Journal of Global Business Education
Board of Reviewers:
Dr. Teri L. Brandenburg
Mississippi State University
Mississippi State, MS
Dr. Don Busché
Mission Viejo, CA
Dr. Burt Kaliski
Southern New Hampshire University
Dr. Heidi Perreault
Southwest Missouri State University
Dr. Cynthia Anast Sequin
Emporia State University
Dr. Lila Waldman
Dr. Patricia Wissen
Northcentral Technical College
Los Angeles Valley College
Valley Glen, CA
Dr. John Lightle
Ivy Tech State College
Leeward Community College
Pearl City, HI
Linn-Benton Community College
Table of Contents
The Shifting Language of Commerce: A Case for Mastering
Dr. Kerry D. Carson, Dr. Patricia A. Lanier,
Dr. Paula Phillips Carson, and Dr. Lewis R. Gale, IV ......... 1
Unveiling Islamic Banking and Financing
Dr. James Calvert Scott ....................................................... 11
A Comparison of U.S. and German Students’ Earnings
Expectations, Utilization of Credit Cards, and Internet
Dr. Marianne L. James, Dr. Carol Blaszczynski, and
Prof. Dr. Hansrudi Lenz ...................................................... 23
Cooperative Learning Barriers & Bridges: Scaffolding Student
John Duncan and Dr. Clora Mae Baker ............................. 35
Evaluating Knowledge and Critical Thinking in International
Dr. Edgar J. Manton, Dr. Donald E. English,
and Dr. Roberto Vinaja ....................................................... 51
The Cross-Cultural Adaptability of a Group of International
Dr. Wanda L. Stitt-Gohdes and Dr. Tena B. Crews ............ 61
Call for Papers ......................................................................... 72
THE SHIFTING LANGUAGE OF COMMERCE:
A CASE FOR MASTERING MANDARIN
Dr. Kerry D. Carson
Dr. Patricia A. Lanier
Dr. Paula Phillips Carson
Dr. Lewis R. Gale, IV
Economic growth in the People’s Republic of China (PRC) has been
phenomenal. From the late 1970s to the beginning of the 21 st century, PRC’s
output has more than quadrupled—and there are no signs of a slow down.
PRC’s 1.3 billion people make up the largest market in the world, representing
20% of the global population. Because of its growth and size, it is expected that
over the next several decades the PRC will become the dominant economic
nation with the United States in second place. Therefore, U.S. universities must
begin preparing students to conduct business and interact with the citizenry in
China. Students will not only need to learn the language, but they must also
learn to read Chinese characters. Additionally, students must be able to
understand the complex Chinese culture. Because change in economic
leadership will likely happen before many of our present college students retire,
we must refocus our educational systems today.
T he profound economic growth over the past couple of decades in the
People’s Republic of China (PRC) is not without its problems, but the
speed and breadth of development are such a phenomena that it is almost
difficult to comprehend. While the world sees other third world countries
struggling to convert their economies to a capitalist model, this has not been
the case in the PRC. In 1978, the year the PRC decided to pursue a market-
oriented economy, the Gross Domestic Product (GDP) for the centrally
planned Soviet-styled economy was $147.3 billion U.S. dollars (Shi, 2000).
By the end of the century, the country’s economic output had quadrupled.
China had become the 7th largest economy in the world and was 9th in
foreign trade; it shows no signs of slowing down. Projections indicate that
the economy will grow at an annual rate of at least 7% during this decade
(Regional Indicators, 2004; Shi, 2000).
As tangible evidence of the PRC’s domestic growth, the number of
motor vehicles in use has spiraled. In 1949, there were only 2,300 vehicles
in Beijing. In 1997, there were 1 million; and this number doubled by 2003.
By 2020, the PRC automobile market is projected to equal that of the U.S.
(Sawyer, 2004; Shi, 2000).
The Shifting Language of Commerce 2
Another premier industry in China is electronics. It has been very
dynamic and robust, ranking first in sales revenue compared to all other
industries, including automobiles. The Chinese electronic industry receives
more direct investments from foreign entities than any other industry
(Zhang & Parker, 2004). Growth is so stunning that U.S. business leaders
such as Warren Buffett and Bill Gates are beginning to find ways to
capitalize on China’s huge economic growth (Gibbons, 2004; Hutchens,
Heavy-lift cranes and skyscrapers dominate the landscape throughout
the PRC. Tall buildings are being erected from Urumaqi in the west to
Beijing in the east. On the East Bank of Shanghai, there were only rice
fields 15 years ago. Today, there is virtually no land left to develop in the
560 square kilometers now known as Pudong. Apartment complexes,
cultural and government buildings, a campus for expatriates, and
commercial skyscrapers replaced the agricultural scene. A riverfront
promenade embraces the waterway where there was once a fishing village,
and Shanghai’s Huangpu River is now crowded with cargo vessels
The Chinese economy is predicted to be as large as the U.S. economy
in only a few decades (Shi, 2000). Because their population is nearly 1.3
billion (over four times the size of the U.S.), the PRC will undoubtedly
become the largest economy in the world before our college-aged students
reach retirement. Due to this rapid economic development, it is important
that the United States begin to prepare students for a U.S. economy that will
likely be totally interdependent with the PRC’s economy. Therefore, this
manuscript provides evidence of the PRC growth phenomenon and
discusses the resulting necessity for foreign language study, specifically
Mandarin, for business students.
Recent Events Leading to a Market Orientation
The potential for this revitalization did not exist until economic reform
was announced in the late 1970’s. At that time, Chairman Deng Xiaoping
outlined the PRC’s economic reform, and within a year there was a
retransformation in the agricultural sector from collective farming to a
family-responsibility system. In 1979, an Open Door Policy was
implemented. The following year, Special Economic Zones (SEZs) were
established in the coastal areas to attract foreign investors. Beginning in
1990, the Shanghai Securities Exchange and the Shenzhen Stock Exchange
were opened. But perhaps a recognizable turning point occurred in 1992
when Chairman Deng Xiaoping took a tour of Southern China and revived
economic activity in that region (Li, 2000).
Even in the difficult years for Asia between 1992 to 1995, the PRC was
able to maintain a GDP growth rate of over 10%. During that time, the
government began privatizing state-run enterprises that could not earn a
The Shifting Language of Commerce 3
profit, thus forcing laid off workers into the private sector. In 1995, a
central banking system was established. Two years later, Hong Kong
reverted back to China from the British and has served as a bridge between
economically developed nations and the PRC. China agreed to give Hong
Kong a great deal of autonomy as a purely capitalistic market (Dejiang,
Possibly the most important event is that China was admitted to the
World Trade Organization (WTO) on November 10, 2001. This new
association will have a great deal of impact on the way the communist
government of China does business, as they will have to become much
more open in their business practices. It will mean much more
interdependence with the world (Pang, Zhou, & Fu, 2002). Already, PRC’s
financial institutions are issuing credit cards, and the insurance industry is
being developed. BMW is talking about establishing plants in the PRC, and
other multinational corporations are knocking at China’s door in order to
have access to its large market (Cui & Liu, 2001).
Today’s China cannot be thought of as a traditional communistic
government. ―Even though it is still called the Communist Party, it’s not
about communism. It’s about making money. It’s about capitalism‖ (Choi,
2004, p. 22). The expectation is that the PRC’s economy will continue to
grow, and nothing will be spared in preparing Beijing for the Olympics in
2008 where two of the three official languages for the games will be
English and Chinese. This event will be the showcase for the world to see
how far the PRC has come (Faster, higher, cheaper, 2004).
Reducing Barriers to Commerce
Currently, English is the language of commerce (Posch, 1994). Indeed,
the role of English in the PRC has become a priority in recent years. In
1996, the Vice Premier of the State Council indicated an urgent need for
English proficiency for the economic globalization and openness of the
society. Today, university students in the PRC are required to study English
for two years. Many colleges and universities require students to pass an
English certification exam before they can receive their diplomas (Pang,
Zhou, & Fu, 2002). College students are motivated to pursue English
proficiency because they want a certificate for career advancement and
monetary gain. Additionally, the society supports their efforts in the name
of patriotism; therefore, ―the popularity of English seems to have reached a
new peak in the PRC with government policy-makers, educationalists, and
the Chinese public‖ (Bolton, 2002, p. 181).
However, if today’s U.S. students want to do business in China, they
will not be able to rely solely on the English language—particularly after
China’s economy exceeds that of the U.S. To conduct business, it will be
important for U.S. students to learn Modern Standard Chinese commonly
referred to as Mandarin (Field, 1996). Speaking the language will not be
The Shifting Language of Commerce 4
enough; students will also need to learn Chinese characters. Traditional
Chinese characters were formed 8,700 years ago and have evolved into an
extremely complex system comprised of 50,000 characters. Today, there is
a new simplified system of characters that allows Chinese to write and
communicate more easily—even on computers (e.g., Liu, Jaeger, &
Beyond the barriers of speaking and reading the language, cultural
differences also can cause problems when conducting business. The U.S. is
different from China with regard to acting as group members or acting as
individuals when making decisions. The U.S. places high value on
individualism; whereas, the Chinese culture values collectivism.
Additionally, the U.S. culture emphasizes wealth, status, and achievement,
while the Chinese emphasize relationships and concern for others (Fan &
Zigang, 2004; Hofstede, 1991).
While it is true that the Chinese culture is fundamental to the
importance of human relationships (Hung, 2004), these cultural differences
may not be regarded as highly as they once were (Lau, 2000). Family, as the
ideal in China, is being replaced by individualism among young people.
There is increasing apathy towards group membership and an increased
affinity for materialism. Eighty percent of young adults, ages 15 to 25, want
to live some distance from their parents and be financially independent of
them, though many unmarried children still live with their parents (Tsui,
1989). Mothers and fathers seem to emphasize materialism as well.
Increasingly, parents are promoting the business sector as a career path for
both sons and daughters (Lau, 2000). The overwhelming cultural
differences, combined with the growing Chinese economy, provide the
backdrop for foreign language curricula changes in business education.
The Case for Foreign Language Study
In 1979, President Carter’s Commission on Foreign Languages and
International Studies reported that our gross national inadequacy in foreign
language skills has become a serious and growing liability. It is going to be
far more difficult for America to survive and compete in a world where
nations are increasingly dependent on one another if we cannot
communicate with our neighbors in their own languages and cultural
contexts (Radebaugh & Shields, 1984, p. 195). Although this group was
commissioned 25 years ago, their findings are, unfortunately, still relevant
today. Specifically, there appears to be a continued lack of awareness of the
usefulness and necessity of foreign language study for business graduates.
Proficiency in a foreign language, combined with knowledge from another
professional business area, is highly desirable in the new marketplace
Although English is the common business language, foreign language
skills are invaluable in terms of being able to socialize with clients and
The Shifting Language of Commerce 5
build relationships, according to Abigail Stevens (2004), a consultant
specializing in placing United Kingdom-qualified accountants abroad.
Kordmeier, Arn, and Rogers (2000) found in their survey of human
resource managers that foreign language skills were in greater demand than
reading and writing. Language proficiency is a critical factor in establishing
rapport with foreign business counterparts. For example, countless and
costly blunders of U.S. staff have been recorded, and most managers admit
that these miscommunications have led to many missed opportunities and
unsuccessful business dealings (Inman, 1987; Ricks, Arpan, & Fu, 1974).
Competency in a foreign language also provides an individual with a
greater understanding of the other country’s culture (Planken, Van Hooft, &
Korzillius, 2004). A recent survey was conducted on industry
representatives interested in doing business in China. According to those
who responded, the most important elements for conducting business in
China were an understanding of: (1) laws and regulations; (2) distribution
networks; (3) market potential; (4) marketing channels; (5) Chinese
business infrastructure; and (6) Chinese language (Meuschke & Gribbons,
2003). Timpe (1989) suggests that the languages of Asia, including
Chinese, will become central to conducting future international trade.
Furthermore, in recognition of ―strong and global economic forces,‖ the
American Assembly of Collegiate Schools of Business (AACSB)
International accreditation standards include learning objectives stating that
―every graduate should be prepared to pursue a business or management
career in a global context‖ (AACSB, 2004, p. 9). This standard suggests
that business students must be provided the tools necessary to compete in
the evolving global economy. Language skills should certainly be included
as one of these tools.
Some educators have recognized the need for foreign language study in
secondary education as well. Since the mid-1980s, public schools have
almost doubled their language offerings (Ging, 1994). Researchers suggest
that there are advantages to teaching foreign languages at an early age
Despite the suggested and acknowledged importance of foreign
language and cultural study, few business schools readily facilitate the
addition of language study to their curricula. In a study of AACSB
International deans, Rogers and Arn (1998) found that although 71% of
those surveyed believed that there should be a foreign language requirement
in business curricula, only 41% currently had such a requirement, and less
than 4% reported a language requirement for all business majors. In
addition, although slightly more than 39% felt that Chinese was the third
most beneficial foreign language for business students to learn, less than
17% of the schools reporting actually offered Chinese language courses
(Rogers & Arn, 1998). To this end, the AACSB International is correct in
The Shifting Language of Commerce 6
suggesting that business globalization is outpacing the development of
teaching and learning materials (AACSB, 2004).
Conclusions and Recommendations
With the increased globalization of business and industry, foreign
language and cultural study must be included in schools of business if U.S.
students are to be successful. Given the emergence of a globalized market,
the past confidence that English is the universal business language must be
replaced with an understanding of societal and industrial interdependence
on the many countries of the world. Specifically, the rapid growth of the
PRC combined with its relative economic size demands that educators
begin to prepare their students for the inevitability of doing business with
and in the Chinese market.
Initially, U.S. colleges and universities must recognize the importance
of making available less traditional languages for study. For example, the
languages of Asia, including Chinese and Japanese, are not frequently
included as part of language curriculum. Yet, these languages are
recognized as being among those most highly beneficial for business
graduates to master. Business school administrators must communicate to
their respective language departments the necessity of including these areas
Furthermore, business schools that are not currently incorporating
foreign language study into their curricula should immediately begin
making plans to do so. Students must be made aware of the communication
challenges they will face in the ever-expanding global business community.
For too long, education in the U.S has focused on the national stage with
only abbreviated references to foreign players. Students need to understand
that their professional success may depend on their acquisition of foreign
language skills. Mastery of any foreign language should profoundly reduce
the air of isolationism. Foreign language fluency is an essential skill for
U.S. business personnel employed by U.S. firms conducting business in
world markets or for those employed by foreign firms doing business in the
U.S. (Radebaugh & Shields, 1984). As economic globalization continues
with an emphasis on Asia, there will be an increasing demand for
individuals with knowledge of less commonly taught languages.
Weatherford (1986) stated that an experience with another culture
enables people to achieve a significantly more profound understanding of
their own culture. There is a direct relationship between learning a foreign
language and the development of intercultural competence (Planken, Van
Hooft, & Korzilius, 2004). Lack of cultural understanding can cause serious
problems when conducting business. As previously discussed, U.S. culture
is very different from the culture of China. However, foreign language
study allows students to gain a deeper awareness of the socio-cultural
behavior of those with whom they are attempting to communicate.
