again, we ag-
gregated the answers into 4 categories with a rank. The lowest rank was
assigned to households with no or incomplete primary education, the
second rank was assigned to households with completed primary edu-
table 2 Descriptive statistics on Roma population
Variable
Mean Range Description of the categories
Wage proxy of a household*
2.72 1-4 (1) loans (2) benefits (3)
occasional wage (4) regular wage
2.39 1-4 (1) incomplete primary, none
(2)	primary (3) apprenticeship
(4) completed secondary
1.83 0-7 (7) = 7 and more working adults
in the household
1.35 0-6 (6) = 6 and more unemployed
in the household
1.95 0-7 (7) = 7 and more children
in the household
1.77 1-3 (1) principally Roma (2) mixed
(3)	principally non-Roma
3.07 1-4 (1) capital city (2) district center
(3) small town (4) village
2.01 1-3 (1) low (2) medium (3) high
Household highest education
Number of working adults
Number of unemployed
Number of children
Household neighbourhood
Type of settlement
Household welfare
* Dependent variable.
cation, third rank was assigned to households with apprenticeship and
incomplete secondary education, and the highest, i. e. the fourth cate-
gory, was given to households which have a member with completed
secondary education or higher. For the latter variable, acquired expe-
rience, we used the number of unemployed and employed household
members. In fact, we built a ratio where in the nominator is the number
of working adults compared to the number of adults in the active age
(employed + unemployed).
In addition to those two, we included into the model two variables
representing localization of the household. The type of settlement ranges
from 1 to 4, where 1 stands for capital city, 2 means district capital, 3 rep-
resents small town and 4 is village. The household neighborhood ranges
from 1 to 3, where 1 means principally Roma neighborhood, 2 is mixed
and 3 stands for principally non-Roma neighborhood. Furthermore, we
add into the model the number of children and the measure of house-
hold welfare, too, as further variables which are usually good in explain-
ing the household background.
Note that the variables in table 2 are ordinal, exclusively. Hence, we use
the Spearman Rho measure of bivariate correlation, which is an ordinal
table 3 Bivariate relations for household wage and set of variables
Country
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Bulgaria
0.110*
0.246** -0.183** 0.000 -0.163** 0.313** -0.181**
6**
The Czech Rep. 0.295** 0.395**	-0.418**	0.237**	-0.024
Hungary	0.331** 0.292**	-0.236**	0.202**	-0.102**
Romania	0.163** 0.082* 0.037	0.128**	-0.111**
0.315** -0.160**
Slovakia
0.268** 0.370** -0.373** 0.207*
All countries 0.202** 0.290** -0.278** 0.176*
-0.178*
0.354*
0.269*
-0.165*
note: Column headings as follows: (1) household highest education; (2) working
adults in the household; (3) unemployed in the household; (4) household neighbour-
hood; (5) type of settlement; (6) household welfare; (7) children in household.
We use here the Spearman Rho as a measure of correlation. We indicate with ** and *,
measures significant at 99%, or 95% significant levels respectively.
0.342** -0.177**
0.227** -0.074*

0.102
alternative of ordinary correlation measures. The results for all countries
as well as for each single country are presented in table 3.
The household education, number of working adults, household
neighborhood and household welfare have a positive impact on the wage
level. On the contrary, the number of unemployed household mem-
bers, the geography, expressed as type of settlement, and the number of
children have a negative influence. The negative sign of the number of
children is especially serious, as it expresses the risk of poverty of large
households, but it might also be a sign for disincentives to look for a
regular job, if the contributions (in this case child support) are offer-
ing the existence minimum for the household. The type of settlement is
clearly negative and presumably would be negative also for other pop-
ulation groups, and expresses rather the economic gap between rural
and urban regions or the gap between capitals and other municipalities.
What attracts attention is a similar magnitude of influence of the variable
number of working adults and unemployed household members, with
opposite signs. An additional correlation test between these two vari-
ables reveals very high correlations. Hence a combination of these two
variables was used in the final model, as described above. If comparing
the magnitudes on the overall level, the education and the two variables
expressing the working experience of the households have the strongest
effects.
If we look closer at inter-country differences, remarkable and very in-
teresting deviations from the all countries correlations are revealed, how-
ever the signs remain. In particular, a still repeating pattern can be ob-
served. The three, so-to-say advanced countries, i. e. the Czech Republic,
Hungary and Slovakia have similar magnitudes, while the less advanced
countries, Romania and Bulgaria have remarkably different magnitudes
than the three others. In the case of education, it has a stronger impact
on wage levels in advanced countries, while the type of settlement has
significantly stronger correlations with wage level in less advanced coun-
tries. This coincidence is especially interesting with regard to the number
of unemployed household members. In the advanced country group we
observe much stronger negative impacts than in the less advanced coun-
try group. Unfortunately, this ought to be again the effect of a generous
social welfare system, which offers little motivation towards seeking for
a serious job.
roma returns to education
In this section we introduce our empirical findings on the returns to ed-
ucation model for Roma households. Recall that our observations are
households rather than individuals. In addition our dependent variable,
household wage, is an ordinal variable and hence we use the probit model
to assess the returns to education. The set of our independent variables
consists of three education dummies, where primary education is the
base category. Moreover, we include a proxy for household experience, as
explained above; geographic ordinal variables: type of settlement, neigh-
borhood; a demographic variable: number of children in a household;
and a proxy for household welfare. Finally we considered four country
dummies, which grasp the unobservable country specific effects. Here,
Slovakia serves as a base category. In table 4 we display the estimation
results from the probit model of four distinct wage categories for 4481
Roma households3 in five European countries. The estimated param-
eters, except for significance, do not have a direct explanation, as the
probit specification is a nonlinear model. Therefore, various transfor-
mations are used in order to interpret the values (Scott-Long 1997).
In our paper we use transformations into predicted probabilities and
will observe the tendency of change within predicted probabilities for
four distinct wage groups, given changes of some variables. In our spe-
cific Roma household model, one can explain the concept of predicted
probabilities as follows. A predicted probability for one category of wage
proxy variable is a probability, with which a Roma household can ap-
pear in this category, holding the set of independent variables constant
table 4 Estimation results
Variable	Parameter estimates
Education dummy - incomplete primary, none	-0.091*
Education dummy - apprenticeship	0.191**
Education dummy - completed secondary and more	0.290**
Ratio - household experience	0.968**
Type of settlement	-0.098**
Household neighborhood	0.097**
Number of children in household	-0.079**
Household welfare	0.344**
Country dummy - Bulgaria	0.452**
Country dummy - The Czech Republic	0.160**
Country dummy - Hungary	0.310**
Country dummy - Romania	0.344**
Pseudo R2	0.106
Number ofhouseholds, N	4481
at their means (Scott-Long 1997). In addition to this basic definition, the
researcher can go further and change the means of some variables and
observe the underlying changes in the predicted probabilities. For us the
variable of crucial interest is household education and experience. In fig.
2a, we display the predicted probabilities for levels of education, hold-
ing the rest of the independent variables constant at their means. In fig.
2b-d we additionally drop down the predicted probabilities with regard
to education into three country groups that showed similar predicted
probability patterns.
The pattern for all countries shows that there is a rapid increase in
the probability of obtaining a regular wage job if one household mem-
ber has higher education. At the same time, there is a slightly weaker,
but still remarkable decline of the probability appearing in the passive-
beneficial group. However, even with higher education, the probability
of regular job wage households does not cross the one of households re-
ceiving benefits. The probability of occasional wage income is relatively
stable (around 16%), across all education levels and the probabilities of
households living on loans are in general negligible, but still we observe
a weak decline with increasing education.
Separating these results for various country groups, we reveal signifi-
figure 2a Predicted probabilities for all countries
0.70
' ~ —- —
" ------
0.60
0.50
0.50
0.30
0.20
0.10
0.00
Incomplete	Complete	,	Secondary and
Apprenticeship	, ,
primary, none	primary	higher
figure 2b Predicted probabilities for the Czech Republic and Hungary
0.70
0.60
0.50
0.50
0.30
0.20
0.10
0.00
o-----
---o- .
' MJ — _ _ _ _ __
Incomplete Complete ,	Secondary and
Apprenticeship	, ,
primary none primary	higher
•—• Loans o--o Benefits 9 9 Occasional	0--0 Regular
cant deviations, especially for beneficiary and regular wage probabilities.
For example, in the advanced countries, such as Hungary and the Czech
Republic, we witness that those households with regular wage income
achieve in the two highest education levels higher probabilities than the
beneficiaries group. An even more optimistic picture can be observed
for the two less advanced countries in our sample: Bulgaria and Roma-
nia. Here, the probabilities have the same tendencies as observed before,
though the probability level of regular wage receivers is throughout all
education levels the highest and reaches almost 60% for households with
secondary educated members. The picture in Slovakia shows rather the
opposite. Here the tendencies are similar, but we observe a tremendously
Evidence of Returns to Education Among Roma 65
figure 2c Predicted probabilities for Bulgaria and Romania
0.70
0.60
0.50
0.50
0.30
0.20
0.10
0.00
o-----
c
• -o-------
Incomplete
primary, none
Complete
primary
Apprenticeship
Secondary and
higher
figure 2D Predicted probabilities for Slovakia
0.70
0.60
0.50
0.50
0.30
0.20
0.10
0.00
o------
----------
Incomplete
primary, none
•—• Loans
Complete
primary
o—o Benefits
Apprenticeship
Occasional
Secondary and
higher
^^ Regular
high probability of beneficiary households, which is always the prevailing
and reaches approximately 50% even for the highest education level. This
is due to the very generous system of social benefits in Slovakia. In this
country, the level of social benefits could reach the minimum wage and
hence this system does not offer enough incentives to find a job if having
achieved only little education. These inter-country deviations suggest the
following remarks:
1.	The education status matters throughout all countries.
2.	However, it matters more in the less advanced countries, perhaps
also because of weak social systems, but this is also supported by
other studies (Psacharopoulos 1994).
fi gure 3 Predicted probabilities for four wage categories with respect
to the ratio of household experience
0.70
0.60
0.50
0.50
0.30
0.20
0.10
0.00 ■
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
•—• Loans	o--o Benefits > > Occasional ^^ Regular
3.	Whenever the system is too generous, it produces weak incentives
to find a regular job, which ought to be the case of Slovakia.
4.	The probability of occasional or irregular wage receivers is robust
throughout the countries and education levels. It seems that 15% to
18% of Roma households are involved in the informal sector.
Another issue is that the weight of the education variable is on the
first three education categories, while the last category is very weak in
comparison to the majority population. Furthermore, in this education
category, also few university educated Roma households (0.5%) are ag-
gregated. Hence, computing returns to education for the tertiary educa-
tion was impossible.
