Journal of Global Business Education Board of Reviewers: Dr. Teri L. Brandenburg Mississippi State University Mississippi State, MS Dr. Don Busché Saddleback College Mission Viejo, CA Dr. Burt Kaliski Southern New Hampshire University Manchester, NH Dr. Heidi Perreault Southwest Missouri State University Springfield, MO Dr. Cynthia Anast Sequin Emporia State University Emporia, KS Dr. Lila Waldman Bloomsburg University Bloomsburg, PA Dr. Patricia Wissen Northcentral Technical College Wausau, WI Consulting Editors: Brenda Ingram-Cotton Los Angeles Valley College Valley Glen, CA Dr. John Lightle Ivy Tech State College Marion, IN Kay Ono Leeward Community College Pearl City, HI Sue Trautwein Linn-Benton Community College Corvallis, OR Table of Contents The Shifting Language of Commerce: A Case for Mastering Mandarin 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 Purchases Dr. Marianne L. James, Dr. Carol Blaszczynski, and Prof. Dr. Hansrudi Lenz ...................................................... 23 Cooperative Learning Barriers & Bridges: Scaffolding Student Success John Duncan and Dr. Clora Mae Baker ............................. 35 Evaluating Knowledge and Critical Thinking in International Business Courses Dr. Edgar J. Manton, Dr. Donald E. English, and Dr. Roberto Vinaja ....................................................... 51 The Cross-Cultural Adaptability of a Group of International Business Educators 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 Abstract 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. Introduction 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, 2004). 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 (Gluckman, 2001). 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, 2004). 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, & Nakagawa, 2004). 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 (Inman, 1987). 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 (McDonald, 2000). 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 of study. 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 counterparts. References American Assembly of Collegiate Schools of Business. (2004). Eligibility and Accreditation Standards for Business Accreditation. St. Louis, Missouri. Bolton, K. 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International Review of Applied Economics, 18(1), 73-91. 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 AND FINANCING Dr. James Calvert Scott Abstract 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. Introduction 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 Scramble,‖ 2003). 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 the bank. 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, 2003). 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 (―Glossary,‖ 2003). 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 Appeal,‖ 2003). 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 Market,‖ 2003). 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 (Taylor, 2003). 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 services. 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. References 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 database. 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 database. Islamic banking music to ears of financial firms. (2002, August 11). Asia Africa Intelligence Wire, n.p. Retrieved December 11, 2003, from the InSite2 database. 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 Banking 4. 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, 40(2), 385-416. 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 INTERNET PURCHASES Dr. Marianne L. James, CPA, CMA Dr. Carol Blaszczynski Dr. Hansrudi Lenz Abstract 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). Introduction 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 careers. 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. Financial Competencies 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 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 (Chatzky, 2002). 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. Income 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 (Sprenger, n.d.). Internet Purchases 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 purchases. 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. Research Questions 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 Internet purchases? 3. Are students who own credit cards more likely to shop on the Internet and more frequently than those who do not own credit cards? 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 grade. 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 German students. Demographics 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 male students. 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. Results 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 Table 1 Descriptive Statistics and Mean Differences Difference 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** ($4,503) Ownership of Savings Account 79% 41% 81% 39% 0p = .29** Ownership 0 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). Conclusions 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 month. 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 Recommendations 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 saving patterns. References Bundesverband Deutscher Banken. (2003a). Statistik-Service Kreditkarten, May 2003. Retrieved October 13, 2003, from http://www .bankenverband.de Bundesverband Deutscher Banken. (2003b). Statistik-Service Umsatzentwicklung, Kreditkarten, June 2003. Retrieved October 13, 2003, from http://www.bankenverband.de Cards unplugged. (2003). CardTrak, August 2003. Retrieved October 11, 2003, from http://www.cardweb.com/cardtrack/pastissues/aug03.html Chatzky, J. S. (2002). Teach our children well: It's never too early to educate kids about money. Money, 31(7), 128. A Comparison of U.S. and German Students’ Earning 32 Credit Union National Association. (2002). 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Changing financial behavior: Implications for family and consumer sciences professionals. Journal of Family and Consumer Sciences, 91(4), 43-48. Organization for Economic Cooperation and Development (2004): OECD Economic Outlook No. 76, December 2004, Statistical Annex Tables. Retrieved January 8, 2005, from http://www.oecd.org/documentprint/ 0,2744,en_2649_201185_201185_2483901_1_1_1_1,00.html Organization for Economic Cooperation and Development. (2003). Purchasing Power Parity for GDP – Historical series. Retrieved October 12, 2003, from http://www.oecd.org Policies Commission for Business and Economic Education. (n.d.) This we believe about the role of business education in financial education, Policy Statement No. 69. Retrieved October 5, 2004, from http://www.nbea.org/curriculum/no_69.pdf 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. Sprenger, B. (n.d.). die bank: Geldvermoegen der Deutschen im Umbruch. Retrieved January 3, 2005 from http://www.die-bank/ printArtikel.asp?artID=273 Statistisches Bundesamt (2004). Arbeitsunterlage Volkswirtschaftliche Gesamtrechnungen: Nettoeinkommen und Zahl der Haushalte nach Haushaltsgruppen 1991 bis 2002, August 2003, Wiesbaden. A Comparison of U.S. and German Students’ Earning 33 Tides Center. (2003). Pew Internet & American life project. America’s online pursuits. The changing picture of who’s online and what they do. Retrieved August 5, 2004, from http://www.pewinternet.org/ pdfs/PIP_Online_Pursuits_Final.PDF Universitaet Essen. (2003). Wirtschaftswissenschaften. Retrieved October 14, 2003, from http://www.uniessen.de/isa/fg_wirtschafts_recht/ wirtschaftswiss/wirtschaftswiss_mw.htm Westenberger, T. (2003). How much money do you really need to be happy? USA Weekend, September 19-21, pp. 6-7. 