The Shifting Language of Commerce 7
In conclusion, business educators must not only recognize the need for
foreign language expertise; this expertise must be built into business
academic programs. Through language study, business graduates will be
better prepared to interact with their foreign and, more specifically, Chinese
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About the authors
DR. KERRY D. CARSON is a management professor at the University of
Louisiana at Lafayette. He received his Ph.D. from Louisiana State
University in management. His research interests are in the areas of
commitment and performance management.
DR. PATRICIA A. LANIER is an assistant professor of management at
the University of Louisiana at Lafayette. She received her D.B.A. from
Louisiana Tech University. Her research interests are in the areas of
women’s issues and management history.
DR. PAULA PHILLIPS CARSON is the MBA Director and Associate
Dean of the B. I. Moody III College of Business Administration at the
University of Louisiana at Lafayette. She received her Ph.D. from Louisiana
State University in management. Her research and teaching interests include
unions and labor history.
DR. LEWIS R. GALE IV is the Dean of the B. I. Moody III College of
Business Administration at the University of Louisiana at Lafayette. He
received his Ph.D. from Arizona State University. His research interests
include international economics and applied microeconomics.
UNVEILING ISLAMIC BANKING
Dr. James Calvert Scott
Islamic banking and financing are based on the Sharia. Islamic financing
uses asset-backed transactions of various types, some of which are familiar in
general concept to Westerners in spite of their Arabic names. Although Islamic
financial practices comply with Muslim beliefs, the ethical treatment of the
transaction parties also appeals to those who are socially conscious. Like their
Western counterparts, Islamic financial institutions have both strengths and
weaknesses. As Islamic banking and financing have spread worldwide, major
financial institutions in the West are starting to offer Sharia-compliant products
and services. Following the lead of these financial institutions, global business
educators should incorporate information about Islamic banking and financing
into their offerings.
I slamic banking and financing are in their ascendancy around the world.
Once confined to a few specialized institutions in the Muslim world,
today the major international financial institutions are trying to establish
their positions in the Islamic financial services marketplace (―Big Players in
Islamic banking and financing should be taken seriously for a variety of
reasons. More than one billion people, about one fifth of the world’s
population (―Islamic Banking Music,‖ 2002), are members of the Islamic
faith. The Muslim faith is the fastest growing religion in the United States.
Islamic banking and financing are growing at an estimated 15% a year
worldwide, much faster than traditional Western banking and financing
(Taylor, 2003). Islamic financial services activity accounts for between
$200 and $250 billion (Siddiqi, 2002). Islamic banking and financing are
blossoming around the world, making alternatives to Western banking and
financing increasing available locally and over the Internet. Potential
customers who are socially conscious, whether Muslim or not, are attracted
by the social good promoted by Islamic financing practices (Taylor, 2003).
Thus, there are compelling reasons why global business educators should
learn more about Islamic banking and financing.
The purpose of this article is to lift the veil on Islamic banking and
financing for global business educators, many of whom know little about
this relatively recent banking and financing development. This article
Unveiling Islamic Banking 12
provides both a basic understanding about Islamic banking and financing
and a related listing of actions that global business educators should take.
Understanding Islamic Banking and Financing
This section of the article is divided into subsections that address the
ethos of Islamic banking and financing, the types of Islamic financial
transactions, insights into Islamic banking and financing in operation, and
the potential for Islamic banking and financing around the world.
Ethos of Islamic Banking and Financing
The ethos underlying Islamic banking and financing comes from the
Islamic religious or canon law known as the Sharia (also transliterated from
Arabic into English with other spellings, including Shari’ah). The Sharia is
derived from the Koran (also transliterated from Arabic into English with
other spellings, including Qur’an), the Muslim holy book the Hadith, the
authenticated pronouncements of the Prophet Mohammed (also
transliterated from Arabic into English with other spellings, including
Muhammed), and the Sunna, the practices and traditions of Mohammed
(―System of Divine Guidance,‖ 2003). Although the Koran is the same for
all Muslims around the world, the Sharia is open to interpretation, which
makes it difficult for Muslims to have universal agreement about many
things (―Regulation,‖ 2003). Rooted in the Muslim faith, Islamic financing
is available to anyone who is interested in ethical banking practices
(―System of Divine Guidance,‖ 2003). ―If Islamic banking offers a better
alternative, the client[s] will go for it no matter what their religious
affiliation is‖ (―Banking That Goes,‖ 2003, p. Islamic Banking 5). The
principles of ethical financing underlying Islamic banking and financing are
also shared by Christianity and Judaism since usury, the lending of money
at excessively high interest rates, is forbidden in religions based on the
Abrahamic traditions (―System of Divine Guidance,‖ 2003).
In his Farewell Sermon, Mohammed set forth the Sharia principles for
financial management to which Muslims should adhere. The role of market
forces and the market economy are acknowledged. Private ownership,
profit, and wealth accumulation are possible provided they do not violate
Sharia rules. Everything that is not haram, or expressly forbidden, is halal,
or lawful, (―System of Divine Guidance,‖ 2003). Riba, which is usually
translated as interest but which some Islamic scholars think should be
translated as usury (―Big Players in Scramble,‖ 2003), is forbidden since it
is fixed and predetermined with an obligation to pay regardless of the
performance of the borrower or the business. Gharar, deception or
ignorance arising through less than full disclosure of relevant facts, is also
forbidden, as is maisir, gambling and speculation. Also ruled out is
engaging in activities involving alcoholic beverages, armaments, gambling,
interest-based financial services, pork products, pornography, and tobacco
(―System of Divine Guidance,‖ 2003).
Unveiling Islamic Banking 13
According to Islamic thinking, money by itself cannot be used to create
additional money. Money should be used for productive purposes that serve
the market, not hoarded or used for speculation. Money is a medium of
exchange rather than a product. Wealth creation should benefit not just a
few who have money to lend but should improve society as a whole
(―System of Divine Guidance,‖ 2003).
In Islamic banking transactions, the lender has to use tangible assets to
back up all financial transactions. Both parties must participate actively in
the transaction, which is subject to divine guidance. Further, those who lend
should share with borrowers in the risks and the profits of the business
(―System of Divine Guidance,‖ 2003).
Assume for the sake of argument that a cash-poor farmer wants to buy
land. Under Islamic financing, which does not allow interest, the bank
secures money from investors and purchases the land. Each of the investors
owns a proportionate share of the land but allows the farmer to use the land
for productive purposes. The bank increases the price of the land by
10 percent to cover its expenses and a reasonable profit and sells it to the
farmer in installments over 30 years. When each installment payment is
made from a portion of the sale of what is produced on the land, a share of
land ownership is transferred to the farmer. Should the farmer fail to make
any installment, the bank and its investors keep a portion of the land. There
is proportional risk sharing for possible gain throughout an Islamic banking
transaction. In contrast, under conventional Western financing, the farmer
takes a 30-year loan at 10 percent interest, with the land serving as collateral
and a portion of whatever is produced on the land sold to pay the
installments. When all installments are paid, the bank transfers the land title
to the farmer. Should the farmer fail to make any installment, the bank takes
possession of the land and sells it to someone else to pay the balance due
Thus, Islamic banking is rooted in the Sharia and provides ethical asset-
backed interest-free financing that promotes societal good.
Types of Islamic Financial Transactions
The basic structure of ten types of Islamic financial transactions, all of
which are interest free, are briefly discussed in this subsection of the article
since there are later references to some of the transaction types. Although
the transaction types have unfamiliar Arabic names that can initially be
intimidating, many of the transactions are actually familiar in general
concept to those accustomed to Western financing.
Murabaha. Murabaha is cost-plus financing that is often used for trade
finance. For example, a manufacturer needing raw materials will ask an
Islamic bank to buy those items on its behalf. For the cost of the goods plus
a charge for service, the bank will provide the items for the manufacturer.
Unveiling Islamic Banking 14
Since the bank owns the items that are subject to risk until those items are
paid for by the manufacturer, the service charge is justifiable (―Glossary,‖
2003; Taylor, 2003).
Bei bi thameen ajil. Bei bi thameen ajil is deferred-payment financing
and a variation of murabaha in which the borrower makes the payments for
the purchase in installments after the item has been delivered to the
borrower (―Glossary,‖ 2003).
Bei bi salam or bei bi salaf. Bei bi salam or bei bi salaf is a forward
transaction that finances working capital and requires the buyer to make
installment payments in advance. An Islamic bank will not use a bei bi
salam or bei bi salaf transaction for the starting of a business venture since
that activity has a different risk profile. A bei bi salam or bei bi salaf
transaction would be appropriate for buying equipment to extract known oil,
where the risk is low, but it would not be appropriate for buying equipment
to explore for oil, where the risk is high (―Glossary,‖ 2003).
Musaqa and muzara’a. Musaqa and muzara’a are also forward
transactions that are similar to the bei bi salam or bei be salaf except that
they finance agricultural development in terms of equipment and supplies.
Musaqa relates specifically to irrigation, and muzara’a relates specifically to
tractors, fertilizer, and seeds. These transactions are predicated on the facts
that the farmer provides land, labor, and management skills and that the
profits from whatever is raised are allocated according to an agreed-upon
formula (―Glossary,‖ 2003).
Mudaraba or muqarada. Mudaraba or muqarada is a venture-capital
transaction and supports the asset-management industry. An entity with
knowledge and skills is allowed to share the profits generated when the
knowledge and skills are used with the capital of another party. The user of
the investment capital is called the mudareb (―Glossary,‖ 2003; Taylor,
Ijara. Ijara is lease financing, with the lessee making periodic fixed
payments to the asset owner for the use of that asset. The payments are not
based on the valuation of the benefits derived from using the asset. Ijara is
widely used to finance such things as cars and factory equipment, although
the latter could also be financed through musharaka transactions, which are
discussed later. The ijara wa-iktina is the lease-purchase variation in which
the lessee gains title to the asset when the lease terminates (―Glossary,‖
2003; Taylor, 2003).
Istisn’a. Istisn’a applies to commissioned manufacturing and is a
contract for specified custom-made items with deferred delivery. Istisn’a is
unlike ijara and bei bi salam or bei bi salaf in the sense that the
manufacturer buys the raw materials outright. Istisn’a also differs from bei
bi salam or bei bi salaf in the sense that the items are always custom made,
Unveiling Islamic Banking 15
full payment in advance is not required, and the date of delivery may or
may not be set in advance (―Glossary,‖ 2003; Taylor, 2003).
Sukuk. Sukuk is the recent Islamic banking term for securitizations.
Backed by assets and based on bundles of ijara transactions, sukuks allow
secondary market trading in what is the Islamic equivalent of bonds
Musharaka. Musharaka applies to partnership or joint venture
investments, with the parties sharing risks and returns proportionate to their
investments. Useful when an investor joins a new or existing venture,
musharakas are relatively rare since they allow unlimited liability for the
investors (―Glossary,‖ 2003; Taylor, 2003).
Qarde hasan. Qarde hasan is benevolent financing that assists
especially deserving institutions and individuals for societal good.
Recipients of qarde hasan are obligated to repay the principal and
sometimes a small administrative fee. Accounting for a small percentage of
Islamic financing, qarde hasan is a charitable activity of an Islamic financial
institution (Taylor, 2003).
Thus, Islamic financing is available through a variety of interest-free
transaction types, some of which in spite of their Arabic names are familiar
in general concept to those knowledgeable about Western financing.
Insights into Islamic Banking and Financing in Operation
While Islam supports private wealth creation, it must be done in such a
way that there are no abnormal profits because of unfair competitive
advantages. Islamic financial institutions, in turn, ensure reasonable returns
on assets and equity and strive to promote the socio-economic welfare of
the societies in which they operate (Siddiqi, 2002).
Islamic bankers sometimes assert that their just and nonexploitive way
of financing is superior to conventional Western interest-based financing for
other than religious reasons. Islamic financial institutions are more
concerned about the future profits of business ventures than their current
creditworthiness. Consequently, financial decisions are based on a more
prudent, longer-term perspective, which has potential to reduce bank
failures (―Forced Devotion,‖ 2001).
Nevertheless, others argue that Islamic banking and financing are not
well suited to contemporary economic life. They point out that judging the
ability of business ventures to generate future profits is much more difficult
than judging the ability of business ventures to repay loans now. As a result,
Islamic financial institutions fund fewer business opportunities than
conventional financial institutions, which limit economic and societal well-
being where Islamic financing is dominant. Also, when funding business
activities, Islamic financial institutions have fewer kinds of financing
options available for customers than conventional financial institutions
Unveiling Islamic Banking 16
have. In fact, well over half of all Islamic financial transactions are not
actually based on the Islamic ideal of true profit and loss sharing; those
transactions are based on murabahas, which have a suspicious resemblance
to interest-bearing loans in all but name (―Forced Devotion,‖ 2001).
While Islamic financial institutions tend to be quite profitable, have
inexpensive and stable deposits, and have loyal customers, these positive
attributes are often offset by less rigorous accounting, weak disclosure
frameworks, and liquidity problems (Hassoune, 2003). Liquidity
management is a major challenge for Islamic financial institutions, in part
because their money and capital markets are not well developed. It is
difficult for Islamic financial institutions to optimize risks, returns, and
liquidity. Since under Islamic thinking money cannot earn a return on itself,
Islamic financial institutions typically have considerable idle assets in
highly liquid accounts because of a shortage of Sharia-compliant investment
opportunities. For example, Islamic banks cannot put uninvested money in
short-term interest-bearing deposits like conventional banks do since that is
money earning money on itself. Islamic banks are starting to use sukuks,
asset-backed, liquid, and tradable Islamic bonds to work around this
problem (―Big Players in Scramble,‖ 2003).
To address inconsistency in accounting, auditing, and regulatory
standards within the diverse Islamic banking and financing sector, the
central banks of Indonesia, Iran, Jordan, Kuwait, Malaysia, Pakistan, Qatar,
and Sudan and the monetary agencies of Bahrain and Saudi Arabia, which
are responsible for most of the Islamic financial sector, created the Islamic
Financial Services Board in 2003. This advisory board seeks to promote
universal Sharia-compliant banking standards and to harmonize the diverse
Islamic banking practices around the world. The board advocates on behalf
of an Islamic banking and financing system that is prudent and transparent.
These developments strengthen the foundation of Islamic financial
institutions and provide a platform for such agencies as the International
Monetary Fund and the World Bank to address through a uniform system
the matter of Islamic banking regulation (―Regulation,‖ 2003).
Thus, like conventional Western financial institutions, Islamic financial
institutions have both strengths and weaknesses.
Potential for Islamic Banking and Financing Around the World
Although Islamic banking has become increasingly popular in the
Islamic world since it was first introduced in 1963 (―Big Players in
Scramble,‖ 2003), financial institutions in the Western world have been
slow to embrace Islamic financing since almost all of their products and
services are interest based. The potential of Islamic financing is just starting
to be understood in the West. As Islamic banking and financing have spread
from the Middle East to East Asia where large numbers of Muslims live,
financial institutions in the West are watching developments and are
Unveiling Islamic Banking 17
starting to realize the growing appeal of interest-free financial transactions.