The return to education literature suggests that experience has a se-
rious impact on wage. Our experience variable expresses the ratio of
household members who are employed to that of all members in the
active age. The Roma households as mentioned before are a bigger en-
tity and the decisions here are made upon approval of all adult mem-
bers. Hence the employed members might pursue the rest of household
members to search for a serious wage job. This hypothesis is supported
by fig. 3.
The higher the ratio of household experience, the lower is the proba-
bility of family members being the benefits receiver and conversely the
higher is the probability of their having a regular wage income. The
threshold is however relatively high, if more than 85% of adult mem-
bers are employed, the probability starts to be higher than the probabil-
ity of being among the pure benefits receivers. Here again the probability
of the loans group almost disappears and occasional wage jobs increase
with only a negligible gain.
The results of our empirical analysis support the traditional hypoth-
esis of the returns to education theory. The probability of being in the
regular wage receivers group grows with the level of schooling and with
work experience. This means that, given our sample, larger returns to
education for higher educated Roma do exist, despite the unfavorable
economic and social conditions.
Conclusion
This paper presents a unique analysis of returns to education for Roma in
five Central and Eastern European countries (Bulgaria, the Czech Repub-
lic, Hungary, Romania and Slovakia) based on data from the undp/ilo
survey conducted in 2001. The evidence from existing qualitative stud-
ies on the situation of Roma in Central and Eastern Europe suggests
that low education levels are one of the main reasons for unemploy-
ment and poverty (e.g. undp 2002). The unfavorable starting position
of the Roma at the beginning of transition in terms of low education lev-
els and over-representation among the unskilled workers, has led to dis-
advantages on the labor market and dependence on the welfare system.
Their over-representation in disadvantaged regions also affects decision-
making and incentives for education. This situation leads to a vicious
circle of increased poverty that in turn further impedes access to qual-
ity education. The current state of research on the situation of the Roma
raises the question whether returns to education for Roma do matter
and, if yes, to what extent.
The descriptive analysis in the second section revealed that in the ex-
amined countries, substantial within-country disparities exist in terms
of economic development and enrollment rates for different types of
education. A general pattern of increasing enrollment rates with rising
gdp can be observed. Several regions face a substantial gap in provid-
ing enough education institutions, especially pre-school. On the other
hand, in these regions incentives for proceeding with higher education
are weak, due to the low level of economic development. Roma in all five
countries live predominantly in those disadvantaged regions and suffer
from these drawbacks to the largest extent. Therefore, it is important to
prove that education matters even in these difficult situations.
Due to the difficulties of monitoring the Roma population in these
countries, studies on returns to education for Roma literally do not exist.
While returns to higher education had been undervalued in Central and
Eastern Europe during the planned system, they rapidly increased during
the beginning of the 1990s and have reached levels similar to those of
other developed market economies. Unfortunately, this change does not
affect Roma much, as they are usually low educated.
But still the results of the empirical analysis support higher returns to
education for higher educated Roma. The probit model confirms that,
in controlling for other household characteristics, returns to education
are present. The probability of being dependent on state benefits is de-
creasing and the probability of having a regular wage income increases
with education level, respectively. Similarly, with increasing experience,
the probability of being dependent on benefits declines and conversely
the probability of having a regular job income increases.
The results have remarkable implications for future policies, not only
within each country but also in terms of the enlarged Europe. Regional
disparities and minority issues have become even more transparent and
will be the subject of discussions. In order to converge to eu levels in
all economic spheres, education has a major role to play. When think-
ing about the European Union's strategy of creating a 'knowledge so-
ciety', this does not only apply to the Roma minority but to the whole
population, as well. It cannot be efficient to set up a large variety of sepa-
rate projects dealing with Roma education. Rather the opposite, a reform
of the mainstream school system seems to be a prerequisite to establish
long-term success and effects. The main objective remains: successful in-
tegration of Roma into the national school system.
Notes
1.	We always use log gdp measured in ppp dollars.
2.	Statistical Office, Czech Republic; Institute of Public Affairs, Slovakia
and undp Bulgaria.
3.	We are lacking several households, from the original 5034, because of
missing observations within the considered set of variables.
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Restructuring and Business Reengineering
in Integrative Processes
Drago Dubrovski
Globalisation has intensified competition to such an extent that the cor-
porations, merely with one's own resources, cannot achieve acceptable
success any longer. Objectives, which had been set-up prior to estab-
lishing the alliance in order to justify the investment, frequently will
not be possible to achieve if during the integrative period revolutionary
methods of change are not applied, to which one can classify restruc-
turing and reengineering. Therefore, it is essential to be successful, not
only in rules and principles of strategic alliances but in the methods of
radical changes.
Key Words: strategic alliance, integration, restructuring,
reengineering, crisis
jel Classification: G34, L14
Strategic Partnerships
Globalisation, which actually integrates all parts of the world into a joint
global market, has intensified competition to such an extent that the
corporations, merely with one's own resources, cannot achieve accept-
able success any longer. Therefore a joint (combined) use of assets of a
number of corporations appears and, in a such a way, it is possible to
achieve objectives which a corporation on its own would not be capable
of achieving. The general objective of linkage and co-operation is found
in increased competitiveness, i. e. improved developmental capabilities.
Strategic partnership can be:
•	strategic business (non-equity) alliance or
•	equity (ownership) linkage (merger, acquisitions, take-over).
Strategic business alliance is not based on capital transactions, as par-
ticipating corporations retain their own legal entities (status) and inde-
pendence. Capital linkage is about altered ownership proportions and
the business co-operation should therefore intensify. The relationship
should be a more long-term one, although it is not necessary that the
equity linkage includes elements of strategic business co-operation.
Dr Drago Dubrovski is an Associated Professor at the Faculty
of Management Koper, University of Primorska, Slovenia
Equity linkages could hardly be a priori defined as strategic partner-
ships since such a relationship is dominated by the stronger corpora-
tion (instead of a '2 + 2 = 5' outcome e. g. a '3 +1 = 5'). Since equity link-
ages primarily represent the finalisation or the final step of prior strate-
gic non-equity co-operations, in this case one could also place capital
linkages among equity partnerships. From such a discussion one could
conclude that capital linkages, in certain cases, play the role of strate-
gic business partnerships (when achieving the '2 + 2 = 5' outcome) and,
in some other cases, do not comprise elements characterised as partner-
ship (e. g. 'straightforward' investments having exclusively financial ob-
jectives). Take-overs, mergers and acquisitions can therefore, on the one
hand, represent finalisation of a strategic business alliance and, on the
other, also the highest evolutionary level of a particular strategic alliance.
As aforementioned, in this case, there is no reason not to classify equity
linkages as strategic partnerships, regardless of whether they emerge as
a developmental step in an evolution of a particular strategic alliance
or come into existence directly, without an evolutionary course. Joint-
ventures, take-overs, mergers, acquisitions and demergers, therefore, es-
sentially represent merely a capital-supported form of one or another
form of strategic linkages, if, indeed, such a content is present.
In any case it is true that at assessing the nature of contents and signifi-
cance of a particular linkage, the substantial content and the significance
of the business co-operation should be taken into account and not its ex-
ternal form, taking into account, indeed, that many of these do not have
a formal configuration.
Non-equity business alliances, which represent up to 90% of all strate-
gic linkages according to certain assessments (Lynch 1993, 29), neverthe-
less prevail in comparison to equity linkages, although the latter are more
visible and echo more in professional circles and among the public.
Strategic alliances and partnerships are modern forms of obtaining
and increasing competitiveness in the global market environment. The
growing competition from all perspectives demands more co-operation
between the corporation and its suppliers, between the corporation and
its clients, between the corporation and its competitors and those carry-
ing out out-sourced functions. By globalising international operations,
when national and regional borders are being blurred or fading away and
consequently the classical definition of product origin, the dimensions of
competition process also change.
Today some authors (Schonberger 1996, 15) even speak of a 'part-
nership era' which commenced in the 90s and succeeded the preced-
ing 'manufacturing era' (1940-1950, characterised by scarcity of goods),
'marketing era' (1950-1965, characterised by unexploited capacities), 'fi-
nancial era' (1965-1980) and 'quality era' (1980-1990, characterised by in-
tercontinental competition). The beginning of the partnership era can be
traced to the early 80s, accompanied by rapid growth of intercontinental
operations and technological headway.
The number of strategic alliances or partnerships cannot be estima-
ted,1 since for certain non-equity partnerships one cannot find officially
published or otherwise accessible data. If one would attempt to present
the 'partnership era' in numbers and amounts of international2 joint
ventures, mergers and take-overs, then the numbers and amounts of
these (totalling minimally to a 10% ownership stake) in the period from
1987 to 1999 increased by 7 times i. e. from less than $100 billion in 1987
to $720 billion in 1999 (un 2000,10). The rate of growth both of the in-
ternational and the national equity linkages during the period between
1980 and 1999 amounted to an astonishing 42% on a yearly base. In 1999
equity linkages already represented 8% of the world's gdp while in 1980
merely 0.3% (un 2000, xiv).
The total amount of all equity linkages on the planetary level exe-
cuted in 1998 is estimated at $2.400 billion (TheEconomist 1998). In 2001
the amount of international acquisitions, mergers and take-overs is sup-
posed to be in excess of $1.100 billion (grand total almost $3.500 billion).
The amount of equity linkages in Europe and the us in 2001 has already
reached $1.830 billion and, due to the known events of 2001 in the us, it
decreased to $1.360 billion (decrease by 26%) in 2002. The period 1998-
2001 some authors characterise as 'merger mania'.
Alliances - a Stage Process
Entering into equity and strategic business non-equity alliances is a
highly demanding procedure, which does not include only stages of car-
rying out the purchase (take-overs) or signing the contract (strategic
alliance), but also involves a set of tasks, duties and procedures3 as such,
which can be classified into three time periods, in regard to the course of
emerging of a particular alliance:
•	period prior to entering into alliance,
•	period of entering into alliance,
•	period consequent to entering into alliance.
table 1 Periods and procedures of the alliance process
Period	Procedures
Prior to entering into alliance Defining and reassessment of strategic orientations
Search for and assessment of partners and of the
feasibility of the integration
Selection of the partner(s)
Selection of the type of integration
Strategic and financial assessment of the integration
Drafting plans for the integrative process
Entering into alliance	Introductory discussions
Letter of intent
Negotiations
Entering into contract
Appointing the responsible alliance manager
Public announcement
Rapid integration
Restructuring and re-engineering
Learning from the partner
Resolving conflicts
Reconfiguration of the alliance
In the continuation we will only discuss the time period consequent
to entering into alliance.
Time Period Consequent to Entering into Alliance
The time period consequent to entering into alliance is designated as the
period of integration, the post-take-over period, the post-take-over inte-
gration or also the operational stage of the integration. It can be further
divided into two stages:
•	stage of carrying out the corporate integration, which is usually
characterised by profound changes (restructuring, business process
reengineering, renewal of the corporation);
•	stage consequent to carrying out the integration, which is intended
for achieving the planned synergy effects (post-integration stage).