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. COOPERATIVE LEARNING BARRIERS & BRIDGES: SCAFFOLDING STUDENT SUCCESS John Duncan Dr. Clora Mae Baker Abstract 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. Background 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). Definition 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 employed. Foundation 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 studies. Global Perspective 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 making. 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 the skills. 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, & Holubec, 1994). 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 process. 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. Reference Alvarstein, V., & Johannese, L. (2001). Problem-based learning approach in teaching lower level logistics and transportation. 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Dillenbourg (Ed.), Collaborative learning: Cognitive and computational approaches (pp. 103-121). Oxford, UK: Elsevier Science. Sharan, Y., & Sharan, S. (1992). Expanding cooperative learning through group investigations. New York: Teachers College Press. Slavin, R. E. (1992). Student team learning: A practical guide to cooperative learning (3rd ed.). Washington: National Education Association. Sternberg, R. J., & Frensch, P. A. (1991). Complex problem solving: Principles and mechanisms. Hillsdale, N. J.: Erlbaum. Sternberg, R. J. (1996). Cognitive Psychology. New York: Harcourt Brace College Publishers. Thompson, J.,& Chapman, E. (2004). Effects of Cooperative Learning on Achievement of Adult Learners in Introductory Psychology Classes. Social Behavior & Personality: An International Journal, 32(2), 139- 145. Tjosvold, D., & Tjosvold, M. M. (1995). Cross-functional teamwork: The challenge of involving professionals. In M. M. Beyerlein, D. Johnson, & S. T. Beyerlein, (Eds.), Advances in interdisciplinary studies of work teams Vol 2: Knowledge work in teams (pp. 1-34). Greenwich, CT: JAI Press. Tjosvold, D., Tang, M., & West, M. (2004). Reflexivity for team innovation in China: The contribution of goal interdependence. Group & Organization Management, 29(5), 540-559. Cooperative Learning Barriers and Bridges 50 Totten, S., Sills, T., Digby, A., & Russ, P. (1991). Cooperative learning: A guide to research. New York: Garland. Vygotsky, L. S. (1986). Thought and language. (Kozulin, A. Ed.). Cambridge, MA: Massachusetts Institute of Technology Press. Vygotsky, L. S. (1978). Mind in society: The development of higher psychological processes. (M. Cole, V. John-Steiner, S. Scribner, & E. Souberman, Eds.) Cambridge, MA: Harvard University Press. Webb, N. (1985). Student interaction and learning in small groups: A research summary. In R. E. Slavin, S. Sharan, S. Kagan, R. Hertz- Lazarowitz, C. Webb, & R. Schmuck (Eds.), Learning to Cooperate, Cooperating to Learn, (pp. 147-172). New York: Plenum. Zhining, Q., Johnson, D., & Johnson, R. (1995). Cooperative versus competitive efforts and problem solving. Review of Educational Research, 65(2), 129-143. 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. EVALUATING KNOWLEDGE AND CRITICAL THINKING IN INTERNATIONAL BUSINESS COURSES Dr. Edgar J. Manton Dr. Donald E. English Dr. Roberto Vinaja Abstract 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. Introduction 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, 1999). 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 material. Bloom’s Taxonomy 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 (1988), 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. Knowledge Objectives 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 test question: 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 e) centralization This question assumes the student has learned the characteristics of an international joint venture and its advantages and disadvantages. Comprehension Objectives 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 demand. 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 cycle. 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 Objectives 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 test question: 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 problem. 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 Objectives 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 question: 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 Objectives 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 question: 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 Objectives 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., 1956). 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 question: 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 better explanation? 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. Summary 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. References 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. Winter, 368-374. 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, 4(2), 195-212. Evaluating Knowledge and Critical Thinking in International Business 58 Kloss, R. J. (1988). Toward asking the right questions. The Clearing House, 61, 245-248. 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. Spring, 37-40. 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), 21-36. 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), 32-48. 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 Systems Department. 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 EDUCATORS Dr. Wanda L. Stitt-Gohdes Dr. Tena B. Crews Abstract 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. Introduction 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. Purpose 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 2001. 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 Inventory? What are specific strategies used by the participants to help their students adapt to cultures different from their own? Related Literature 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). Method Sample 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 Data Sheet. Instrumentation 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. Study Demographics 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. Findings 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 Table 1 CCAI Scale Scores Scale Participants 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. Table 2 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 years. 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 experiences. Discussion 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. References 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/ foundation/index.html 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, 638. 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 teaching. 72 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. Description 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 Association. Format 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 73 (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 numbering. Tables 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 requirements. Final Copy 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 For questions regarding the Journal, please contact Dr. Wanda L. Stitt-Gohdes (WLSG@uga.edu) or Dr. Tena B. Crews (email@example.com).
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