As time passes, major financial institutions in the West are starting to offer
financial products and services that comply with Islamic rules (―Soaring
Developments in Asia. While countries outside of the Middle East such
as Brunei, Indonesia, Thailand, and Singapore have experiences with
Islamic banking and financing, it is Malaysia that has established a vision
and model for the global Islamic banking sector. Its system for Islamic
banking is the most proactive and dynamic one in existence (―A Model,
2003). Although Islamic banking started out in Malaysia as an alternative to
conventional Western banking, Islamic banking has now become
mainstream (Jaaffar, 2003). Both the country and its central bank, Bank
Negara Malaysia (BNM), are strongly committed to developing the Islamic
banking sector. To increase people’s awareness of Islamic banking products
and services, all Islamic banking products and services are required to have
an i suffix that instantly communicates to potential customers that these
products and services are Sharia compliant. While these products and
services are primarily designed to appeal to Muslims, they are also
attractive to other major Malaysian groups, including Chinese and Indians.
By having a well-developed Islamic banking system, Malaysia hopes to
attract funds from oil-rich Islamic countries (―A Model,‖ 2003).
To make its Islamic banking system a worldwide leader, Malaysia has
created a sound Islamic banking infrastructure. Among its features designed
to cater to the needs of the global financial market are these:
(a) ―comprehensive Islamic banking laws,‖ (b) ―world-class prudential
regulation and supervision,‖ (c) ―accounting standards,‖ (d) ―anti-money
laundering measures,‖ (e) ―a high number of players,‖ (f) ―a large pool of
funds,‖ (g) ―Islamic interbank money market,‖ (h) ―an Islamic cheque
clearing system,‖ (i) ―an Islamic capital market,‖ and (j) ―consumer
protection legislation‖ (―A Model,‖ 2003, p. Islamic Banking 4). Further, a
code of ethics for Islamic banks has been developed (―A Model,‖ 2003).
Developments in Europe. London remains the major center for the
global financial sector both in Europe and worldwide. By 1999 seven banks
operating there, three of which are Western owned (i.e., ANZ International,
Citibank International, and Dresdner Kleinwort Benson) and one of which
is foreign owned but London based (i.e., United Bank of Kuwait), offered
Islamic banking and financing supporting various activities. Although the
now defunct Al-Baraka International Bank initiated Islamic housing finance
in Britain (Wilson, 1999), 1st Ethical opened up the financial services sector
for the country’s Muslims, who total about 2 million people. 1 st Ethical
finances house purchases and business activities in a Sharia-compliant
manner. Currently, about 70% of Muslim-owned houses in Britain are
financed through conventional banks, which forces Muslims to compromise
Unveiling Islamic Banking 18
their religious beliefs in order to own housing. The only alternatives were to
buy houses outright, which most could not afford to do, or to rent until
1st Ethical got extensively involved in house financing (―Billion-pound UK
HSBC became the first large British-based banking chain to offer
a range of Sharia-compliant Islamic banking and financing services as part
of its global growth strategy, having gained the approval of
its Sharia Board and United Kingdom banking regulators. Like
1st Ethical, HSBC uses the ijara to structure home financing. Both banks
would purchase the house in question, take its title, and
then lease it to the customer for 25 years during which time
the customer pays installments that cover the rent and the purchase price.
Assuming all payments are made as scheduled, when the final installment is
received, the bank transfers the title of the house to
the customer. HSBC plans to expand into other types of Islamic financial
products and services, including Sharia-compliant insurance, in the near
future (―Billion-pound UK Market,‖ 2003). Using the United Kingdom as a
base, HSBC and other major financial institutions, which are exploring
Islamic banking and financing, will export their Sharia-compliant products
and services throughout Europe, especially where significant Muslim
communities exist (―Cracking Koran Credit,‖ 2003).
Developments in the United States. While Sharia-compliant asset-
gathering financial institutions are not technically known as banks because
they do not meet the capital and profitability requirements of governmental
regulatory agencies that are known to exist in the United States, they
primarily serve customers in their immediate areas and do not operate
across regions or the entire country yet. Nevertheless, potential exists for
community-based financial institutions to establish branch operations
elsewhere, especially where there are sizeable Muslim populations, and for
nationwide financial institutions to use Internet and electronic media portals
The Islamic financial institutions that enter the U.S. marketplace early
could gain important marketing and customer-support advantages. If a
financial institution that offered Islamic financial products and services also
met the safety and soundness requirements of state and federal regulatory
bodies, then that financial institution could easily differentiate itself in the
marketplace from other institutions offering Islamic financial products and
services whether it has the form of a bank, savings association, or credit
union (Taylor, 2003).
Thus, the potential for Islamic banking and financing continues to grow
as they spread around the world, with conventional Western financial
institutions starting to offer a variety of Sharia-compliant products and
Unveiling Islamic Banking 19
Taking Relevant Actions
Since Islamic banking and financing are a growing phenomenon around
the world, global business educators ought to acknowledge this by taking
prudent actions. First, global business educators should learn more about
this important banking and financing development. While reading this brief
article is a starting point, many global business educators should learn
considerably more about Islamic banking and financing through a variety of
means. They should consult relevant print and electronic sources to add
breadth and depth to their understanding. Interested global business
educators might, for example, read Lewis and Algaoud’s (2001) Islamic
Banking or the special 1999 Islamic banking issue of the Thunderbird
International Business Review, volume 41, issue 4/5. Of course, they can
retrieve relevant electronic documents about Islamic banking and financing,
many of which have limited depth and/or breadth. Global business
educators could also learn more about Islamic banking and financing and
their underlying philosophy through interactions with members of the local
Islamic community, including its religious leaders.
Second, global business educators should explore the availability of
Islamic financial products and services locally and electronically. Through
conversations with local Islamic leaders, bankers, financial services
providers, and investment advisors, global business educators can find out
the extent to which Islamic financial products and services are accessible
within the local business community. Through Internet explorations using a
search engine, global business educators may be able to ascertain whether
Islamic financial products and services are available from online sources.
Third, global business educators should update their banking- and
financing-related curricula to include relevant information about Islamic
banking and financing. Global business educators will need to decide where
information about Islamic banking and financing best fits into the
comprehensive and integrated business education program. They will need
to allocate the selected topics among courses, taking into account such
things as the purpose of the course, the relevance of the content, and the
maturity level of students. Since many business education courses include
information about banking and financing for personal or professional
purposes, global business educators will find that there are a number of
possible places where information about Islamic banking and financing
could be incorporated logically. The issue quickly becomes finding where
the information about Islamic banking and financing can most effectively
be placed for maximum instructional value.
Fourth, global business educators should develop effective instructional
activities about and resources for teaching about Islamic banking and
financing. Since the content information about Islamic banking and
financing is evolving, global business educators will need to keep their
Unveiling Islamic Banking 20
content knowledge current and to create their own instructional materials
tailored to the needs of their courses and students. As global business
educators create, test, and refine instructional activities, they should make
them available to others through print and electronic means. Such sharing of
instructional resources will stimulate other global business educators to do
likewise, building a body of useful instructional resources for teaching
about Islamic banking and financing within a few years. Thus, global
business educators can take a number of relevant actions regarding Islamic
banking and financing.
In summary, since Islamic banking and financing are growing rapidly
around the world and appeal not only to Muslims but also to members of
other faiths, global business educators should follow the lead of
conventional Western financial institutions and incorporate Islamic banking
and financing into their offerings.
Banking that goes beyond religion. (2003, October 8). The [London] Times,
p. Islamic Banking 5.
Big players in scramble for a slice of the action. (2003, October 8). The
[London] Times, p. Islamic Banking 2.
Billion-pound UK market. (2003, October 8). The [London] Times,
p. Islamic Banking 10.
Cracking Koran credit: HSBC plans to launch new services aimed at the
UK’s 1.6 million Muslims, in a major move towards building up a
global Islamic personal financial services business. This industry could
be worth $2.4 billion worldwide. (2003, April). Bank Marketing
International, p. 8. Retrieved December 11, 2003, from the InSite2
Forced devotion; Islamic banking; Pakistan’s banks go Islamic. (2001,
February 17). The Economist (U.S. ed.), p. 6.
Glossary. (2003, October 8). The [London] Times, n.p. Islamic Banking 5.
Hassoune, A. (2003). Key rating factors for Islamic banks: Although
sometimes complex, Standard & Poor’s analyzes Islamic financial
institutions on the same basis as conventional financial institutions. The
Banker, 153(924), 12. Retrieved December 11, 2003, from the InSite2
Islamic banking music to ears of financial firms. (2002, August 11). Asia
Africa Intelligence Wire, n.p. Retrieved December 11, 2003, from the
Unveiling Islamic Banking 21
Jaaffar, J. (2003, May 17). Islamic banking fast becoming mainstream.
[Malaysia] New Straits Times, n.p. Retrieved November 14, 2003,
from the Business Source Premier database.
Lewis, M. K., & Algaoud, L. M. (2001). Islamic banking. Cheltenham,
United Kingdom: Edward Elgar.
A model for the future. (2003, October 8). The [London] Times, p. Islamic
Siddiqi, M. A. (2002, July-August). Banking of Shari’ah principles: Islamic
banking has witnessed remarkable growth from its humble beginnings
in the early 1970s into a 21st century multi-billion dollar global niche
industry. The Middle East, 34-37. Retrieved December 11, 2003, from
the InSite2 database.
Soaring appeal of an account with no interest. (2003, October 8). The
[London] Times, p. Islamic Banking 2.
System of divine guidance. (2003, October 8). The [London] Times,
p. Islamic Banking 7.
Taylor, J. M. (2003). Islamic banking—the feasibility of establishing an
Islamic bank in the United States. American Business Law Journal,
Wilson, R. (1999). Challenges and opportunities for Islamic banking and
financing in the West: The United Kingdom experience. Thunderbird
International Business Review, 41(4/5), 421-444.
About the author
DR. JAMES CALVERT SCOTT is a full professor in the Department of
Business Information Systems in the College of Business at Utah State
University in Logan, Utah. He prepared this article while on sabbatical
leave attached to the Bristol Business School at the University of the West
of England, Bristol, in Bristol, United Kingdom.
A COMPARISON OF U.S. AND GERMAN
STUDENTS’ EARNINGS EXPECTATIONS,
UTILIZATION OF CREDIT CARDS, AND
Dr. Marianne L. James, CPA, CMA
Dr. Carol Blaszczynski
Dr. Hansrudi Lenz
University-level students in the United States (n = 137) and in Germany
(n = 163) completed a survey about ownership of savings and checking
accounts, ownership and frequency of use of credit cards, use and frequency of
online shopping, and earnings expectations. Approximately the same percentage
of U.S. and German students has savings and checking accounts. A statistically
significant difference occurred in the ownership of credit cards. Over 90% of
U.S. students own credit cards, while only 50% of German students own credit
cards (p < .01). The difference in frequency of credit card use was also
statistically significant (p < .01); U.S. students use credit cards 7.7 times per
month, and German students use credit cards 3.3 times per month. While
German students engage in online shopping more frequently than do U.S.
students (p < .01), U.S. students make purchases more frequently (p < .01). The
German students’ earning expectations exceeded that of U.S. students (p < .01).
M any U.S. students will be working with or marketing products and
services to European citizens. Some students may complete
temporary overseas assignments in Germany during their careers. Likewise,
some German students will have co-workers originating from the United
States or may be completing short-term or long-term assignments in the
United States. As a result, knowledge about how personal financial
behaviors differ between the United States and Germany can be helpful to
both German students and U.S. students in their prospective business
Understanding global e-commerce opportunities is important for
businesspersons. In Europe, Amazon and EBay are among the top ten web
sites as measured by the percent of the total online users that visit the site
monthly. In fact, the number of visitors to the German EBay site rose 20%
over the past year, attracting in excess of 17 million visitors each month
(Reinhardt & Hof, 2004). Clearly, there are many opportunities for
entrepreneurs to penetrate the German and European e-commerce markets.
A Comparison of U.S. and German Students’ Earning 24
The purpose of this study was to investigate differences in U.S. and
German business students’ utilization of credit cards, savings and checking
accounts, Internet purchases, and their expectations of initial hiring salaries.
Review of the Literature
This section focuses upon financial competencies, savings, use of
credit, income aspects, and Internet purchases.
The Policies Commission for Business and Economic Education
Association has identified financial competencies needed for lifelong
success in its Policy Statement 69, This We Believe About the Role of
Business Education in Financial Education. Among the personal financial
education competencies delineated are the use of credit, income and
spending, money management, and savings and investment (Policies
Commission for Business and Economic Education, n.d.). Since attaining
financial literacy is a lifelong venture, providing youth with sound financial
information at an early age helps to develop good financial habits (National
Endowment for Financial Education, 2002). Financial literacy is also a
theme of growing concern in the European Union. The General Directorate
for Employment and Social Affairs of the European Commission
commissioned several institutions to research gaps in financial literacy and
in the current provision of financial education in Great Britain, Belgium,
France and Germany (European Clearinghouse Financial Literacy, 2003).
Personal financial competencies impact our students widely. Many
students are unaware that credit checks may be a part of the pre-
employment screening practices of prospective employers. Access to the
credit reports of individuals is given by the Federal Fair Credit Reporting
Act, which allows use to evaluate potential ―employment, promotion
reassignment, or retention‖ (Federal Fair Credit Reporting Act, 2003).
Savings rates vary in different countries. For example, OECD
(Organisation for Economic Co-operation and Development) statistics show
that the U.S. has a significantly lower household savings ratio than
Germany. In 2002, German households saved an average of 10.5% of
disposable household income; whereas, U.S. households saved only 2.0%
(OECD, 2004). Thus, the savings rate of German citizens was five times as
much as the savings rate of Americans in 2002. How do the credit behaviors
of citizens of both countries compare?
Use of Credit
According to Jean Chatzky (Westenberger, 2003), the author of You
Don't Have to be Rich: Comfort, Happiness, and Financial Security on
Your Own Terms, the average American household has 16 credit cards.
A Comparison of U.S. and German Students’ Earning 25
Credit card penetration is quite high in the United States: approximately
81% of American households own at least one credit card (Cards
unplugged, 2003). In contrast, in Germany, the largest European economy,
credit cards are much less common; and a large part of those credit cards are
pre-paid cards or cards that are paid from bank accounts within four weeks.
According to the Bundesverband Deutscher Banken (2003a), currently there
are 20.8 million credit cards in Germany. With 38.124 million private
households during the same year, this means that approximately every
second household owns a credit card.
There are disturbing statistics about Americans and credit. According
to CardTrak (Cards unplugged, 2003), American households with at least
one credit card have credit card debt of over $8,000. In fact, the average
household credit balance in 2000 amounted to $8,387 (Cards unplugged,
2003). In the first quarter of 2002 total credit debt reached $660 billion. Of
that amount, about $60 billion was attributed to credit card debt. In contrast,
Germans rarely carry credit card debt; thus, statistics about German credit
card debt are not available. Statistics published by the Bundesverband
Deutscher Banken (2003b) show that annual credit card spending was
€40.7 billion in 2002. While many U.S. customers make finance purchases
using credit cards, German customers tend to utilize bank credit.