The duration of the period intended for carrying out the operational
integration cannot be fully defined, since each alliance has its own par-
ticularities. Certain research studies4 (e. g. Devine 2002,19) state that the
post-take-over period lasts for approximately two years, while the act of
take-over itself lasts for 3-6 months, and the rest is intended for tran-
sitional adjustment (soft balancing, further restructuring, cultural inte-
gration).
Consequent to entering
into alliance
The integration in strategic alliances can be:5
•	procedural (includes combining two systems and procedures of
participating corporations on operational, monitoring and strate-
gic levels);
•	physical (assets and resources - consolidation of programmes,
manufacturing technologies, projects, operational-manufacturing
units, infrastructure);
•	managerial and socio-cultural (the most demanding problem - in-
cludes transfers of managers, modifications to the organisational
structure, development of a consistent corporate culture, models of
strategic operations, motivational system and installing a new lead-
ership).
The integration must be rapid in order to achieve the synergy effects
as soon as possible, i. e. achieve the pre-set objectives. The rapidity and
effectiveness of the integration is largely dependent on the preparatory
period (prior to the integration). Certain research (Devine 2002,156) has
determined that:
•	40% of all changes take place during the first two months conse-
quent to establishing the alliance;
•	more than half of the latter (20%) take place immediately after the
alliance;
•	changes continue at a high pace, but have a rapidly decreasing ten-
dency during the next six months;
•	after nine months more than 80% of changes had been initiated.
Processes referring primarily to equity linkages are highly stressful and
cause anxiety, concern, anger, cynicism and depression among partic-
ipating parties. This is one of the reasons why the integrative activi-
ties should be launched immediately after the formal entering into co-
operation (or even prior to this), since fear and uncertainty can block
achieving jointly pre-set objectives if such a state persists for a longer
period.
This can also cause the so-called 'merger syndrome' (Devine 2002,157)
which addresses six common problems influencing the success of the op-
eration in one way or another:
•	deteriorating communications;
•	poor productivity;
•	increased parochialism and less team play;
Integration
Evaluation
Adjustment
Evaluation
Reconfiguration
figure 1 Adjustment and/or renewal of alliance
•	power struggles;
•	reduced commitment to corporate goals;
•	a tendency to bail out by leaving the organisation.
The 'merger syndrome', therefore, can lead not only to inability for
achieving the pre-set synergy effects, formed by the mutual value-added,
but can also lead to the joint outcome being even on the negative balance
side considering the costs that have already risen.
After the essential modifications towards the integrated corporations
have been carried out, a significant part of the post-integration period is
reverse learning from the partner, as the integrated corporations should
possess complementary knowledge and skills which will lead to achiev-
ing the pre-set strategic objectives of the integration.
Integrative processes, despite the abundance of guidelines and in-
structions on carrying out the processes, often lack the so-called 'co-
operational mentality' and even more in the case of integrating non-co-
operative cultures. Therefore, learning for co-operation is an inevitable
condition for successful functioning of the alliance. One must not over-
look the fact that the transfer of knowledge, i. e. reverse learning, will not
take place automatically.
Deviations, conflicts or poor functioning of the alliance or some of
its parts might occur during its establishment or on its emergence, re-
gardless of the preparative period being put to good use for assessing
the future alliance, therefore, adjustments of the alliance should be pre-
planned in order to adjust to new circumstances. In this case one might
not talk of deep-penetrating changes but merely fine, soft adjustments
and balancing (evolutionary changing). If the integration does turn out
to be inappropriate, i. e. not functioning, then the process should be
repeated from the very beginning i. e. a reconfiguration of the alliance
should be carried out (revolutionary changes).
'A gap appears to exist between what experts say about m&as and what
managers experience [...]. Only a few m&a transitions can be neatly
packaged into a set of processes, or a single magic formula' (Devine
2002,11).
A combination of order and chaos, planned and unexpected, is a char-
acteristic of almost every equity linkage. Managing alliance is as much an
art as a science. Equity linkages are matters which 'happen' to people who
can join or oppose the process. The process of establishing strategic al-
liance often contains improvisations, adjustments, putting out fires and
learning, not merely carrying out a pre-planned strategy.
Restructuring and Business Reengineering
Most frequently the process of integrating connected corporations will
only be possible by using revolutionary methods of change, as which
one can classify restructuring and business process reengineering. If a
particular structure of a corporation or one of its individual sectors is
not appropriate in regard to circumstances demanded by the new (al-
tered) environment, the existing structure is to be changed and com-
pletely renewed. This process, representing a transition from the existing
structure to a new one (programme-market, manufacturing, technolog-
ical, financial, organisational, personnel, ownership, ecological, develop-
mental) which enables greater successfulness and efficiency of corporate
operations, is designated as restructuring. Restructuring is one of the
methods of revolutionary changes and a way to achieve renewal of the
corporation as a result of strategic alliances.
The basic distinction between the revolutionary methods of changes6
and the evolutionary methods of achieving changes lies in the frequency
of the former being less common, being more profound and widely
aimed, having a greater intensity and risk during a shorter time frame
and simultaneously demanding certain sacrifices. The range of sacrifices
can include tangible assets (selling premises, giving up traditional pro-
grammes, withdrawing from long-term equity and business alliances,
sell-out of so-called 'social-standard' capabilities, decreasing resources
for non-commercial investments, etc____) and intangible assets (reduc-
ing the number of employees, replacing and making experts redundant,
selling patents or brands, etc____). Due to the very sacrifices the revolu-
tionary methods of changes are not welcomed as pleasant but cause fear,
uncertainty, and distress.
When addressing restructuring one should bear in mind the following
important rules:
•	it takes place in various areas (changing structures in one area de-
mands changing structures in other areas);
•	it derives from the fundamental strategies of the corporation;
•	its departure points are programme-market structures (restructur-
ing of programmes and markets);
•	it contains all characteristics of the revolutionary methods of chan-
ges (already mentioned).
Restructuring usually cannot be carried out in an individual area (e. g.
corporate function) regardless of others, and the effects will be visi-
ble only when modifying several area structures. Change of the prod-
uct portfolio (restructuring of the programme) can also demand al-
tering: the organisational structure of the corporation (organisational
restructuring), the technology (technological restructuring), the finan-
cial resources (financial restructuring), the human resources (personnel
restructuring), the informational system (informational restructuring),
etc. Sometimes various changes are dependant on or triggered by own-
ership restructuring (alteration of the ownership structure). The need
for a balanced and simultaneous restructuring is particularly applicable
in order to relieve a crisis which cannot be relieved otherwise by mere
financial restructuring, while other areas remain unchanged.
The consequences of restructuring processes can also be uncertain
when projects are carried out unsuccessfully or the achieved outcomes
fall below the expectations in regard to sacrifices and efforts. Rock and
Rock (1990, 43) determined that half of the unsuccessful restructur-
ing projects caused losses to their owners. Platt (1998, 144) also states
that only 50% of the projects achieve the pre-set objectives (for cost-
reductions the result is slightly higher at 61%). The actual problem in
these cases are sacrifices suffered as restructuring needed to be imple-
mented in the form of a radical alteration, while methods of step-by-step
changes had either been neglected and underestimated, or else such an
alteration is demanded by external (altered) circumstances (e. g. entering
into partnership).
Programme-market restructuring represents a transition from the
prior structural combination of products or services, and markets, to
a new structure which must achieve greater successfulness (profitability)
and efficiency of corporate functioning (productivity, cost-efficiency).
In regard to such a restructuring, which takes place within a complex
relation, one must consider the market (the selected segment of cus-
tomers) and the programme (product, service), since it is most fre-
quently true that the same offerings cannot be positioned in a new mar-
ket or the new programme in the prior market. Therefore the essence
of the programme-market restructuring lies in the marketing approach.
From the selection of needed and available measures, those in the area
of programme-market changes are common both in the period of crisis
solving and the period of corporate development. The research among
221 marketing experts (Shaw and Mazur 1997,10) indicated (marks 1 to 5)
that the altered conditions in the market (marketing) environment are
the very foundation for programme-market restructuring.
The process of programme-market restructuring is, most frequently,
conducted in two areas:
1.	the internal aspect, aimed at achieving the optimal position of the
programme in regard to mutually intertwined and dependant cor-
porate functions and the organisational units of the corporation;
2.	the market (external) aspect, aimed at exploring possibilities for im-
plementation of the existing or the new programme in the selected
markets i. e. segments.
Similarly to the programme-market, restructuring in the develop-
mental7 and technological area is connected to the transition of the
existing structures to the new ones which enable the corporation to
achieve a more rapid, market-orientated development, greater efficiency
of functioning and application of modern technological equipment. De-
velopmental restructuring is, therefore, aimed at designing a structure of
products and services which would contain more value-added, in other
words, at achieving greater levels of technological sophistication of the
product and of the processes. Technological restructuring, on the other
hand, represents applying such scientific methods, knowledge and skills
which will enable manufacturing of the planned products.
If the primary objective of technological and developmental restruc-
turing is to design a structure of products and services containing a
greater value-added, then one can derive the following objectives of re-
structuring processes in the mutually connected and dependent areas of
development, technology and manufacturing:
•	orientation of all activities toward customers;
•	decrease of internal (passive, waiting) and external (introduction to
the market) non-productive periods;
•	simultaneous engineering;
•	limitation and cancellation of activities which do not contribute to
the value of the product (service);
•	integration of various areas and processes;
•	relative cut-offs (reductions) in costs;
•	increase of productivity and flexibility by introduction of modern
methods.
Restructuring of the manufacturing function represents the installa-
tion of such a structure of manufacturing methods and approaches and,
on the other, processes and tasks which will ensure completion of se-
lected (ordered, planned) products in the most efficient way.
Restructuring in the area of human resources should be discussed in
a wider context, best represented by hr management. The tasks of man-
aging employees are the following:
1.	discovering and developing capabilities of personnel which are used
by various sectors of the corporation in order to satisfy customers,
achieve competitive advantages and contribute to the collective
value of the corporation;
2.	directing a variety of relations between managers, employees and
others, and their interests, in accordance with corporate strategies.
Restructuring of the human resources area represents installing a new
structure in regard to employees either as an entirety or as individual
parts of the corporation (e. g. the management, manufacturing workers,
particular functions or sectors, etc.). Similarly to other areas restructur-
ing measures must also derive from the general strategy of the corpora-
tion and, therefore, have to be carefully prepared, even more, since they
refer directly to personnel (relations, emotions, co-operation, collective
values, behaviours, viewpoints, values as 'softer', less visible factors in
comparison to objectives, structures, markets, finances, techniques as
'harder', more visible factors - Perlitz et al. 1996,342). One must not ne-
glect the point that employees (hr, personnel) are viewed today as the
greatest potential of a corporation. Restructuring in the hr area is also a
possibility for establishing a new organisational scheme, a new systemi-
sation of tasks and a new system of rewards.