The money habits of teenagers are set by high school according to
Teenage Research Associates (Chatzky, 2002). Seven percent of 16- and
17-year-olds in the United States own a credit card in their name, while
18% use a parent’s credit card. These teenagers spend an average of
$153 a week. The Jumpstart Coalition for Personal Financial Literacy tested
American high school seniors about their personal finance mastery. On
average, students got 57% of the 31 multiple-choice questions right
A 2001 survey by Nellie Mae found that college students will increase
their credit card debt by 200% by the time they graduate (Cards unplugged,
2003). According to the Credit Union National Association (2002), over
75% of undergraduates own credit cards. Most of the students own more
than one card, with a total unpaid balance averaging $2,748.
What do Americans earn? O’Neill, Bristow, and Brennan (1999)
surveyed adults in New York and New Jersey about financial practices.
More than two-thirds of the respondents earned a household income
exceeding $45,000. Chatzky's (Westenberger, 2003) research determined
that an American household income of around $50,000 a year allows people
to live comfortably. Any more money earned above that figure does not buy
additional happiness. According to Statistisches Bundesamt (Federal
Statistical Office), the average German household disposable income in
2002 was €36,600 (2004). In addition, each German on average has
A Comparison of U.S. and German Students’ Earning 26
accumulated €44,600 in liquid assets. Of this amount, an average of
€16,300 are bank savings and €12,100 are insurance related savings
The Pew Internet & American Life Project (Tides Center, 2003)
gathered statistics about Internet usage among Americans. By December
2002, 61% of American Internet users had made Internet purchases—an
increase of 63% from 41 million in March 2000 to 67 million.
Approximately the same number of men and women made Internet
Those who had completed more years of education are more likely to
make online purchases. Completion of additional years of education is
associated with making online purchases. Half of American high school
graduate Internet users made e-purchases, versus 71% of college graduate
Internet users. One fourth of Internet users aged 18-29 had participated in
an online auction by December 2002 (Tides Center, 2003).
In a German study about Internet usage in 2002, 46% of German users
accessed the Internet for online shopping (Der E-Commerce, 2004). In 2004
this percentage increased to 61%. Men made more Internet purchases than
women. The years of education had a significantly positive influence on the
use of the Internet for shopping purposes. Younger persons used the
Internet more often than older persons for Internet purchases.
No studies were located that compared personal financial behaviors of
undergraduate and graduate students in the United States and Germany. As
a result, this study attempts to fill part of the gap in the literature.
The following research questions were posed:
1. Are there significant differences between U.S. and German
accounting students’ expectations regarding expected monthly
starting salary immediately after graduation?
2. Are there significant differences between U.S. and German
accounting students with respect to: ownership of a savings
account, ownership of a checking account, ownership and
frequency of use of credit card(s), and use and frequency of
3. Are students who own credit cards more likely to shop on the
Internet and more frequently than those who do not own credit
A Comparison of U.S. and German Students’ Earning 27
Methods of Research
A questionnaire was developed by the researchers to capture
information about the participants including demographics, ownership of
savings and checking accounts, ownership and use of credit cards, and
Internet shopping. The research instrument was first developed in English,
translated into German, and reviewed by two colleagues for face validity.
Two of the researchers, who are fluent in written and verbal German and
English, independently translated and reviewed the questionnaires. The
survey instrument was piloted for face validity; based upon the feedback,
modifications were made.
The questionnaires were administered in the U.S. during the Summer
2002 quarter in two sections of Managerial Accounting, during the Fall
2002 quarter in two sections of Intermediate Accounting, and during the
Winter 2003 quarter in one section of Cost Accounting at a major Western
public university. In Germany, the questionnaire was administered in one
section of Auditing and one section of Financial Accounting – German and
International Accounting Standards during the Summer 2002 and Winter
2002 semesters at a major German university. The students were assured
that their responses were anonymous and would not affect their course
Data were input into Microsoft Excel and imported into Statistical
Package for the Social Sciences (SPSS) version 10.0 for analysis. All results
were evaluated at the 0.05 alpha level utilizing t-tests and Pearson
correlation tests. The questionnaire was completed by 137 U.S. and 163
Sixty-five percent of the U.S. study participants were female and 35%
were male, while 35% of the German participants were female and 65%
were male. These gender distributions are approximately representative of
the distributions at the business schools of U.S. and German universities. In
the year 2001, 39% of German business students were female, while 61%
were male (Universitaet Essen, 2003). This differs somewhat from the U.S.,
where the percentage of female business students exceeds the percentage of
The participants were asked to identify the age group to which they
belong. Based on the participants’ reports, 8% of the U.S. students were less
than 21 years old, 46% were 21-25 years old, 27% were 26-30 years old,
12% were 31-34 years old, and 7% were over 35 years old. None of the
German students were less than 21 years old, 45% were 21-25 years old,
47% were 26-30 years old, and 8% were 31-34 years old.
Fifty-eight percent of the U.S. students were accounting majors, while
83% of the German students pursued studies that included a strong
A Comparison of U.S. and German Students’ Earning 28
accounting concentration. Choosing a major differs in the U.S. and in
Germany. In the U.S., a business student who studies for a Bachelor of Arts
or Science degree typically chooses one major. Some students also carry
one or more minors or a double major. In Germany, a business degree is
that of a ―Diplom Kaufmann,‖ which consists of an average of eleven
semesters of university-level course work. These business students are
required to choose three concentrations or ―Schwerpunktfaecher.‖ Popular
combinations include accounting/ finance/taxation and business information
systems/production management/logistics. However, many different
combinations are possible.
Eight percent of the U.S. participants were sophomores, 46% were
juniors, 35% were seniors, and 11% were graduate students. Two percent of
the German students were in their fourth semester of studies, 20% were in
their fifth semester, 23% were in their sixth semester, 15% were in their
seventh semester, 17% were in their eighth semester, 9% were in the ninth
semester, 9% were in the tenth semester, 2% in the eleventh semester, and
3% in the twelfth semester. On average, business students in Germany
graduate after eleven semesters. This is also the typical duration of a
business degree at the University of Wuerzburg. Approximately 2% of the
German students can be classified as sophomores, 43% as juniors, 32% as
seniors and 23% as graduate students.
The study participants were asked to indicate whether they currently
worked while attending school, and 83% of the U.S. and 51% of the
German students indicated that they did.
Research Question 1—Expected Monthly Starting Salary
The participants were asked to indicate the amount of monthly starting
salary that they expected to earn immediately after graduation. The U.S.
students expected to earn a mean starting salary of U.S. $3,306 per month,
while the German students expected to earn €4,323 per month. According to
a statistic provided by the Organization for Economic Cooperation and
Development (2003), the purchasing power of $1 was equal to 0.96 Euro.
Thus, the mean starting salary of €4,323 was equal to U.S. $4,503 during
2002. Utilizing the purchasing power adjusted amount, a t-test analysis of
the difference in means showed that the amount expected by German
graduates is statistically significantly higher than the amount expected by
U.S. students (p < .01) as illustrated in Table 1.
A Comparison of U.S. and German Students’ Earning 29
Descriptive Statistics and Mean Differences
U.S. in U.S and
Standard German Standard German
Variable U.S. Mean Deviation Mean Deviation Means
Expected Starting Salary $3,306 $1,520 €4323 $1,512 0p = .00**
Ownership of Savings Account 79% 41% 81% 39% 0p = .29**
of Checking Account 96% 19% 98% 13% *p = .16
Ownership of Credit Card(s) 91% 29% 50% 50% 0p = .00**
Frequency of credit card use 7.7 times 8.2 3.3 times 4.1 0p = .00**
per month per month
Online shopping 55% 50% 65% 48% 0p = .04**
Frequency of online shopping 3.8 times 3.7 1.8 times 2.4 p = .00**
per month per month 0
Note. * = p < .05; ** = p < .01.
Research Question 2—Account Ownership and Frequency of Use
Savings accounts were held by 79% of the U.S. participants and 81% of
the German participants. In contrast, checking accounts were held by 96%
of the U.S. and 98% of the German participants. T-test analyses of the
difference in means showed that the percentage of U.S. participants holding
savings and checking accounts is not significantly different from the
percentage of German participants holding savings and checking accounts
(p > .05).
The participants were asked whether they owned credit cards and, if
yes, how frequently they were utilizing them on average per month. Ninety-
one percent of the U.S. participants indicated that they carried a credit card
and utilized it an average of 7.7 times per month. In contrast, only 50% of
the German participants indicated that they carried a credit card and utilized
it an average of 3.3 times a month. A t-test analysis of the difference in
means shows that the mean percentage of U.S. participants who hold credit
cards is significantly higher than the mean percentage of German students
who hold credit cards (p < .01). In addition, a t-test revealed that the mean
number of times per month that U.S. participants utilize credit cards is
significantly higher than the mean number of times that the German
participants who hold credit cards utilize them (p < .01).
A Comparison of U.S. and German Students’ Earning 30
The participants were asked to indicate whether they shopped online,
and, if they did, how frequently they shopped online per month. Of the U.S.
participants, 55% indicated that they shopped an average of 3.8 times per
month online , while 65% of the German participants indicated that they
shopped an average of 1.8 times per month on line. A t-test analysis showed
that the difference in the mean percentage of German participants who shop
online was significantly higher than the percentage of U.S. participants who
shop online (p < .05). However, analysis showed that the U.S. participants
tended to shop more frequently than the German participants (p < .01).
Research Question 3—Credit Card Ownership and Internet Shopping
Correlation analysis showed a highly positive relationship between the
frequency of credit card use and the frequency of online shopping for U.S.
participants (p < .01). Thus, U.S. participants who utilized credit cards more
frequently were also more likely to shop more frequently online.
U.S. participants who held credit cards were not more likely to shop
online (p > .05). Conversely, German participants who held credit cards
were more likely to shop online (p < .01) but were less likely to shop as
frequently as U.S. students (p < .05).
A significantly higher percentage of U.S. students than German
students held credit cards. In addition, U.S. students utilized credit cards
more frequently than did the German students. This may be due to a
difference in the borrowing attitudes of U.S. and German citizens. This is
evidenced by the German participants’ use of the ―EC Card,‖ which is a
pre-paid card that is widely accepted in Europe as a medium for payment.
Currently, nearly 31% of German retail purchases are non-cash. While
24% of purchases are paid for by utilizing the EC card, only 5% are paid for
utilizing credit cards (die bank, 2004). In fact, while only 50% of the
German study participants indicated that they held credit cards,
96% indicated that they utilized an EC Card, on average 10 times per
A higher percentage of the German participants than the U.S.
participants indicated that they shopped online. However, the U.S.
participants who shopped online tended to shop more frequently than did
German online shoppers. The German students expected significantly
higher starting salaries in terms of purchasing power than did the U.S.
participants. This difference may be partially attributed to the typically
longer time commitment required to obtain a business degree in Germany
than in the U.S.
A Comparison of U.S. and German Students’ Earning 31
Based upon the conclusions, the following recommendations are advanced:
1. The results of this study should be communicated to business
educators who can then disseminate the findings to their students.
More specifically, business educators teaching personal finance
classes can inform students about cultural differences in the use of
credit, which potentially can serve as an impetus to increase
savings rates. Individuals working in a global business
environment must be aware of differences in the earnings,
spending, and savings attitudes, and behaviors and expectations of
citizens of different countries. Business educators should help
students understand and appreciate these differences.
2. The implications of the study results in terms of the willingness of
German students to buy products through the Internet should be
communicated to business students, particularly those considering
e-business startups and expansions.
3. The study should be extended to include other nations. By doing
so, understanding of variations in the use of (a) credit cards and
(b) the Internet for purchases will be furthered, thus promoting
deeper analysis of cross-cultural similarities and differences. The
study should be expanded to include debit card use comparisons
among participants from different nations. In addition, other
aspects of online activity should be investigated such as
participation in online auctions and online banking to develop a
wider lens of the interplay among technology and spending and
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Reinhardt, A., & Hof, R. D. (2004, July 12). Europe heads for the e-mall.
U.S. companies dominate as Internet sales explode across the continent.
Business Week, 51.
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Retrieved January 3, 2005 from http://www.die-bank/
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Gesamtrechnungen: Nettoeinkommen und Zahl der Haushalte nach
Haushaltsgruppen 1991 bis 2002, August 2003, Wiesbaden.
A Comparison of U.S. and German Students’ Earning 33
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online pursuits. The changing picture of who’s online and what they do.
Retrieved August 5, 2004, from http://www.pewinternet.org/
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About the authors
DR. MARIANNE JAMES is an Associate Professor of Accounting at
California State University, Los Angeles, where she teaches courses in
financial, managerial, cost, and case studies in accounting. She resided in
Europe for a number of years.
DR. CAROL BLASZCZYNSKI is a Professor in the Information Systems
Department at California State University, Los Angeles, where she teaches
courses in business communication, office applications/systems, financial
accounting, and leadership, and professional skills for accountants.
DR. HANSRUDI LENZ is a Professor and Chair of Accounting and
Auditing at the University of Wuerzburg, Germany. His main research and
teaching areas are financial accounting, auditing, and business valuation.
BARRIERS & BRIDGES:
SCAFFOLDING STUDENT SUCCESS
Dr. Clora Mae Baker
Cooperative learning is a foreshadowing of 21st century work life in that it
consists of diverse and cross-cultural interactions within a knowledge
workforce. In order to develop good workers and good citizens, we have to
teach them how to make sound decisions and how to identify better solutions to
complex problems. The foundation for decision making and problem solving is
to teach people how to evaluate the information they receive. Cooperative
learning groups are actively involved in organizing, explaining, summarizing,
and integrating material into existing conceptual structures (Johnson, Johnson,
& Holubec, 1994). Cooperative learning is effective when properly
implemented in appropriate contexts using assessment and feedback to guide the
students through the process. As usual, the most important element is a well-
skilled and experienced teacher.
I n order to develop good workers and good citizens, we have to teach
them how to make sound decisions and how to identify better solutions to
complex problems. The foundation for decision making and problem
solving is designed to teach people how to evaluate the information they
receive. As their evaluation skill levels progress, they are able to transition
from knowledge receivers to knowledge builders. One tool for building
knowledge is cooperative learning, which clarifies thinking and generates
multiple perspectives by offering explanations to others. Cooperative
learning is effective because learning should be contextually authentic
(Dewey, 1938/1997, Kilpatrick, 1918) and should emulate the use of
teamwork in the business context. Cooperative learning is most effective for
higher order skills such as analysis, synthesis, and evaluation (Johnson,
Johnson, & Holubec, 1994).
Cooperative learning, as defined by Artzt and Newman (1990) is a
―small group of learners working together as a team to solve a problem,
complete a task, or accomplish a common goal‖ (n.p.). Further, cooperative
learning is a process rather than a destination and foreshadows 21 st century
work life in that it consists of diverse and cross-cultural interactions within
Cooperative Learning Barriers and Bridges 36
a knowledge workforce. Social interaction is the common core of many
variants of cooperative learning. To achieve success, that interaction must
be structured with an interdependence of goals, roles, and resources
promoting positive interaction among the participants. The purpose of this
paper is to look at how the cooperative learning process can be effectively
Although much has been written about cooperative learning in recent
years, the use of cooperation in classrooms is not a recent innovation.
Totten, Sills, Digby, and Russ (1991) describe the use of small classroom
groups involved in cooperative tasks by educators such as John Dewey and
William Kilpatrick in the early part of the 20th century. Cooperative
learning methods have done much more than survive over the decades; and,
according to Slavin (1992), ―Cooperative learning seems to be an
extraordinary success. It has an excellent research base, many viable and
successful forms, and hundreds of thousands of enthusiastic adherents‖
(p. 86). The term cooperative learning, while well defined, is frequently
used interchangeably with other terms. For the purpose of this paper, the
definition is, as suggested by Johnson, Johnson, and Holubec (1994), people
working together to maximize their own and each other's learning.
Not everyone is in agreement about cooperative learning. One
viewpoint asserts that there is no such thing as group behavior. Garmston
and Wellman (1999) describe all ―group behavior‖ as decisions and actions
of individuals aligned in productive patterns to produce positive results.
However, even as they would deny group behavior, it seems that the phrase
―aligned in productive patterns‖ would imply some mutuality of interests
towards a common goal. Dillenbourg (1999) ascribes individual learning to
participation in activities like reading and predicting, which in turn trigger
learning mechanisms such as induction and deduction. Cooperative learning
is well supported by an impressive array of research and theory-building
While a great deal is written about cooperative learning from the
American perspective, a useful document written by Johnson, Johnson, and
Stanne (2000) is the meta-analysis on cooperative learning methods. They
report on findings of 164 studies involving minority and majority
populations done not only in North America, but also Europe, the Middle
East, Asia, and Africa. The interest continues today, and a quick database
search reveals recent studies from Lebanon (Ghazi, 2003), Brazil, and the
United Kingdom (Balbosa, Jofili, & Watts, 2004), Israel (Hertz-Lazarowitz,
2004), Australia (Thompson & Chapman, 2004), China (Tjosvold, Tang, &
West, 2004), and Denmark (Alvarstein & Johannese, 2001). More and
more, employers want people who can work well together; and the
Cooperative Learning Barriers and Bridges 37
increased global focus on suppliers and customers demands skills to
facilitate those interactions.
Businesses emphasize the need for collaboration among employees
locally as well as internationally. Several recent organizational management
books (Francesco & Gold, 2005; George & Jones, 2005; and Greenberg,
2005) have incorporated activities for developing cooperative working
skills. In addition, several cases from many countries are included to
emphasize the role culture and values play in developing cooperation.
Theory and Research
Related Psychological Theory
If the overall goal is to support learning, then it is important to
understand the processes that foster learning. The foundation of cooperative
learning is the ―exposure to multiple perspectives. Encountering new ideas
raises new possibilities for what to believe and opportunities to hone one's
views‖ (Baxter-Magolda, 2001, p. 200). Next, it is important to understand
the process of knowledge construction. Perry (1999) described
comprehension as an active and constructive process involving schemata.
During the process, hypotheses evolve as they are tested against new
information. Schemata are either reinforced by new information
(assimilation), or they are modified in light of the new information
(accommodation) (Perry, 1999). The process also should involve a great
deal of critical thinking, which is defined by Ennis (1985) as "reasonable,
reflective thinking that is focused on deciding what to believe or do‖
(p. 46). If the foundation of cooperative learning is multiple perspectives,
constructivism, and critical thinking, then the key process is promotive
interaction through positive conflict.
Cooperative Learning Research
Theories are excellent for providing a foundation for hypotheses, but it
takes quality research to properly evaluate those hypotheses. Johnson,
Johnson, and Holubec (1994) reported that hundreds of experimental and
over 100 correlational studies have been performed to compare cooperative,
competitive, and individualistic efforts to learn. What the research has
shown is that "cooperative learning offers: (a) higher achievement,
productivity, motivation, and higher level reasoning and critical thinking,
(b) more positive relationships and valuing of diversity and cohesion, and
(c) enhanced social competencies, self-esteem and ability to cope with
adversity and stress" (p. 11). Research is not enough. Effective practice
requires cycles of research and theory building, so it is also important to
review the theoretical background of cooperative learning.
Genealogy of Cooperative Learning Theory
The foundations of cooperative learning can be traced back to the
Gestalt perspectives of German researchers Max Wertheimer, Kurt Koffka,
Cooperative Learning Barriers and Bridges 38
and Wolfgang Kohler who first challenged the behaviorist concept that
individuals’ behaviors are driven by sensory input and controlled by
external rewards. Kurt Lewin, founder of social psychology, whose work in
field theory and group dynamics, showed that groups are dynamic wholes
that are guided by the interplay among the members and their environment
(Johnson, Johnson, & Holubec, 1994). In his dissertation and continuing on
later in life, Morton Deutsch, one of Lewin’s graduate students, examined
positive interdependence in cooperative groups and negative
interdependence in competitive groups (Deutsch, 2000). This work was
continued and refined first by David Johnson, one of Deutsch’s graduate
students, and then by David and his brother Roger Johnson into what is now
known as their social interdependence theory of cooperative learning
(Johnson & Johnson, 2002). Regardless of the promise of theory and the
research results, the ultimate challenge typically comes during the transition
from theory to practice in real world situations.
Implementation and Assessment
Contextual Elements of Cooperative Learning
In an industrial-manufacturing model of work, workers are typically
treated as interchangeable parts of the process with the only improvements
deemed necessary being based on efficiency of production. For many years
this same model has been pervasive in our school systems. The primary
goal for business or education was to strive to be number one in business or
in learning. In business, being number one is typically graded in terms of
efficiency, effectiveness, or innovation. In education, being number one
results in top grades and, therefore, increased opportunities. As we leave
behind that industrial model for work and education, "we enter into an era
that is defined by new ways to link, organize, create, and communicate"
(Garmston & Wellman, 1999, p. IX). Therefore, being number one is no
longer enough because success for top performers in a global, knowledge
economy is now measured in terms of creativity and knowledge solutions
that are better achieved through cooperation. This is echoed by Dockterman
(1998), who found that cooperative learning "improves the acquisition and
retention of content and skills" (p. 5). The result, as described by Johnson,
Johnson, and Holubec (1994), is that "cooperative learning replaces the
mass-production, competitive organizational structure of most classrooms
and schools with a team-based, high-performance organizational structure"
(p. V). This change will facilitate the preparation of learners for learning
and work environments situated in a climate of continuous change. Because
cooperative learning is a process, it is important to better understand that
process in order to employ it effectively.
Cooperative Learning Process
A significant challenge is to decide how to align a group of learners in
productive patterns for positive results. As will be shown, the process of
Cooperative Learning Barriers and Bridges 39
putting people into work groups and the context in which they function are
important pieces of the puzzle but first a bit of detail about the process of
group functioning. According to Ploetzner, Dillenbourg, Preir, and Traum
(1999), one part of the process that facilitates "the acquisition of knowledge,
especially of factual knowledge, is the construction, transmission, and
comprehension of explanations" (p. 103). This interaction among group
members involved in explanations inevitably generates questions and
disagreement that trigger further cognitive mechanisms (Dillenbourg,
1999). Even a brief look at the process highlights the fact that the process of
explaining, questioning, and constructing knowledge will take more time
than simply having a lecturer state the facts to the students. So, the obvious
next question is why would we be willing to invest the extra time involved
in cooperative learning?
Benefits to Students
How does cooperative learning impact the learners? Slavin (1992)
cites, "wide agreement among reviewers of the cooperative learning
literature that cooperative methods can and usually do have a positive effect
on student achievement" (p. 99). More specifically, properly designed and
implemented cooperative learning ―leads to positive effects in student self-
esteem, cooperativeness, feelings about class and school, and acceptance of
others‖ (Totten, Sills, Digby, & Russ, 1991, p. 3). Another broad view of
the benefits of cooperative learning over competitive and individual forms,
which is based on decades of experience and analyses of hundreds of
research studies, is offered by Johnson, Johnson, and Holubec (1994). They
cite several beneficial outcomes of cooperative learning: "First, it helps you
raise the achievement of all students, including those who are gifted or
academically handicapped. Second, it helps you build positive relationships
among students, which is the heart of creating a learning community that
values diversity. Third, it gives students the experiences they need for
healthy social, psychological, and cognitive development" (p. V). Given
that cooperative learning takes more time and effort to implement, it may
not be the best solution. The next question is: when should cooperative
learning be used?
Effectiveness of Cooperative Learning
Cooperative learning is not appropriate for all learning goals. Because
they do not require consensus, competitive methods are more effective in
situations with time constraints or involving well-defined problems and
solutions. Competitive methods arrive at an acceptable solution to
problems, but rarely by comparing a wide range of alternatives as would
occur in the cooperative learning process. In addition to the interpersonal
and individual benefits that accrue as part of the process of cooperative
learning, the major product benefit is the creation of better solutions. Two
factors underscore the efficacy of cooperative learning. The first is that
Cooperative Learning Barriers and Bridges 40
reasoning and problem solving have been part of nearly all definitions of
intelligence (Sternberg & Frensch, 1991), and the second is that the key to
transforming information into knowledge is to discuss, analyze, and
understand information and then to relate it to previous knowledge (Sharan
& Sharan, 1992). The result of this process points to a major advantage of
cooperative methods over competitive method which relates to decision
Improved Decision Making
Research suggests that people automatically apply standard solutions to
familiar problems with little intervening thought or metacognitive activity
(Kuhn, Amsel, & O'Loughlin, 1988). The problem with this method is that
it leads to satisficing, which means selecting an option as soon as we find
one that meets our minimum level of acceptability (Sternberg, 1996).
Cooperative learning groups are actively involved in organizing, explaining,
summarizing, and integrating material into existing conceptual structures
(Johnson, Johnson, & Holubec, 1994). This type of cooperative learning
leads us to evaluate a range of solutions and to select the best alternative.
Once again, the benefits of cooperative learning do not automatically
accrue because students are placed into groups. As described by King and
Kitchener (1994), "Teaching students to think clearly and complexly, to
argue coherently and persuasively, and to weigh competing claims fairly
and critically is obviously a complicated and difficult process" (p. 230). The
most critical question is how to effectively implement cooperative learning.
―Skillful coordination of theory and evidence entails a complex interplay.
While existing theories provide the basis for interpretation of new
information, new information ideally is attended to and utilized as a basis
for evaluating and revising theories‖ (Kuhn, Amsel, & O'Loughlin, 1988, p.
3). Additionally, this coordination requires metacognition in the form of
―reflection on one’s own cognition‖ (Kuhn, Amsel, & O'Loughlin, 1988, p.
3). In the early 19th century, Hegel described the evolution of knowledge as
the search for contradictions which cause conflicts that are resolved when
the original and opposing information is subsumed into a new level of
knowledge. What is known as Hegel’s dialectic is described as a three-stage
process: (a) thesis, (b) antithesis, and (c) synthesis.
The tension between thesis and antithesis generates a desire to
eliminate the tension by resolving the conflict. This concept of tension
between what is known and the current context or environment as a driving
force to change is common to many theories. Whether it is Lewin’s (1951)
dynamic field, Festinger’s (1957) cognitive dissonance, Koffka’s (1935)
dynamic stress, or Piaget’s (1972) disequilibrium, imbalance motivates a
desire to resolve conflict and restore balance. That resolution requires an
objective evaluation of the available information and ultimately a decision
or synthesis to restore balance.
Cooperative Learning Barriers and Bridges 41
Cooperative Learning Structure
One of the best ways of evaluating conflicting ideas and resolving
dissonant information is to use cooperative learning. The key elements of
cooperative learning have been well defined by David and Roger Johnson
(1994) and they are (a) positive interdependence, (b) face-to-face promotive
interaction, (c) individual and group accountability, (d) interpersonal and
small-group skills, and (e) group processing. These five elements and the
student mix require successful orchestration through the skills of a well-
qualified teacher as follows:
Positive interdependence. Cooperative learning groups are established
with no single leader and structured for mutual dependence for individual
and group success. The structure and performance are facilitated with
rewards and through assessments. The measure of success for this element
is that all members must not only learn the material but also must ensure
that other group members learn the material.
Face-to-face promotive interaction. Group members promote each
other's success by sharing information, mutual teaching, giving and
providing explanations, and helping each other to link current information
to prior knowledge.
Individual and group accountability. Accountability begins with
acceptance by all group members of process methods and common goals. In
addition, there must be ongoing assessment and evaluation of both
individual and group performance.
Interpersonal and small-group skills. To effectively participate in
cooperative learning groups, members need a wide range of skills including
(a) leadership, (b) decision making, (c) conflict management, (d) clear
communications, (e) providing encouragement and support, (f) trust
building, (g) clarifying, (h) giving feedback, (i) compromise, and
(j) negotiation. The teacher's responsibility is to sell the benefit, teach the
skill, help the students practice the skills, and assess their performance of
Group processing. In order for the group members to improve their
skills, the members need to assess them and to provide feedback to each of
the group members both during and after the project. Assessment should
include issues such as goal achievement, group work process, and helpful
and unhelpful activities.
Role of Teachers and Students in Cooperative Learning
Teacher's Role in Cooperative Learning
As usual, the most important element is a well-skilled and experienced
teacher. ―One danger inherent in the widespread adoption of cooperative
learning is that large numbers of teachers with half-knowledge may use
Cooperative Learning Barriers and Bridges 42
ineffective forms of the approach and experience failure and frustration‖
(Slavin, 1992, p. 86). Just as in other endeavors, it takes considerable time
to gain expertise in implementing cooperative learning. Johnson and
Johnson (1994) wrote that it takes years of training and practice to become
an expert in the use of cooperative learning. The teachers' role "when using
cooperative learning is multifaceted. They must make a number of pre-
instructional decisions, explain the learning task and the cooperative
procedures to students, monitor student groups as they work, evaluate the
quality of students' learning, and encourage students to process how
effectively their learning groups are functioning‖ (Johnson, Johnson, &
Teacher Roles to Enhance Cooperative Learning. Theoretical
literature in the field of education, ―dating back to the beginning of the
century, reflects the view that the only effective way to teach students to
think is to engage them in thinking‖ (Kuhn, Amsel, & O'Loughlin, 1988,
p. 230). One traditional method of engaging students in thinking is the
Socratic teaching method. The concept that construction of explanations
might lead to the acquisition of new knowledge forms the foundation of the
ancient ―Socratic teaching‖ method. In Socratic teaching, the teacher guides
the student's explorations by posing key questions (Ploetzner, Dillenbourg,
Preir, & Traum, 1999). Therefore, it is important that the teacher first accept
this new role of guide prior to beginning the process.