The hr area is inseparably connected to the organisational structure
of the corporation, although one rarely speaks of organisational restruc-
turing, since these changes are a consequence of programme-market,
manufacturing-technological and personnel changes. It would be com-
pletely senseless to set the change of the organisational structure as the
primary objective, regardless of the fundamental orientations of the cor-
poration, its developmental level, programmes, methods of management
and available resources. On the other hand it is also true that changes to
other areas cannot be carried out without modifying the organisation.
Lately, restructuring or renewals of informational systems are fairly
common as consequences of altered circumstances of a corporation's
functioning, extremely dynamic events in a corporation's environment
and general headway in the area of informational systems, processes and
hardware. Therefore, in a corporate milieu, the term informational tech-
nology is more commonly used and refers to the suitability of computer
hardware, also software, in the widest possible sense. It is also true that
projects of reengineering in this area prevail, focusing on the process and
the predominating significance of the informational technology.
Changing external resources of financing from less favourable (short-
term, more expensive) to more favourable (long-term, less expensive)
ones, is usually a highly desired measure in financial restructuring but is
accompanied by abundance of difficulties in praxis due to the unwilling-
ness of banking creditors to encounter setbacks in regard to their placing
and needs for ensuring available resources which would replace the pre-
ceding. The remains of liquid resources, which are a consequence of all
other measures, must be placed to those areas where the effect would be
the greatest. Measures, classified into this group, can be: postponement
of due liabilities (reprogramming, prolongation, moratorium); replace-
ment of existing loans with new ones (refinancing); writing-off calcu-
lated interest; debt to equity swap; procurement of additional external
developmental resources of financing (equity) while accounting for the
financial lever; decreasing investments having long-term effect and ad-
vancing smaller investments having rapid effect - these can be market-,
technology- or personnel-orientated.
In comparison to restructuring, whose primary objectives are mod-
ifications of various structures in a corporation, reengineering brings
about 'a fundamental rethinking and radical redesign of business pro-
cesses to achieve dramatic improvements in critical, contemporary mea-
sures of performance, such as cost, quality, service, and speed' (Hammer
and Champy 1994, 32).
Reengineering, just like restructuring, is a method of revolutionary
change and, therefore, embodies all general features of such radical
changes. Reengineering and restructuring are not mutually incompat-
ible methods although they derive from different starting-points, since
in a corporation they can run parallel to one another or even be inter-
twined.
table 2 Cost savings delivered by mergers and acquisitions
Sector	Percentage of answers
Head-count reduction	66
Buying and merchandising	60
Supply chain	60
Procurement	48
Manufacturing	35
Warehousing/distribution	32
New product development	32
Outsourcing	25
Research and development	24
Source Devine 2002,166.
With regard to the definition and contents of reengineering, one could
indicate its essential ingredients: focus on corporate processes, radical
changes, dramatic improvements and a multidisciplinary approach. In-
stead of organisational structure or function, a reengineering project
focuses on corporate processes which can be interpreted as a set of con-
nected activities which engage an input (from suppliers), transform it
and produce an output (for the customer). The corporate process, there-
fore, includes those activities which are crucial for an agile delivery of
products and services to the customers and simultaneously contribute to
greater quality and low costs. The processes can be classified as core,
main or sub-processes and also as partner-orientated, internally- or
customer-orientated. Corporate processes are not the responsibility of
an individual function but include a range of activities, dispersed over
individual areas.
Due to anticipated and needed changes, which have to be carried out
in a rapid and consistent manner during the post-integrative period if
to achieve the planned synergy effects, a take-over can often prove itself
as insufficiently flexible to achieve developmental objectives and is fre-
quently succeeded by merger or acquisition.
An investigation into integrative processes of Slovenian corporations
(e. g. Lahovnik 2001) finds that measures during the period consequent
to alliance mostly refer to various profound transformations (table 3).
Thus, while linking two or more corporations, various modes of re-
structuring take place which are also visible in the relocation of previous
activities, processes and tasks.
Restructuring and Business Reengineering in Integrative Processes 83
table 3 Most frequent measures during the period consequent to integration
in the case of Slovenia
Measures during post-integrative period	Percentage of answers
Reorganisation of marketing activities	84
Reorganisation of supply activities	84
Management training programmes	82
Introduction of new sales programmes	76
Financial consolidation	64
Selling of non-core business assets	58
Management reorganisation	58
Replacements of members of the top-management team	51
Reducing the number of employees	40
Source: Lahovnik 2001.
Strategic Alliances and Resolving and Preventing Crisis
For various corporations, or even branches, entering into strategic part-
nerships at a particular developmental level is not merely a strategic pos-
sibility and opportunity but a business necessity, since it will be the only
possible way to preserve one's competitive position and prevent crisis8
in the future. On the other hand, strategic business alliances and eq-
uity linkages enable (re)solving corporate crisis, while the process of
re(solving) includes all available assets of partner corporations and a si-
multaneous search for synergy effects.
Strategic equity and non-equity alliance is, therefore, significant both
during the period of preventing crisis and also during the period of re-
solving crisis.
The objective of today's strategic alliances, which have not occured
due to major difficulties in one or even both partner corporations, is an
increase of collective (global) competitiveness which actually represents
preventing a crisis from emerging. A corporation, which otherwise de-
velops relatively successfully, will start to lag on a certain developmental
level behind its competitors which have integrated their own forces and
achieved the synergy effects that cannot be achieved by an 'independent'
corporation.
In cases of strategic business or equity alliance when one of the part-
ners is facing crisis, such an alliance can bring about the solution of crisis
for the corporation in question. Since in this case the alliance combines
an economically stronger partner with a weaker one, the latter cannot
table 4 Mergers and acquisitions by acquiree situation in the case of 170 analysed
companies in the period 1985-1990
Situation	Percentage of cases
Strategically troubled
Financially troubled
Joint growth opportunities
Dependent on related company
Divesting non-core business
fac pullout
Target of aggressive move
Others
25
16
13
12
12
8
7
7
Source: Bleeke and Ernst 1993,116.
await an equal position in regard to integrative processes which actually
represent a sacrifice for the corporation in question. The same is true for
all cases of crisis resolving.
The reason behind a stronger partner linking with a weaker one facing
acute crisis, while there is a possibility of a chain crisis reaction, is that
the corporation facing crisis possesses:9
•	a verified manufacturing-sales programme which - due to all other
required potentials (financial, personnel, technological, etc.) being
absent - cannot be appropriately developed and introduced to the
market;
•	suitable technology which cannot be optimally exploited due to dif-
ficulties in the marketing-sales area;
•	an excellent team of experts who cannot assert their knowledge and
skills since the corporation faces unsurmountable financial or other
problems;
•	such assets which can be utilised in order to gain much greater effi-
ciency and profitability by the partner;
•	a differentiated domestic or/and foreign distributive network, but
cannot maintain it due to financial difficulties.
In order to successfully avoid the dangers, which derive from link-
age with a corporation in crisis, pre-integrative processes take place in
practice which utilise, when required, the introduction of radical resolv-
ing activities in the corporation facing crisis (voluntary or compulsory
agreement; disinvestments; 'cleaning' balance sheets; even programmed
- controlled bankruptcies, etc.) or less risky methods (e. g. take-over by
acquisition of assets).
Difficulties and Traps of Alliance
Although strategic alliances represent one of the most significant mod-
ern forms of international business, the rate of their successfulness i. e.
survivability is not high, since, on the average, it ranges merely from 30
to 45%. By unsuccessfulness of the integration we do not only mean that
the linked corporations fail or go bankrupt (which is otherwise com-
pletely possible), but by the same token, we designate such a partnership
that has not achieved the pre-set synergy objectives (an alliance is un-
successful also in those cases when the potentials of two corporations are
merely summed up i. e. the outcome is '2 + 2 = 4').
Such, a relatively low rate of successfulness can be 'justifiable', since
strategic alliances are the most demanding form of organisational rela-
tionships where one can consider that co-operation is actually another
form of competition, that harmony is not the most crucial criterion
of successfulness, that co-operation has its limitations when corpora-
tions must address competition compromises, and that reverse learning
is most important (Hamel by Ramu 1997, 74).
If we summarise the findings of various research studies and cases on
unsuccessfulness of alliances, then we can gather the causes into the fol-
lowing groups:
•	short duration and lack of systematic and planned preparations
during the period prior to closing the deal (deals with no prior anal-
ysis and assessments and incorrect selection of the partner, i. e. tar-
get corporation);
•	overestimated (overoptimistic) assessments of effects (unrealistic
synergy effects);
•	incorrect (overestimated) price or a 'bite to large' (combined with
overestimated effects, an exhausted (dried-up) corporation);
•	unaccomplished complementarity of manufacturing, program-
ming and marketing structures;
•	disorganised, weak and difficult communications (external and in-
ternal);
•	managing difficulties and lack of systematic supervision (inexperi-
ence at integrating, insufficient monitoring of the integration);
•	disharmony of cultures and management styles;
table 5 Varying of integration successfulness
Partner a
Advantages
Disadvantages
Partner b Advantages
2 + 2 = 5
synergy
integration
2 + 2 = 3 or 4
counterproductive
integration
Disadvantages
2 + 2 = 3 or 4
counterproductive
integration
2 + 2 = 0
destructive
integration
Source: Büchel et al. 1998, 47.
•	internal opposition to changes (also departures of key personnel);
•	integration being too late and too slow (poor operational imple-
mentation);
•	difficulties at transfer of knowledge and skills between partners;
•	underestimated competition (competition reacts to equity transac-
tions by its own strategies and does not allow others to achieve syn-
ergy effects at their expense);
•	changes in the environment or in partner corporations (demand
modifications of strategies and management or sell-out of the own-
ership stake).
On the average, alliances are more successful when the environment is
more turbulent (Bucklin and Sengupta 1993), while on long-term equity
linkages can prove more successful.
Since both equity and non-equity alliances, worldwide and domestic,
have a high rate of unsuccessfulness, as already mentioned, their prepa-
rations should be approached in a planned, sufficiently analytical and
systematic manner, which is also visible in the fact that integrations do
not come into existence 'overnight' but only after a longer period of pre-
testing of partners during 'usual' co-operation. Integrations implicate
dual risks: a possibility of the alliance failing and a possibility of link-
ing corporations failing.10
As easily as strategic alliances arise, so too they can also end, since
they have their own life cyclen which is only partially dependant on each
individual life cycle of participating corporations. Non-equity alliances
can result into:
•	equity merger, acquisition or take-over;
•	demerger;
•	reorganisation or restructuring of one or both partners.
It is obvious that successful partnerships compensate for the disad-
vantages of unsuccessful ones, since otherwise it would not be so pop-
ular as a strategic tool in the global environment. Certain data indicate
that alliances accumulate 18% of all incomes of the 500 largest American
corporations (The Economist 1998).