Also, before any activity begins, it is important for the teacher to attend
to some of the more important details. One of the first questions is how
many people should be in the group for best performance. Dockterman
(1998) defines the ideal group as having four members, a full range of
abilities, and an even distribution of gender, race and ethnicity. In addition
to grouping, Sternberg and Frensch (1991) describe the benefit of planning,
which ― … serves to bridge the gap between an initial state and a final-goal
state by providing a manageable set of signposts for negotiating uncharted
territory" (p. 65). The intermediate steps or stages may be used for process
or metacognitive reflection and/or formative assessment. Other important
contextual factors, according to Idol and Jones (1991), include issues such
as student motivation and the influence of policy and regulations. In
addition to these structural and contextual factors, it is also very important
to establish the framework for interaction among group members. As stated
by Garmston and Wellman (1999), ―Group talk is the organizing ingredient
of shared learning, yet it is dangerous and often counterproductive to put
adults in a room without frameworks and tools for skilled interaction‖
(p. 51). Garmston and Wellman (1999) further describe essential group
norms as the full attention of each group member focused on the
understanding of the essence of others’ messages and with the intention to
support thinking, problem solving, and group development. Still another
element of cooperative learning is to promote trust among group members.
Cooperative Learning Barriers and Bridges 43
―Assuming others' intentions are positive encourages honest conversations
about important matters … as speakers frame their paraphrases and
inquiries within positive presuppositions‖ (Garmston & Wellman 1999,
p. 45). With these teacher responsibilities under control, the next area of
concern is the process and responsibilities related to student activities.
Student Roles to Enhance Cooperative Learning
Role of Conflict in Cooperative Learning. In addition to the structural
incentives and goalposts established by the teacher, additional motivation is
achieved through structured, positive conflict. As Festinger (1957)
describes, ―dissonance, being psychologically uncomfortable, will motivate
the person to try to reduce the dissonance and achieve consonance‖ (p. 3). It
is possible, according to Dockterman (1998), to establish an environment
conducive to cooperative learning through the use of either complimentary
shared information or through the use of evaluation of conflicting ideas. As
previously stated, ―disequilibrium facilitates learning. Contradictions should
be illuminated, explored, and discussed. Group discomfort within the
context of safety is an important learning resource‖ (Garmston & Wellman,
1999, p. 94).
Knowledge Construction in Cooperative Learning
However, exposure to alternative explanations is not enough. Webb
(1985) wrote that "to ensure that every group member learns something, it is
in the interest of every group member to spend time explaining concepts . . .
the students who gain most from cooperative work are those who give and
receive elaborated explanations" (p. 94). Providing those explanations
requires that we first organize what we know. As Baxter-Magolda (2001)
explained, ―Publicly declaring and defending their positions contributed to
learners' construction of their own views because it helped them clarify why
they held particular views‖ (p. 197).
Evaluating Information in Cooperative Learning. The listening role is
equally active. Beyer (1987) describes the interplay between receiving and
accepting information. The receiver must determine the strength of an
argument or claim by examining the credibility of a source. This includes
evaluating the relevance of information or claims, determining whether the
facts and value claims are verifiable, and identifying any logical
inconsistencies or unstated assumptions and bias. Another important step in
this interplay of information is to formatively assess activities and to
provide feedback to each other (Garmston & Wellman, 1999). ―Groups that
develop consciousness about paraphrasing and give themselves permission
to use this reflective tool become clearer and more cohesive about their
work‖ (Garmston & Wellman, 1999, p. 40).
Cooperative Learning Barriers and Bridges 44
Assessing Cooperative Learning
The final cooperative learning issue deals with assessment. Regardless
of which outcome is selected for measurement, it should be noted that, as
described by Dillenbourg (1999), the most important measure of
interactivity is the degree of impact on another's cognitive processes. In
order to evaluate interactivity, the evaluator must be present to observe the
process at key points.
Because cooperative learning is a process, it is important to employ
assessment during the process (formative). This enables the teacher and
learners to provide feedback at the appropriate time to improve the process.
Similar to the effects from continuous process improvement in the
manufacturing world, the formative assessment facilitates midcourse
corrections and process revisions to enhance outcomes before they occur.
The teacher and learners must also assess the outcomes of the process
(summative). The assessment should evaluate the quality of achievement of
intermediate and outcome goals. The feedback provided should be
incorporated into the groups’ and individuals’ reflections on how to
improve the interactive process and the results.
Summary and Implications
Learning together in cooperative groups is a fundamental, but powerful,
methodology. Both Dewey (1916) and Lewin (1944) were proponents of
cooperative classroom learning and related the socialization process to the
democratic process in society. Cooperative learning is a process of
evaluating information and potential solutions to problems whose potential
benefits are well-supported by theory and extensive research. To be
effective, it requires much more than simply placing people into groups
with a common goal. Thorough attention must be paid to the five elements
of cooperative learning as outlined by David and Roger Johnson (1994), the
context for the group, and the processes employed by the group.
In cooperative learning situations, students perceive that they can reach
their learning goals only if the other students in the learning group also do
so. Students who are able to work together demonstrate improved self-
esteem as they maximize their own and each others’ learning (Johnson,
Johnson, & Holubec, 1994). Students develop social skills, cast schoolmates
as allies, colleagues, and friends; and there is a built-in commitment to the
common good and a concern for the success of others, as their success
depends on the joint efforts of everyone to achieve mutual goals. What is
valued is teamwork and civic responsibility. With learning as the goal
instead of winning, cooperators value intrinsic motivation based on a
striving to learn, grow, develop, and succeed. Cooperation teaches that self-
worth results from contributing whatever resources one has to the joint
effort and common good. Cooperative learning is effective when properly
implemented in appropriate contexts using assessment and feedback to
Cooperative Learning Barriers and Bridges 45
guide the students through the process. It requires extensive planning before
the activities and requires management during the process. The students
must be motivated and taught how to carry out their roles. And, finally,
there must be ongoing assessment used to fuel reflection by the group
members and the teacher during and after the cooperative learning group
In the increasingly global focus on business education today and in the
future, competitive advantage depends upon our ability to develop students
who can use critical thinking and teamwork skills and can appreciate the
benefits of diversity. Appreciation for and enrichment by diversity are just
two of the many dynamic instructional components that are inherently
linked to appreciation for international cooperative learning (Jackson,
1992). Significant improvements in relationships occur among these
students. Group cooperation helps promote positive attitudes among
different ethnic groups by placing value on a wide range of diverse qualities
that facilitate joint success. Because there are many diverse ways that a
person may contribute to a joint effort, facilitating, promoting, and
encouraging the success of others is a natural way of life; and other people’s
worth is unconditional. Thus, people who are different from oneself are to
be valued. Other people are perceived to be potential resources for and
contributors to one’s success. Difference is valued because it means that
more diverse resources are available for the joint effort. These diverse
contributions of members result in the realization that everyone is of equal
value and equally deserving, regardless of their gender, ethnic membership,
culture, social class, or abilities.
The current research indicated that with frequent use of cooperative
learning, diversity among students can be a potential source of creativity
and productivity (Johnson & Johnson, 1997). The discords of diversity are
not automatically transformed into a symphony when people are brought
face-to-face. In fact, prejudice, stereotyping, and discrimination often
increase with proximity. What largely determines whether interaction
results in positive or negative relationships is the context of the interaction.
Rather than requiring group members to compete, group members must
work together to achieve mutual goals. When people cooperate, they tend to
like each other more, trust each other more, and are more willing to listen to
and be influenced by each other (Johnson & Johnson, 1989).
Recognizing diversity and valuing and respecting difference is essential
in order to develop an appreciation for the individual and for other group
members’ gender, religious, ethnic, or cultural background. In essence,
learning groups and multi-national businesses have their own culture that
supersedes the individual cultures of members. That culture includes a
pluralistic set of values concerning democracy, freedom, liberty, equality,
justice, the rights of individuals, and the responsibilities of citizenship. Only
Cooperative Learning Barriers and Bridges 46
through knowing, working with, and personally interacting with members
of diverse groups can individuals really learn to value diversity, utilize
diversity for creative problem solving, and work effectively with diverse
peers. Diverse cooperation is an excellent opportunity for students to obtain
a global perspective on business and culture. Considering the increasingly
global character of today’s economy, the ability to understand people from
different cultures and to work efficiently in the international community are
necessary components of success.
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About the authors
JOHN DUNCAN is a Ph.D. student in Human Resource Education at the
University of Illinois at Urbana-Champaign. He has worked as a research
assistant on several projects and as a teaching assistant in computer,
business, instructional systems development, and educational psychology
courses. He has a bachelor’s degree in occupational education from
Southern Illinois University and masters’ degrees from City University and
Southern Illinois University.
DR. CLORA MAE BAKER has been an associate professor in the
Department of Workforce Education and Development at Southern Illinois
University Carbondale, Illinois, since 1989. She is the coordinator of the
business education program, advisor to the Beta Omicron chapter of Delta
Pi Epsilon, National Vice President of Delta Pi Epsilon and is
professionally active in several business and workforce organizations.
AND CRITICAL THINKING
IN INTERNATIONAL BUSINESS COURSES
Dr. Edgar J. Manton
Dr. Donald E. English
Dr. Roberto Vinaja
In view of the increasing business globalization trend, the development and
implementation of teaching/learning strategies appropriate for the international
business curriculum is a critical factor for the success of international business
students. Bloom’s taxonomy is a useful tool that can assist the teacher in testing
and instructional evaluation. The purpose of this paper is to show the application
of the taxonomy in educational testing in general and specifically in
international business educational testing. Benjamin Bloom proposed six
hierarchical and cumulative levels of testing to measure different levels of
student learning. A review of these levels would assist the international business
teacher in developing tests to measure the desired level of student mastery of the
subject. Constructing test questions based on Bloom’s taxonomy will
significantly improve testing and assessment. Instructors will be better enabled
to ensure that students acquire the skills and competencies required in today’s
global business marketplace.
A s corporations become increasingly global, many managers need to be
able to function in a global environment. A related consequence is that
business schools have recognized the need to internationalize their courses
and teaching methods (Vielba and Edelshain, 1995).
In 1997 the Association of Advance Collegiate Schools of Business
(AACSB), the premier accrediting agency for programs in business
administration, added International to its name to reflect its new global
focus. It is now known as the Association to Advance Collegiate Schools of
Business (ASCSB International). In addition, AACSB International
specifically demands internationalization of the business curriculum. The
emphasis and development of international business programs has been
analyzed in a significant number of studies (Kwok, Arpan, and Folks, 1994;
Muuka, Harrison, and Hassan, 1999; and Webb, Mayer, Pioche, and Allen,
The growing importance placed on international business education
increases the teacher’s responsibility for encouraging students to develop
the skills and competencies to successfully function in a global business
Evaluating Knowledge and Critical Thinking in International Business 52
environment (Vielba & Edelshain, 1995). The development and
implementation of teaching/learning strategies appropriate for the
international business curriculum is a critical factor for the success of
international business students. Previous studies have suggested a number
of teaching/learning strategies for teaching international business. Some
areas of study in international business are more complex or advanced than
others, requiring materials to be presented at different learning levels
depending on course objectives.
A major challenge is how to measure the level of student success in
acquiring skills and competencies required in the global business
marketplace. Testing should cover all levels of material presented to
determine what students have mastered. Studies show, however, that most
college testing involves recalling memorized facts (Crooks, 1998). It
appears that most testing activities focus on recalling and understanding
principles and concepts. Learning is limited to a shallow level, and critical
thinking is not emphasized or evaluated. Additional testing should be done
to evaluate the student’s ability to analyze, synthesize, and evaluate
One approach for improving the design of learning objectives and
testing procedures in the classroom would be to follow Benjamin Bloom’s
taxonomy of educational objectives. The taxonomy defines three domains:
the cognitive domain, the affective domain, and the psychomotor domain.
This article will specifically focus on the cognitive domain. According to
Bloom, et al. (1956), the cognitive domain includes those educational
objectives associated with the attainment and development of knowledge
and intellect. The taxonomy has been applied in a wide number of areas of
study, from chemistry to real estate (Manton and English, 1989), including
management education. Bloom’s taxonomy is a framework for analyzing
and testing for levels of knowledge achievement. According to Kloss
Teachers who want to improve their questions, whether for essay
tests or class discussions, will discover that constructing them on
Bloom’s model will make their task much simpler. In so doing, they
will also guarantee a mix of questions on all cognitive levels and
constrain students to perform the necessary critical thinking to answer
them (p. 245).
Taxonomy is a hierarchical ranking of classifications to describe the
level of subject matter knowledge. A taxonomy designates the complexity
and differences among these classifications. As originally designed, the
Bloom’s taxonomy was an attempt to establish a sequential and cumulative
hierarchy depicting the stages of learning from the most elementary to the
most complex (Bloom, B. M. D., Englehard, E. J., Furst, Hill W. H., &
Evaluating Knowledge and Critical Thinking in International Business 53
Krathwohl D. R.). A review of Bloom’s taxonomy classification can help
international business teachers design more effective tests and questions to
evaluate student progress. The purpose of this paper is to show the
application of the taxonomy in educational testing in general and
specifically in international business educational testing.
Evaluative Techniques for Cognitive Objectives in Testing
Bloom identified six levels of evaluation for cognitive objectives
which relate to levels of testing. In order from the lowest level of teaching
or testing to the highest, the levels include: knowledge objectives,
comprehensive objectives, application objectives, analysis objectives,
synthesis objectives, and evaluation objectives. Each of these objectives
will be discussed in the following pages.
The knowledge objective involves the recall of specifics and universals,
the recall of methods and processes, or the recall of a pattern, structure, or
setting. For measurement purposes, the recall situation involves little more
than memorization. The knowledge objective primarily emphasizes the
psychological process of remembering (Bloom et al., 1956).
Although the knowledge category is the lowest in the taxonomy, this
does not mean that it is not important. Mastering the knowledge category is
a prerequisite for successfully handling upper level categories. The vast
majority of instructor manuals and test banks for international business
instruction have focused on testing knowledge objectives. True-false,
multiple-choice, and short answer questions typify this level. Some key
words usually associated with this level are: name, list, define, identify,
who, what, when, and where.
The following is an example of an international business knowledge
Which one of the following is not a potential advantage of an
international joint venture?
a) reduction of risk
b) economies of scale
c) access to technology
d) access to markets
This question assumes the student has learned the characteristics of an
international joint venture and its advantages and disadvantages.
The comprehension objective represents the lowest level of
understanding. With comprehension, an individual must not only have
knowledge, but must understand what he/she knows (Bloom et al., 1956).
Evaluating Knowledge and Critical Thinking in International Business 54
The material for translation, interpretation, or extrapolation must not be
the same as was used in instruction; but it must have similar characteristics
in terms of language, complexity, and content. Comprehension includes
translation and interpretation. Some of the keywords that imply translating
from one abstraction framework to another are: give examples, illustrate,
and paraphrase. Interpretation or extrapolation can be tested using the
following keywords: describe, infer, interpret, relate, and explain.
The following is an example of an international business
comprehension test question:
The product life cycle approach in international theory asserts that as a
product moves through the cycle, it is associated with an international
trade and investment cycle. Which one of the following choices
provides a supporting example of this approach?
a) Product development occurs near the country of highest
b) Product development is always conducted at headquarters.
c) Demand in foreign markets is constant.
d) The investment pattern is not related to stages of the product
To answer the question correctly, the student must know the description
of the product life cycle theory. In addition, the student should understand
the meaning of both an international demand cycle and an international
investment cycle (Giddy, 1978).
Application is the use of abstractions in particular and concrete
situations. The abstractions may be in the form of general ideas, rules for
procedures, or generalized methods. The abstractions may also be technical
principles, ideas, and theories which must be remembered and applied
(Bloom et al., 1956).
A difficult and complex objective of education is to teach students to
apply principles and generalizations to new problem situations. In other
words, students must be able to use their knowledge in new concrete
situations. Application is usually regarded as an indication that subject
matter has been adequately mastered. Questions pertaining to the
application objective can be asked in verbal directives, such as: solve, use,
determine, employ, demonstrate, and relate.
The following is an example of an international business application
Use the quality function deployment (QFD) method to choose the best
location for a manufacturing plant. The potential locations are Mexico,
Korea, and China. Some suggested factors to take into account are tax
Evaluating Knowledge and Critical Thinking in International Business 55
incentives, foreign exchange rate, political stability, infrastructure
development, profit repatriation, and availability of labor. Feel free to
include other factors that you consider important for the selection
The student should understand the QFD method (Partovi, 2004) and be
able to apply it to this specific decision-making task. The question also
requires the student to apply his/her knowledge of foreign investment
theory and project valuation to include additional factors not in the list.
Analysis is the breakdown of material into its constituent elements or
parts so that the relative hierarchy of ideas is made clear and/or the
relationships between the ideas expressed are made explicit. Such analyses
are intended to clarify the communication, to indicate how the
communication is organized, and the way in which it manages to convey its
effects, as well as its basis and arrangement (Bloom et al., 1956). Verbs
usually associated with the analysis level are: analyze why, support,
categorize, classify, and distinguish.
The following is an example of an international business analysis
The MNC strategy development matrix is a useful tool to classify
multinational firms based on two dimensions. The two dimensions are
the relative cost of operations and degree of technology change. The
combination of these two dimensions results in a four-cell framework.
There are specific strategies for each cell. Analyze the characteristics
and background of any four multinational firms and classify each one
of them in the appropriate cell of the MNC matrix.
To answer this question, the student must understand the meaning of
the two dimensions in the MNC matrix (Fannin & Gilmore, 1986) and be
able to analyze the characteristics of a multinational firm.
Synthesis is: ―The putting together of elements and parts so as to form a
whole. This is a process of working with elements, parts, etc., and
combining them in such a way as to constitute a pattern or structure not
clearly there before‖ (Bloom et al., 1956).
Under the synthesis objective, students must be able to put all the parts
together into a whole. The teacher must be aware that each student may
have a different ―correct‖ answer based on his/her ideas, background, and
experiences. The synthesis category emphasizes problem solving, creativity
and inventiveness. Creativity is a required competence for students in the
international business curriculum because organizations functioning in a
challenging international environment must develop creative strategies to
Evaluating Knowledge and Critical Thinking in International Business 56
gain or maintain a competitive advantage. Challenging assignments, such as
asking students to write a case study, require synthesis, promote creativity,
and facilitate learning (Riordan, Sullivan, and Fink, 2003).
The synthesis objective can be appraised by questions using verbs such
as: design, create, construct, develop, compose, and plan.
The following is an example of an international business synthesis
Assume you are a product manager for a mid-size multinational
corporation. Design a plan for the selection of a strategic alliance
partner to introduce your product in a new foreign market.
This type of question would require the student to integrate a number of
factors associated with the suitability of potential partners in strategic
alliances; for instance, the importance of matching the partner with the
needs of the organization establishing the alliance, the balance of
resource/skill bases, among others (Harvey & Lusch, 1995). Based on the
identified factors, the student is expected to design a methodology or plan.
Evaluation is defined as the making of judgments about the value of
ideas, works, solutions, methods, materials, etc. It involves the use of
criteria as well as standards for appraising the extent to which particulars
are accurate, effective, economical, and/or satisfying. The judgments may
be either quantitative or qualitative, and the criteria may be either those
determined by the student or those which are given to him/her (Bloom et al.,
In the taxonomy of educational objectives, evaluation is placed as the
highest category of objectives. Objectives in this category require some
competence in all the previous categories. Evaluation goes beyond previous
categories in that the student is required to apply something he/she knows,
has analyzed, and has synthesized, on the basis of certain criteria.
Evaluation criteria can be based on either internal consistency or external
standards. Verbs used in the evaluation objective include: judge, evaluate,
criticize, choose, estimate, and support.
The following is an example of an international business evaluation
Many experts have stressed the growth and importance of foreign
direct investment in the United States. Two competing theories that
have attempted to explain the foreign direct investment phenomenon
are the cost-of-capital theory and the industrial organization theory.
The former emphasizes why net investment among pairs or groups of
nations tends to flow in certain patterns. The latter focuses on the
characteristics of specific firm investors and their rivalries with other
Evaluating Knowledge and Critical Thinking in International Business 57
firms. Compare and contrast both theories. Which theory provides a
The student will have to analyze, synthesize, and evaluate the
differences between the elements of both theories (Trevino & Daniels,
1995) and then develop an appropriate recommendation. Obviously,
grading this type of question requires a serious commitment from the
instructor. There is no absolute ―right‖ answer, and every response must be
evaluated based on its own logic, consistency, and persuasiveness.
The measurement of the degree of learning acquired by a student is a
difficult task. The international business teacher must determine the
appropriate level of learning to be obtained by the student in a course and
must design instructional objectives accordingly. Then, the teacher should
construct test questions to measure the level of learning achieved by the
student. Bloom’s taxonomy model can be useful for both tasks. The
international business teacher can use Bloom’s taxonomy as a framework to
determine desired levels of learning. In addition, the taxonomy facilitates an
understanding of how to test for a degree of success in achieving these
levels of learning. Constructing test questions based on Bloom’s taxonomy
will significantly improve testing and assessment. Instructors will be better
prepared to ensure that students acquire the skills and competencies
required in today’s global business marketplace.
Bloom, B. M. D., Englehard, E. J., Furst, Hill W. H., & Krathwohl, D. R.
(1956), Taxonomy of Educational Objective, Handbook I: The
Cognitive Domain. New York: McKay.
Crooks, T. J. (1998). Impact of classroom evaluation on student. Review of
Educational Research. Winter, 438-481.
Daines, D. (1998). Are teachers asking higher level questions? Education.
Fannin W. R., & Gilmore C. B. (1986). Developing a strategy for
international business, Long Range Planning, 19(3), 81-85.
Giddy, I. H. (1978). The demise of the product life cycle model in
international business theory. Columbia Journal of World Business.
Spring, 13(1), 90-97.
Harvey, M. G., & Lusch, R. F. (1995). A systematic assessment of potential
international strategic alliance partners. International Business Review,
Evaluating Knowledge and Critical Thinking in International Business 58
Kloss, R. J. (1988). Toward asking the right questions. The Clearing House,
Kwok, C. C. Y., Arpan, J., & Folks, W. R. (1994). A global survey of
international business education in the 1990s. Journal of International
Business Studies, 25(3), 605-623.
Manton, E. J., & English, D. E. (1989). Bloom’s taxonomy applied to
testing in real estate. Real Estate Educators Association Journal.
Muuka, G. N., Harrison, Dannie E., & Hassan, S. Y. (1999). International
business in American MBA programs—Can we silence the critics?
Journal of Education for Business. March/ April, 74(4), 237-242.
Partovi, F. (2004). An analytic model for locating facilities strategically.
Omega, The International Journal of Management Science. Retrieved
16 September 2004.
Riordan, D. S., Sullivan, M. C., & Fink, D. (2003). Promoting creativity in
international business education: A protocol for student-constructed
cases. Journal of Teaching in International Business, New York: 15(1),
Trevino, L. J., & Daniels, J. D. (1995). FDI theory and foreign direct
investment in the United States: A comparison of investors and non-
investors. International Business Review, 4(2), 177-194.
Vielba, C. A., & Edelshain, D. J. (1995). Teaching international business
management effectively. Journal of Management Development, 4(10),
Webb, M. S., Mayer, K. R., Pioche, V., & Allen, L. C. (1999).
Internationalization of American business education. Management
International Review, 39(4), 379-397.
Evaluating Knowledge and Critical Thinking in International Business 59
About the authors
DR. DONALD E. ENGLISH is Professor and Head of the Department of
Business Administration and Management Information Systems at Texas
A&M University-Commerce. He received his Bachelors degree and Masters
degree from Illinois State University, Normal, Illinois. He received his
Ph.D. degree from the University of North Dakota. His teaching fields are
business communication and business research.
DR. EDGAR J. MANTON received his undergraduate degree from the
U.S. Naval Academy and the MS and DBA degrees from Florida State
University. He served in the U.S. Air Force as a ballistic missile launch
control officer; later he was employed by NASA at the John F. Kennedy
Space Center in Florida during the Gemini and Apollo Programs. He has
been at Texas A&M University-Commerce for the past 32 years as a
department head, director of institutional research, and currently is a
professor in the Business Administration and Management Information
DR. ROBERTO VINAJA is an Assistant Professor of Management
Information Systems in the Department of Business Administration and
MIS, College of Business and Technology, Texas A&M University-
Commerce. His research interests include Database Management, and
Decision Support Systems. He serves as book reviewer for the Journal of
Global Information Technology Management. His research has been
published in the following journals: International Journal of Management,
United States Distance Learning Association (USDLA) Journal, and
Midwestern Business and Economic Review.
THE CROSS-CULTURAL ADAPTABILITY OF
A GROUP OF INTERNATIONAL BUSINESS
Dr. Wanda L. Stitt-Gohdes
Dr. Tena B. Crews
This study sought to determine the cultural adaptability of a group of
professors attending the Centennial Conference of the International Society for
Business Education in Zurich, Switzerland. Based on the scale scores on the
Cross-Cultural Adaptability Inventory (CCAI), these participants’ scores all
exceeded the 50th percentile scores reported in the normed data for the CCAI.
The CCAI is a tool used to provide information to one about his/her potential
for cross-cultural effectiveness. In addition, these participants used a variety of
strategies to help their students learn about other cultures such as case studies,
directed conversation, and student assignments.
s noted by Smith, Hornsby, and Kite (2000), ―terms like global
A economy, cultural diversity, and global environment are now part of
our everyday vocabulary‖ (p. 713). Therefore, the notion of one’s ability to
adapt to those whose cultural and ethnic backgrounds differ is an
increasingly important topic in educational environments in the United
States. Demographic changes in the U.S. largely drive the need to address
issues of cultural adaptability in business and education. In fact, John and
Roberts (1996) suggest that the steady stream of foreign-born workers is
one change that is bound to influence management and productivity of any
business. Lehman and DuFrene (2005) state the obvious: ―managing a
diverse workforce effectively will require you to communicate with
everyone and to help all employees reach their fullest potential and
contribute to the company’s goals‖ (p. 26). Understanding the influence of
culture on behavior and knowing the extent to which one is culturally
adaptable, then, are important tools for those who prepare students to enter
the workforce, whether as educators or business/industry employees.
What is culture?
There are many areas in which culture can be a factor in education,
business, and life; consequently, culture may be defined in many ways.
Jacobson (1996) defines culture as ―first and foremost a shared way of
making sense of experience, based on a shared history‖ (p. 15). The
definitions of culture continue with Rosenzweig’s (1994) explanation of ―a
set of taken-for-granted assumptions, expectations or rules for being.‖A
Cross-Cultural Adaptability of Business Educators 62
current definition of culture reads ―the customary beliefs, social forms, and
material traits of a racial, religious, or social group‖ (Merriam-Webster
Dictionary, 2004). A variety of cultures exist in a multitude of areas. There
are business/organizational cultures, societal cultures, group/team cultures,
individual cultures, and basic beliefs. Therefore, one person can belong to
several different cultures. However, as educators, all of these realms need to
be dealt with and taught in an educational environment. Cultures are ever
evolving and should not be thought of as stagnant. Cultures have positive
and negative aspects and both are shared and learned in a variety of ways.
Thus, developing an awareness of one’s own ability to adapt to cultural
differences is key to success in education and business today.
Looking inward to first develop self-awareness before judging others
may help one view others in a different light. One must realize that his/her
culture regulates or influences how he/she communicates, views, and
accepts other cultures through their own ―cultural eye.‖ Newman (1997)
notes that as individuals are generally raised in one particular culture, their
own culture becomes mutually exclusive; when other cultures are viewed
and/or experienced, those cultures may seem unusual and hard to accept.
Therefore, before individuals can accept others, it is important for them to
accept themselves and their cultural adaptability.
The purpose here, is to describe the cultural adaptability of a group of
international business educators attending the Centennial Conference of The
International Society for Business Education in Zurich, Switzerland, in
The following questions were addressed:
How culturally adaptable were the participants based on the four
scales (Emotional resilience, Flexibility/openness, Perceptual
Acuity, and Personal autonomy) of the Cross-Cultural Adaptability
What are specific strategies used by the participants to help their
students adapt to cultures different from their own?
The U.S. population is a rapidly changing demographic environment
with a variety of cultures. Promoting cross-cultural competence has been a
topic of much research. Ward and Ward (2003) discussed how this was
being developed in pre-service teachers. These authors noted that ―future
teachers will be faced with greater diversity in their classrooms, schools,
and communities as a result of over five hundred distinct ethnic groups in
the United States (p. 532). ―The International Society for Business
Education (ISBE) is an organization for teachers, students, and business
Cross-Cultural Adaptability of Business Educators 63
professionals who are interested in international business‖ (ISBE, 2004).
With international business and its impact on curriculum and instruction in
mind, it is essential that business educators recognize their own strengths
and weaknesses in the area of cross-cultural adaptation.
Educators in general, not just business educators, are interested in
cultural adaptability. For example, Connolly, Darby, Tolle-Watts, and
Thomson-Laky (2000) note that educating dental hygienists to provide
services for culturally diverse clients is essential. Forty health sciences
faculty were involved in this study and represented a range of areas such as
dental hygiene, medical laboratory sciences, nursing, and physical therapy.
Their study involved the Cross-Cultural Adaptability Inventory (CCAI) and
resulted in all faculty groups exhibiting higher average CCAI scores than
the CCAI norm group. The authors noted that results of these CCAI scores
indicate that these ―qualities should provide a strong foundation for the
development of additional competence in cross-cultural health care and
preparing practitioners who can provide culturally sensitive health care‖
(p. 102). Use of the CCAI with dental hygienists indicates how this
instrument can be used with a variety of results to identify adaptability in
various occupations. Educators in all areas must develop this foundation to
help others learn how to self-analyze their own cultural adaptability and
then emphasize the importance of reviewing personal strengths and
weaknesses in adapting to other cultures.
The globalization trend has enhanced the number of research projects
conducted in cross-cultural studies. Wellins and Rioux (2000) learned that
88% of organizations in a global environment reported that the method of
conducting business and training in a particular location is affected by the
local culture. Therefore, when educating/training individuals from other
cultures, communication, understanding, and acceptance can be obstacles in
the educational process. Chang (2004) noted that ―studying culture can
improve our understanding of people’s environments and how
environments may influence them but cannot help us to make conclusions
about people themselves‖ (p. 177).