Successfulness of a particular alliance is often assessed merely through
financial indicators, such as increased market value of shares, dynamics
of share value of the participating partners in a certain period prior and
consequent to take-over, etc.
However, financial criteria are just one aspect of examining the suc-
cessfulness of an alliance, whereas other indicators should be taken into
account for determining the successfulness of integrated corporations.
Assessment of alternative paths for each of the participating entities is
significant by all means and answers the following questions: would any
of the particular corporations survive in a medium-term period?; what
would be the value of its shares by that point in time?; what would be the
value of future profits by that point in time?, etc.
Successfulness of a particular alliance cannot be assessed merely by
financial indicators, but one can speak of four groups of criteria (eco-
nomical, strategic, behavioural and learning aspects; Büchel et al. 1998,
198), whereas from the professional literature it emerges (Ittner and Lar-
cker 2001, 388) that a huge discrepancy exists between the significance of
strategic alliances and qualitative criteria for assessing their successful-
ness.
One should also stress that the results of alliance probably will not be
identical for both (all) participants, but it is important that these should
be proportional in regard to pre-set objectives, which can differ from one
participant to another.12
Triple Role of Restructuring
Restructuring has a triple role from the aspects of threat and perspective
of the corporation's position:
•	crisis solving,
•	crisis preventing,
•	development of the corporation.
Resolving of crisis by itself demands a range of integral area restructur-
ings (programme-market, organisational, financial...), whose purpose
is to initially halt negative developments. Therefore, restructuring at this
stage is rapid, less extensive and non-integral, as short-term effects are
being sought. Only at the second stage, when establishing of develop-
mental foundations along with profitable operations is being addressed,
are integral and long-term restructuring projects being carried out, hav-
ing medium- and long-term effects. Therefore, the role of restructuring
during the first stage of crisis solving (halting negative developments) is
less stressed, while later it has priority.
Restructuring has even a more significant role for preventing crisis
and development, either as internal (organic) growth or growth by the
helping hand from partners, in comparison to acute crisis solving it-
self, when measures having short-term positive effects take priority. Al-
though development contains activities, which simultaneously represent
preventing of crisis arising, various restructurings can take place merely
in order to adjust the corporation to new circumstances in the environ-
ment along the process, using less extensive modifications and, by doing
so, prevent the emergence of a latent or acute crisis, since the corpora-
tion does not develop as rapidly as its environment (competition, altered
consumer behaviour, etc.). On the other hand, the corporation can im-
prove its competitive position and developmental possibilities through
appropriate strategic planning, by the internal structures being continu-
ally renewed.
It is not possible to expect long-term success without an appropriate,
pre-planned approach during analysis of the actual environment and po-
tential partners, which would be based on assessment of the possibilities
for fulfilment of mentioned conditions within the strategic partnership.
Many successful integrations have arisen from long-term co-operation
due to exactly this, since a thorough assessment of the partner's suitabil-
ity for a further strategic equity linkage or a mere business alliance, was
possible during this period. 13
Entering into alliances must, as aforementioned, be well deliberated
and planned and must be a part of an integral corporate strategy taking
into account all stated conditions for a successful strategic alliance. It is
not possible to anticipate all events and conflicts during the preparatory
period, whereas success cannot be ensured through precisely defining
rules. Here one can state the following recommendations:
• the process of integration must commence prior to signing the con-
tracts;
•	it is recommended to appoint the responsible manager having ex-
clusively these tasks and addressing only the process of integration;
•	in the integration period the process of restructuring is to com-
mence as soon as possible,
•	integration does not refer merely to business activities but also to
the cultures of the partners.
Corporate linkage must have sufficient flexibility in order to respond
to changes either in its environment or in the life cycle of the alliance
itself, in other words, the principles of co-operation, which had been set
prior to establishing the integration, should be repeatedly reassessed.
Strategic equity and non-equity alliance has become, regardless of our
will, an integral part of modern strategic thinking and acting. It is obvi-
ous that equity and non-equity alliance, despite the many obstacles, traps
and difficulties which hinder the rate of successfulness of alliances, has
many advantages and benefits pointing the trend steeply towards con-
tinuation. According to certain findings, more than a half of all corpo-
rations worldwide already participate in various forms of alliances, and
the proportion is still increasing, since the rate of success should grow by
increased experience and scientific research into alliances.
Objectives, which had been set-up prior to establishing the alliance in
order to justify the investment (in a financial, time, effort sense, and op-
portunity possibilities), frequently will not be possible to achieve if dur-
ing the integrative period revolutionary methods of change are not ap-
plied, to which one can classify restructuring and reengineering. There-
fore, it is essential to be successful, not only in the rules and principles of
strategic alliances but also in the methods of radical changes - such are
restructuring and reengineering - in order to successfully prepare and
implement a strategic partnership which will give rise to synergy effects
and not result in a failure, since otherwise we remain far away from the
planned objectives.
Conclusion
Globalisation has intensified competition to such an extent that the cor-
porations, merely with one's own resources, cannot achieve acceptable
success any longer. Objectives, which had been set-up prior to establish-
ing the alliance in order to justify the investment, frequently will not be
possible to achieve if during the integrative period revolutionary meth-
ods of change are not applied, to which one can classify restructuring and
reengineering. Entering into equity and strategic business non-equity al-
liances is a highly demanding procedure, which involves a set of tasks,
duties and procedures as such, which can be classified into three time
periods, in regard to the course of emerging of a particular alliance: pe-
riod prior to entering into alliance, period of entering into alliance and
period consequent to entering into alliance.
During the post-integrative period the anticipated and needed chan-
ges have to be carried out in a rapid and consistent manner in order to
achieve developmental objectives and planned synergy effects.
In this article the following recommendations have been stated: the
process of integration must commence prior to signing the contracts; it
is recommended to appoint the responsible manager having exclusively
these tasks and addressing only the process of integration; in the inte-
gration period the process of restructuring is to commence as soon as
possible; integration does not refer merely to business activities but also
to the cultures of the partners.
Notes
1	Lynch (1993, 18) states that well-known strategic alliances should be
complemented by at least as many alliances which remain covert as
hidden competitive advantages. Well-known consultant houses (Booz,
Allen & Hamilton) estimate a formation of more than 32,000 strategic
partnerships in the period 1996-1998.
2	Characterised as international capital transactions are those which
combine equity of incorporated entities from two or more countries.
According to certain estimates (un 2000, xiv) the international eq-
uity mergers and take-overs represent 25% of all mergers, acquisitions
and take-overs, while the trend points to increasing.
3	More on various aspects and descriptions of strategic co-operations
and integrations can be found in the following papers: e. g. Aiello and
Watkins 2001, 39-40; Bleek and Ernst 1993, 45; Büchel et al. 1998, 52;
Connell, LaPlace, and Wexler 2000, 7.
4	According to Devine (2002, 106), the process of integration has four
stages, also designated as the '4c': putting commitments into effect
(commitments): openness and trustfulness; defined roles, objectives,
milestones, managerial structure ... (coordination); gathering infor-
mation and ideas, listening, swot analysis (co-operation); joint activ-
ities, wider inclusion (collaboration).
5	Ramu (1997, 87) distinguishes among the following types of integra-
tion: strategic integration, tactical integration, operational integra-
tion, interpersonal integration and cultural integration.
6	Different associations use a most diversified range of terms for ex-
pressing radical changes as a managerial method which, on the other
hand, often lack definitions of its contents and a critical and principled
approach.
7	By the developmental restructuring one usually bears in mind restruc-
turing of the entire corporation along with introduction of all required
areas in order to achieve (more rapid) development of the corporation
as an integrity. We are using the term here to discuss restructuring in
the area of development (the developmental corporate function) as a
section of a corporation.
8	Crisis is a short-term, less favourable, undesired and critical state in
a corporation which has arisen due to both external and also internal
causes and directly endangers the future existence and development of
the corporation (Dubrovski 2000, 2).
9	In regard to this, acquisitions and take-overs are divided into two
groups: those, which represent an opportunity (opportunity driven),
and those which are driven by problems in target corporations (prob-
lem driven) (Lynch 1993,71).
10	Since integrations in Slovenia frequently took place as a matter of fash-
ion or a matter of corporate necessity, involving excessive activity of
share takeovers and purchase of shares, various forms of competition
over acquisition of a particular corporation and other equity trans-
actions in order to achieve even non-business or non-economical in-
terests, while development or even urgency for crisis solving in one's
own corporation has been neglected. Thus, obsession with takeovers
can have negative consequences which are visible by: the exhaustion of
the corporation (appropriate resources should be procured for take-
overs); shift of focus from one's own difficulties to others'; redirection
of developmental investments (resources devoted to takeover activi-
ties instead of investments into one's own technology, hr and mar-
kets); inappropriate approach to crisis solving (resolving of crisis be-
ing sought through takeovers instead of carrying out profound inter-
nal measures).
11	Examples of life cycles for some alliances can be found in the literature
by Spekman, Isabella, and MacAvoy (2000,133-7).
12	A study on key factors of successful management of integrated corpo-
rations (interviews with 50 corporate representatives) classified clar-
ity of purposes and objectives as the primary factor, followed by ap-
pointment of a quality management and planning in advance (Hamill
1993, 3).
13 A research into 45 acquisitions in Slovenia (Lahovnik 2001), based on
questionnaires and interviews, found that 47% of partners had not
cooperated prior to linking.
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Key Sector Analysis: A Case of
the Transited Polish Economy
Henryk Gurgul
Pawei Majdosz
The transition process from a centrally planned economy to a market
economy started in Poland at the beginning of the 1990s. In this pa-
per we try to answer the question in which direction has the structure
of Polish economy changed, if indeed it has. By means of the key sec-
tor analysis applied to the Polish input-output tables that come from
the period 1990-2000, we find that the structure of the Polish economy
still remains characteristic of a centrally planned economy rather than
a market economy. Although, in the last year of the period under study,
the first improvement symptoms could be observed (the increased sig-
nificance of services in the Polish economy) but there is still a lot of
work to be done. An inefficient operation in the case of some sectors
reaches a considerable level. This is reflected by the structure of the
most important input-output coefficients, of which, the most impor-
tant inputs are located on the diagonal of the sensitive matrix.
Key Words: input-output tables, transition, key sector analysis
jel Classification: C67, P21
Introduction
In the early 1990s the centrally planned Polish economy started trans-
forming into a market economy. Without any economic theory on how
to carry out such a process, this task appeared to be very difficult. In
the first stage of the transition, the economy in Poland suffered from
the two opposing trends in the macroeconomic statistics. On the one
hand, industrial output, wages and salaries dropped considerably and
on the other, inflation and unemployment rose. Although, Balcerowicz's
plan based on the three nominal anchors allowed inflation to be kept un-
der control, the other macroeconomic statistics still remained below an
advisable level. The first improvement symptoms could be observed in
Henryk Gurgul is a Professor at the Department of Applied
Mathematics, University of Science and Technology, Poland.
Pawel Majdosz is an Assistant at the Department of Quantitative
Methods, School of Economics and Computer Science, Poland.
trade, and later also in services. Manufacturing, especially in the case of
heavy industry, appeared to be extremely resistant to change.
The transition process did not avoid the basic principles used by the
Central Statistical Office in Poland when preparing the input-output ta-
bles. For example, the Polish input-output table from 1990 was compiled
according to the material product system (mps), while the table for 1995
and later was made according to the system of national accounts (sna).
Therefore, the first task was to transform the input-output matrix from
1990 into the sna system to assure the comparability of the matrices
coming from different periods and the results of the computations based
on these matrices.
Under this study, we decided to analyse the changes of the economic
structure by means of methods based on the entropy theory (key sector
analysis).
In 1967 Theil published his work on the entropy decomposition analy-
sis, which provided a useful way of examining errors or changes in input
structures. Theil (1967) suggested that a change could be decomposed
into a set of additive components and he formulated a maximum en-
tropy principle. On the basis of this principle, so-called key sector anal-
ysis can be performed. Key sector analysis provides empirical evidence
regarding the economic structure of sectors within an economy (Chen-
ery and Watanabe 1958; Hewings and Romanos 1981; Hewings 1982; De-
fourny and Thorbecke 1984; Biaias and Gurgul 1998). The main aim of
the key sector investigations is to find the sectors whose structure has the
greatest impact on the rest of the economy. A key sector analysis of back-
ward and forward linkages is related to the so-called multiplier product
matrix (mpm). This matrix is based on the maximum entropy criterion.
By means of this matrix, the probable future course of economic devel-
opment can be identified. The interaction of the different firm strategies
towards innovation explains the dynamics of the entries in the input-
output matrix. Rasmussen (1956) introduced to economics the notions
of backward and forward linkages. These two indices allow us to find the
key sectors of an economy.
The Entropy Decompositions
A static io model (Cmiel and Gurgul 1996a; 1996b; 1997) is given by the
equation
y = (i - A)x,	(1)
where a denotes the io matrix, x the output vector, and y the final de-
mand vector.
Therefore,
x =(i - a)-1 y = By.	(2)
Define
Bi• = Z bij,
j=l
n
B• j = Z bij, and
i=l
(3)
(4)
(5)
V = Z bij.
i,j=l
The input-output multiplier matrix (mfm) (Sonis and Hewings 1989)
is given by the formula:
Bl
1 1
m = -[bi.b.j] = -
Bi,
Bn
[B»i, B.2,...,B.n ] = [mij].
(6)
Thus, the structure of the mpm is essentially connected with the prop-
erties of the sectoral backward and forward linkages defined below.
Assuming that B• j0 stands for the largest column multiplier and Bi0 •
for the largest row multiplier, then the element located at (i0, j0) is given
by the formula:
mi
1
l'0j0 — yBio*B*jo'	(7)
which is called the largest cross. If this cross is excluded from M, then
the second largest cross can be found. After the exclusion of row i0 and
j0, the second largest cross mi0j0 can be found and so on. The number
of crosses is equal to the rank of the matrix mpm. Following Rasmussen
(1956), there are two types of indices of the Leontief inverse, which are
called backward linkages
BLi
n
n
i=1 Bij
L yd
and forward linkages
Bi
FLi
■r
j=1 Bij
1 yd
„2 L,
i,j=1 Bij
nB.j
nBj.
V '
(8)
(9)
1
n
A backward linkage greater than 1 (BLj > 1) means that a unit change
in final demand in sector j will create an above average increase in activ-
ity in the economy, and analogously if forward linkage is greater than 1
(FLi > 1), it is taken for granted that a unit change in all sectors of the
final demand will create an above average increase in sector i.
Definition i. Sector k is called key sector if both indices are greater
than 1.
Definition 2. Sector k is forward linkage oriented if FL is above 1
and BL is below 1.
Definition 3. Sector k is backward linkage oriented if FL is below 1
and BL is above 1.
Definition 4. Sector k is called weak oriented if both indices
are less than 1.
Assuming b = (i — a)-1 = [bij] to be Leontief inverse, also known as
the matrix of total inputs. For each location (i0, jo) we define a matrix
f(i0, j0) (Sonis and Hewings 1989; 1992) of the form:
F(io, jo)
B1io
B2io
Bnio
j Bjo2' Bjo n] = \biio bjo j].	(10)
This matrix is referred to as the first order field of influence of change.
The economic interpretation of this matrix is related to the Sherman-
Morrison (1950) formula. By using this formula, changes of entries in
matrix b can be investigated. If the change e is located in position (i0, j0)
in matrix a, following the above mentioned Sherman-Morrison for-
mula, we have
- h i bii«bi«je (u\
1 uJoioe
or in matrix form
B^(Mo)_B = _i_F(io,;o).	(12)
1 bjo io
The sum of all components of the matrix f(i0, j0) is given below:
S(F(io, j0)) = £ bii0bj0j = B,i0Bj0• and	(13)
hj
1
M = -[S(F(j/i))}.	(14)
These formulas allow us to investigate the importance of direct inputs,
which means the impact of the coefficients of a on b = (i — a)-1.
Below we demonstrate that mpm has the property of maximum en-
tropy (Shannon and Weaver 1964; Theil 1967; Kullback 1970).
Let q = [Qij] be a positive matrix and
£ Qij = Bi•, £ Qij = B• j and £ Qij = V.	(15)
j i ij
Consider the probability spaces (X, F, Pi) i = 1,2, that is a basic set
of elements x e X and a collection F of all possible events (sets) made
up of elements of the sample space X for which a probability measure
Pi, i = 1,2 has been defined. Assuming that the probability measures
P1 and P2 are absolutely continuous with respect to one another, then
there exists a probability measure p (for example p = (P1 + P2)/2)
and functions fi (x), i = 1,2 called the generalized probability densi-
ties (Radon-Nikodym derivatives), unique up to sets of probability zero
in p, measurable in p,0 < fi (x) < x almost everywhere in p such that,
for all A eF, Pi (A) = JAf{ (x)dp(x), i = 1,2.
Applying the Taylor expansion
1
logx = x — 1 — yj(x ~ l)2'c S (min{l,x},max{l,x}),
one can see that
X/.Miogfg^M
= Jx(f2(x) -fl(x))dß(x) - ± jf /l(x) (HI -l)2dß(x)

I f2(x)dp(x) — (f1 (x)dp(x)
XX
n2
2 c2Jx-

2
im'1) Mx)-°-
The inequality
is known as the basic information inequality.
Applying this inequality to the two dimensional distributions with the
density function fXY (x, y) and the product of one dimensional distribu-
tion fx(x) fY(y) we have
and as a consequence
/ fxY(x, y) log fxY (x yW(x, y)
J X
< - I fx(x) logfx(xW(x) - I fY(y) logfY(y)d^(y).
XX
The above inequality can be written in the form
H(X, Y) < H(X) + H(Y),
where
H(X) = - f fx (x) log fx (x)dß(x)
X
is called the entropy of random variable X (or its distribution).
Similarly
H(x, Y) = - fxY (x y) log fxY(x, yW(x, y)
X
is called the entropy of a two dimensional random variable (X,Y) (or its
distribution).
For the discrete two dimensional distribution we have (in a special
case) the inequality
i,j	rij
Hence
- L Vi, j log pi,j <-L pi• log pi.- L p• j log p• j. (16)
i,j i j
Applying this result to the probabilistic distribution Q(pij = Qij/V)
and the product M of its marginals (p. = B. /V and p. j = B. j /V) and
taking into account
H(Q) = - £ p(i, j) In p(i, ;) = -£ ^ In ^	(17)
i,j i,j
we have
i,j i,j
Key Sector Analysis: A Case of the Transited Polish Economy 101
Bi B j Bi B j
i,j
The multiplier product matrix m depends on the column and row
multipliers. Therefore, mpm does not take into account the interactions
of each sector with other sectors. From (18) it follows that mpm has
the property of maximal entropy in the class of all matrices with fixed
marginals. For the case where simultaneous changes occur in two places
(i0, jo) and (i1, j1) in a direct inputs matrix, a formula similar to (11) can
be derived (see Hewings and Romanos 1981).
Notice that the sum of all the elements of m is equal to the sum of all
the elements of b.
Matrix m represents the maximum entropy tendency. Thus, matrix m
may be considered to represent the most homogenous distribution of the
components of the column and row multipliers of the Leontief inverse b
(which represents total inputs). From the economic point of view, the
mpm matrix stands for the equalisation tendency of total inputs in an
economy (i. e. in all industries the same - in monetary approach - output
needs approximately the same input).
Define
d = diag(b - m) (diagonal),
r = b - m - d,
s = 2-1 (r + rt) (symmetric with null diagonal),
Sa = 2-1 (r - rt) (asymmetric with null diagonal).
Therefore,
r = 2-1 (r + rt) + 2-1 (r - rt) = s + sa.
Thus
b = m + d + s + Sa,
where m represents the maximum entropy tendency and the diagonal
matrix d stands for the so-called additional sectoral scale effects. The
symmetric matrix s and asymmetric matrix sa represent the symmetric
and asymmetric tendency.
Application to the Polish Input-Output Tables
from the Period 1990-2000
The statistical data used here come from the Polish Statistical Yearbooks
(published by The Central Statistical Office) covering the period 1990-
2000. Since input-output tables are published on a basis of a five-year-
period in Poland, we focus our attention on the three years in the period
table 1 Key Sector analysis of the Polish economy over the period 1990-2000
(aggregation 6 x 6)
Sector	1990	1995	2000
	FL	BL	FL	BL	FL	BL
1. Manufacturing	2.295	1.070	2.646	1.258	1.556	1.038
2. Construction	0.536	0.988	0.526	1.087	0.731	1.081
3. Agriculture and forestry	0.852	1.122	0.854	1.045	0.854	1.167
4. Transportation and	0.736	1.057	0.691	1.022	0.832	0.980
communication						
5. Trade	0.687	0.894	0.536	0.780	0.979	0.853
6. Service	0.894	0.869	0.747	0.808	1.047	0.881
of interest, namely: 1990,1995, and 2000. We began by using an aggrega-
tion 6 x 6. Using a notion of backward and forward linkages, the taxon-
omy of the Polish economy is carried out. This taxonomy characterises
changes in the economic structure over the period under consideration
(Sonis and Hewings 1981; Durand and Markle 1984). The results of key
sectors analysis are summarised in table 1 and figures 1, 2, and 3.
Over the whole analysed period, the key sector was manufacturing.