Language is one barrier that typically comes to mind first when dealing
with other cultures, but it is not the only limitation. Color, clothing, gender,
educational level, societal status, profession, sexual orientation, personal
space, and more are related to culture. The way we view other cultures as
inferior or as an extension of our own is often based on wrong or
stereotypical information. One may be insecure about stepping across that
cultural boundary to move beyond culture shock and investigate another
culture so that an understanding or a better way to communicate can be
achieved. For example, DuPont incorporated a multicultural team to
investigate how to bring in new business; and an approximate $45 million
gain was achieved after the team’s experiences with other cultures.
Cross-Cultural Adaptability of Business Educators 64
Adapting colors that appealed to overseas customers was one major factor
that led to the gains in revenue (Speechley & Wheatley, 2001).
Purposive sampling was used for this study. The study participants
were international business educators attending the Centennial Conference
of The International Society for Business Education in Zurich, Switzerland,
in 2001. These participants attended a presentation conducted by the authors
that addressed Cross-Cultural adaptability. A total of 33 individuals
completed the Cross-Cultural Adaptability Inventory and a Demographic
The Cross-Cultural Adaptability Inventory (CCAI) is a tool used to
provide information to one about his/her potential for cross-cultural
effectiveness. Developed by Kelley and Meyers (1995), it is cultural-
general and consists of 50 items spread across four scales: Emotional
Resilience (ER), Flexibility/Openness (FO), Perceptual Acuity (PAC), and
Personal Autonomy (PA). After reading each question, participants
responded to each with a choice from a six-point Likert scale: definitely
true, true, tends to be true, tends not to be true, not true, and definitely not
true. The four scales are described next.
Emotional Resilience (ER). This dimension shows the degree to which
individuals are able to regulate their emotions and maintain an emotional
balance while dealing with setbacks, difficult feelings, and challenging
environments in a cross-cultural experience. Eighteen of the 50 items deal
with emotional resilience.
Flexibility/Openness (FO). This dimension shows the extent to which
a person enjoys the different ways of thinking and behaving that are
typically a part of the cross-cultural experience. Fifteen of the 50 items deal
with flexibility and openness.
Perceptual Acuity (PAC). This dimension shows the degree to which
individuals have established a cultural empathy through investigating the
confidence in their own ability to actually perceive others’ feelings, possess
a non-judgmental attitude toward others, and value other cultures. Ten of
the 50 items deal with perceptual acuity.
Personal Autonomy (PA). This dimension shows the extent to which
individuals have a strong sense of self, respect for themselves and others,
and clearly defined personal values and who do not feel like they must
abandon this ―self‖ when in a different culture. Seven of the 50 items deal
with personal autonomy.
Cross-Cultural Adaptability of Business Educators 65
The potential range of scores for each dimension (ER, FO, PAC, and
PA) differs due to a set subscale for each dimension. The range of scores for
ER, FO, PAC, and PA are intervally scaled and analyzed using central
tendencies on the following scales: 18-108, 15-90, 10-60, and 7-42
respectively. While the subscale may be different for each of the four
dimensions, this is true for all: The higher the scores, the higher the level of
the particular cross-cultural attribute being assessed.
Connolly, Darby, Tolle-Watts, and Thomson-Lakey (2000) describe the
CCAI as a tool which is ―designed to help people learn useful information
about themselves that can guide them in developing cross-cultural abilities
and skills and to better understand the importance of living and working
among people, of different cultures‖ (p. 107). The CCAI does not predict
success or failure, but helps individuals examine a person’s ability or lack
thereof to adapt to cultural situations. If weaknesses are identified, then one
has the opportunity to strengthen that area to enhance his/her ability to
adapt to different cultures.
Thirty-three international business educators participated in this
descriptive study. Of these participants, 24% were male (n=8) and 76%
(n=25) were female. The average age was 53.7 years. Three percent (n=1)
were African American, 88% (n=25) were Caucasian, 3% (n=1) reported
Other, and 6% (n=2) did not respond. Participants taught in a variety of
educational environments: secondary/high school (n=5), vocational-
technical school (n=10), community college (n=5), and college/university
(n=15). For this question, more than one response could be selected.
The CCAI was used to determine participants’ ability to adapt
culturally in four areas: emotional resilience, flexibility/openness, personal
autonomy, and perceptual acuity. This study also sought specific strategies
used by participants to help their students learn to be culturally adaptable.
Table 1 provides mean scores for the four CCAI scales for study
participants. Also included is the 50th percentile spread as reported in the
CCAI Manual (Kelley & Meyers, 1995).
Cross-Cultural Adaptability of Business Educators 66
CCAI Scale Scores
50th percentile spread
Emotional resilience 86.7 77-81
Perceptual acuity 48.2 45-47
Flexibility/Openness 69.9 65-69
Personal autonomy 35.9 31-33
For every CCAI scale, these study participants ranked higher than the
50th percentile as reported in the CCAI manual. Two points are worth noting
here. Two-thirds of the ISBE conference attendees were, from a North
American perspective, international scholars, with only one-third from the
United States. And of the 653 subjects involved in the norming process for
the CCAI, 80% were U.S. citizens and 20% were not citizens of the U.S. Of
this study’s participants, 70% reported traveling frequently (3-4 times per
year) outside the country where they live; 9% reported traveling
occasionally (once a year) outside the country where they live.
Comparing participants’ scale scores with mean scale scores reported in
the CCAI Manual also yields interesting data.
Comparison of Participants’ Scores with CCAI Manual Scores
Scale Participants Age 50+ Travel Travel
< 1 month 1-12 Months
Emotional resilience 86.7 81.3 81.6 80.2
Perceptual acuity 48.2 47.0 46.4 47.2
Flexibility/Openness 69.9 70.2 67.1 68.4
Personal autonomy 35.9 32.2 34.4 32.8
Again, the study participants’ scores exceeded those reported in the
CCAI Manual for every scale. The mean age of study participants was 53.7
When asked if they used specific strategies in their classes to help
student learn to adapt to cultures different from their own, 63.6% (n=21) of
Cross-Cultural Adaptability of Business Educators 67
participants answered ―yes.‖ Of those responding ―yes‖, 43% (n=9) were
from the USA and 57% (n=12) were from other countries. The strategies
reported varied widely. Simple conversation/dialogue that specifically
addressed issues of diversity, cultural variances and working in a diverse
workforce was used by several participants. Small group work where a mix
of cultures, races, genders, and ages are included was another strategy used.
Some business communication instructors required their students to attend a
cultural or international presentation on or off campus and write about what
they learned. The most frequently cited strategy, clearly, was the use of case
studies. For example, one respondent wrote, ―I discuss and use case studies
to create awareness and understanding of ethical and cultural considerations
in designing training and education programs.‖ Some encouraged students
to create class presentations that highlighted their own cultures and
For these study participants, the strongest CCAI scale was emotional
resilience. Emotionally resilient people are more likely to have a positive
attitude, are typically more self-confident, and are more able to deal with
ambiguity. They are more excited about new experiences and less
concerned about making mistakes. ―These characteristics are often
associated with a spirit of adventure and a tendency to experiment or take
risks‖ (Kelley & Meyers, 1995, p. 13).
Curiously, the lowest scale was flexibility/openness. One must note,
however, that even though this was the lowest scale score, it was still at the
top range for the 50th percentile. Flexible, open people like being around
and interacting with people who think differently from themselves. ―People
who are open and flexible tend to be nonjudgmental and tolerant of people
who are different from them‖ (Kelley & Meyers, 1995, p. 14).
When these study participants were compared with CCAI norm scores
for age (50+) and travel outside one’s home country (less than one month
and from 1-12 months), the participants’ scores for all four scales exceeded
the norm scale scores.
A major factor that may have affected the study participants and
affected their scale scores was the extent to which they travel frequently
outside their countries. As stated earlier, 70% (n=23) of the participants
traveled frequently (3-4 times per year) outside the countries where they
live. This international travel often affects one’s world view and, thus, one’s
ability to more effectively adapt in culturally different circumstances.
International travel or overseas experience allows others to experience
and explore other cultures and may also influence career development
(Inkson & Myers, 2003). It also appeared that the effects of this
international travel surfaced in the classes these educators teach and their
Cross-Cultural Adaptability of Business Educators 68
interactions with students. Strategies used to help students learn how to
adapt to cultures different from their own included group work, case
studies, directed discussion, and class assignments. There are a variety of
avenues for students to pursue travel abroad. Several organizations and
many educational institutions provide international travel opportunities to
students, educators, and business personnel to increase their awareness of
other cultures. Rotary International is one example of a foundation that
supports the mission of achieving a world of ―understanding and peace
through local, national, and international humanitarian, educational, and
cultural programs‖ (Rotary International, 2004). However, the strategies
currently used by the participants in this study help those students who
cannot participate in traveling to another country.
Conclusions and Recommendations
Based on this small, purposive sample, one may conclude that
international travel and study does, indeed, affect one’s ability to adapt to
culturally diverse situations. The impact of international travel can also be
felt in the travelers’ classrooms where specific opportunities are provided
for their students to learn about cultural adaptation.
As indicated earlier by Lehman and DuFrene (2005) and Newman
(1997), this study clearly points to the need for continuing investigation of
strategies used to help business education students learn to live and work in
culturally diverse settings. A specific recommendation would be to use the
Cross-Cultural Adaptability Inventory or a similar instrument with
undergraduate business education students as way of determining a
benchmark regarding their cultural adaptability. Using the instrument in a
Business Communication class provides an excellent opportunity to address
effective communication techniques with diverse populations.
A second recommendation would be to determine those business
teacher education programs with a heavy focus on international business to
establish strategies used in educating students about cultural differences.
A third recommendation is to seek resources to support traditional
course textbooks. One such resource is Working with Groups in the
Workplace: Celebrating Diversity by Cheryl Hetherington. Hetherington
(1995) provides a number of activities to use in an educational setting to
help students expand their world view.
Chang, W. (2004). A cross-cultural case study of a multinational training
program in the United States and Taiwan. Adult Education Quarterly,
54 (3), 174-192.
Cross-Cultural Adaptability of Business Educators 69
Connolly, I. M., Darby, M. I., Tolle-Watts, L., & Thomson-Lakey, E.
(2000). The cultural adaptability of health science faculty. Journal of
Dental Hygiene, 74 (2), 102-116.
Hetherington, C. (1995). Working with Groups in the Workplace:
Celebrating Diversity. Duluth, MN: Whole Person Associates.
Inkson, K., & Myers, B. A. (2003). ―The big OE‖: Self-directed travel and
career development. Career Development International, 8 (4), 170-181.
International Society for Business Education. (2004). Message from the
2004-2005 U.S. Chapter President, Sue Trautwein. Retrieved October
11, 2004, from the ISBE Web site: http://www.isbeusa.org/index.html
Jacobson, W. (1996). Learning, culture, and learning cultures. Adult
Education Quarterly, 47 (1), 15-29.
John, M. T., & Roberts, D. G. (1996). Cultural Adaptation in the
Workplace. New York: Garland.
Kelley, C. K., & Meyers, J. (1995). Cross-Cultural Adaptability Manual.
Minneapolis: National Computer Systems.
Lehman, C. M., & DuFrene, D. D. (2005). Business Communication (14th
ed.). Mason, OH: Thomson South-Western.
Lewis, R. D. (1999). When Cultures Collide: Managing Successfully Across
Cultures. Naperville, IL: Nicholas Brealey.
Merriam-Webster Online Dictionary. (2004). Culture. Retrieved October
11, 2004 from the Merriam-Webster Online Web site: http://www.m-
w.com/cgi-bin/dictionary?book= Dictionary&va =culture
Newman, D. (1997). Sociology: Understanding the Architecture of
Everyday Life, 2nd Ed. Thousand Oaks, CA: Pine Forge.
Rosenzweig, P. M. (1994). National culture and management. Boston:
Harvard Business School.
Rotary International. (2004). The Rotary Foundation. Retrieved October 11,
2004, from The International Rotary Web site: http://www.rotary.org/
Smith, B. N., Hornsby, J. S., & Kite, M. (2000). Broadening the business
curriculum via a cross-disciplinary approach: A mobile unit on cultural
diversity. Education, 120 (4), 713-724.
Speechley, C., & Wheatley, R. (2001). Developing a culture for diversity in
a week. Hodder & Stoughton Ltd.
Cross-Cultural Adaptability of Business Educators 70
Ward, M. J., & Ward, C. J. (2003). Promoting cross-cultural competence in
preservice teachers through a language use. Education,123 (3) 532-536,
Wellins, R., & Rioux, S. (2000). The growing pains of globalizing HR.
Training & development. 54 (5), 79-85.
About the authors
DR. WANDA L. STITT-GOHDES is a professor in the College of
Education at The University of Georgia. At the undergraduate level, she
teaches business communication and consumer finance courses. At the
graduate level, she helps master teachers prepare for National Board for
Professional Teaching Standards certification and also teaches a course to
prepare doctoral students to become members of the academy. Dr. Stitt-
Gohdes earned her Ed.D. and M.Ed. from The University of Georgia; her
B.S. was earned at Indiana University of Pennsylvania.
DR. TENA B. CREWS is the Director of Business Education at the
University of South Carolina. Her degrees include Ed.D. in Business
Education with a minor in Management Information Systems from the
University of Georgia, and both a Master of Arts and Bachelor of Science
from Ball State University. Her research interests include online learning
design and development along with online instruction and methods of
International Society for Business Education (ISBE)
Journal for Global Business Education
Guidelines for Authors
You are invited to submit a manuscript for the sixth edition of ISBE
refereed publication, the 2006 Journal for Global Business
Education. Topics should focus on International Business and may
include reviews of literature, research, teaching methodologies, and
other appropriate options. Specific guidelines for authors are printed
below. A panel of reviewers will determine the papers that will be
included in the publication. The deadline for submission of papers
for the 2006 Journal is October 15, 2005.
The Journal for Global Business Education is a non-profit, refereed
publication of the International Society for Business Education.
Manuscripts should focus on the philosophy, theory, or practices
related to international business education at all levels of instruction.
Reviews of literature, research, and teaching methodologies will be
considered for publication. Manuscripts should not have been
published or be under consideration for publication for another
journal. We encourage business educators at all levels and
international business representatives to submit manuscripts for
publication. Submissions are invited from all interested parties.
Those authors whose articles are accepted for publication will
receive an honorarium of one year's membership in the International
Society for Business Education/National Business Education
The style manual used for the Journal for Global Business Education
is the Publication Manual of the American Psychological
Association, 5th Edition. Papers should be no longer than 15 pages
(3,000 words), including references, tables, and figures. It should
include an abstract. Footnotes should be included at the end of the
document. Manuscripts should include page numbers and line
Tables should be provided only if the information is essential to the
understanding of the article. APA guidelines must be followed, the
table must be ready for publication, and should have no special
Five double-spaced copies of the manuscript should be sent to
Wanda Stitt-Gohdes to be considered for publication. Once a
decision has been made to publish a manuscript, the author is
responsible for providing a copy of the article on a 3½‖ disk in
Microsoft Word 97 or greater. A short biographical sketch should
be included at the same time the final copy is submitted.
Submit articles to:
Dr. Wanda L. Stitt-Gohdes
The University of Georgia
225 River’s Crossing
850 College Station Rd.
Athens GA 30602
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