This indicates that a unit change in final demand in this sector will cre-
ate an above average increase in activity in the economy, and unit change
in all sectors of the final demand will create an above average increase
of output in this sector. It is worth noting that both the backward and
forward linkages of this sector tend to increase only in the first half of the
analysed period, while in 2000 their level is even below the one observed
in 1990. This means that the influence of the changes in the final demand
of this sector on the whole economy was initially becoming stronger with
time, but then the trend was reversed. It should also be emphasised that
there is no forward linkage oriented sector at this level of aggregation
except for services in 2000. The backward oriented sectors were agricul-
ture and forestry as well as transportation and communication, but in
the case of the second one, only over the first half of the analysed period.
Also, construction could be considered as a backward linkage oriented
sector since 1995, when its BL reached the greatest value. Apart from the
key sectors, it is also interesting which of the selected sectors can be cat-
egorised as a weakly oriented sector. It results from our computations
that trade alone is a weakly oriented sector over the whole period under
consideration.
Key Sector Analysis: A Case of the Transited Polish Economy 103
figure 1 Visualisation of the results of key sector analysis for 1990
1,3
1,2
' 1,1
1,0
k 0,9
0,8
Backward Linkage Oriented Sectors 3 0 4 o	Key Sectors 1 0
0 2 5 6 0 Weakly Oriented Sectors	Forward Linkage Oriented Sectors
0,7
0,4 0,6 0,8 1,0 1,2 1,4 1,6 1,8 2,0 2,2 2,4 2,6 2,8
Forward Linkages (FL)
figure 2 Visualisation of the results of key sector analysis for 1995
1,3
1,2
' 1,1
1,0
W 0,9
0,8
0,7
Backward Linkage Oriented Sectors 2 o 4 3 o	Key Sectors 1
6 ■ 5 0 Weakly Oriented Sectors	Forward Linkage Oriented Sectors
0,4 0,6 0,8 1,0 1,2 1,4 1,6 1,8 2,0 2,2 2,4 2,6 2,8
Forward Linkages (FL)
figure 3 Visualisation of the results of key sector analysis for 2000
1,3
1,2
' 1,1
z= 1,0
dr
ar
I 0,9
co
0,8
0,7
Backward Linkage Oriented Sectors 3 o 2 o	Key Sectors 1 o
o 4 5 0 Weakly Oriented Sectors	6 0 Forward Linkage Oriented Sectors
0,4 0,6 0,8 1,0 1,2 1,4 1,6 1,8 2,0 2,2 2,4 2,6 2,8
Forward Linkages (FL)
The investigations of the most important coefficients were performed
by means of the Sherman-Morrison formula defined by (11), which gives
the change in the entries of the Leontief inverse, caused by a change in
one component of the direct coefficients matrix a. For any fixed position
(i0, jo) we perturbed the corresponding element of a by replacing the
element ai0/j0 by ai0/j0 (1 + e). Let us denote the direct coefficients matrix
perturbed in this way by ae(i°'jo). The number can be interpreted as the
relative perturbation of aio,j0. Then the inverse error matrix given by
Q£(i0,j0) =
,e(io, jo)
ij
= (i - ae(io,jo- (i - a)-1,
the relative inverse error matrix
rbe(i0,j0) =
e(io, jo)
bi
and its norm
n be(i0'j0 0
||rb£(wo)|| = £ i _m-1
i,j=1 bi,j
were computed.
In the same way we computed the above elements for all possible po-
sitions (i0, j0), so we finally obtained the sensitivity matrix
sm = |"|| RBe(io'jo^l .
Then we assigned ranks in descending order for the elements of this
matrix. Rank 1 in position (i0, j0) indicates that aio,j0 is the most sensitive
(according to the inverse) element of matrix a, i. e. the relative change of
this element has the greatest influence on b = (i - a)-1.
The analysis was done, in the first step, for the years 1990, 1995 and
2000 in an aggregation 6 x 6. The results are presented in table 2.
One will find that the most important input-output coefficients are
manufacturing products used as input by manufacturing itself, agricul-
ture and forestry products used by agriculture and forestry itself or by
manufacturing. Among the most important coefficients in the analysed
periods are also the coefficients of manufacturing products used by agri-
culture and forestry or by transportation and communication or by ser-
vices, and service products used by manufacturing, and products of trad-
ing used by manufacturing. The input coefficients whose changes are
less important for the economy under study are also interesting. The
least important coefficients in the considered periods were those of con-
struction products used by construction itself or trade, agriculture and
Key Sector Analysis: A Case of the Transited Polish Economy 105
table 2 Inverse important coefficients over the period 1990-2000 (aggregation 6 x 6)
1990	1995	2000
	1.	2.	3-	4-	5-	6.	1.	2.	3-	4-	5-	6.	1.	2.	3-	4-	5-	6.
1.	1	7	8	5	11	4	1	7	4	6	11	10	1	5	7	8	17	4
2.	15	34	24	26	23	18	13	16	30	27	33	15	20	14	33	28	26	10
3.	2	33	3	36	30	35	2	35	3	36	26	34	2	36	3	35	30	34
4.	10	21	31	14	12	25	8	24	29	9	21	19	15	29	32	16	13	22
5.	6	29	20	19	32	27	12	25	31	20	32	18	6	23	19	21	25	24
6.	9	28	22	16	17	13	5	23	28	17	22	14	18	27	31	12	11	9
Note that inverse important coefficients are numbered according to importance.
The ten top inverse important coefficients are in bold.
forestry products used by construction or by transportation and com-
munication or by services.
The authors also provided the results of the decomposition of the
Leontief inverse into the M (called mpm), diagonal, symmetric and
asymmetric matrices in the years under consideration (see tables 3
and 4).
The additional effect greater than one can be observed in the case of
such sectors as: agriculture and forestry (1990, 1995, and 2000), man-
ufacturing (1995) and also transportation and communication (1995).
The smallest effect can be identified in the case of the trade sector. From
matrix s it follows that the largest (by absolute value) bilateral balances
occur in the pair of sectors: agriculture and forestry and transportation
and communication (1990), manufacturing and services (1995) as well as
agriculture and forestry and services (2000). From matrix s„ it follows
that the largest (by absolute value) bilateral imbalances were in the pair
of sectors construction and manufacturing (1990-2000).
The authors also performed the computations for two different aggre-
gations: 10 x 10 and 24 x 24. Unfortunately, since 2000 the Central Sta-
tistical Office has published the Polish input-output tables on the basis
of different schema that makes it impossible to prepare an aggregation
10 x 10 and 24 x 24. Therefore, we have used an input-output matrix up-
dating technique based on the sum of squared differences. More details
can be found in Jackson and Murray (2004). The selected results are sum-
marized below (see tables 5, 6, and 7).
One will notice that the superscripts of top inverse important coeffi-
cients (obtained from 100 and 576 coefficients) are strongly related to the
table 3 Matrix M over the period 1990-2000 (aggregation 6x6)
I
3
<3
0
o*
o-*
a
1
3
1990
1995
	1.	2.	3-	4-	5-	6.	1.	2.	3-	4-	5-	6.	1.	2.	3-	4-	5-	6.
1.	•873	.204	•324	.280	.262	•340	1-395	•2 77	.450	•364	.283	•394	•495	•233	.272	.265	•311	•333
2.	.806	.188	•299	•259	.241	•314	1.206	.240	•389	•315	•244	•340	•515	.242	•283	•275	•324	•346
3-	.916	.214	•340	•294	•274	•357	1.160	•231	•374	•303	•235	•327	•556	.261	•305	•297	•350	•374
4-	.863	.202	•320	•2 77	.258	•336	1-134	.225	.366	.296	.230	•320	.467	.219	.256	.250	•294	•314
5-	•730	.170	.271	•234	.219	.284	.865	.172	•279	.226	•175	•244	.406	.191	•223	.217	.256	•273
6.	.709	.166	•263	.228	.212	.276	.896	.178	.289	•234	.182	•253	.420	•197	.230	.225	.264	.282
table 4 Matrix [Sa\D\S] over the period 1990-2000 (aggregation 6X6)
1990	1995	2000
	1.	2.	3-	4-	5-	6.	1.	2.	3-	4-	5-	6.	1.	2.	3-	4-	5-	6.
1.	.952	-•143	-.226	-.171	-.211	-.199	1-133	-.161	-.210	-•243	-.241	-.278	.915	-.144	-•173	-.207	-.190	-.200
2.	-.644	.838	-.210	-.167	-.154	-.163	-1.009	.926	-•237	-.202	-.166	-•159	-•340	•949	-.246	-.200	-•175	-.184
3-	-.546	.062	1.096	-.248	-•195	-.217	-.684	.128	1.107	-.252	-.183	-.224	-.284	.017	1.071	-.240	-.167	-.245
4-	-.617	.069	-.014	.890	-•134	-.169	-.778	.081	-.047	1.011	-.156	-•157	-.182	.048	•037	•935	-•155	-.132
5-	-•431	.062	.014	.000	•845	-.150	-.564	.061	-.057	-.002	.881	-•135	-•053	.126	•159	.044	•843	-.156
6.	-•377	.128	.094	.121	.086	.899	-.456	•131	.029	.092	.050	•953	-.092	.111	.110	.130	.044	•917
Note that the diagonal elements of [S„ \ D \ S] are equal to the diagonal element of D. The lower triangular elements of [S„ \ D \ S] are equal to the
lower triangular elements of S„. Upper triangular elements of [S„ \ D \ S] are equal to upper triangular elements of S.
table 5 Key sector analysis of the Polish economy over the period 1990-2000
(aggregation 10 x 10)
Sector	1990	1995	2000
FL	BL	FL	BL	FL	BL
1. Group of industries of fuels and energy	1.372	1.061	1.420	1.027	1.073	0.893
2. Group of industries of raw material	1.711	1.048	1.922	1.170	1.050	0.991
3. Electromachine	0.963	0.994	1.004	1.169	0.753	0.958
4. Food	0.656	1.073	0.711	1.239	0.820	1.292
5. Group of light industries	0.947	1.029	1.140	1.093	0.887	0.979
6. Construction	0.561	0.960	0.545	0.984	0.797	1.054
7. Agriculture and forestry	0.968	1.091	0.911	0.955	1.026	1.167
8. Transportation and communication	0.860	1.027	0.812	0.920	0.989	0.956
9. Trade	0.839	0.871	0.585	0.711	1.299	0.845
10. Services	1.122	0.846	0.949	0.731	1.306	0.865
key sectors numbers. Therefore our conjecture is that the parameters of
location of inverse important coefficients determine approximately the
same key sectors as indicators BLj and FLi.
We also find that the most important input coefficients come from
the main diagonal of the input-output matrix (large intraindustry flows).
This means that this structure of the most important inputs was still typ-
ical for centrally planned economies (domination of raw materials and
fuels). Large coefficients airi can be a signal of the inefficiency of econ-
omy (intraindustry flows dominate interindustries flows - i. e. in some
branches their production is mainly devoted to their input, therefore,
some branches producing final goods can experience a shortage of inter-
mediate goods needed for their own inputs). In highly developed mar-
ket economies these coefficients are lower. In the considered periods we
also find some important input-output coefficients connected with in-
terindustries flows, for example, agriculture and forestry products used
as input by the food industry, food products used as input by trade, met-
allurgical products used as input by the electromachine industry. In these
three cases, the importance of these coefficients is somewhat natural.
Other conclusions (analogous to the case of aggregation 6 x 6) are left
to the reader.
table 6 Key sector analysis of the Polish economy over the period 1990-2000
(aggregation 24 x 24)
Sector	1990	1995	2000
FL	BL	FL	BL	FL	BL
1. Products of the coal and fuel industry	1.826	1.116	2.067	1.014	1.261	0.797
2. Energy, gas, hot water	1.273	1.031	1.223	1.049	1.212	1.042
3. Metal ores, products from metallurgic irons and non-ferrous industry, recycling of metals	1.921	1.107	2.004	1.409	1.288	1.254
4. Products of metal industry	0.863	0.992	0.880	1.113	0.876	1.061
5. Machinery and device	1.017	0.972	1.031	1.123	0.761	1.053
6. Products of precise industry	0.554	0.921	0.797	1.199	0.716	1.023
7. Products of the transport industry and the transportation trade	0.782	1.044	0.952	0.975	0.975	1.008
8. Products of electrotechnical industry	0.833	1.063	0.624	1.148	0.599	0.880
9. Chemicals and chemical products and products manufactured with other non-metal materials	1.765	1.072	2.703	1.104	1.227	1.002
10. Products of the wood industry but not including furniture	0.944	1.056	0.700	1.089	0.813	1.100
11. Products of the paper and printing industry, data carriers, remaining products and material services	1.109	1.017	1.279	1.168	0.921	0.986
Continued on the next page
Conclusions
The main aim of this paper is to carry out a taxonomy of the Polish econ-
omy in transition. A further interest is to identify the most important
input-output coefficients and also answer the question as to whether or
not the structure of the Polish economy is still characteristic for a cen-
trally planned economies.
Applying the methods based on the entropy theory, we identified the
sectors which can be considered as a key, and examined the additional
table 6 (continued)
Sector	1990	1995	2000
FL	BL	FL	BL	FL	BL
12. Textiles	0.821	1.066	0.862	1.173	0.656	0.889
13. Clothes and products manufactured from fur, skin or products manufactured with skin	0.592	1.001	0.561	1.000	0.587	0.892
14. Food	0.879	1.094	0.819	1.248	0.962	1.343
15. Production and services of construction	0.717	0.980	0.733	1.000	1.125	1.102
16. Agriculture, hunting, forestry and fishing	1.251	1.112	1.074	0.956	1.165	1.211
17. Transportation	1.264	1.085	0.975	0.958	1.130	0.976
18. Communication	0.567	0.826	0.581	0.721	0.905	1.048
19. Trade	1.368	0.890	0.544	0.692	1.859	0.870
20. Municipal services, water and its distribution	0.604	1.145	0.467	0.846	0.760	0.937
21. Housing services	0.502	0.924	0.857	0.810	0.747	0.997
22. Education, medical services, social services	0.604	0.823	0.450	0.688	0.647	0.742
23. Services for people (hotels, restaurants, tourism, financial agency, leasing of machines and services)	0.803	0.916	1.447	0.841	2.244	1.021
24. Government administration, organizations	1.139	0.745	0.369	0.675	0.564	0.766
scale effects as well as the symmetric and asymmetric tendency in the
economy. The striking empirical finding based on the most important
input-output coefficient analysis is that the greatest importance is as-
sociated with the input coefficients which come from the diagonals of
input-output matrices. It can be concluded that the structure of most
important inputs was still typical for centrally planned economies even
in 2000. In addition, large input coefficients airi may be a signal of an
inefficiency of the Polish economy over the period under consideration.
It is worth noting that there exist also positive tendencies in the Pol-
ish economy. For example, the increased importance of services. In our
opinion, this trend will continue also in the future.
table 7 Ten top inverse important coefficients
Aggregation	Year	Coefficients
10 x 10	1990	a2,2; a1,1; «7,7; «5,5; «7,4; «4,9; «2,3; «1,2; «3,3; «9,2
	1995	«2,2; «1,1; «5,5; «3,3; «4,4; «7,7; «2,3; «7,4; «8,8; «10,2
	2000	«1,1; "3,1; "3,3; "1,6; «1,2; «5,1; «1,3; «1,4; «6,6; «2,6
24 x 24	1990 1995 2000	«3,3; «1,1; «9,9; «16,16; «11,11; «16,14; «1,2; «12,12; «14,19; «16,10 «3,3; «9,9; «11,11; «1,1; «1,2; «12,12; «14,14; «16,16; «16,14; «5,5 a3,3; a23,23; a16,16; a16,14; a14,14; a1,2; a3,4; a7,17; a13,18; a9,2
Acknowledgments
The authors thank the anonymous referee for helpful comments. The
autors also thank the managing director Artur Satora and Mrs Mal-
gorzata Wfglowska from Central Statistical Office in Warsaw for sup-
plying data.
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Managing the Process of Globalisation
in New and Upcoming eu Members
6th International Conference
of the Faculty of Management Koper,
University of Primorska
24-26 November 2005
Congress Centre Bernardin
Portorož, Slovenia
Conference Subject Areas
•	Theoretical Aspects of Globalization
and Internationalization in Transition
Economies
•	Economic and Financial Policy as a
Framework for Global Economic
Success
•	Management in the Process of
Economic Internationalization of
Transition Economies
Programme Board
•	Dr. Vito Bobek, President of the
Programme Board, Faculty of
Management Koper, University of
Primorska, Slovenia
•	Dr. Marjan Svetlicic, Faculty of Social
Sciences, University of Ljubljana,
Slovenia
•	Dr. Matija Rojec, Faculty of Social
Sciences, University of Ljubljana,
Slovenia
•	Dr. Gerhard Wuehrer, Faculty of Social
Sciences, Economics and Business
Administration, Johannes Kepler
University, Linz, Austria
•	Dr. Zeynep Bilgin, Faculty of Social
and Administrative Sciences, Marmara
University, Istanbul, Turkey
•	Dr. Ladislav Kabat, Faculty of Social
and Economic Sciences, Comenius
University, Bratislava, Slovakia
Dr. Cezar Scarlat, Department of
Industrial Management, University
Politechnica of Bucharest, Romania
Dr. Andras Inotai, Hungarian Academy
of Sciences, Budapest, Hungary
Dr. Milena Peršic, Faculty of Tourism
and Hospitality Management,
University of Rijeka, Croatia
Dr. Sreten Cuzovic, Faculty of
Economics, University of Niš, Serbia
and Montenegro
Dr. Corrado Cerutti, Faculty of
Political Science, University of
Macerata, Italy
Conference Programme and all
information regarding the conference
venue and registration are available
on the faculty web site.
University of Primorska
Faculty of Management Koper
Cankarjeva 5, 6104 Koper, Slovenia
Phone: ++386 (0) 5 610 2007
Fax: ++386 (0) 5 610 2015
E-mail: conference@fm-kp.si
www.fm-kp.si _
Managing Global Transitions
International Research Journal
AIMS AND SCOPE
The journal Managing Global Transitions
is aimed at providing a forum for
disseminating scholarship focused on
transitions. The journal seeks to publish
ground breaking work in management
research that will provide integrated and
diverse perspectives on the processes of
change and evolution in a broad range of
disparate fields, including systems theory,
leadership development, economics,
education, sociology, informatics,
technology, decision-making theory, and
action learning. To further the
understanding of transition environments
internationally the journal aspires to
enhance the availability of case studies and
analysis of data from different cultural
environments in public, non-profit, and
corporate contexts.
INFORMATION FOR AUTHORS
Manuscripts should be prepared following
the style of The Chicago Manual of Style
(University of Chicago Press 2003).
Manuscript Style
•	Papers should be submitted
electronically via e-mail.
•	Papers should be between 5000 and 6000
words in length, accompanied by a
100-150-word abstract, and no more than
five key words and two areas of JEL
classification (see http://www.aeaweb.org/
journal/jel_class_system.html) on a
separate sheet. Book reviews should be
between 1000 and 2000 words in length.
•	The title page must list full title, author(s)
address, phone, fax, and e-mail.
•	Manuscripts must be printed on one side
of A4 (or letter size) paper with double
spacing and 25 mm (1 in) margins. Italics
should be used for emphasis and bold for
headings, which must be numbered (e.g.
1,1.1,1.2, etc.) and written using
uppercase and lowercase letters.
•	Illustrations and tables must be printed
on separate sheets.
•	We accept files created with all major
word processing packages, but prefer MS
Word and LTEX. Figures should be saved
as separate files in tiff or eps format,
and source files should be included.
Author name should be used as file name
(e.g. smith.doc for the main file and
smith1.eps, smith2.eps, etc. for figures).
Reference Style
The author should make sure that there is a
strict correspondence between the names
and years in the text and those on the list.
The list of references should appear at the
end of the main text. It should be listed in
alphabetical order by author's name.
References should appear as follows:
Beech, M. H. 1982. The domestic realm in
the lives of Hindu women in Calcutta. In
Separate worlds: Studies of purdah in
South Asia, ed. H. Papanek and G.
Minault, 110-38. Delhi: Chanakya.
Jackson, R. 1979. Running down the
up-escalator: Regional inequality in
Papua New Guinea. Australian
Geographer 14 (May): 175-84.
Lynd, R., and H. Lynd. 1929. Middletown: A
study in American culture. New York:
Harcourt, Brace and World.
University of Chicago Press. 2003. The
Chicago manual ofstyle. 15th ed. Chicago
and London: University of Chicago Press.
Articles are double-blind peer reviewed.
copyright notice
Copyright for all articles published in
Managing Global Transitions is held by
individual authors.
subscriptions
Annual subscription (two numbers):
individual rate 4.900 sit (euro 20);
institutional rate 6.900 sit (euro 29).
Prices include postage.
Printed in Slovenia
Managing Global Transitions
International Research Journal
volume 3 • number 1 ■ spring 2005 ' issn i581-63ii
5 E-Learning and the Changing Face
of Corporate Training
and Development
Max Zornada
23 School Leadership Training under Globalisation:
Comparisons of the uk, the us and Norway
Arild Tjeldvoll
Christopher Wales
Anne Welle-Strand
51 Evidence of Returns to Education Among Roma
in Central and Eastern Europe and
Their Policy Implications
Susanne Milcher
Katarina Zigovä
71 Restructuring and Business Reengineering
in Integrative Processes
Drago Dubrovski
95 Key Sector Analysis: A Case of
the Transited Polish Economy
Henryk Gurgul
Pawel Majdosz
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